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

9320071006

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,

5^th 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

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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!!

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 31^st March 2010” & “1^st April 2010 – 30^th 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 15^th 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 1^st April 2019 to 31^st 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.

Answer:

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.

Answer:

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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SUFI– Steel Users Federation of India – An Introduction

SUFI President & Board Members with Shri Chaudhary Birender Singh, Shri Raj Purohit & Mr G.N Bajpai at SUFI Steel Awards 2018

While several associations and trade bodies exist to represent various segments of the industry, SUFI intends to fulfill the void of an apex body to represent the various segments of steel industry across the nation.

SUFI provides PAN India presence with a democratic, honest and focused approach to address the members / member association’s problems and take them up suitably with relevant authorities with result oriented approach.