AINO COMMUNIQUE

[November 2021, 97th Edition]

Aino Management Consultancy Private Limited

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Dear Professional colleague

Greetings!!!

“Some people dream of success, while other people get up every morning and
make it happen”

It’s not about how much knowledge we have, it’s about how to use the knowledge we have
for best result!

Putting knowledge into Work & Practice: Going from knowing about something to really
growing and developing requires knowing how to use it. New ideas, new approaches, new
skills all need some space to settle into the scheme of what we already know and do. Our
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need to consider how they apply more broadly.

We believe that success of AINO lies in our client’s success and so we do feel happy to
provide our services and we assure you to provide our best in future too. We are glad to
bring our 97th edition of AINO communiqué and this Statutory monthly update includes
updates regarding statutory compliance & Key announcements from the various acts like
Income tax act, Goods and Service act, Companies act, RBI act, with latest statutory updates,
regulatory policies and opportunities given by the
Government to revive our Business in this pandemic Situation.

We hope you find this journal informative and of continued interest. We welcome your
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With warm regards,

Sudheer Javali
CEO
 TABLE OF CONTENTS

Sr. No. PARTICULARS

I. Statutory Due dates in the Month of
November 2021

II. Income Tax Act, 1961

III. Goods and Services Tax

IV. Companies Act,2013
V. Reserve bank of India
VI. Knowledge Capsule
I. STATUTORY & TAX COMPLIANCE CALENDAR FOR THE
MONTH OF OCTOBER 2021

SL Particular Due date

NO
1. TDS Payment for October 2021 7-11-2021
2. TCS Payment for October 2021 7-11-2021
3. GSTR-7 (Monthly) for October 2021 10-11-2021
4. GSTR-8 (Monthly) for October 2021 10-11-2021
5. GSTR 1 (Monthly) for October 2021 11-11-2021
6. Half-yearly return of ESIC for the period April to September 12-11-2021
7. GSTR 1 (IFF) for October 2021 - GST return for the taxpayers who opted for 13-11-2021
QRMP scheme (Optional)
8. GSTR-6 (Monthly) for October 2021 – Input Service Distributors 13-11-2021
9. Furnishing of TDS certificates certificate in respect of tax deducted (from 15-11-2021
payments other than salary) for the quarter ending September 30, 2021
10. Provident Fund (PF) Payment for October 2021 15-11-2021
11. ESI Payment for October 2021 15-11-2021
12. E-payment of Provident Fund 15-11-2021
13. GSTR 3B for Monthly October 2021 20-11-2021
14. GST Challan Payment - GST Challan Payment if no sufficient ITC (for all 25-11-2021
Quarterly Filers)
 II. INCOME TAX ACT, 1961

1. Guidelines under clause (23FE) of section 10 of the Income-tax Act, 1961 reg.
The Central Board of Direct Taxes (CBDT) on October 26, 2021 has issued
Guidelines under clause (23FE) of section 10 of the Income-tax Act, 1961 to clarify
that eligibility of exemption under clause (23FE) of section LO of the Act shall be as
follows: -

a. if the loans and borrowings have been taken by the specified fund or any of its
group concern, specifically for the purposes of making investment by the
specified fund in India, such fund shall not be eligible for exemption under
clause (23FE) of section 10 of the Act; and

b. if the loans and borrowings have been taken by the specified fund or any of its
group concern, not specifically for the purposes of making investment in India, it
shall not be presumed that the investment in India has been made out of such
loans and borrowings and such specified fund shall be eligible for exemption
under clause 23(FE) of section 10 of the Act, subject to the fulfilment of all other
conditions under the said clause, provided that the source of the investment in
India is not from such loans and borrowings.

https://www.incometaxindia.gov.in/pages/communications/notifications.asp

2. Process flow document for form 15CA/CB Including bulk filing/Uploaded

The income tax provided steps for 15CA/CB for filing 15CA/CB and bulk filing and
uploaded

And Income tax website had provided link for our reference

https://www.incometax.gov.in/iec/foportal/latest-news

3. No Deduction Of TDS u/s 194A to Scheduled Tribes Located in Specified Area.

The Central Government hereby notifies that no deduction of tax shall be made on
the following payment under section 194A of the said Act, namely payment in the
nature of interest, other than interest on securities, made by a scheduled bank
(hereinafter the “payer”) located in a specified area, to a member of Scheduled Tribe
(hereinafter the “receiver”) residing in any specified area, as referred to in clause
(26) of section 10 of the said Act, subject to the following conditions:

The payer satisfies itself that the receiver is a member of Scheduled Tribe residing
in any specified area, and the payment as referred above is accruing or arising to
the receiver as referred to in clause (26) of section 10 of the said Act, during the
previous year relevant for the assessment year in which the payment is made, by
obtaining necessary documentary evidences in support of the same.

The payer reports the above payment in the statements of deduction of tax as
referred to in sub- section (3) of section 200 of the said Act
The payment made or aggregate of payments made during the previous year does
not exceed twenty lakh rupees.

https://www.incometaxindia.gov.in/communications/notification/notification-no-
110-2021.pdf.pdf
 CBDT rolls out Annual Information Statement (AIS) to provide details of
taxpayer’s financial information
The Income-tax Dept. has rolled out the new Annual Information Statement (AIS)
on the Compliance Portal, which provides a comprehensive view of information to a
taxpayer with a facility to capture online feedback.

Annual Information Statement is a tax passbook of the assessee which will provide
an assessee with the information about the prepaid taxes and prescribed financial
transactions entered into during the relevant previous year.

The new AIS includes additional information relating to interest, dividend,

securities transactions, mutual fund transactions, foreign remittance information
etc. A facility has also been provided to submit online feedback by the taxpayer.

III. GOODS AND SERVICES TAX

1. Advisory for taxpayers on Form GSTR-2B
Form GSTR-2B is an auto-drafted ITC statement which is generated for every normal
taxpayer on the basis of the information furnished by their suppliers in their respective
GSTR-1/IFF, GSTR-5 (non-resident taxable person) and GSTR-6 (input service distributor).
This statement indicates availability and non-availability of input tax credit to the taxpayer
against each document filed by their suppliers and is made available to the taxpayers in the
afternoon of 14th of every month

Click on below links to access additional content related to Form GSTR-2B:

https://tutorial.gst.gov.in/downloads/news/updated advisory_gstr_2b_12_10_2021.pdf –
for detailed advisory

https://tutorial.gst.gov.in/userguide/returns/index.htm#t=Manual_gstr2b.htm – for User

Manual

https://tutorial.gst.gov.in/userguide/returns/index.htm#t=FAQ_gstr2b.htm – for FAQs

2. Availability of Input Tax Credit (ITC) for FY 2020-21

As per Section 16(4) of CGST Act, 2017, no taxpayer shall take input tax credit in respect
records (invoices and debit notes) for supply of goods or services (or both) for Financial Year
2020-21 after the due date of furnishing the return for the month of September 2021. The due
date for the GSTR-3B for September 2021 is either 20th October 2021 for monthly filers and
22nd or 24th October 2021 depending on the State/UT of registration of the taxpayer. In
view of the same, the following may kindly be noted:

Records (invoice or debit notes) pertaining to Financial Year 2020-21 reported in GSTR-1
after due date of GSTR-3B of September 2021 will not reflect as “ITC Available” in GSTR-2B
of the recipients. Such records will reflect in “ITC Not Available” section of GSTR-2B and
such ITC shall in turn not be auto-populated in GSTR-3B.
 Records (invoice or debit notes) pertaining to Financial Year 2020-21 reported in GSTR-1
after due date of GSTR-3B of September 2021 will also not reflect as “ITC as per GSTR-2A”
in Table-8A of GSTR-9 of the recipients.
It is requested that the taxpayers may take note of the above and ensure that their records
pertaining to Financial Year 2020-21 are reported on or before the due date of their GSTR-3B
for the month September 2021, or for the quarter of July to September 2021 in case of
quarterly GSTR-3B filers. Availment of ITC by the recipient’s contrary to the legal provisions
in GST may entail action by the tax administrations in accordance with law.
Link: https://www.gst.gov.in/newsandupdates/read/509

3. Resumption of Blocking of E-Way Bill (EWB) generation facility.

The blocking of E way bill generation facility had been temporarily suspended by
Government on account of Covid pandemic. In terms of Rule 138 E (a) and (b) of the CGST
Rules, 2017, the E Way Bill generation facility of a person is liable to be restricted, in case the
person fails to file their return in Form GSTR-3B / statement in CMP-08, for consecutive two
tax periods or more, whether Monthly or Quarterly.
The blocking of EWB generation facility has now resumed on the EWB portal for all the
taxpayers. Going forward, from the tax period August, 2021 onwards, the System
will periodically check the status of returns filed in Form GSTR-3B or the statements filed in
Form GST CMP-08 as per the regular procedure followed before pandemic, and block the
generation of EWBs as per rule.
To avail EWB generation facility on EWB Portal on continuous basis, you are, therefore,
advised to file your pending GSTR 3B returns/ CMP-08 Statement on regular basis.
For details of blocking and unblocking EWB, Click on below link:
• https://tutorial.gst.gov.in/userguide/returns/index.htm#t=FAQs_unblockingewaybill.ht
m

IV. COMPANY LAW UPDATES

1. Ministry of Corporate Affairs vide its General Circular No 16/2021 has granted extension
to LLPs for filing of eForm-8 (Statement of Account and Solvency) for two months i.e., from
30th October, 2021 to 30th December, 2021. Accordingly, the eForm-8 for FY 2020-21 can be
filed by the LLPs upto 30.12.2021 without payment of any additional fees
https://www.mca.gov.in/bin/dms/getdocument?mds=D6JwDgXJxJkSj9vnkrkNZw%253D
%253D&type=open

2. AGM – Due Date Extended by 2 Months:

The Central Government has received representation seeking extension of Annual
General Meetings for Financial Year 2020-21 citing many difficulties faced by
stakeholders during the second wave of Covid-19 and consequent lockdown etc.,
accordingly, the Central Government has decided to advise Registrar of Companies
(RoCs)to accord approval for extension of time for a period of two months beyond
 the due dates by which companies are required to conduct AGMs for the financial
year 2020-21 ended on March 31, 2021

The due date for holding the AGM by the corporate entities and laying down their
annual audited financial statements for the FY 2020-21 was 30.9.2021. Now, once the
order for extension of the AGM due date is issued by the respective RoCs, the
revised due date for holding of AGM would be 30.11.2021 i.e., would be extended by
a period of two months.

https://www.mca.gov.in/content/mca/global/en/data-and-reports/rd-roc-
info/extension-agm.html

V. RBI UPDATES

1. Inclusions to Second Schedule of RBI

Paytm Payments Bank Limited in the Second Schedule of the Reserve Bank of India Act,
1934
Link:
https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12176&Mode=0

VI. KNOWLEDGE CAPSULE

1. ANALYSING THE CSR AMENDMENT RULES 2021

Introduction

The Ministry of Corporate Affairs (MCA) released a notification on January 22, 2021, and
brought into effect the Companies (Corporate Social Responsibility Policy) Amendment
Rules 2021 which amended the Companies CSR Policy Rules, 2014. The prime objective
behind these amendments was to bring transparency within the CSR regime and further
increase accountability of the companies undertaking activities pertinent to CSR with an aim
to achieve an efficient and reinforced CSR ecosystem.

This article attempts to throw light on the key changes within the CSR policy that have taken
place by the way of the 2021 amendments and also discusses in detail that how the notion of
CSR developed in India. Furthermore, it will also analyse the impact of the amendments on
the corporate sector in light of the COVID-19 pandemic and will highlight the major
drawbacks of these amendments.
Background: How did CSR develop in India?

Corporate Social Responsibility is conceptualised on corporations acting as partners in the

process of social development of the nation. The notion of CSR began to develop in India
during the period of economic liberalization and got popularity during the early 2000s when
several multinational companies set up businesses in India.1 In 2009, the Ministry of
Corporate Affairs (MCA) came up with CSR Voluntary Guidelines to promote Corporate
Social Responsibility and then in 2011, it came up with National Voluntary Guidelines on
Social, Environmental, and Economic Responsibilities of Business. Since the guidelines were
only voluntary, it was observed that only limited companies implemented them.2

Subsequently, in 2013, CSR was made a mandatory obligation by the Companies Act, 2013
under section 135 in order to make it an essential part and a core of business philosophy.
Thereafter, the CSR Policy Rules, 2014 came up with certain specifications and laid down the
procedure that the companies are required to abide by while performing their CSR
obligations. Major reforms were made in CSR provision under section 135 of the Companies
Act by way of the Companies Amendments Acts of 2019 and 2020. Lastly, the very recent
amendment was made in January 2021 when MCA notified the Companies CSR Policy
Amendment Rules that gave effect to the changes introduced in CSR by the Companies
Amendment Act of 2019 and 2020.

Key changes: What provisions have been amended so far and why?

The amendments have been made in the CSR regime to ensure that the companies are
strictly complying with the provisions of the said rules and maintaining transparency with
respect to the CSR activities they are undertaking. Major highlights of the 2021 amendment
rules are as follows:

1. Changes in Rule 4 – The title of Rule 4 has been changed from CSR Activities under
CSR Policy Rules 2014 to CSR Implementation as a result of the 2021 Amendment.
Under the New Rules, a company is allowed to undertake its CSR implementation
either by itself or through another company established under Section 8 of the
Companies Act, a registered public trust or a registered society established (i) either
by the company itself, or (ii) by the Central Government or State Government. In
addition to the above, a company may also take help of (i) any entity established
under an Act of Parliament or a State legislature, or (ii) a Section 8 company,
registered public trust or registered society, not referred to above but having an
established track record of minimum three years, for its CSR implementation.

2. Introducing International Organisations – Companies are allowed to engage

International Organisations for designing, monitoring and evaluating CSR projects
and also implement agencies by taking prior approval of the Central Government.

3. Introducing the concept of ongoing projects – Companies are now permitted to

undertake multi-year CSR projects known as ongoing projects and can fund them in
the prescribed manner stated in the Draft Rules. The earlier framework lacked a
provision for the same.
 4. Changes in CSR definition (Rule 2)–The previous definition of CSR barred the
activities carried out solely for benefit of a company's employees and their families
but according to the modified definition, now if such activities have less than 25%
employees as its beneficiaries, then it will be considered as CSR.

5. Introduction of Impact Assessment – The companies that spend CSR above a

specific threshold, will now be under an obligation to carry out an impact
assessment of the CSR activities and disclose details of it in their Annual Report on
CSR.

6. National Upsent CSR Fund – The 2021 Amendment has introduced a New Rule 10
requiring companies to transfer the unspent CSR amount to any fund already
mentioned under Schedule VII till "the Fund" referred to in Section 135(5) and 135(6)
of Companies Act, 2013 is created or specified.

It is to be noted that the Draft Rules proposed the establishment of a National

Unspent CSR Fund by the Central Government ("the Fund") for the purposes of
Section 135(5) and 135(6) of the Companies Act. There has however been no mention
of any such specific central Fund to be created by the Central Government under the
New Rules of 2021.

7. Changes in CSR Expenditure (Rule 7)–The assets acquired by the companies or

even created by it cannot be now held by such companies and must be transferred to
companies established under Section 8 of the Act having either charitable objects or
public authority within the timeline prescribed.

Concluding remarks

It is evident that the amendment rules, 2021 have made significant reforms within the CSR
regime. The changes have emphasized strict compliance with the Act and also focussed on
other necessary aspects such as accountability and transparency within the companies
undertaking CSR activities. Furthermore, the amendment rules 2021 have also played a vital
role during this pandemic when a majority of the companies contributed financially and
extended a helping hand to fight against the problems that arose due to this pandemic.
Though the changes made so far still need to implement other suggestions put forward by
the HLC that are highly important and not implementing the same led to few drawbacks in
the existing framework, still it can be said that the step taken to introduce the amendments
was in the right direction that helped in revamping the CSR regime.

2. UNEXPLAINED INCOME UNDER INCOME TAX ACT

The unexplained income is that part of income which is not disclosed by the taxpayer in his
income tax return. It covers all those incomes, investments or expenditures which are either
not recorded in the books of accounts or in respect of which the assessee does not have any
satisfactory explanation. The unexplained income attracts tax at the rate of 78% and
penalty.
a. Types of Unexplained Income
The Income-tax Act provides for taxability of unexplained income in accordance with
provisions of Sections 68 to 69D. The unexplained income shall coverall those incomes,
investments or expenditures in respect of which the assessee does not have any satisfactory
explanation.

i. Cash Credits
If any sum is found credited in the books of accounts maintained by the assessee for any
previous year and the assessee offers no explanation about the nature and source thereof or
the explanation offered by him is not satisfactory, the sum so credited may be charged as
unexplained income of that previous year.

ii. Unexplained Investments

If an assessee has made investments but failed to record them in books of account
maintained, the value of such investments may be deemed as unexplained income if
assessee offers no explanation about the nature and source of investments or the explanation
offered by him is not found satisfactory by the Assessing Officer.

iii. Unexplained Money and other Assets

If assessee is found to be the owner of any money, bullion, Jewellery or other valuable
articles which he failed to record in the books of account and he offers no explanation about
the nature and source of their acquisition or the explanation offered by him is not found
satisfactory by the Assessing Officer, such valuable articles may be taxable as unexplained
income of the assessee.

iv. Investments not fully disclosed in books of accounts

Where assessee has made investment or is found to the owner of any bullion, Jewellery or
other valuable article, and the Assessing Officer finds that the amount expended on making
such investments, or in acquiring such bullion, Jewellery or other valuable article exceeds
the amount recorded in the books of accounts maintained by the assessee, the differential
amount may be taxable as unexplained income of the assessee.

v. Unexplained Expenditure
Where in any financial year an assessee incurs any expenditure but he has no explanation
about the source of such expenditure or the explanation, if any, offered by him is not
satisfactory in the opinion of the Assessing Officer, the amount covered by such
expenditure, may be deemed as unexplained income of the assessee for such financial year.

vi. Borrowing or Repayment through Hundi

Where any amount is borrowed on Hundi or any amount due thereon is repaid, otherwise
than through an account payee cheque, the amount so borrowed or repaid shall be deemed
to be the income of the person borrowing or repaying the amount.
b. Overview

Section Nature of Transaction Conditions for taxability

Section Cash Credits Sum found in the books of accounts but assessee has
68 no satisfactory explanation about the nature and
source
Section Unexplained Investments Investment is made but not recorded in the books of
69 account
Section Unexplained Money Assessee is found to be owner of money, bullion, etc.
69A but they are not recorded in the books of account
Section Investment not fully Sum expended in Investments, money, bullion,
69B disclosed in books of valuable articles, etc. is more than the amount
account recorded in the books of account
Section Unexplained expenditure Expenditure is incurred by the assessee but he has no
69C satisfactory explanation about the source of such
expenditure
Section Amount borrowed or Amount is borrowed or repaid on Hundi otherwise
69D repaid on Hundi than through an account payee cheque.

c. Treatment of Unexplained Income

How unexplained income shall be taxable?

The nature and source of an unexplained income may be any of the income as mentioned in
Section 14 (i.e., Income from house property, business profits, capital gains, other source,
etc.), but it shall not be taxable in any of these heads. The Gujarat High Court has approved
this interpretation and it held that the unexplained income is deemed to be income of
assessee and it would not be possible to classify it under any of heads mentioned in Section
14. When unexplained income is not classified under any head, no deduction under any of
the provisions which correspond to such heads would be available. In other words, no
deduction in respect of any expenditure or allowance or set off of any loss shall be allowed
to the assessee in computing his income under this provision.

Example, if gold and Indian currency confiscated from an assessee is treated as assessee's
unexplained income, he cannot claim any deduction for such confiscation as trading loss
under Section 29. Thus, entire unexplained credit is liable to be included in assessee's income
as source of investment or its acquisition was not explained and assessee has no right to
claim that its value should be allowed as deduction from his income.

However, for the purpose of computation of income in return of income, the unexplained
income is disclosed in Schedule OS (Income From Other Source) and tax is computed on
such income at special tax rate as provided in Section 115BBE.
What is the tax rate on unexplained income?

The unexplained income may be detected by the Assessing Officer or assessee can Suo-moto
offers it to tax in the Income-tax return. In both the situations, the unexplained income shall
be taxable at special rate as provided in Section 115BBE. In other words, the provisions of
Section 115BBE shall be applicable in the following cases:

(a) If total income of assessee as reflected in the Income-tax return includes any income as
referred to in Sections 68 to 69D.

(b) If total income of assessee determined by the Assessing Officer includes any income as
referred to in Sections 68 to 69D.

The unexplained income shall be taxable at the rate of 60% which shall be further increased
by surcharge of 25% and health and education cess. The effective tax rate shall be 78% [Tax
60% + 15% Surcharge (at the rate of 25% of 60%) + 4% Health & Education Cess (at the rate
of 4% of aggregate of Tax and Surcharge of 75%)].

The assessing officer shall also levy penalty in respect of unexplained income in accordance
with Section 271AAB and 271AAC.

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