LLP Settlement Scheme 2020

LLP settlement scheme 2020 would allow for a one-time condonation of the delay in filing with the Registrar statutory records. LLP Settlement Scheme, 2020 will come into effect on March 16, 2020, and remain in force until June 13, 2020.

It was found that due to the applicability of additional late filing fee, which could in effect become a financial burden in case of inordinate delay, a large number of Limited Liability Partnerships (LLPs) have remained non-compliant, primarily because of their inability to pay late fees for the accumulated delay period.

As part of the ongoing efforts by the government to encourage ease of doing business, it was agreed to grant the default LLPs a one-time relaxation in addition to an additional fee by filing pending documents and serve as a compliant LLP in the future.

Accordingly, the Central Government has decided to implement a scheme called “LLP Settlement Scheme, 2020” by providing for a one-time condonation of delay in the filing with the Registrar of statutory documents.

LLPs, who wish to take advantage of the scheme, may file pending documents/forms and rectify defaults in order to gain immunity from prosecution for such defaults.

limited liability partnership

The scheme shall come into force on March 16, 2020, and will remain in effect until June 13, 2020. It would apply to the default LLP in respect of the filing of late documents due for filing until 31 October 2019 for payment of a nominal additional fee of Rs 10/-per day for the period of delay, in addition to any fee payable for the filing of such document or return, subject to a maximum amount of Rs. 5,000/-as an additional fee per document.

The Scheme shall apply to the filing of the following documents:

  1. Form-3-Information on the limited liability partnership agreement and changes, if any, made therein;
  2. Form-4- Notice of appointment, termination, change of name/address/appointment of a designated partner or partner and consent to become a partner / appointed partner;
  3. Form-8-Statement of Account & Solvency (Annual or Interim)
  4. Form-11- Annual Return of Limited Liability Partnership (LLP).

This scheme shall not apply to LLPs which have made an application to the Registrar in Form 24 for the deletion of their name from the Register as per provision to Rule 37(1) of the LLP Rules of 2009.

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100% Tax Exemption on Investment in Sovereign Funds

100% Tax Exemption on Investment in Sovereign Funds National Infrastructure Pipeline (Section 80-IA)

Per Budget 2020, FM has announced a 100 percent tax exemption on the returns on Investment made in National Infrastructure Pipeline( Allocated Rs 103 Cr.) informs both equity & debt. It’s available to sovereign wealth funds, namely Abu Dhabi Investment Authority as well as any entity wholly owned and controlled, directly or indirectly, by a foreign government.

 Sovereign funds, willing to invest in India’s story in Infrastructure growth, can write to the Finance Ministry along with their project details as it enables choice for funds to invest through incorporated entities rather than investing directly. Every case based on merits of the details will be vetted by the Department of Revenue  and as per the scheme, Sovereign funds will be notified for exemption under Section 80-IA of the Income Tax Act.

Tax exemption for the Infra. Related Instruments will cover –

  • Dividend
  • Interest or
  • Long-term capital gains arising from a debt or equity

 The major condition is that Invested Funds should be used in a “company or enterprise carrying on the business of developing, or operating and maintaining, or developing, operating or maintaining any infrastructure facility” as specified by the law.

  • The infrastructure projects will include:
  • Road, a bridge or a rail
  • Highway project including housing or other activities being a part of the highway project.Water supply project, water treatment system, irrigation project, sanitation, and sewerage system or solid waste management system.
  • Port, airport, inland waterway, inland port or navigational channel in the sea.

The investment needs to have been made before March 31, 2024, and held for at least three years.

A hundred percent deduction for any profits and gains from an investment will be available for 10 consecutive years, according to the Finance Bill.

National Infrastructure Pipeline Project timelines broadly cover a time frame from 2019-20 to 2024-25. These projects have been identified in sectors such as energy, roads, railways, ports and airports, digital infrastructure projects, mobility projects, irrigation, rural, agriculture and food processing.

Projects worth about Rs 25 lakh crore have been identified in the energy sector followed by road projects worth Rs 20 lakh crore.

Some of the other funds that eye to invest in the Govt of India scheme are:-

  • Norway’s Government Pension Fund Global with $1.2 trillion in investments
  • Singapore’s Temasek—an investment fund with a $313-billion portfolio.
  • Public Investment Fund of Saudi Arabia
  • Mubadala Investment Company of UAE
  • GIC Pvt. Ltd., Kuwait Investment Authority,  & Temasek Holdings

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India faces first fall in direct taxes

India’s corporate and income tax revenue is likely to fall for the first time in at least two decades, more than half a dozen senior tax officials told Reuters, amid rapid declines in economic growth and lower corporate taxes rate.

The government of Prime Minister Narendra Modi targeted for a direct tax collection of 13.5 trillion rupees ($189 billion) for the year ending March 31-a 17 percent rise over the previous fiscal year.

A sharp decline in demand, however, has forced companies to slash investment and jobs, dent tax collections, and prompted the government to forecast 5 percent growth for this fiscal year – the slowest in 11 years.

A senior tax officer said that the tax department was able to collect only 7.3 trillion rupees as at January 23, more than 5.5% below last year’s level.

In the final three months, authorities usually raise about 30 to 35% of annual Direct Taxes from businesses during advance for the first three quarters, according to estimates from the last three years.

Yet eight senior tax officials interviewed by Reuters said this fiscal year was likely to fall below the 11.5 trillion collected in 2018-19, despite their best efforts to steer tax collections.

“Forget about the target. That’s the first time we’re ever going to see the drop in direct tax collections,” a tax officer in New Delhi said.

He predicts that direct tax receipts will end up around 10 percent below fiscal 2019 for this year.

The government’s annual revenue projections usually account for around 80% of direct taxes, and the deficit will leave the government with the need to raise borrowing to meet its expenditure commitments.
Tax officials also say that another major reason behind the lenient tax collections is a surprise reduction in the top corporate income tax rate last year aimed at wooling the fabricators and raising investment in Asia’s third-largest economy.

“We will be very pleased if we can even breakeven with what we raised last year,” said another senior tax official in the financial capital Mumbai, the largest tax driver, which accounts for about a third of direct tax revenues.

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