Source: Ministry of Corporate Affairs, Govt of India
Ministry of Corporate Affairs has, during the past one year, taken a number of steps, and is in the process of further streamlining processes and the regulatory framework, to reduce the overall time taken for incorporating of a company as a part of the “ease-of-doing business” effort of the Ministry. The introduction of an integrated incorporation Form INC29 and tighter monitoring of ROCs’ performance has resulted in faster approvals and lesser number of clarifications being asked from stakeholders. The Ministry will soon introduce a new version of INC29 incorporating suggestions received from stakeholders allowing upto 5 Directors to be appointed and greater flexibility in proposing a name for a company. This will allow an even more wider use of this integrated Form, which is already gaining in popularity. The Rules with regard to reserving and approving of names for companies are also being simplified, and a centralized new process will be introduced soon for strictly time bound approval of names for companies.
As a result of many steps taken by the Ministry, the average number of days taken for incorporation of a company has come down significantly from 9.57 days in December 2014 to 4.51 days in November 2015. It is targeted that the average number of days would be further reduced to one to two days for approval in normal cases. The Ministry would welcome feedback from companies and professionals to countercheck the system introduced.
Signing of Advance Pricing Agreements (APAs) signals major push towards tax certainty
The Central Board of Direct Taxes has recently entered into 11 more Advance Pricing Agreements (APAs) with Indian subsidiaries for foreign companies. In a major push towards providing certainty to foreign investors in the arena of transfer pricing, the CBDT signed these APAs operating in various segments of the economy like investment advisory services, engineering design services, marine products, contract R&D, software development services, IT enabled services, cargo handling support services etc.
While 7 of these APAs have rollback provisions contained in them, the other 4 are Agreements for the future five years only. APAs with rollback provisions can cover a maximum period of 9 years in total. With this, the CBDT has so far entered into 31 APAs (30 unilateral and one bilateral).
It may be recalled that the APA programme was introduced in 2012 vide the Finance Act, 2012. In the first three years of the programme, a total of about 580 applications have been received from taxpayers. While CBDT concluded 5 APAs within the first year, a further 4 APAs got signed in the second year. This year has already witnessed a dramatic increase with the conclusion of 22 APAs and it is expected that a further 30 to 40 Agreements could be finalized before the end of the fiscal. Analysts and experts feel this new momentum will go a long way in avoiding disputes.