Analysis of Notifications and Circulars for Week ending 17th November 2024

The week ending 17th November 2024 saw several significant notifications and rulings across Income Tax, GST, and corporate governance. In Income Tax, the Petroleum and Natural Gas Regulatory Board was exempted from taxes under section 10(46A)(b) of the Income Tax Act, while the Delhi High Court ruled that income escapement alone is insufficient to reopen assessments under section 147. Regarding GST, advisories were issued to improve the Invoice Management System (IMS) and resolve issues in GSTR-2B, while the AAR clarified GST classification for products like antioxidant water and diagnostic services. SEBI also issued consultation papers to review custodial regulations, Angel Funds, and the use of AI by regulated entities. In the insolvency domain, the Supreme Court and NCLAT ruled on the application of IBC over other laws, emphasizing the authority of creditors’ decisions and the resolution of worker dues in insolvency plans. Key rulings included decisions on the role of committees in liquidation and resolution proceedings, showcasing the continued evolution of legal frameworks in these sectors.

Notifications & Circulars issued during week (11^th– 17^th Nov 2024)

A. Income Tax

Exemption to Income of Petroleum and Natural Gas Regulatory Board:  The central government notified Petroleum and Natural Gas Regulatory Board, a board constituted under the Petroleum and Natural Gas Regulatory Board Act, under section 10(46A)(b) of Income Tax Act. This provision exempt any income arising to a body or authority or Board or Trust or Commission, not being a company, which is notified by the Central Government in the Official Gazette for the purposes of this clause. (Income Tax Notification 118/2024 Dated 12/11/2024)

HC, Income escapement alone insufficient to reopen assessment under section 147 without assessee’s disclosure failure: Case of Discovery Communications India vs ACIT, HC Delhi Judgement Dated 8th November 2024. The Delhi High Court has held that once scrutiny assessment is held under Section 143 of the Income Tax Act but due to a mistake of the Assessing Officer there is under assessment of income, reopening assessment under Section 147 of the Income Tax Act, 1961 is not permissible. Assessment cannot be reopened merely on the basis of change of opinion beyond the period of four years when there was no fault on the part of the assessee to disclose truly and completely the material particulars. (HC Delhi Judgement Dated 08/11/2024)

HC, No section 14A disallowance without exempt income: Case of PCIT vs Sahara India Financial Corporation Ltd, HC Delhi Judgement Dated 16th October 2024. The Delhi High Court dismissed the Revenue’s appeal challenging the Income Tax Appellate Tribunal’s (ITAT) decision on the applicability of Section 14A disallowance. The case revolved around the question of whether expenditure disallowance under Section 14A of the Income Tax Act, 1961, could be applied even when no exempt income was earned by the assessee.  The court referenced its prior rulings to affirm that Section 14A cannot be applied unless exempt income is actually generated. (HC Delhi Judgement Dated 16/10/2024)

B. GST

Advisory on IMS on Supplier View: Invoice Management System (IMS) has been made available on the GST Portal from 14th October, 2024 wherein the recipient taxpayer can accept, reject or keep the invoices pending which are saved/filed by their suppliers in their respective GSTR-1/1A/IFF. The first GSTR-2B on the basis of such actions taken in IMS by the recipient taxpayers will be generated for October-2024 period on 14th November, 2024. To further facilitate the taxpayers, the ‘Supplier View’ of IMS has also been made available where the action taken by their recipients on the records/invoices reported in GSTR-1/1A/IFF, will be visible to the suppliers in ‘Supplier View’ functionality. This will help a supplier taxpayer to see the action taken on their reported outwards supplies and will help to avoid any wrong action taken by the recipient taxpayer. (GSTN Advisory Dated 13/11/2024)

Advisory regarding IMS during initial phase of its implementation: IMS, being a new functionality introduced on the portal, there may be cases where in the initial phase of implementation of IMS, the recipient may make error/mistake while taking action (like acceptance/rejection/keeping pending) on the IMS in respect of an invoice/record. In such cases, the recipient can change the action on the IMS in respect of an invoice/record (e.g. from rejected to accepted or vice versa) and can recompute his GSTR- 2B at any time till the filing of GSTR-3B for the corresponding tax period, so that correct ITC is auto- populated in his GSTR-3B.

— Further, during this initial phase of implementation of IMS, the taxpayers are advised that in such cases, where due to any inadvertent mistake in the action taken on the IMS, if incorrect details of ITC/ liability are auto-populated in GSTR-3B on the portal, the taxpayer may before filing their GSTR-3B return, edit such wrongly populated ITC/liability in their GSTR-3B, to correctly avail ITC or pay correct tax liability based on the factual position as per the documents/records available with him. (GSTN Advisory Dated 12/11/2024)

Advisory, Important advisory on GSTR 2B and IMS: It has been reported by few taxpayers that their GSTR-2B for October-2024 period has not been generated on 14th November, 2024. In case the taxpayer has opted for QRMP scheme (Quarterly filers), GSTR-2B will not be generated for first and second month of the quarter. Ex. For quarter Oct-Dec, 2024, the quarterly taxpayer will get GSTR-2B for December-2024 period only and not for October-2024 & November-2024. In case the taxpayer has not filed their previous period GSTR-3B, GSTR-2B will not be generated by the system. Such taxpayers need to file their pending GSTR-3B in order to generate GSTR-2B on demand. Once the taxpayer files their GSTR-3B for September-2024, they will be able to generate their GSTR-2B for October-2024 by clicking the “Compute GSTR-2B (OCT 2024)” button on the IMS dashboard. (GSTN Advisory Dated 16/11/2024)

AAR, GST Classification and Tax Rate for Antioxidant Water: Case of IDYA, AAR Tamil Nadu Ruling Dated 5th November 2024. M/s. IDYA, a manufacturer based in Chennai, sought clarification on the correct classification i.e. HSN code and applicable GST rate for their product, ‘Natural Antioxidant Water’ with betel leaf and ajwain extract. AAR concluded that the classification under HSN 2202 was inappropriate, as the product did not match the description of beverages containing fruit pulp or juices. The ruling further clarified that the product should be classified under HSN code 22011010, which covers natural mineral waters and aerated waters not containing added sugars or flavoring agents. Accordingly, the correct GST rate for this category was determined to be 18%. (AAR Tamil Nadu Ruling Dated 05/11/2024)

AAR, Uber India Liable for GST on passenger services as E- Commerce Operator: Case of Uber India Systems Pvt Ltd, AAR Karnataka Ruling Dated 4th November 2024. Uber proposed a new model where drivers register on its platform by paying a subscription or membership fee, allowing them to connect with passengers who book transportation services. Uber India argued that it functions as a technology provider rather than as an operator of the transport service itself. Consequently, Uber sought clarification on its tax obligations, including whether it is required to collect and remit GST on behalf of its drivers. AAR ruled that the applicant satisfies the definition of an e-commerce operator and the nature of supply as conceptualized in Section 9(5) of CGST Act, read with notification No.17/ 2017 dated 28^th June 2017. The applicant is liable to collect and pay GST on the supply of services supplied by the drivers/ service provider (person who has subscribed to online Uber platform in relation to proposed business model) to their customers (person who has subscribed to online Uber platform, identified on the Uber’s platform) under the proposed business model. (AAR Karnataka Ruling Dated 04/11/2024)

AAR, GST on diagnostic and lab services provided through third party diagnostic labs:  Case of Medpiper Technogies Pvt Ltd, AAR Karnataka Ruling Dated 13^th November 2024.

AAR ruled that the assesse need to collect GST on the diagnostic and lab services provided through third party diagnostic labs, for the whole invoice amount and the applicable tax rate is 18% and SAC is 9993. (AAR Karnataka Ruling Dated 13/11/2024)

AAR, GST on services provided by GTA as supply of pure services: Case of Globe Moving and Storage Company Pvt Ltd, AAR Karnataka Ruling, Dated 6^th November 2024. The applicant is into the business of GTA (Goods Transport Agency) and packing, moving, transportation, custom clearing through CHA and related supporting services; they provide services to their foreign clients who are in the same line of business, with regard to exports to India from their country on Door-to-Door delivery basis such as ‘Custom clearance, transportation and related supporting services’ for delivering such exported goods to the place of customer in India. AAR ruled that the exemption is not applicable to the services provided by the applicant. (AAR Karnataka Ruling Dated 06/11/2024)

AAR, Precooked ready to eat food to attract 18% GST: Case of HIC-ABF Special Foods Pvt Ltd, AAR Kerala Ruling Dated 13th September 2024. The applicant approached AAR to seek advance rulings on 26 types of ready to eat and one ready to cook food. It argued that ready to eat food items are prepared without addition of preservatives and using RETORT technology from Japan which ensures a shelf life of 18 months. AAR analysed the arguments and decided on the classification of these items. (AAR Kerala Ruling Dated 13/09/2024)

C. Central Excise

No notification and Circular during the week

D. Custom Duty

Amendment for direct supplies to Defence or Government departments: The notification has amended the existing customs duty exemption framework outlined in Notification No. 50/2017 dated 30^th June 2017. The condition No. 48 now includes provisions for direct supplies to the armed forces of the Union under the Ministry of Defence and to government departments. It will enables eligible entities to directly procure goods duty-free, under Section 25 of the Customs Act, and Section 3 of the Customs Tariff Act. (Custom Notification 47/2024 (T) Dated 13/11/2024)

Amendment to notification on Maharashtra Ports: The notification amends previous notification 12/1997 dated 2nd April 1997. Related to state of Maharashtra. It removes item (iv) in column (3) and its corresponding entry in column (4). This change affects the designated customs points in Maharashtra as listed in the original 1997 notification. (Custom Notification 76/2024 (NT) Dated 11/11/2024)

Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver: CBDT notified the Tariff Values of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver, which shall come into force w.e.f. 13^th November 2024. (Custom Notification 77/2024 (NT) Dated 12/11/2024)

Jajpur Port in Odisha, added for Import and Export Operations: The notification adds Jajpur in Odisha as an authorized location for the unloading of imported goods and loading of export goods under the Customs Act. (Custom Notification 78/2024 (NT) Dated 12/11/2024)

Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver:  The notification revises tables listing the customs tariff values for goods, replacing previous tables effective from 14^th November 2024. However, no changes were made to the actual tariff values for the listed items. The key tariff values include $1,046 per metric tonne for crude palm oil, $5,463 per metric tonne for brass scrap, $845 per 10 grams for gold, and $989 per kilogram for silver. All manually adjusted values and item descriptions are now updated in Tables 1, 2, and 3 to ensure consistency and clarity in customs processing. (Custom Notification 79/2024 (NT) Dated 13/11/2024)

Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver: CBDT notified the Tariff Values of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver, which shall come into force w.e.f. 15^th November 2024. The tariff value for crude palm oil is set at USD 1080 per metric ton, while gold and silver have revised tariff values of USD 837 per 10 grams and USD 1005 per kilogram, respectively. The tariff value for areca nuts remains unchanged at USD 6552 per metric ton. (Custom Notification 80/2024 (NT) Dated 14/11/2024)

Chhara Port in Gujarat, added for Import and Export Operations: The notification designates Chhara in the State of Gujarat as an authorized location for unloading imported goods and loading export goods. It adds Chhara as item 32 under serial number 5 in the original 1994 notification, expanding the list of approved sites in Gujarat for customs-related activities. (Custom Notification 81/2024 (NT) Dated 14/11/2024)

Anti-dumping Duty on Epichlorohydrin originating  in or exported from China, Korea and Thailand: Anti-dumping Duty has been imposed on imports of Epichlorohydrin originating in or exported from China, Korea and Thailand, and imported into India. It shall be applicable for a period of 5 years. (Custom Notification 24/2024 (ADD) Dated 11/11/2024)

Classification of Clear Float Glass under Customs Tariff: The issue is regarding whether clear float glass, having a tin layer on one side, due to the manufacturing process, could be classified as glass with an absorbent or reflective layer. As per Customs Tariff Act, clear float glass with a tin layer does not qualify as having an absorbent, reflecting, or non-reflecting layer unless there is a microscopically thin coating, such as metal oxide, that improves the glass’s reflective or absorptive properties. It is clarified that clear float glass with only a tin layer on one side, without any additional metal oxide layer, should be classified under tariff item 7005 29 90, as it does not meet the conditions for an absorbent layer. (Custom Circular 23/204 Dated 14/11/2024)

General ways of identification of the Low Voltage Switchgear and Controlgear under EEQCO as per phased implementation plan: The first phase of the EEQCO is set to begin on November 10, 2024. The EEQCO mandates compliance for Low Voltage Switchgear and related products, with guidelines for identifying such products. The order includes a document that explains the general identification process for Low Voltage Switchgear under the EEQCO, which will assist in enforcing the standards. (Custom Instructions 28/204 Dated 12/11/2024)

Requirement of registration of Foreign Food Manufacturing Facilities (FFMF) as per FSSAI regulations: It has been notified that registration of FFMFs shall be mandatory, who intend to export Milk and Milk products, Meat and Meat products including poultry fish and their products, Egg powder, Infant Food, and Nutraceuticals. An online portal ‘ReFoM’ is available on FSSAI website. The import of said food categories will be allowed only from registered FFFM of exporting country. (Custom Instructions 29/204 Dated 14/11/2024)

Extension of CAVR Order for Stainless Steel Imports: The order extends the validity for a period of 1 year with effect from 29^th November 2024, and shall remain in force till 28^th November 2025. It is aimed at ensuring proper value declaration for identified stainless steel imports. (Custom CAVR Order Dated 13/11/2024)

E. Directorate General of Foreign Trade (DGFT)

Amritsar Airport Added for Export of Jewellery Goods: The amendment adds Amritsar Airport as an additional port of export for gold, silver, platinum jewellery, and related articles. (DGFT Public Notice 32/2024 Dated 13/11/2024)

Fixation of new Standard Input Output Norms (SIONs) at SION A-3682 for Clobetasol Propionate under ‘Chemical and Allied Product’: It sets specific input-output ratios for the export of Clobetasol Propionate, for each kilogram of Clobetasol Propionate exported, an import allowance of 0.95 kg of Betamethasone will be permitted. (DGFT Public Notice 33/2024 Dated 14/11/2024)

Harmonisation of Schedule-II (Export Policy): The new export policy replaces the previous description-based approach, aligning it with the updated tariff codes under the Finance Act 2024. A draft version for Chapters 40-98 was previously shared, and after incorporating feedback, a revised draft for all Chapters 01 to 98 is now available. The comments/ feedback from stakeholders is invited. (DGFT Trade Notice 22/2024 Dated 14/11/2024)

F. Securities and Exchange Board of India (SEBI)

Procedure for reclassification of FPI investment to FDI: If an FPI’s investment in an Indian company exceeds 10% of its paid-up equity capital, the FPI can reclassify its holdings as FDI, following the guidelines set by the Foreign Exchange Management Act (FEMA). Upon receiving intent from the FPI, the Custodian must report it to SEBI and freeze the FPI’s purchase transactions of the company’s equity until the reclassification process is complete. The Custodian will then facilitate the transfer of equity instruments from the FPI’s demat account to its FDI demat account once all necessary reporting to the Reserve Bank of India (RBI) is fulfilled. (SEBI Circular Dated 11/11/2024)

Trading supported by Blocked Amount in Secondary Market: SEBI has introduced new guidelines allowing trading supported by blocked funds in the investor’s bank account. This facility, which was launched in January 2024, enables clients to block funds at the time of placing buy orders without transferring them to Trading Members (TMs) upfront. The feature includes integration with demat and bank accounts, blocking funds or securities as necessary, and releasing them if the orders are not executed.

— SEBI now mandates that Qualified Stock Brokers (QSBs) provide clients with the option to trade using the UPI block mechanism or a 3-in-1 trading account, which integrates trading, bank, and demat accounts. Clients can choose between the new facility or continue with the traditional method of transferring funds to TMs. The provisions will be effective from 1^st February 2025. (SEBI Circular Dated 11/11/2024)

Simplified registration for Foreign Portfolio Investors (FPIs): The abridged Common Application Form (CAF) is available to specific FPI categories, such as funds managed by already-registered investment managers, sub-funds of master funds, and insurance schemes with registered parent entities. Applicants in these categories are allowed to fill only fields unique to them, while other fields are either auto-populated or disabled in the system. Designated Depository Participants (DDPs) must ensure that complete information, both filled and auto- populated, is reflected accurately in the CAF module for each applicant. (SEBI Circular Dated 12/11/2024)

Relaxation and updates on InvITs Employee Trust and Reporting: The updates include relaxations, reporting format standards, and timeline alignments. SEBI provided relaxation on lock-in and allotment restrictions for units allotted to employee benefit trusts under the unit-based employee benefit (UBEB) scheme. It also directed the Bharat InvITs Association (BIA) to standardize the format for quarterly reports and compliance certificates that investment managers of InvITs submit to trustees. It also updated the the timeline requirements, aligning them with recent amendments to InvIT regulations and specified procedures for managing unclaimed amounts. Any unpaid distributions are now required to be transferred to an “Unpaid Distribution Account” within seven days of the distribution deadline. (SEBI Circular Dated 13/11/2024)

Relaxation and updates on REITs Employee Trust and Reporting: The updates include relaxations, reporting format standards, and timeline alignments. SEBI provided relaxation on lock-in and allotment restrictions for units allotted to employee benefit trusts under the unit-based employee benefit (UBEB) scheme. It also directed the Indian REITs Association (IRA) to standardize the format for quarterly reports and compliance certificates that investment managers of REITs submit to trustees. It also updated the timeline requirements for distributions by REITs, aligning them with recent amendments to REIT regulations and specified procedures for managing unclaimed amounts. Any unpaid distributions are now required to be transferred to an “Unpaid Distribution Account” within seven days of the distribution deadline. (SEBI Circular Dated 13/11/2024)

Master circular for compliance with the provisions of the Listing Obligations and Disclosure Requirements (LODR) Regulations by listed entities:  In order to enable the users to have access to the provisions of the applicable circulars at one place, SEBI issued the Master Circular by consolidating all relevant circulars issued till 30^th September 2024. It provides a chapter-wise framework for compliance with various obligations under the LODR Regulations. (SEBI Master Circular Dated 11/11/2024)

Master Circular for Issue of Capital and Disclosure Requirement (ICDR) Regulations: In order to enable the users to have access to the provisions of the applicable circulars at one place, SEBI issued the Master Circular by consolidating all relevant circulars issued till 30^th September 2024. It provides a chapter-wise framework for compliance with various obligations under the ICDR Regulations. (SEBI Master Circular Dated 11/11/2024)

Consultation paper on seeking waiver or reduction of interest in respect of recovery proceedings initiated for failure to pay penalty: Under SEBI’s powers, recovery proceedings follow the Income-tax Act provisions, and it has delegated authority to reduce or waive interest to the Competent Authority. A panel of Executive Directors handles requests for amounts less than Rs. 2 crores, while the panel of Whole-time Members oversees others. However, no reductions apply to penalties related to fees or disgorged amounts. To seek a reduction, applicants must meet specific criteria, including demonstrating hardship, proving the default was beyond their control, and cooperating with inquiries. Applications must be made after the demand notice has been issued and once the principal amount is paid. The orders on applications to be issued within 12 months. (SEBI Circular Dated 11/11/2024)

Consultation Paper on Review of Custodian Regulations and operational guidelines for Custodians: The custodians, handling a wide range of institutional and non-institutional clients like like Foreign Portfolio Investors (FPIs), Mutual Funds (MFs), Portfolio Managers, Alternative Investment Funds (AIFs), are responsible for safekeeping assets and ensuring compliance with regulations. The rapid expansion of assets under custody (AUC) and changes in settlement cycles, has necessitated revision to update custodial regulations, including the process for seeking approval for changes in control, outsourcing activities, and storage of physical records. It discusses the necessity of vaults for holding physical securities and the categorization of activities for outsourcing. The proposals also involve reducing duplicative reporting requirements and refining policies related to the physical storage of assets. (SEBI Consultation Paper Dated 13/11/2024)

Consultation paper on review of regulatory framework for Angel Funds in AIF Regulations: Angel Funds are a category of venture capital funds that channel investments into start-ups, primarily from Angel Investors. The paper explores the need to continue regulating Angel Funds, given the removal of Angel Tax and the growing interest in direct investments. It proposes changes to improve the framework, such as clarifying operational procedures, strengthening governance, and ensuring investments are limited to those with the necessary risk tolerance. (SEBI Consultation Paper Dated 13/11/2024)

Consultation paper on use of Artificial Intelligence tools by regulated entities: The consultation paper proposes amendments to several regulations related to the use of Artificial Intelligence (AI) tools by regulated entities such as market infrastructure institutions, stock brokers, and other intermediaries. The aim is to assign clear responsibilities regarding the usage of AI, particularly ensuring the privacy, security, and integrity of investors’ data. It also seek to hold these entities accountable for any outputs produced by AI tools. (SEBI Consultation Paper Dated 13/11/2024)

G. Ministry of Corporate Affairs (MCA)

No Notification/ Circular during the week.

H. Insolvency and Bankruptcy Board of India (IBBI)

SC, Financial decision by Committee of Creditors while evaluating resolution plan will prevail: Case of Noida Special Economic Zone Authority vs Manish Aggarwal, SC Judgement Dated 5th November 2024. The Apex Court held that the financial decisions as have been taken by Committee of Creditors, especially with regard to viability or otherwise, while evaluating the resolution plan would prevail. (SC Judgement Dated 05/11/2024)

NCLAT, IBC prevails over TRAI Act hence penalty imposed by TRAI to be recovered as per scheme of IBC: Case of TRAI vs Reliance Telecom Ltd, NCLAT Judgement Dated 6th November 2024. It was held that IBC being a special statute shall prevail over the TRAI Act therefore any penalty imposed by the TRAI on the corporate debtor would be recovered as per the scheme of the IBC. There was no error in the order of the Adjudicating Authority, accepting the outstanding dues as ‘operational debt’, to be paid as per the provisions of the Resolution Plan. There was no material on record to accept that the amount of security deposit balances of post-paid subscribers and unspent balances of prepaid subscribers be accepted as CIRP cost. (NCLAT Delhi Judgement Dated 06/11/2024)

NCLAT, Resolution plan duly approved as gratuity and provident fund of workers admitted in full: Case of Audico Forge Kamgar Sangathana vs CA Ramchandra Dallaram Choudhry, NCLAT Delhi Judgement Dated 29th October 2024. It was concluded that the entire admitted claim in question for provident fund and gratuity having been paid in the Resolution Plan, we do not find any ground to interfere with the order of the Adjudicating Authority of approving the Resolution Plan. (NCLAT Delhi Judgement Dated 29/10/2024)

NCLAT, CoC empowered to decide to liquidate Corporate Debtor before confirmation of resolution plan: Case of Sanjay Dava vs Andhra Bank Limited, NCLAT Delhi Dated 29^th October 2024. It was held that Section 33 of IBC clearly empowers the CoC to decide to liquidate the Corporate Debtor any time before the confirmation of the resolution plan by the Adjudicating Authority. This decision of the CoC is a business decision taken in the exercise of their commercial wisdom which is clearly not amenable to judicial review. There is no incidence of any statutory aberration having been committed by the RP or CoC in this regard. (NCLAT Delhi Judgement Dated 29/10/2024)

NCLAT, Corporate Debtor forfeited right to file arbitration application post filing of reply to Section 7 of IBC: Case of Century Aluminium Company Ltd vs Religare Finvest Ltd, NCLAT Judgement Dated 29th October 2024. It was held that by not filing of application under Section 8 of the Arbitration and Conciliation Act, at the time of filing of a Reply to Section 7 of the IBC, Corporate Debtor has forfeited his right to file his application for arbitration. Allowing the application amounts to asking the Adjudicating Authority to wait till Arbitration Proceedings are decided which is not in accord with the scheme of the IBC and shall defeat the entire purpose and object of the IBC. Adjudicating Authority in the Impugned Order has rightly rejected Application under Section 8 filed by the Corporate Debtor for referring to the dispute between the parties to the Arbitrator. (NCLAT Delhi Judgement Dated 29/10/2024)

IBBI suspends registration of IP Jitender Arora for his conduct during CIRP: He was accused of failing to include an agenda for his replacement in meetings of the Committee of Creditors (CoC) despite requests from creditors. The failure to act on these requests, despite a voting majority in favour of his removal, was deemed a violation of the Insolvency and Bankruptcy Code (IBC) and related regulations. IBBI concluded that his failure to include the agenda was unprofessional and contrary to the regulations governing the CIRP process, and therefore, decided to suspend the registration of Mr. Jitender Arora for a period of one years. (IBBI Order Dated 12/11/2024)

I. Reserve Bank of India (RBI)

Operational framework for reclassification of Foreign Portfolio Investment to Foreign Direct Investment (FDI): If an FPI exceeds the 10% limit on a company’s total paid-up equity, it must either divest or reclassify the excess investment as FDI. The FPI must seek necessary approvals from the government and the investee company, and follow the applicable sectoral caps, investment limits, and pricing guidelines. The reclassification process includes reporting through forms FC-GPR and FC-TRS, followed by the transfer of equity instruments from the FPI’s portfolio account to its FDI account. Post- reclassification, the investment is governed by FDI regulations, and even if the FPI’s stake drops below 10%, it remains classified as FDI. (RBI Notification 90/2024 Dated 11/11/2024)

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Disclaimer: The contents of this article are for informational purposes only. The user may refer to the relevant notification/ circular/ decisions issued by the respective authorities for specific interpretation and compliances related to a particular subject matter)