Representation of COVID – 19 & its short-term relief measures

Respected Sir/Madam, 

Steel Users Federation of India (SUFI) is an Apex body representing the Steel Industry with a member strength of more than 7000 spread across India.

The following Chambers/Associations are the leading Bodies representing the various Sectors/Industry:

Ø  Chamber of Association of Maharashtra Industry & Trade – CAMIT

Ø  Bombay Metal Exchange – BME

Ø  All India Electronics Association – AIEA

Ø  Federation of Retail Trade Welfare Association – FRTWA

Ø  SUFI – Steel Users Federation of India

Ø  Steel Chambers of India – SCI

Ø  DISMA – Darukhana Iron and Steel Merchants Association

Ø  SPDA – Scooter Parts Dealers Association

Ø  COSIA – Chamber of Small Industries Association

Ø  The Bombay Sugar Merchants Association – TBSMA

This joint representation seeking certain immediate short-term relief measures is being made by SUFI and other Chambers/Associations in the wake of the extraordinary situation that has arisen due to the outbreak of ‘Coronavirus’ (COVID 19) and the challenge it has posed before the business community.

Macabre COVID-19 and its crippling impact on Business & Finance:

The outbreak of this new disease that first took its hold in Wuhan, China in an unobtrusive manner and its subsequent spread like a wildfire, across the globe so as to become the ‘global pandemic COVID-19’ does not need any elaboration here. As many as 105 countries across the globe are presently in the vice like grip of the deadly virus and this merchant of death has already arrived at the Indian shores.

However, even before this pandemic made its present felt in the country, the Trade & Industry in India has already been experiencing the devastating impact of this pandemic on the global economy. For the Businesses in India, the situation has since then only worsened in last few weeks. The ill-effects of this pestilence are clearly visible in:

  • Badly impacted productions due to the disruptions in the global supply chain;
  • Negative growth being witnessed in imports;
  • Shrinking exports;
  • Postponement or cancellation of export orders from the affected countries.

However, the worst impact of this pandemic is on the consumer’s demand which is plummeting downward at the terminal velocity. 

Needless to say, these economic woes have its debilitating impact on the finances of the Businesses, seriously impacting their cash flow. The financial cycle is completely in disarray and there is an unprecedented squeeze on the working capital, hurting the MSME sector the most!

On the operational front, the implementation of ‘Work from Home’ policy being adopted by the businesses- voluntarily or otherwise- has its own constraints. Barring large business organizations, majority of the Businesses, particularly in the MSME sector have no ways and means to effectively implement ‘Work from Home’ policy. At the same time, adhering to this policy has also resulted into acute shortage of manpower throwing the day to day functioning of the business entity out of gear!

The devastating impact being experienced by the Businesses, both on the Financial as well as Operational, front has created a very precarious situation for them. SUFI is of the view that in these critical times, some immediate short-term relief measures are inevitable so as to enable the businesses, particularly in the MSME sector, to tide over this unprecedented crisis.

SUFI expects the following measures which may be actively considered by the Government;

I. On Statutory Compliance/Payment Front;

a) Extension of due dates falling in remainder of March, 2020 for filing the various Returns including GSTR-3B prescribed under GST laws to April 30, 2020;

b) Extension of due dates falling in remainder of March, 2020 for furnishing various Returns/Forms prescribed under the Income Tax Act, 1961 to April 30,2020.

c) Extension of due date from March 31, 2020 to April 30, 2020 for 100% payment of tax under recently operationalized Vivad Se Vishwas Scheme,2020

d) Extension of due dates falling in the remainder part of March, 2020 in respect of other regulatory compliances/filing of returns as prescribed under various legislations to April 30, 2020.

e) Waiver of penalty or late fee or interest, as the case may be, in case of delayed discharge of any statutory dues under GST laws, IT Act, etc. during February 2020 and March, 2020;

f) Waiver of demur-rage/detention charges or any port charges etc. in respect of the international cargo considering the fact that the cargos are being subjected to vigorous examination leading to delay in clearance. 

II. On Departmental Adjudication/Appellate & other Proceedings;

a) To put a temporary hold on the fixation of personal hearings in any adjudication or appellate proceedings being undertaken by the departmental authorities under the GST laws or IT Act;

b) To put on hold or discontinue the ongoing EA 2000 audit or any audit being undertaken by the CGST and Central Excise/Service Tax authorities for at least 2 months;

c) Issue of instructions to the adjudicating/appellate authorities to refrain from passing any adjudication/appellate orders ex-parte (orders maybe passed, if feasible, only in case of concluded hearings);

d) Issue of the instructions to the adjudicating/appellate authorities for entertaining the request for the adjournments (irrespective of the stipulation in law).

III. On the Financial Front;

a) Extension of due date for payment of EMI’s including EMIs related to various Credit Facilities availed by the Businesses from the Banks by 90 days without any penal interest or late payment charges and also without any negative impact on the credit rating of the borrower;

b) Issue of instructions to the banks and financial institutions to relax the conditions related to maintenance of margin balance against working capital limits for at least 90 days;

c) Extension of payment of Letters of Credit (LC) by at least 90 days without any penal interest (a letter of assurance from the beneficiaries may be asked for from the Indian businessman.)

d) Extension of time bound commitments under FEMA such as collections from the foreign debtors, export commitments, payment to foreign creditors, etc. Falling due between March 15, 2020 and April 30, 2020 from the date of it becoming due.

e) Impermissibility of any defaults committed during this period to be a ground for initiation of the proceedings under IBC. 

SUFI sincerely believes that the above short-term relief measures would enable the businesses to tide over this crisis and ensure its sustenance and stability in the long run. Unquestionably, these are “Extra-ordinary Times” and therefore, will require “Extra-ordinary Measures”!    

And Finally …..

SUFI acknowledges the commendable and comprehensive action being taken by the Government, both at the Central & States’ level, to fight the menace of this pandemic and contain its spread in the country. SUFI promises its full and wholehearted support to the Government in controlling the spread of this disease. SUFI and its members, representing a crucial segment of the Economy, also vow to make all-out efforts & contributions in reviving it once these challenging times have passed.

With Best Regards,

Nikunj Turakhia, President – SUFI

Contact Person:

Mitesh Prajapati, Gen. Secretary – SUFI


Copy to:

1.   The Hon’ble Revenue Secretary,

 Ministry of Finance,

 Government of India, 

 North Block, 

 New Delhi – 110 001

2.   The Special Secretary

GST Council,

GST Council Secretariate,

5th Floor, Tower II,

Jeevan Bharti Building, Janpath Road,

Connaught Place,

New Delhi-110 001 

3.   The joint Secretary,

GST Council,

GST Council Secretariate,

5th Floor, Tower II,

Jeevan Bharti Building,

Janpath Road,

Connaught Place,

New Delhi-110 001

4.   The Commissioner (GST),

GST Council,

GST Council Secretariate,

5th Floor, Tower II,

Jeevan Bharti Building,

Janpath Road,

Connaught Place,

New Delhi – 110 001

5.   The Hon’ble Chairman, 

Central Board of Indirect Taxes & Customs,

Department of Revenue,

Ministry of Finance,

Secretariat Building,

North Block,

New Delhi – 110 001

6.   The Hon’ble Chairman, 

Central Board of Direct Taxes,

Department of Revenue,

Ministry of Finance,

Secretariat Building,

North Block, 

New Delhi – 110 001

7.   The Presidents of the respective

Chambers / Association

Thank you and stay safe

Government’s Regulation on steel in India

This is article was provided to us by Mr. A.C.R Das, Ex Industrial Adviser, Ministry of Steel & Member of SUFI Advisory Board

This article was last updated in January 2020

Iron and Steel industry in India has grown over the years from its very little presence of around 1 million tonnes at the time of independence, to over 110 million tonnes today. Over the last 7 decades, the steel industry has passed through a number of policy regimes, regulations and also ups and downs. According to me, some of the important policy framework which regulated the growth and development of steel industry in India over the years are:

i) Industrial (Development & Regulation) Act, 1951 and the associated Industrial Policy Resolution, 1956 which chalked the pathway of Central Public Sector Enterprises and the License raj, which were dismantled only in 1991 when the industrial growth and development, including in steel sector was completely de-licensed and de-regulated.  

ii) Iron and Steel Control Order, 1956 issued under the Essential Commodities Act which regulated production, distribution and pricing of steel across the country till 1992 when pricing and distribution was completely de-regulated. Subsequently the said Order was abandoned in February 2017.

iii) DGFT Notification 44 dated 11 Nov, 2000 notifying 33 steel products to conform to Indian Standards when imported to India. Since, this Notification did not give similar treatment to domestic production and imported good, it was not found WTO friendly and hence withdrawn.

iv) Steel and Steel Products (Quality Control) Order, 2007 issued by Department of Consumer Affairs, Government of India notifying thereby 17 steel products basically to ensure production, import and availability of only quality steel as per Indian Standards. Later, the Order was enforced only on 7 products and 10 were omitted later.

v) Steel and Steel Products (Quality Control ) Order, 2012 which was issued by Ministry of Steel in supersession of DCA Order covering the aforesaid 7 steel products. In addition, another order, viz. Steel and Steel Products (Quality Control) Second Order, 2012 was issued by Ministry of Steel covering 9 products on the same day. These orders were amended and many more products included from time to time. Today, there are 66 steel products of non-alloy, alloy and stainless steel categories covered under the QCO vide Steel and Steel Products (Quality Control) Order, 2019 dated 22.07.2019. The said Order covers over 80% of total steel consumption in the industry. Issuance of a few more QCOs are in the pipeline. As per the QCOs, production, import, storage, distribution and sale of notified steel products without BIS certification and ISI Mark is prohibited. Also production, import and sale of seconds and defective steel products is prohibited. Thus, the QCOs ensure availability of only quality steel for public and also empower them to take legal course against supply of sub-standard steel products as per BIS Act.

vi) Trade Remedy Measures: In addition of QCOIs, Government has been issued several Trade Remedy Measures from time to time to regulate import of steel products and also to protect the interest of domestic steel industry against large-scale cheap imports and/or dumping etc. Some of such regulations/measures are Minimum Import Price (MIP), Safeguard Duty, Anti-Dumping Duty etc besides directing import of certain seconds & defective steel products only through some designated ports to control import of such products.  Recently, several countries have imposed Anti-Dumping Duty, Countervailing Duty and Safeguard Duty against India in respect of several steel products.

vii) Steel Import Monitoring System (SIMS) which is one of the most important regulations imposed recently duly notified by DGFT on 5th September 2019. This inter-alia warrants all imported steel products covered under ITC (HS) chapter 72 including several goods/articles made of steel (Chapter 73 and 86) to be registered by Customs Authorities before they land in India.

Budget 2020 Wishlist

Photo taken from RupeeIQ

This is article has been written by (from L to R) Mr. Samir Sanghvi & Mr. Manish Agarwal, Empanelled members of GST Committee, SUFI

Budget 2020 is going to be very crucial for both the Government as well as for the development of the Economy. To achieve the sustainable growth rate, focus should be on long term goals rather than short term benefits to the public. This budget should be considered over and above the politics and vote banks. Therefore, we should not expect any tax reduction. This budget should be saving oriented, lean towards infrastructure development not only construction of bridges or road but also to develop unconventional ways like development of inland water ways. This budget should focus on growth which should be visible at ground level so that everyone in the country can feel that bad phase is over and they are moving ahead.

1) Agriculture Sector- Advancement of cold supply chain:

Agriculture and allied sub-sectors is a substantive part of the Indian economy, contributing up to 14.4% of GDP and half (49.8%) of the country’ employment (NITI Aayog, Govt. of India 2015).

Lack of infrastructure leads to an average of 15-40% loss of food as well as an imbalance in linking demand with supply that can often result in large scale discarding of produce during harvest season.

Loss of produce, on one hand, results into lower income of farmers and reduction in their investment capacity and on the other hand, import dependency resulting in increase in cost. To overcome the problem of loss of food, GOI may consider development of infrastructure aiming at long term growth, sustainability and reducing import dependability like cold supply chain rather than incentivising them in monitory terms or waiving of their current financial burden. 

2) Competitiveness of Indian Industries

  • Sometimes too much protectionism may lead to deterioration, therefore, the Government must remove trade restrictions in identified industries which aims at reducing competition.
  • The Government must extend perpetually tax concessions and cheap financing options to research and development activities to bring new technology into the country.
  • Opening up of cheapest foreign financing options like ECBs, Bonds, NCDs for manufacturing segments.

3) Measures to be taken to appreciate Rupee

  • Exploring new avenues to increase export of Indian goods and services in the midst of the ongoing trade war between China and US.
  • By curbing import of non-essential goods like low quality toys, furniture, plastic goods etc. which accounts for INR 4 trillion alone from China.
  • Reduction in import of petroleum products by promoting renewable sources of energy and related industries. Promotion of electric vehicle (EVs) and usage of solar energy are good example where significant import bill can be reduced.

4) River inter-linking project

The river-linking initiative was envisaged during the Atal Bihari Vajpayee government when a plan to connect 14 Himalayan and 16 peninsular rivers was unveiled. The plan envisaged the construction of 30 canals and 3,000 reservoirs to irrigate 87 million hectares of land and produce 34 gigawatts of hydroelectricity.

  • Create the potential to increase agricultural production by an additional 100 per cent over the next five years;
  • Avoid the losses of the type that occurred in 2002 to the extent of $550 million by the loss of crops because of extreme drought or flood condition;
  • Save $ 565 million a year in foreign exchange by avoiding importing oil;
  • Provide for enhancing the security of the country by an additional waterline of defense;
  • Provide employment to the 10 lakh people for the next 10 years;
  • Eradicate the flooding problems which recur in the northeast and the north every year;
  • Solve the water crisis situation by providing alternative, perennial water resources;
  • The large canals linking the rivers are also expected to facilitate inland navigation too;
  • Increasing food production from about 200m tones a year to 500m tones;
  • Boost the annual average income of farmers, from the present $40 per acre of land to over $500 per acre.
  • State with river bank should be compensated by the State utilizing water resources for its own growth.

5) Financial reforms

  • One-time restructuring of all types of loans/refinancing of all types of loan from banks should be allowed without attracting any NPA tag or provisioning norms. Further such accounts should not have any stigma attached to them.
  • Allow banks to raise tax free bonds or similar instrument for adequate capital with the fixed long term tenure.
  • The Government may explore to consider investment in 0% Infrastructure Bond with lock in period of minimum 10 years under the ambit of CSR. Accordingly, current rate of 2% of CSR may be increased to 5%. Further, ambit of CSR may be extended to other body corporates.
  • Ease of raising construction finance for Real estate projects which are RERA registered.
  • Ease of raising loans through credit risk insurance for higher ticket size.
  • Receivable financing, of all large corporate accepted invoices, without recourse on Trade Receivables Discounting System (TReDS).
  • Deposit Insurance and Credit Guarantee Corporation coverage enhancement from Rs 1 lakh to Rs 10 lakh.

6) Protection of interest of MSME-

The Indian MSME sector is the backbone of the national economic structure. MSMEs contribute around 6.11% of the manufacturing GDP and 24.63% of the GDP from service activities as well as 33.4% of India’s manufacturing output with employment to around 120 million persons and contribute around 45% of the overall exports from India.

Following proposals to drive the economy in the right path through strengthening MSME-

  1. Extension of credit guarantee upto 2 crores under Credit Guarantee Trust Fund for Micro & Small Enterprises (CGT MSE) to medium enterprises.
  2. Easy and cost-effective recovery procedure for MSME under IBC
  3. MSME creditors should be considered at par with secured creditors under IBC
  4. Fast track resolution of revival plan of MSME business entity under IBC
  5. Stringent regulation under negotiable instrument act to protect the interest of MSME especially cheque bounce cases under Section 138 of Negotiable Instrument Act.

7) Direct Tax Reforms

  • Encouragement of small savings by rationalising deduction under section 80C from Rs. 1,50,000 to 15% of Gross Total Income subject to maximum of Rs. 5,00,000.
  • Higher deduction of interest on housing loan in metro cities from Rs. 2,00,000 to Rs. 5,00,000.
  • Increase in limit for National Pension Scheme (NPS) from an existing amount of Rs. 50,000 to Rs. 1,00,000 per annum.
  • Increase in deduction related to health expenses by Rs. 25,000 from existing limits.
  • Shifting taxation under Dividend Distribution to Withholding tax of 10%. This will also help for identification of dividend recipients.
  • Relief to notified stressed and insolvent companies by exempting them from section 50C, 50CA and 56(2)(x), allowing for reduction of debt waived off (including accumulated unpaid interests) under the MAT provisions and relaxing carry forward of loss provisions for companies undergoing restructuring activities with the financial creditors prior to any IBC proceedings.
  • Prescribe determination of FMV of intangible assets under rule 11UA of IT Rules
  • Clarification on applicability of general anti-avoidance rule GAAR vis-à-vis principle purpose test (PPT) as provided in India’s tax treaty framework with Singapore, Netherlands, France, etc.
  • Issue clarifications for efficient application of the newly introduced corporate tax rates.

8) Indirect tax reforms-

  • Introduction of TDS in GST in B2B transaction to ensure smooth flow of input tax credit and to protect the interest of buyer on account of default of suppliers.
  • Bringing petroleum products under the ambit of GST with input tax credit. This move will ensure reduction in price.
  • Rationalization of GST rates on services.
  • The Government may consider lower rate of GST on electric vehicle and related infrastructure.

Thank you for reading!!

Purpose of Steel in Construction

This is article was provided to us by
Mr. A.C.R Das, Ex Industrial Adviser, Ministry of Steel & Member of SUFI Advisory Board

Steel is one of the most prominent metals having dominant role in industrial development as well as economic and strategic growth of any economy. Steel is characterised by its excellent properties which makes it suitable for use in every aspect of our lives in automobiles, rails, road, white goods, ships, energy structure and many more. Most importantly, steel is the most prominent building block of our houses, buildings and all construction and infrastructure projects.

Now the question arises why only steel and is there no substitute for steel in applications like constructions /infrastructure or any other applications stated above. Strictly speaking, today, there is no other material as versatile as steel for use in such applications. Steel is one of the rarest material which has exceptionally high tensile strength which makes it appropriate to bear/ support the load of large construction and infrastructure like rail, road, bridges, flyovers, subways, ships, housing, high-rise buildings, airport terminals etc. Steel offers a range of products viz. bars & rods, shapes & sections, Plates, Flats, Pipes & Tubes (circular, square and rectangular etc) which are ideally suited for construction and infrastructure projects. Apart from shapes and sizes, steel is available in variety of compositions and specifications in terms of physical, chemical, electrical, electro-technical and metallurgical properties which make it the material of choice for various applications and end uses.

Steel is not only hard and strong, but it is also elastic and largely formable and draw able; and hence can be transformed into any required shapes and size by any of the forming processes like rolling, forging etc. Steel is also a weldable material which helps in fabrication of any large/huge sections/structure used in construction and infrastructure projects. Further, steel offers cost-effective solutions and higher speed of construction, it increases the functionality and performance of buildings and infrastructure, and also helps to reduce consumption of resources and energy in construction process. It is proven beyond doubt that on life cycle cost basis, steel works out to be much cheaper in construction and in infrastructure projects.

One of the problems associated with using steel is its corrosive property which often leads to higher cost of maintenance. This has also been addressed now with the help of use of Galvanised structural sections, pipes/tubes and TMT bars etc. Moreover, still long lasting and cost-effective solutions have been developed with the use of stainless steel.

Needless to mention, steel has all along remained and is likely to remain the material of choice for all construction and infrastructure in years to come. Alternative products like plastics and composites will have their own applications but steel is likely to remain strong enjoying its lion’s share in various applications described above.

Written By

Mr. A.C.R. Das, Member of Advisory Board

Analysis of Minimum Import Price (MIP)

This article was provided by Mr. Nikunj Turakhia, President, SUFI and was published in Steel Scenario magazine (March 2019 Edition)

Recently, Indian steel mills lead by SAIL represented to the steel ministry to safeguard their interest as imports have risen substantially and thus put Minimum Import Price (MIP) at the level of USD 615 for hot rolled coils and increment of USD 170/mt for other downstream products. The mills contention was that imports have risen or likely to rise from countries like Indonesia, Japan and S.Korea and their local production costs have also risen due to increase in raw material prices Last MIP was brought in Feb, 2016 and the question arises that is it prudent to bring MIP at this point in time. Let us analyse the issue.

1. The immediate impact of MIP is restrictions on import, thus supply is curbed and leads to immediate increase in-domestic prices. Last time when MIP was introduced, the domestic prices went up by almost 15%. Incidentally Quarter 4, 2018 has already seen very low demand especially in auto and construction sector due to tremendous liquidity crisis. The liquidity crisis being triggered by IIFL issue and thus bringing most of the NBFC’S under government scanner. Therefore an increase in domestic prices will not augur well for the demand as already India is a high priced market. Further high prices hampers consumption, makes steel user industry non-Competitive and effects “Make In India” initiative badly.

2. Are imports really hurting India? This moot question needs to be looked into .If figures as published by JPC is to be relied upon then there is no such alarming situation. In fact India’s imports have gone down considerably. 7.22 million tons in 2016-17, 7.48 million tons in 2017-18 as compared to 11.71 million tons in 2015-16.-a reduction of about 40% while exports have risen in 2016-17-8.24 million tons, 2017-18–9.62 million tons as compared to meagre 4.08 million tons in 2015-16. Thus, India became net exporter of steel in 2016. The total imports are at just 7% of India’s production and thus in no way alarming by any standards further it should be understood that a exports of finished steel rises, imports will also rise imports of raw material will come without payment of duty under advance authorization scheme. It should be understood that imports constitute mainly:

a) Steel products which are not being manufactured in India or Indian mills cannot produce economically.

b) Import of raw material against exports against advance authorisation or other schemes.

c) Steel products both in flat and long products which are in short supply i.e. demand outstrips supply certain products where the local mills have kept realistic high prices and thus making import viable.

3. What is a long term solution? Given a choice a steel user/trader will never go for imports as there are lot of risks involved such as foreign exchange risks, market risks as time lag from import booking to receipt of material is too long, import-export policy risk etc. Only when there is no other alternative that a steel user will opt for imports, this means that something is drastically wrong with the domestic pricing. The bottom line is Indian steel user industry needs to be safe guarded, nurtured so that Indian manufacturing is globally competitive. At the same time, Indian steel mills are amply safe guarded by protective measures such as anti-dumping duty and steel quality control order over and above a customs duty of 13.2%. Do they need more protection?

With anti-dumping measures there is really no case of dumping. Mills have also raised the issue of free trade agreements with Japan, S Korea and Indonesia where the basic customs duty is zero and thus the allegation that these mills are dumping in India. The fact is due to zero customs duty these countries are charging premium over and above the prevailing international prices. A long term solution to my mind is to ascertain what is the threshold import level required based on demand/supply data. Based on this a quantitative restriction can be put on imports product wise so that Indian mills are amply protected as well as Steel user industry can source certain raw material in international market. Easier said than done but yes it is a point to ponder.

Significant Beneficial Owners (SBO):

Ministry of Corporate affairs has come up with new reporting requirement E-Form BEN-2. This form is applicable to the Company where details of Significant Beneficial owner (SBO) have to be reported by the Company to ROC by 30th July, 2019.

Therefore, it is important to understand the meaning and the scenarios where an “Individual” can be a SBO in the reporting company.

SBO/Individual as per Rule 2 of The Companies (Significant Beneficial Owners) Rules, 2018

Note: If Individual does not hold any share indirectly then he is not an SBO.

Different Scenarios along with Illustrations for Indirect Holding (SBO):

Clause (i)(a):

Where the member of the reporting company is a body corporate (whether incorporated or registered in India or abroad), other than a limited liability partnership, and the individual holds majority stake in that member

Illustration: Mr A holds majority stake of >50% in XYZ Ltd which is a shareholder of R Ltd

Conclusion: Mr. A is a SBO of R Ltd, since he holds >10% in R Ltd indirectly through XYZ Ltd.

Reporting Co. (R Ltd.)

Clause (i)(b):

The individual holds majority stake in the ultimate holding company (whether incorporated or registered in India or abroad) of that member;

Illustration: Mr A holds majority stake of >50% in ABC Ltd which is a holding company of XYZ Ltd. XYZ Ltd. is a shareholder of R Ltd holding > 10% in Equity of R Ltd.

Conclusion: Mr. A is a SBO of R Ltd (Reporting Company), since he holds >10% in R Ltd indirectly through ABC Ltd. & XYZ Ltd. If XYZ is reporting company, then Mr. A is also a SBO of XYZ Ltd.

Clause (ii):

Where the member of the reporting company is a Hindu Undivided Family (HUF) (through Karta), and the individual is the Karta of the HUF

Illustration: Mr. A is Karta of ABC HUF. ABC HUF is a shareholder of R Ltd holding > 10% in Equity of R Ltd.

Conclusion: Mr. A is a SBO of R Ltd, since he holds >10% in R Ltd indirectly through ABC HUF.


Where the member of the reporting company is a partnership entity (through itself or a partner), and the individual,

  • is a partner, or
  • holds majority stake in the body corporate which is a partner of the partnership entity; or
  • holds majority stake in the ultimate holding company of the body corporate which is a partner of the partnership entity.

Illustration: ABC & Co. is a shareholder of R Ltd holding > 10% in Equity of R Ltd.

Case (a): Mr. A is Partner of ABC & Co.

Conclusion: Mr. A is a SBO of R Ltd, since he holds >10% in R Ltd indirectly through ABC & Co.

Case (b): Mr. A is Shareholder (>50%) in Z LLP (where Z LLP is a partner of ABC & Co)

Conclusion: Mr. A is a SBO of R Ltd, since he holds >10% in R Ltd indirectly through Z LLP and ABC & Co.

Case (c): Mr. A is a shareholder (>50%) in Y Ltd which is Ultimate Holding Co of Z Ltd. Z Ltd. is partner in ABC & Co.

Conclusion: Mr. A is a SBO of R Ltd, since he holds >10% in R Ltd indirectly through Y Ltd, Z Ltd and ABC & Co.


Where the member of the reporting company is a trust (through trustee), and the individual,-(a) is a trustee in case of a discretionary trust or a charitable trust; (b) is a beneficiary in case of a specific trust;(c) is the author or settlor in case of a revocable trust.

Illustration: Mr. A is either Trustee, Beneficiary or Author/Settlor of Trust (T). The said Trust T is a shareholder of R Ltd, holding > 10% in Equity of R Ltd.

Conclusion: Mr. A is an SBO of R Ltd, since he holds >10% in R Ltd indirectly through Trust.


Where the member of a reporting company is, (a) a pooled investment vehicle (PIV); or (b) an entity controlled by the pooled investment vehicle, and Entity is based in the member country of Financial Action Task Force (FATF) and the market regulator of member countries of FATF is a member of the International Organization of Securities Commissions (IOSC). The individual in relation to the pooled investment vehicle: a general partner; or an investment manager; or a Chief Executive Officer where the investment manager of such pooled vehicle is a body corporate or a partnership entity

Applicability of Clause (v):

Note: If above conditions are not fulfilled, then Clause (i) to (iv) shall apply depending upon the case.


Case 1:

M Ltd, a pooled investment vehicle is situated in China who is a shareholder of R Ltd situated in India and holding 40% in Equity of R Ltd. Mr. A is a general partner or investment manager in M Ltd.

In the above case, applicability of clause (v) is to be determined-1- China is the member of FATF; and

2- Market Regulator i.e. China Securities Regulatory Commission (CSRC) is the member of IOSC

Since both the conditions are satisfied, therefore determination of SBO will be done as per clause v and accordingly Mr. A who is general partner or investment manager in M Ltd. will be SBO for R Ltd.

Case 2:

In the case-1, if investment manager of M Ltd. is a body corporate namely Y Ltd. which is situated in Singapore. Mr. A is the CEO of Y Ltd.

Conclusion: Mr. A is an SBO of R Ltd, because he is the CEO of Y Ltd being the investment manager of M Ltd, a PIV.

Case 3:

In the case-1, M Ltd, a pooled investment vehicle is situated in China, controls ABC Ltd. situated in Singapore. ABC Ltd. is a shareholder of R Ltd, situated in India, holding 40% in Equity of R Ltd.

Conclusion: Mr. A is an SBO of R Ltd, because he is the general partner/investment manager of M Ltd (A PIV) which controls ABC Ltd. (a shareholder of R Ltd)

Points to be addressed-

Following points need to be addressed-

•What if, in case of HUF, if the shares are purchased by father of Mr. A in capacity of the Karta of HUF and Mr. A controls the HUF of his father subsequent to his father’s death.

•What if, in case of shares owned by deceased person which are not transferred in the name of the legal heir then who will be considered as SBO.

•What if, member provides wrong information about SBO. It will be difficult for the reporting company to validate the data provided by the member.

•What if, ownership of shares held by the individual, is disputed

•What if, shareholder is not traceable becuase shareholder did not update communication address in Company records.

•What if, shareholder could not disclose any details because of lack of documents like share certificates.

Key Definitions:

1. Significant influence:

  • The power to participate, directly or indirectly
  • In the financial and operating policy decisions of the reporting company
  • But is not control or joint control of those policies

2. Control:

  • Right to appoint majority of the directors
  • In Management or policy decisions
  • Includes Shareholding, voting as well as management rights

3. Shares Include instruments in the form of

  • Global depository receipts (GDR’s
  • Compulsorily convertible preference shares
  • Compulsorily convertible debentures

4. Majority Stake: means > 50% in

  • Equity Share Capital
  • Voting Rights
  • Distributable Dividend



2- Companies Act, 2013

3- The Companies (Significant Beneficial Owner) Rules, 2018




The issues of concern raised, conclusions reached and views expressed in the presentation are matters of opinion. Our opinion is based on our understanding of the law, procedures and regulations prevailing as of the date of this Note and our past experience with the regulatory authorities. However, there can be no assurance that the regulators may not take a position contrary to our views. Legislation, its judicial interpretation and the policies of the regulatory authorities are also subject to change from time to time, and these may have a bearing on the advice that we have given. Accordingly, any change or amendment in the law or relevant regulations would necessitate a review of our comments and recommendations contained in this Note. Unless specifically requested, we have no responsibility to carry out any review of our comments for changes in laws or regulations occurring after the date of issue of this Note. This presentation is prepared exclusively for knowledge upgradation and not for solicitation of any assignment. This presentation may not be distributed or otherwise made available to other parties without our consent. Synthesis, its partners, employees and or agents, neither owe nor accept any duty of care or any responsibility to any other party, whether in contract or in tort (including without limitation, negligence or breach of statutory duty) however arising, and shall not be liable in respect of any loss, damage or expense of whatever nature which is caused to any other party. It is advisable that no one should act on the basis of the note above without appropriate professional advice after a thorough examination of particular situation.

You can reach us –

Samir Sanghvi | Manish Agarwal

Steel Users’ Federation of India (SUFI)

2/3, Ashok Chambers, Devji Ratanshy marg,

Carnac Bunder, Masjid East, Mumbai – 400 009.


Email –

Electric Vehicles In India To Get The World’s First Anti-Theft System

This article was provided by Mr. Abhijeet Sinha, Director of ASSAR and Member of Advisory Board, SUFI

It has been an uphill battle to facilitate pan-Indian adoption for electric vehicles in India. While the millennial have shown relatively more interest in electric vehicles than their Gen-X counterparts, the Government is aiming to leave no stone unturned to achieve complete electric mobility in the country in the future. This has resulted in an increase in investments not only in producing different types of vehicles but also in the provision of modern, consumer-oriented features in them which are equipped with the latest, state-of-the-art technology.

Electric Vehicles in India to Be Equipped With ATS

The provision of features has taken a 2-fold approach, where the registration process of an electric vehicle plays a key role as the initial step and the usage of a new Anti-Theft System (ATS) plays a crucial role in the 2nd step. The inclusion of the ATS is something which we will be discussing in this article and see how it plays an important role in safeguarding electric vehicles in India.

The registration process for electric vehicles in India, although straight-forward with the provision of a green number plate to the vehicle, will now include their registration with ATS to digitize the process and maintain a database of vehicles in a given geographical area. Once the vehicles are registered with the ATS, tracking of the vehicle in the unfortunate case of its theft will be significantly easier.

An FIR for a stolen electric vehicle submitted at a nearby police station will be transferred to the Cyber Crime Cell, after which the latter transfers the complaint to a centrally located ATS which works on a real-time basis. 

The central ATS that will be connected to charging grids across the country will be able to access any specific area’s grid and charging stations via network service providers. As a result, as soon as the vehicle is switched ‘on’, the battery management system in the vehicle will flag off the vehicle’s real-time location using its digital registration identity and Global Positioning Systems (GPS). Additionally, the vehicle will be prohibited from accessing charging stations, grids, apps as well as payment interface. 

The ATS technology will be prototyped under the NHforEV2020 project for electric vehicles in India, as the initiative to bring about sustained in mass e-mobility has also been analyzed from a post-buy and security assurance point of view. Installation of the ATS will come at no extra cost for electric vehicles, which again comes as good news as most traditional fuel-powered / ICE-powered vehicles in India are not equipped with a real-time ATS.

The implementation of ATS in the 2-wheeler and 3-wheeler segments as well as in the commercial sector can additionally result in a notable positive impact on the livelihoods and consequently on related logistics sectors.

Mohit Baid, Director of Vaishnavi Logistics Solutions Private Limited, thinks that an integrated ATS in an electric heavy vehicle operating the logistics sector has a higher probability of providing security to the shipment. Vaishnavi Logistics is primarily engaged in long-haul and trailer services for the shipment of goods across India.

“Presently we need to install third-party GPS tracking devices in our trucks to not track the journey but also for whatever security they can provide to the consignment. The knowledge of the device being present onboard, to some extent, acts as a dissuading factor for car-jackers. However, there is always the chance that the driver or car-jacker will simply remove the device and throw it away. But if the system is integrated into the electronics of the vehicle itself, there is a better probability that the vehicle will make the journey safely,” says Mohit Baid.

Inevitably, ATS will also help to eliminate human error and negligence in terms of vehicular thefts and the ensuing investigations for the same, as the entire segment will be digitally operated in real-time. The only human intervention which might be required will be in terms of filing an FIR, after which the entire process of finding a stolen EV becomes digital.

The ordeal of the Indian public and their apprehension to switch to electric vehicles stems from concerns with range anxiety (you can read about the efforts being made to eliminate it, HERE), cost of charging, and a convenient, cost-effective post-buy experience. However, with the current Government’s ambitions supported by the private sector’s rich R&D is surely looking to make the transition seem more realistic, day by day.

If the vehicle is getting stolen, the process of retrieving doesn’t work unless there is a seamless connectivity between all applications. So, regardless of who creates the application, be it Government bodies or private players, there needs to be a binding regulatory force for the same which is the User ID of the particular vehicle. Be it via using a Google API, or using an online payment portal, or navigating to a nearby EV charger, etc. And this User ID must be the vehicle registration number of the vehicle since 2 vehicles can’t have the same registration number.

Secondly, there must be a pan-Indian dashboard which regulates the registration process of new EVs and this data must be shared with the Central Government. The data maintained must be maintained monthly as well as quarterly in order to maintain a real-time projection analysis.

Thirdly, even banks are aggressive in securing these vehicles. Banks are keen to fund EV projects and they have a basic mandate, which is basically securing collateral. So, this serves as a reassurance system to the banks and they can monitor the situation of the vehicle in question, thereby ensuring via this control that they continue to fund the upcoming EV projects and more electric vehicles in India can be brought about with ease.

Written by

Abhijeet Sinha

Member – Advisory Board, Steel Users Federation of India (SUFI)

Vision of Budget 2019-20

Mr. Abhijeet Sinha, Director of ASSAR and Member of Advisory Board, SUFI has written this article.

Last govt was the govt of ‘Reforms’ this new tenure of 2.o starting from 2019 will be the tenure of growth and delivery, precisely said ‘Economy of Growth’. Time for govt to restore its credibility, get numbers right, and build a robust growth trajectory for ‘Circular Economy’.

During last tenure govt strike the right balance between containing fiscal deficit while increasing government spending to invigorate the macroeconomy of India and deliver superior GDP growth. If we look at the style of governance of the MODI govt it suggests that the focus will remain on pursuing strategies that will deliver long term strength to the economy.

But with limited fiscal maneuverability it remains to be seen how the Finance Minister can inject a strong dose of fiscal stimulus to revive growth driver sectors. She will need to focus on strong and sustainable resource generation by increasing the tax to GDP ratio and push for aggressive divestment. Resources thus generated will have to be funneled to finding structural solutions to address farm distress and double farmers’ income over the next 5 years as well as to create a conducive environment for strong employment generation.

Government has to address the slowdown in the economy with an immediate focus on the crisis in the NBFC sector which has led to a massive liquidity squeeze in the economy. The fact that the global economy is slowing down makes her task all the more challenging. The market is now being driven by a strong predictability of growth. The hope is that the strong government will get down to the business of serious reforms that can arrest the slowdown and revive growth.

Written by

Abhijeet Sinha

Member – Advisory Board, Steel Users Federation of India (SUFI)

Understanding the 2019 Amnesty Scheme of the Govt of Maharashtra

This Blog was provided by Mr. Samir Sanghvi,
Empanelled member of Tax Committee – SUFI

Government of Maharashtra had introduced an Ordinance on 6th March 2019, providing relief in case of litigation of undisputed and disputed tax, interest, penalty or late fee, as the case may be, which were levied, payable or imposed for period ending on or before 30th June, 2017. This scheme aims to close down pending cases on fast track mode and give concession to the dealers in Government dues.

Individuals and dealers applicable under this scheme are –

Registered or unregistered dealers under all these erstwhile (former) laws –

And Dealers who had availed the benefit of any amnesty schemes declared by the Government of Maharashtra or under the Maharashtra Settlement of Arrears in Dispute Act, 2016

The dispute period under which the Amnesty scheme comes under is “Before 31st March 2010” & “1st April 2010 – 30th June 2017. But there will be certain special or unique cases where the dealer cannot opt to come under the scheme; these non applicable cases are –

1) Statutory orders or returns or the revised returns under the erstwhile (former) laws which were stated in the above image, which are to be filled after 15th July 2019

2) Remand back cases where the order has not been passed on or before 15th July 2019

3) Credit transitioned to the GST regime unless the credit equivalent to the amount for which the settlement application is filed has been reversed by debiting electronic credit/cash ledger on or before the filing of the application.

The application can be filed during 2 sets of phases, Phase I – 1st April 2019 to 30th June 2019 and Phase II-1st July 2019 to 31st July 2019.

The schedule for the payment and the waiver can be easily understood through this table –

There are certain conditions to be met for opting under the scheme –

  • Pre-implication – All undisputed tax amount to be paid in full, Percentage of payment and waiver is to be calculated for the disputed amount. Along with the application, the dealer would be required to make payment of both the disputed and undisputed amount as per the scheme. Dealers would be required to unconditionally withdraw appeals pending before the appellate authority/tribunal/court.
  • Post-implication – Any post-assessment interest or penalty or both leviable but not levied up to the date of application to be waived in full. Late fee in respect of returns filed during the period commencing from 1st April 2019 to 31st July 2019 to be waived in full. The dealer shall not be entitled to claim refund of the amount paid under the scheme. An order issued shall be conclusive as to the settlement of arrears covered in the order and it shall not be reopened in any proceeding review/revision under the relevant act.

For better understanding we have two examples:-

Example 1 – Mr A has paid Sales tax of Rs 4,000 cr net of input tax credit whereas assessed by the assessing authority is totaling of Rs 35,125 cr comprising of Tax amount of Rs 20,125 cr, Interest of Rs 5,000 cr and penalty of Rs 10,000 cr for F.Y. 15-16. Partial Amount paid by Mr A is Rs 16,500 cr as on 01.05.2018 without any dispute. What would be the settlement amount to be paid in Amnesty Scheme.


a. Total amount of Un-disputed balance tax of Rs 3,625 cr i.e. (Rs 20,125-Rs16,500)

b. Interest 20% as per the scheme i.e. Rs 1,000cr (20% of Rs 5,000)

c. Penalty 10% as per the scheme i.e. Rs 1,000cr (10% of Rs 10,000)

Hence, total requisite amount to be paid is Rs 5,625 cr in order to opt for amnesty scheme.

Example 2 – Suppose in example 1, Mr A disagrees with the demand of the Assessing officer. Then, what would be settlement amount payable under the scheme.


a. Disputed tax amount of Rs 11,288cr (i.e. 70% of Rs 16,125)

b. Interest 20% as per the scheme i.e. Rs 1,000cr (20% of Rs 5,000)

Penalty 10% as per the scheme i.e. Rs 1,000cr (10% of Rs 10,000)

Written by:

Mr. Samir Sanghvi,

Empanelled member of Tax Committee for Steel Users Federation of India (SUFI)

Unregulated Deposit Scheme Ordinance Explained

Hello, To our readers

This blog is written to give a short explanation on the Banning of Unregulated Deposit Scheme Ordinance.

India has a large, low-income, rural population with limited access to formal banking facilities. This leads to the limited opportunity for poor people to place their money safely in deposits. Further there is lower rate of returns in Banks and Post Offices. There comes the role of the financial operators who operated Ponzi Schemes which promise to give higher rate of interest/returns on amount deposited.

To curb this practice, Unregulated Deposits Scheme is introduced to impose ban on schemes and arrangements leading to unauthorized collection of money and deposits fraudulently by inducing public to invest in an uncertain scheme that promises high returns or other benefits are still operating in the society.

The ordinance which came into effect on 21st February covers those who collect Unregulated Deposits by way of business (i.e.  Unregulated Deposit Takers)

But an important fact to keep in is that this ordinance excludes 1) Banking companies & 2) Companies incorporated under special Act of parliament or state legislature such as – Airport Authority of India, Food Corporation of India or other such type of bodies.

One of its most interesting points is that, it is also applicable to the persons who induce other persons to invest in or become a member of any Unregulated Deposit Scheme.

This scheme aims at saving poor and financially illiterate of their hard earned savings.

Thank You,

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