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Recent GST Councils decisions not in national interest: IRS officers body

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Recent GST Councils decisions not in national interest: IRS officers body

Citing deep anguish and feeling of dejection among them, an association of about 3,000 Indian Revenue Service officers today claimed that certain decisions taken recently by GST Council were not in national interest and they may have “serious implications” for government revenue and smooth implementation of Goods and Services Tax (GST).

The Indian Revenue Service (Customs and Central Excise) officers` association has also sought fair representation of their members in the GST Council which has representatives from central and state governments.

Claiming attempts by officers of state governments VAT departments to equate themselves with IRS (Customs and Central Excise) officers, the association asked the government not to wish away sanctity of their service.

Various such matters including the implementation of the GST were discussed during a meeting of the association held here yesterday under the chairmanship of its President Anup K Srivastava.

The GST Council had in its meeting on January 16, agreed to give states the power to levy tax on economic activity within 12 nautical miles of territorial waters.

Also, it was decided that the states will have the power to assess and administer 90 per cent of the tax payers under Rs 1.5 crore annual turnover, while the remaining would be controlled by the Centre.

“The decision to transfer much of the work related to the assessees below Rs 1.5 crore is not proper as it amounts to transferring the rightful assignment of IRS(C&CE) officers to Group B officers of states through an administrative arrangement. Revenue collection is an encadred assignment and officers are selected through Union Public Service Commission (UPSC) process.

“The sanctity of the same can not be wished away. Officers of states through cross-empowerment can not be effectively made into IRS(C&CE) officers without qualifying the UPSC exam. Unless the distribution of assessee is done fairly, the issue would not get resolved,” said a senior IRS officer, who attended the meeting.

All members of the service have expressed their deep anguish and concern over such decisions, he said.

Buy back rulesground covered

Introduction

1. Buy back of shares is a common method of rewarding investors. It also provides the investors an opportunity to exit from their investments, especially in case of unlisted companies. In addition to benefits to shareholders, buy back of shares also provides various benefits to companies like optimizing capital structure, returning excess cash to shareholders, improving earnings per share, stabilizing share prices, etc.

Repatriation of profits to shareholders through buy back of shares gained momentum in India, as repatriation through distribution of dividend attracted dividend distribution tax (DDT) in India. Distribution to shareholders on buy back of shares was not liable to DDT and was, instead, taxable as capital gains in the hands of shareholders, subject to treaty benefit for foreign shareholders. Therefore, Indian companies with surplus income bought back shares instead of declaring dividend and shareholders were taxed depending upon their tax attributes.

Advent of buyback tax in India

2. To curb the practice of taxpayers of escaping DDT by taking the buy-back route for repatriation of cash to shareholders, the Indian legislature introduced buy back tax (BBT) in India. The Income Tax Act, 1961 was amended in the year 2013 and tax on “distributed income” on buy back of shares by unlisted companies was levied at 20% (plus applicable surcharge and cess). On the other hand, shareholders were given complete exemption from capital gain tax. “Distributed income” was defined as consideration paid by the company on buyback of shares as reduced by the amount received by the company for issue of such shares.

Controversy around interpretation of the words “the amount received by the company for issue of such shares”

3. There were certain interpretation issues of the words “the amount received by the company for issue of such shares,” while determining distributed income on buy back of shares. The disputes were particularly in situations where shares were issued for non-cash consideration such as issue of shares in a scheme of amalgamation or demerger, swap of shares, shares issued in consideration for acquisition of an asset or for settlement of liability.

The Memorandum to Finance Bill, 2016 stated that the lack of clarity in the manner of determination of consideration received by the company would present a tax arbitrage opportunity of scaling up of consideration, particularly under a tax-neutral business reorganisation followed by buyback of shares. To resolve such disputes, the definition of “distributed income” provided under section 115QA was amended by the Finance Act, 2016 with effect from 1 June, 2016. As per the new definition, distributed income shall mean the consideration paid by the company on buy back of shares as reduced by the amount that was received by the company for issue of such shares, determined in the manner as may be prescribed.

Accordingly, the Central Board of Direct Taxes (CBDT) had come up with draft rules in July of this year to prescribe the manner of determining the “amount received.” The CBDT also invited comments from stakeholders before publishing final rules, thereby encouraging public participation and transparency. The industry and professional bodies made various representations on issues that were not specifically covered by the draft rules and would cause hardship to taxpayers. The CBDT considered the concerns raised by the stakeholders and notified the final rules on 17 October, 2016. The final rules provide for determination of “amount received by the company for issue of shares” in different situations, which are discussed below.

(i) When a company issues shares by way of subscription: amount received would be that actually received by the company on issue of shares including the premium amount.
(ii) When the company, prior to buy back, returned any sum out of the sum received on issue of shares: amount received by the company as reduced by the sum so returned.
It is also clarified that if the company paid tax on the sum so returned under section 115-O of the Act, then such sum shall not be reduced to arrive at the amount received.
Illustration 1
Particulars Amount in INR (per share)
Amount received by A Co. on issue of shares 20 (including INR 10 premium)
Amount distributed by A Co. on capital reduction 5
Consideration paid by A Co. on buy back of shares A 100
Amount received (20-5) B 15
Distributed income (A-B) 85
In the above illustration, if A Co. had paid DDT under section 1150-O on INR 5 returned to shareholders on capital reduction, then amount received by the company for the purpose of computation of distributed income on buy back of shares would have been INR 20 and not INR 15. The BBT in such case would have been levied on distributed income of INR 80 and not INR 85.
(iii) When shares are issued under ESOP or as part of sweat equity shares: amount received shall be the fair market value (FMV) of the shares as determined by the merchant banker on the specified date to the extent credited to the share capital and share premium account by the company.
Merchant banker means a Category I merchant banker registered with SEBI.
Specified date means the date of exercising the option or any date that is earlier than the exercise date and is not more than 180 days earlier than the exercise date.
(iv) When shares are issued under a scheme of amalgamation in lieu of shares of amalgamating company and such shares are being bought back by the amalgamated company: amount received shall be the amount received by the amalgamating company in respect of such shares
Illustration 2
Particulars Amount in INR (per share)
Amount received by amalgamating company on issue of shares 20 (including INR 10 premium)
Share exchange ratio on amalgamation: for every five shares held in the amalgamating company, the shareholders will get one share of the amalgamated company
Consideration paid by amalgamated company on buy back of shares A 100
Amount received by amalgamated company B (one share was issued in lieu of five shares of amalgamating company. Therefore amount received by amalgamating company for five shares would be taken as the amount received in the hands of amalgamated company i.e., 5 * INR 20) 100
Distributed income (A-B) Nil
(v) When shares are issued under a scheme of demerger by resulting company: amount received shall be computed in accordance with the following formula
A x B/C
where A = amount received by the demerged company in respect of issue of original shares
B = net book value of assets transferred in demerger
C = net worth of demerged company
Illustration 3
Particulars Amount in INR
Amount received by the demerged company on issue of shares A 20 per share (including INR 10 premium)
Share issuance ratio on demerger: for every five shares held in the demerged company, the shareholders will get one share of the resulting company
Net book value of assets transferred on demerger B 50cr
Net worth of the demerged company before demerger C 100cr
Consideration paid by resulting company on buy back of shares X 100 per share
Amount received for one share of resulting company YA x B/ C i.e., INR 100* x (50/ 100)]

*As one share of resulting company was issued for five shares of the demerged company, the amount received by the demerged company for 5 shares would be taken for computing the amount received i.e., 5 x INR 20 = INR 100

50 per share
Distributed income (X-Y) 50
(vi) When the original shares in the demerged company are bought back: amount received shall be the amount received by the demerged company as reduced by the amount so arrived above in point no. 5.
Illustration 4 (in continuation to illustration 3)
Particulars Amount in INR
Consideration paid by the demerged company on buy back of shares A 100
Amount received by the demerged company B[Amount received by the demerged company on issue of shares: amount so arrived in illustration 3 i.e., INR 20 – INR 10*]

*As one share of resulting company was issued for five shares of the demerged company, the amount received by the demerged company for one share would be taken for computing the amount received i.e., INR 50/ 5 = 10

10
Distributed income (A-B) 90
(vii) When shares are issued as part of consideration for acquisition of any asset or settlement of any liability: amount received shall be determined using the following formula
A/ B
where A = lower of the following:
(a) the amount which bears to the FMV of the asset or liability, as determined by a merchant banker, the same proportion as part of consideration being paid by issue of shares bears to the total consideration;
(b) the amount of consideration for acquisition of the asset or settlement of liability to be paid in the form of shares, to the extent credited to the share capital and share premium account by the company.
B = number of shares issued by the company as part of consideration
Some examples of issue of shares that would fall under this case are swap of shares i.e., issue of shares as a consideration for acquisition of shares of another company; issue of shares as a consideration for acquisition of machinery; conversion of loan into shares, etc.
Illustration 6
Particulars Amount in INR
Fair market value/ purchase price of machinery 1,000
Consideration discharged in the form of shares (10 shares at INR 10 plus premium of INR 40 per share) 500
Consideration discharged in cash 500
Consideration paid per share on buy back of shares X 100
Amount received per share = A/ B = 500/ 10 YA = lower of

(a) FMV of asset x (consideration discharged by issue of shares/ total consideration) i.e., INR 1000 x (500/ 1,000) = INR 500
(b) consideration paid by issue of shares to the extent credited to share capital and share premium account i.e., INR 500

A= lower of the above = INR 500

B = number of shares issued = 10

50
Distributed income (X – Y) 50
(viii) When shares are issued on succession or conversion of a firm or proprietary concern by company: amount received would be determined by using the following formula
(A – B)/ C
where A = book value of assets in the balance sheet – (TDS/ TCS/ advance tax – refund) – amount shown as an asset in the balance sheet that does not represent value of any asset including unamortised amount of deferred expenditure.
Revaluation of assets, if any, shall be ignored while computing book value of assets.
B = book value of liabilities shown in the balance sheet excluding capital, reserves, provision for taxation, provision for unascertained liabilities and contingent liabilities.
C = number of shares issued on conversion or succession
(ix) When shares are issued without any consideration i.e., issue of bonus shares: amount received shall be deemed to be nil.
(x) When shares are issued on conversion of preference shares, bonds or debentures, debenture stock or deposit certificate or warrants or any other security: amount received shall be the amount originally received by the company in respect of instrument so converted.
(xi) When shares are held in dematerialised form: amount received by the company shall be determined in accordance with this rule on the basis of first-in-first-out (FIFO) method.
The practical implementation of this rule may need further guidance.
(xii) In any other case: amount received shall be the face value of shares.

Despite the clarity provided in the rules on the above situations, some scenarios need to be addressed. For instance, there can be two ways of calculating the BBT when a company has previously issued bonus shares. Take for example, Company A issued 1,000 shares for INR 450 per share (i.e., fair market value per share), and subsequently, gave bonus shares in the ratio of 20 shares for every 1 share reducing the fair market value to INR 21.43 per share. Now if this company undertakes to buy back 5,000 shares at fair value of INR 21.43, there could be two scenarios for the calculation of the BBT.

Scenario 1: computation of BBT separately for each type of shares i.e., original shares and bonus shares

Particulars Amount (in INR)
Buy back of original shares
Buy back consideration (1,000 x INR 21. 43) 21,430
Less: amount received (1,000 x INR 450) 4,50,000
Distributed income (4,28,570)
BBT Nil
Buy back of bonus shares
Buy back consideration (4,000 x INR 21.43) 85,720
Less : amount received Nil
Distributed income 85,720
BBT @ 20% 17,144

Scenario 2: computation of BBT on a consolidated basis for both types of shares

Particulars Amount (in INR)
Buy back consideration (5,000 x INR 21. 43) 1,07,150
Less : amount received (1,000 x INR 450 + 4,000 x INR 0) 4,50,000
Distributed income (3,42,850)
BBT Nil

The rules as currently drafted reckon amount received for each share issuance separately. Therefore, scenario 1 seems to be the correct approach of computing BBT. The rules do not provide any provision for set-off of distributed income for calculation of BBT (as in scenario 2), and thus, requires clarification.

Takeaways

4. The CBDT has followed a holistic approach and has accommodated commercial considerations related to issue of shares in the final rules. This is a welcome move to reduce the ambiguity involved in computation of BBT and is in line with Government’s philosophy of bringing more certainty in the tax regime.

However, one aspect that warrants more clarification is BBT on secondary market deals. The new rules do not recognise the secondary transactions between investors in unlisted companies, and thus, leads to double taxation. For perspective, suppose a company issues shares to a shareholder at INR 100 and after a few years, such shareholder sells these shares to another investor at INR 200. The shareholder will be subject to capital gains tax on the same. Subsequently, the company comes out with a buyback offer at INR 300 in which the investor tenders its shares. Under the proposed tax rules the investor would be liable to 23.08% tax on INR 200 (against an actual income of INR 100), as under the buyback rules the BBT is calculated on the difference between the amount paid on buy back and original price at which shares were issued by the company. This is because buy back law do not recognise step-up price in secondary deals, which leads to double taxation. Each time the shares exchange hands in the secondary market, their step-up price would be ignored in such computation and would result in double taxation on the same amount, once as capital gains, and thereafter, as BBT. This ambiguity in the Income Tax Law has existed since the introduction of BBT in India. It will be interesting to see what the legislature will do to plug this loophole.

Salary paid outside India by Private Companies

 

As per section 5 (2) subject to the provisions of the Income tax act 1961, the total Income of any previous year of a person who is a non-resident includes all income from whatever source derived which-

  • Is received or is deemed to be received in India in such year by or on behalf of such person; or
  • Accrues or arises or is deemed to accrue or arise to him in India during such year.

 

Note: By the above section we can here by reach on the conclusion that if any salary of employee is received in India it will be taxable in India irrespective of accrual of salary.

Further,

As per section 9 (ii) income which falls under the head “Salaries”, if it is earned in India, it shall be deemed to accrue or arise in India.

Note: By above mentioned section 9(ii) it is clear that if Income is earned in India i.e. services by employee are rendered in India under the terms of employment it shall be taxable in India and if services under the terms of employment are rendered outside India it will be subject to receipt of income for the purpose of taxability.

Conclusion for salary paid outside India to NRI employee: If salary is received outside India and services by the employee are also rendered outside India it will be not taxable in India subject to section 9 (iii) of Income tax act 1961.—-DIT v. Prahlad Vijendra Rao[2011] annexed with this note.

DIT vs Prahlad Vijendra Rao

 

Articled Clerk Tarun

CA Final

RPL & Co.

Give renewable energy zero-rate status under GST: Power Ministry

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Give renewable energy zero-rate status under GST

The Ministry of Power has recommended that renewable energy be given a zero-rate tax status under the Goods and Services Tax, predicting several adverse effects to the economy if there is any increase in power tariffs due to the new tax regime.

“Any further tariff increase due to GST may have a multiplier effect on economic development (such) as: (i) difficulty in passing through the impact to agriculture and domestic consumers, (ii) adverse impact on industrial production and GDP, (iii) adverse impact on Make in India, and (iv) adverse impact on export competitiveness of Indian products and services,” according to a presentation made by it to the GST Council during the ninth meeting of the GST Council on January 16.

In the presentation, a copy of which is in the possession of The Hindu, the Ministry took a benchmark GST rate of 18% and calculated that, if renewable energy is taxed at this rate, then capital expenditure in the sector would increase between 10% and 12% and tariffs for wind and solar energy could increase by as much as ?0.5 per unit.

The Power Ministry`s recommendation was for the GST Council to choose one of two options: either give renewable energy supply a zero-rate status, or give it a deemed export status.

The Ministry also asked for the inclusion of all hydro projects as renewable energy projects. Currently, only small hyrdro projects of a capacity of up to 25 MW are deemed renewable energy projects.

“It is a very arbitrary decision to have this distinction,” Sabyasachi Majumdar, Senior Vice President at ICRA, said. “Having all hyrdo projects as renewable will be good for the entire renewable sector because, with large renewable capacity being put in place, you need grid stability and large hyrdro is very good for grid stability.”

The Ministry also requested that supplies made to under-construction hydro power projects be granted deemed export status in line with what is being contemplated for solar projects.

“Granting deemed export status may involve tax shortfall of ?880 crore spread over a period of five years,” according to the presentation.

“If the idea is to have affordable power, it makes sense to have zero rate GST for renewable energy,” Mr. Majumdar said. “It would be very critical to maintain the growth and competitiveness of the sector. Either of the two options of zero rate or deemed export status will work for this.”

 

Articled Clerk Tarun

CA-Final

RPL & Co.

GDP may further slow down if GST implemented in hurry: Tax officials to FM Arun Jaitley

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GDP may further slow down if GST implemented in hurry: Tax officials to FM Arun Jaitley

Claiming that demonetisation has affected country`s growth, a major central revenue body has asked Finance Minister Arun Jaitley not to implement Goods and Services Tax (GST) in a hurry and threatened to take legal recourse in case their concerns are not addressed.

It termed as “illegal” certain decisions taken by Jaitley-headed GST Council and demanded that they be corrected. It also sought that the officer`s body be consulted before any final decision is taken.

The Council in its meeting on January 16, had agreed to give states the powers to levy tax on economic activity within 12 nautical miles of territorial waters.

Also, it was decided that the states will have powers to assess and administer 90 per cent of the tax payers under Rs 1.5 crore annual turnover, while the remaining would be controlled by the Centre.

In a letter to Jaitley, the All India Association of Group B Central Excise Gazetted Executive Officers, said the decision to transfer 90 per cent of service tax assessees to states is not supported by any lawful and logical base and therefore, the decisions taken by GST Council should be withdrawn immediately.

“Needless to say, any judicial intervention in the illegal decisions taken by GST Council, and if implemented by the Centre, would cause unnecessary delay in the implementation of Goods and Services Tax (GST).

“It is further added that due to demonetisation of old bank notes of Rs 500 and Rs 1,000, the GDP of the country is expected to fall at least 1 per cent (from 7.6 estimated to 6.6 per cent, as reviewed), and in case implementation of GST is delayed further, due to judicial scrutiny of the illegal decisions taken by GST Council, the country may suffer economically as the GDP may further slow down,” it said.

It said the GST Council has not been conferred upon any power by the Constitution to recommend transfer of rights or allowing levy and collection of IGST (which deals in levy on inter-state supply including stock transfers of goods or services) to states.

It said the area in sea (territorial waters) up to 12 nautical miles from the coastline falls within the territory of India and therefore, the powers to tax transactions in such areas are vested in the Union Government.

“The decision taken by the GST Council to empower states to levy state GST or central GST or IGST, as the case may be, is in gross violation of the constitutional provisions,” the association said.

The GST is likely to be rolled out from July 1, as against April 1 decided earlier by the government.

There is no logic or rationale, legally, to transfer the 90 per cent GST assessees to states for the purpose of audit and assessment, it said.

“Moreover, the service tax assessees falling within the annual turnover limit of Rs 10 lakh to Rs 1.5 crore are at present being assessed by the Centre smoothly. By transferring of 90 per cent of these assessees to states for levy and collection of SGST and CGST, the officers of the Centre would become work-less,” the association said in the letter.

The transparency in collection of CGST from these 90 per cent assessees may be compromised in the hands of state officers, said the body which claims to represent about 50,000 Group B and Group C tax employees.

“Would the Centre like to empower CBI and CVC to have their jurisdiction upon states` officers also for any laxity or compromise by these officers in revenue collection of CGST?

“Would states allow these organisations to interfere in the functioning of their officers? Does the GST Council take guarantee that any laxity or collusion with the trades, and compromise to collect CGST revenue would be investigated by CBI and CVC in case of states` officers?” it asked.

The association “condemns and opposes the illegal decisions” taken by the GST Council and expresses anguish among its members over the transfer of their taxing powers to state officers, the letter said.

“You are requested to please take immediate necessary action to resolve these issues. Otherwise, the association will call for a meeting of its all members and pass a resolution to oppose the decisions taken by the GST Council, initiate non-cooperation movement towards implementation of GST, and may also take legal course of action to protect the levy and collection powers of the Central Board of Excise and Customs (CBEC).

“Any such decisions taken by GST Council, without prior consultation from the associations of affected officers of CBEC, would be agitated, leading to country-wide protest agitation against the decisions taken by the GST Council, unilaterally,” it said.

Demonitisation will impact consumer spending in short term

The demonetisation undertaken in India will have a “significant impact” on consumer spending in the short term but the country’s economy will return to the about 7.6-7.7 percent growth forecast by a flagship UN report, a senior economic official said.

The United Nations World Economic Situation and Prospects (WESP) 2017 report launched today said India’s economy is projected to grow by 7.7 percent in fiscal year 2017 and 7.6 percent in 2018, benefiting from strong private consumption.

The report however did not take into consideration the impact of the demonization policy on the country’s economic growth.

Senior Economic Affairs Officer, Global Economic Monitoring Unit, Development Policy and Analysis Division in the UN Department of Economic and Social Affairs Dawn Holland said the report’s forecast was finalised on November 11, just a few days after the demonitisation policy was announced and so it hasn’t been revised to take into account the impact on economic growth that might be expected from withdrawal of the high-denomination currency notes by the government.

What we do expect is that, as we have already seen the first signs, the cash shortages that have resulted from that will have significant impact on consumer spending in the short term – in the fourth quarter of 2016 and also following in the first quarter of this year,” Holland said in response to a question by PTI on what demonitisation’s impact will be on the country’s growth going forward.

Holland added that India’s economic growth rate could see a downward revision when the estimates are updated in the next few months, taking into account the demonitisation impact.

We don’t think it should have a long term impact so we would expect the economy to return to the sort of rates of growth that we have in the current forecast but for the 2016-17 financial year we would probably be looking to revise that down somewhat,” Holland said during a briefing here to launch the report.

She added that an update of the economic report will be made in April and that will take into account the impact of demonitsation on India’s growth. Holland said she wouldn’t put a number on what India’s economic growth will be when the effects of the currency withdrawal are taken into consideration.

We don’t expect the country to be in recession. That is not the level of impact that is expected but it certainly will slow the rate of consumption spending in the short term,” she said.

Articled Clerk Tarun

CA Final

RPL & CO. (Patparganj Branch)

 

What is CGST, SGST & IGST and Input tax credit in GST

CGST stands for Central GST and SGST stands for State GST and IGST stands for Integrated GST.

Government recently notified standard GST rate of 18% which would be levied on goods & services which are taxable, let us understand what does it got to do with CGST & SGST.

If some one will issue an invoice of any service or goods then if the sale is Intra-state (i.e. within same state) then he will charge GST of 18% which will comprise of CGST & SGST both of 9% that means 9% belongs to state government and 9% belongs to central government.

Further if sale made is Inter state (i.e. state other than from where supply is made) GST charged at 18% in invoice will be IGST.

Note: Rate of 18% may vary as per notification of central government in this regard.

 

Now how can credit be utilized in each case:-

Below mention table sums up the utilization rule as per Model GST law-

 

Input tax Paid Dischargeable Tax
  1. CGST
CGST & IGST
  1. SGST
SGST & IGST
  1. IGST
CGST, SGST & IGST

 

 

Articled Clerk Tarun

CA-Final

RPL & Co.

Complete Procedure for ESOP of Private Limited Company (with draft scheme)

ABC Private Limited

Complete Procedure for ESOP

 

  1. Notice for board meeting is to be given by not less than 7 (Seven) days in writing by post or by electronic means as per Section 173(3) of the companies act 2013. Step 1
  2. As per Section 62(1)(b) Hold board meeting for the ESOP and pass the resolution for issuance of ESOP scheme. Step 2
  3. See recent valuation report to find the value of share to be proposed in ESOP. Step 3
  4. Exercise price i.e. the value of share under ESOP is to be decided by the management. Step 3
  5. Vesting period i.e. the period after which ESOP right can be exercised. Step 3 (Minimum One year as per Rule 12 sub rule 6(a) of Co. (share capital and debentures) rules,2014.
  6. Exercise period i.e. the period in which option can be asked for issuance of share. This is to be decided by the management. Step 3
  7. Prepare full ESOP scheme. Step 3
  8. ESOP scheme to be circulate among employees and management will decide the criteria to whom ESOP scheme will be proposed and how many of them are ready for the right. Step 3
  9. Notice to be given by not less than 21(Twenty one) clear days before EGM to be held as per Section 101(1) with explanatory statement annexed as required by Sec. 102(1) with notice for issuance of ESOP. (Resolution is to be prepared to be annexed). Step 4
  10. Hold EGM and pass the ordinary resolution for the ESOP (as per new Notification No. GSR 464(E), dated 5-6-2015 after passing the resolution file MGT-14 within 30 days of passing the resolution at EGM held as required by Sec. 117(1) and Sec. 117(3) of companies act 2013. Step5

 

Note: As per sub rule 4 of Rule 12 of Companies (Share Capital and Debentures) Rules, 2014 approval of the shareholders by way of special resolution shall be obtained by company in  case of- grant of the option to identified employees, during any one year, equal to or exceeding 1 (One) percent of the issued capital at the time of grant of option. At the time of Step 5

11.    Maintain register in form SH-6. Step 6

12. At the End of the vested period till exercise period allotment of shares in form PAS-3 is to be filed with ROC within 30 days of allotment of shares read with Section 39(4) and rule 12 of the Companies (Prospectus and Allotment of Securities) Rules, 2014. Step 7

13. Check expenses to be booked in books of account and maintain year to year expenses as per calculation according to share based payments guidance note by ICAI. Step 8

Draft ESOP scheme