1AUGUST 2015

7, Jolly Bhavan #2, New Marine Lines, Mumbai - 400020. Tel : + 91 22 613 77 600 ; F : + 91 22 613 77 666 ; Email: bca@bcasonline.org ; Website : www.bcasonline.org ; WebTV : www.bcasonline.tv

Vice-President’s CommuniquéDear Members,

STUDY CIRCLES have been the backbone of the Society in fulfilling its vision of harnessing talent and disseminating knowledge. The Society has ten topical study circles which meet regularly to discuss interesting and intricate areas requiring thorough deliberations to grasp the subject in detail. To achieve the objective of grooming young talent and to spread its wings by reaching out to the members, the Society has active Students Study Circle as well as Suburban Study Circle. Study circles have not only helped members in skill development but also in networking. It is needless to emphasize the importance of group studies in today’s fast changing world where plethora of decisions come every day, number of Acts are either amended or replaced, increased risks, responsibilities and/or liabilities of professionals, ever increasing compliances and so on. It is humanly impossible for any professional to keep track of all the changes or judicial development. That’s where Study Circle helps us to keep abreast of latest developments in the profession and tax laws. I am sure our learned members will take benefit of these Study Circles in enhancing their knowledge and skills. Those who cannot attend due to constraint of distance can join via our dial-in conference facility. In my opinion, Study Circle is the best forum for youngsters to develop their oratory and presentation skills, under the guidance of seniors who may chair such meetings.

There cannot be a better way to “Learn, Share and Grow”. Therefore, I appeal to the members to take maximum benefit of the Study Circles. This newsletter has a list of Study Circles and the Enrollment Form for you all to fill. To conclude on this topic, I am reminded of a quote “If you are educated yesterday and stop learning today then you are uneducated tomorrow”. BCAS Study Circles provide you the opportunity for continuous learning, sharing and updating. It inculcates in the participants, not to just know the concepts, tools and prescriptions, but the desire for excellence; the desire to be the best.

Harnessing Talent and Providing Quality Service A Monthly Newsletter of the Bombay Chartered Accountants’ Society

BCASNewsletterFor Members only. For Private Circulation only. Price: R10

(Continued on page 2)

President: Raman H. Jokhakar 98208 77976 | president@bcasonline.org

Vice-President: Chetan M. Shah 9820223402 | vp@bcasonline.org

Hon. Jt. Secretary: Narayan R. Pasari 98200 38095 | joint.secretary@bcasonline.org

Hon. Jt. Secretary: Sunil B. Gabhawalla 98213 23921 | joint.secretary1@bcasonline.org

Hon. Treasurer: Manish P. Sampat 9820010064| treasurer@bcasonline.org

Vol. 18 n No. 5 n August 2015

Accounting & Auditing Study Circle Meetings On Ind AS.................... 20.08.2015, 18.09.2015, 15.102015, 19.11.2015 .....BCAS, 7, Jolly Bhavan No. 2, New Marine Lines...........................4

Indirect Tax Laws Study Circle Jointly with Suburban Study Circle ............................22.08.2015............................................ Direct-I-Plex, Old Nagardas Road, Andheri East .........................4

Half-Day Seminar on Foreign Contribution Regulation Act, 2010 ................................04.09.2015 ........................................... BCAS, 7, Jolly Bhavan No. 2, New Marine Lines..................... ......3

Half Day Workshop on Impact Analysis under Proposed GST Regime ....................12.09.2015 ............................................. BCAS, 7, Jolly Bhavan No. 2, New Marine Lines............................3

Lecture Meetings .....................................................................................................21.08.2015, 28.08.2015, 04.09.2015, 16.09.2015....................................................................................................................................1

LECTURE MEETINGS

Speaker: Yogesh Thar, Chartered AccountantSubject: ICDS: Overview and Challenges in Application Venue: Walchand Hirachand Hall, 4th Floor, IMC, Churchgate, Mumbai 400020Day, Date & Time: Friday 4th Sept. , 2015, 6.15 p.m.*

Speaker: Ketan Dalal, Chartered Accountant, Subject: Tax & Structuring – The Big PictureVenue: Walchand Hirachand Hall, 4th Floor, IMC, Churchgate, Mumbai 400020 Day, Date & Time: Wednesday 16th Sept., 2015, 6.15 p.m.*

Speaker: Atul Bheda, Chartered Accountant, Mayur B. Nayak, Chartered AccountantSubject: Achieve Success in CA Exams Venue: BCAS, 7, Jolly Bhavan No. 2, New Marine Lines, Mumbai 400 020Day, Date & Time: Friday 21st August, 2015, 5.00 p.m.

*(Fellowship over a cup of tea at 5. 45 p.m.)

The CA Final results are out and for the students there were moments of ecstasy and agony. Ecstasy for those acquiring the coveted title of CA and agony for the ones who have to go through one more grind to become a CA. My heartiest congratulations to Ms. Shailee Chaudhary and Mr. Rahul Aggarwal for topping the CA final examination. This year seems to be the year of woman

PROGRAMMES AT A GLANCE DATE VENUE PAGE NO.

Speaker: Dr. Vandana ShivaSubject: Food Smart Cities, Leading a Transition to Health, Sustainability, and Fairness Venue: Walchand Hirachand Hall, 4th Floor, IMC, Churchgate, Mumbai 400020Day, Date & Time: Friday, 28th August, 2015, 6.15 p.m.*

(under the auspices of Shri Dilip N. Dalal Oration Fund)

2 AUGUST 2015

(Continued from page 1)

power with both the 1st rank as well as the 2nd rank achievers of the CA final being girls. Recently, Ira Singhal became the first physically challenged candidate to top the civil services examination that saw women take the top four ranks in the UPSC exam. Another proud moment for India was on 28.12.2014, when sisters Nungshi and Tashi became the world’s first twins to ski to the South Pole after conquering the tallest peaks in all continents, the renowned ‘Seven Summits’. They are featured in the Guinness World Records and also the Limca Book of Records. In the Annual General Meeting of the BCAS, the Society felicitated Ms. Purnima Sharma for becoming a Chartered Accountant after overcoming all the odds and inspite of having hearing and speaking challenges. Her mentor Ms. Manju Joshi was also felicitated who not only motivated but also provided untiring assistance for her to become a Chartered Accountant. Every member became emotional when she demonstrated courage to speak from her electronic voice box. I am sure that all these achievements will inspire millions of young girls and women to dream big and achieve their goals.

It is our continuous endeavour to contribute towards Environment & Rural economic development. This year a few members went to a remote interior village of Vansda at Dharampur in association with ‘Dhanvantari Trust’ to plant Mango Trees, the fruits of which will ultimately benefit the poor villagers. Many members voluntarily contributed to this project by donating the mango saplings. We are thankful to all of them. I appeal to the members to continue to wholeheartedly support the Society on all such Nobel initiatives it takes from time to time.

ALL THE THREE CLINICS WILL BE HELD IN THE LIBRARY OF THE SOCIETY

RIGHT TO INFORMATION CLINIC

CHARITABLE TRUST CLINIC

ACCOUNTS & AUDIT CLINIC

Advisory Panel : Narayan K. Varma, Adv. A. K. Asher, Hema D. SampatClinic Co-ordinator: Mrs. Madhuri Haware – 66595636

Advisory Panel : Dr. Gautam N. Shah and Tushar K. DoctorClinic Co-ordinator: Mrs. Madhuri Haware – 66595636

Advisory Panel : Sanjeev R. Pandit, Himanshu V. Kishnadwala, Jayesh M. Gandhi Clinic Co-ordinator : Mrs. Madhuri Haware – 66595636

Foundation operates a Right to Information (RTI) Clinic on a regular basis. The Clinic provides help and guidance to BCAS members as also to non-members, i.e., all citizens, for making applications under the RTI Act and also assists in resolving any related difficulties on the subject of RTI. The RTI Clinic operates on every 2nd, 3rd and 4th Saturday from 11 a.m. to 1 p.m. The next RTI Clinic days accordingly are 22nd August 2015 and 12th, 19th and 26th September 2015. Please call to obtain a prior appointment.

The next Charitable Trust Clinic will be held on 4th September 2015 from 5 p.m. to 7 p.m.

Chartered Accountants and Trustees interested in having their queries solved are requested to send their queries by email to journal@bcasonline.org and call to obtain a prior appointment, latest by noon on the day of the clinic. Querists are also advised to bring along relevant papers like trust deeds, audited accounts, etc.

The next Accounts & Audit Clinic will be held on – 4th September 2015 from 4 p.m. to 5 p.m.

Persons interested in having their queries pertaining to accounting and auditing issues solved are requested to send the queries by e-mail to journal@bcasonline.org one week in advance and call to obtain prior appointment, at least a day before the day of the clinic. Please note that the panel will not answer any queries pertaining to tax issues.

I humbly request all the members who have not yet renewed their memberships to do so urgently so that you continue to be part of the BCAS family and we together expand our skill-set in response to the dynamic environment and new developments.

While I was concluding my communiqué, there was an event which took away from us one of the most respected figures of our time. Yes, it is the Past President of India, Dr. A. P. J. Abdul Kalam. A lot has been said and written about his nobility and love for children, students and progressive India. However, I would fail in my duty, if a worthy homage is not offered to him. I would like to state a quote from his book “Ignited Minds”:

“Start by risking your own position for a mission. Either I deliver or I go. Prepare yourself for the endeavour. With effort and perseverance you will succeed. There is always a risk involved when we venture into something new. After all, the process of birth itself is a risky affair. But then the infant starts breathing…. and life follows, with all its hopes and aspirations. Breathe in thoughts of success and you will be a success.”

Warm regards,

Chetan Shah

3AUGUST 2015

Chairman: Kanu ChokshiConvenors: Jayanty Thakur, Sameer Kapadia & Preeti Oza

Co-ordinators: Preeti Oza & Manish Sampat

Chairman: Govind GoyalConvenors: Mandar Telang, Saurabh Shah & Suhas Paranjpe

Co-ordinators: Mandar Telang & Saurabh Shah

CORPORATE & ALLIED LAWS COMMITTEE

INDIRECT TAXATION COMMITTEE

Half-Day Seminar on FOREIGN CONTRIBUTION REGULATION ACT, 2010DATE: 4th September 2015

TIME: 2:30 p.m. to 5.30 p.m.

LOCATION: BCAS, 7, Jolly Bhavan No. 2, New Marine Lines, Mumbai 400 020.

SPEAKER: Mr. Noshir Dadrawala

Fees: ` 684/- Member ` 855/- Non-MemberFee includes tea, coffee, refreshments, study material, and ` 30/- towards BCAS Foundation.

WHY THIS SEMINAR?The FCRA 2010 has made wide sweeping changes that includes doing away with the Concept of ‘permanent’ registration. The NGOs registered under the FCRA 2010 are required to renew their certificate of registration every five years. In case of NGOs already registered or granted permission under the previous FCRA, such registration / prior permission will be required to be renewed before end of its validity on 30th April 2016. Such application for renewal is required to be submitted at least six months prior to the date of expiry of the validity period, i.e. before 31st October, 2015. It is vital that the registration under FCRA is renewed in timely manner for their uninterrupted functioning.

WHO SHOULD ATTEND?- NGOs - Professionals concerned / associated with NGOs - Corporates who are CSR partners of NGOs

KEY TAKEAWAYS-- Insight of FCRA with respect to NGOs-- Timely renewal of registration under FCRA-- Understand the nitty-gritty of the FCRA and recent developments -- Q & A with the learned and experienced speaker- Avoid unforeseen, unwarranted situation of FCRA violation.

Half Day Workshop on IMPACT ANALYSIS UNDER PROPOSED GST REGIME DATE: 12th September 2015

TIME: 9:30 a.m. to 1:00 p.m.

LOCATION: BCAS, 7, Jolly Bhavan No. 2, New Marine Lines, Mumbai 400 020.

SPEAKERS: CA. Parind Mehta will speak on GST Impact Analysis for Construction Sector

CA. Divyesh Lapsiwala will speak on GST Impact Analysis for Pharmaceutical Sector

Fees: ` 570/- Member ` 855/- Non-Member

Fee includes the cost of background material, tea, coffee, refreshments and study material.

WHY THIS WORKSHOP?The proposed Goods and Services Tax (“GST”) is a major indirect tax reform which will not only impact the tax compliances but will result in a substantial financial implications both in terms of tax outflows and credits as well as realignment of base procurement/supply prices. In that sense, GST is likely to be a business reform and a game changer.

Businesses will need to undertake an analysis of the impact that the proposed tax is likely to have on the way the businesses are carried out and the financial implications thereof. To walk through some of the areas of impact analysis in the sectors of Construction and Pharmaceuticals, the Committee has organized this workshop where the faculties will demonstrate through examples, the process of conducting an impact analysis of GST for a business.

WHO SHOULD ATTEND?

- Chartered Accountants practising in the field of indirect tax- Chartered Accountants intending to expand practice into the field of proposed GST- Professionals from the Industry who would like to understand the Impact of GST on their businesses

KEY TAKEAWAYS

- Learning the process of conducting the impact analysis of the proposed GST

- Understanding the challenges in the said process- Identifying critical issues to watch out for as the proposed GST law

unfolds

4 AUGUST 2015

Convenors: Chirag Mehta, Mandar Telang, Rajkamal ShahSuburban Study Circle Convenors: Giriraj Soni, Mrinal Mehta, Chirag Doshi

INDIRECT TAX LAWS STUDY CIRCLE JOINTLY WITH SUBURBAN STUDY CIRCLE

INDIRECT TAX LAWS STUDY CIRCLE JOINTLY WITH SUBURBAN STUDY CIRCLE

On: Service Tax – Investigation & Audit (including discussion on Circular 185/4/2015 ST Dt. 30/06/2015)

Date: 22/08/2015

Time: 5.00 p.m. to 7.00 p.m.

Location: Direct-I-Plex, Old Nagardas Road, Opp. Wilson Pens, Near Andheri East Subway, Andheri (East), Mumbai 400069

Speaker : Mr. Gaurav Sarda, Chartered Accountant

Chairman : Mr. Sunil Gabhawalla, Chartered Accountant

WHY THIS STUDY CIRCLE ?• CBEChasrecentlyissuedacircularonthedetailedscrutinyof

the Service Tax ST-3 Returns .• Assesseeswithtotalservicetaxliabilitybelow` 50 Lakhs are

covered.• Large scale investigations and audits by the Service Tax

Department are expected.• Righttimetoupdatethemembersabouttheintricaciesand

practicalities involved in attending to such enquiries

WHO SHOULD ATTEND• CA’s• CAofficestaffandarticles• CorporatestaffinvolvedinServiceTax

KEY TAKEAWAYS• Understandthe Investigationsandauditprovisionsunderthe

Service Tax Law • Howtoreplyenquiriesfromservicetaxdepartmentinlightofthe

recent circular• KnowtheDepartment’sperspectiveontheauditsandenquiries• Casestudies

Chairman: Harish MotiwallaConvenors: Chirag Doshi & Mitesh Majithia

COMPANY LAW, ACCOUNTING AND AUDITING STUDY CIRCLE

ACCOUNTING & AUDITING STUDY CIRCLE MEETINGS ON Ind ASSeries of meetings on Ind ASDATE: August 20, September 18, October 15, November 19 of 2015

Further series to be announced at a future date

TIME: 18:15 Hrs to 20:15 Hrs

VENUE: BCAS Office, New Marine Lines

The announcement for additional series of IND AS shall be made in due course.

WHY THESE SERIES OF STUDY CIRCLE MEETINGS?• To understand the applicability of The Indian Accounting

Standards (Ind ASs). • Basic concepts of Ind ASs • Learn, measurement and disclosure requirements • The date of implementation and its impact• Accounting Treatment for each type of entity• Comparison with corresponding IAS/IFRS and existing AS

TOPICS & GROUP LEADERS:

20th Aug ‘15 1. Overview of Ind AS and roadmap to conversion 2. Ind AS 1- Presentation of Financial Statements CA Anand Banka

18th Sept ‘15 1. Ind AS 16, Property, Plant and Equipment 2. Ind AS 38, Intangible Assets 3. Ind AS 40, Investment Property CA Sanjay Chauhan

15th Oct ‘15 1. Ind AS 23, Borrowing Costs 2. Ind AS 17, Leases Eminent Speaker

19th Nov ‘15 1. Ind AS 21: The Effects of Changes in Foreign Exchange Rates 2. Ind AS 12: Income Taxes Eminent Speaker

•ComparisonwithcorrespondingIAS/IFRSandexistingAS•Examplesandcasestudies

WHO SHOULD ATTEND?- CAs in Assurance Practice - CAs in Industry- CAs in Teaching Profession

KEY TAKEAWAYS- Understanding the new set of Accounting Standards converged with IFRS- Learn intricacies of reporting requirement under the new GAAP- Practical knowledge- Discussion on challenges related to implementation- Knowledge sharing by eminent faculties

5AUGUST 2015

BOMBAY CHARTERED ACCOUNTANTS’ SOCIETY

Staff Contact Details

Sr No Name and designation Role Email ID Extn Direct Contact

1 Ms. Shital Monde-Reception Board Line reception@bcasonline.org 600 61377600

2 Mr. Amit Singh Events Manager

Co-ordinator for Lecture meetings, Seminars, Workshops & Residential Courses

em@bcasonline.org 606 61377606

3 Mr. Javed Siddique Events Manager

Co-ordinator for Lecture meetings, Seminars, Workshops & Residential Courses

em1@bcasonline.org 607 61377607

4 Ms. Bindu Mistry Events Executive

Co-ordinator for meetings and study circles at BCAS office

asst.em1@bcasonline.org 605 61377605

5 Ms. Madhuri Haware Asst. Knowledge Manager

Journal & Newsletter Production asst.km@bcasonline.org 636 66595636

6 Ms. Bhavna Mali Member Services

Membership, Imprest, Publications and Online Payments

mrd@bcasonline.org, bca@bcasonline.org

633 66595633

7 Mr. Manoj LokhandeFront Desk Executive

Enrollments and Collections memberinfo@bcasonline.org 631 66595631

8 Mr. Prakash Palsamkar Front Desk Executive

Enrollments and Collections memberinfo@bcasonline.org 634 66595634

9 Ms. Rathi Nair-Secretary to President Executive Assistant sp@bcasonline.org 612 61377612

10 Mr. Upendra Hisaria-Office Manager General Office Administration om1@bcasonline.org 611 61377611

11 Ms. Jyoti Malkani-General Manager Escalations and all other matters not mentioned above. gm@bcasonline.org 602 61377602

A man always has two reasons for what he does--a good

one, and the real one.- J.P. Morgan

A budget tells us what we can’t afford, but it doesn’t keep

us from buying it.

- William Feather

Rule No. 1 : Never lose money. Rule No. 2 : Never forget

Rule No. 1.- Warren Buffett

6 AUGUST 2015

7AUGUST 2015

8 AUGUST 2015

9AUGUST 2015

Subscribe Now!!!

Lecture Meeting on Filing of Income Tax Return by CA. Ganesh Rajgopalan and CA. Rutvik R. Sanghvi, held on 29th July, 2015, is available on BCAS Web TV.

BCAS WEB TV

Payment can be made by cheque/DD payable at par in Mumbai in favour of ‘Bombay Chartered Accountants’ Society’. You can also pay by cash/credit card at the payment counter of BCAS Office. If you have an Imprest Account, then you can instruct us to adjust the subscription through the Imprest Account. The rates are subject to change based on notification from time to time.

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*Inclusive of Service Tax.

10 AUGUST 2015

FROM RBIContributed by : Gaurang V. Gandhi

The Reserve Bank of India has issued the following 5 circulars and DIPP has issued 1 update and 1 Press Note

A. P. (DIR Series) Circular No. 3 dated July 9, 2015Exim Bank’s GoI supported Line of Credit of USD 15.13 million to the Government of Republic of Djibouti

Exim Bank has made available, subject to certain terms and conditions, to the Government of the Republic of Djibouti a Line of Credit of US $ 15.13 million for financing Ali Sabieh Cement Project in the Republic of Djibouti. Eligible goods and services including consultancy services of the value of at least 75% of the contract price must be supplied by the sellers from India, while the remaining 25% of the goods and services (other than consultancy services) can be procured by the sellers from outside India.

The last date for opening of Letters of Credit and Disbursement for project exports will be 48 months from the scheduled completion date of the contract and March 8, 2021 in case of supply contracts.

A. P. (DIR Series) Circular No. 4 dated July 16, 2015Issue of shares under Employees Stock Options Scheme and/or sweat equity shares to persons resident outside India

Presently, an Indian Company can issue shares to its employees or employees of its joint venture or wholly owned overseas subsidiary / subsidiaries who are resident outside India, directly or through a Trust under Employees’ Stock Option (ESOP) Scheme, if: -

1. The scheme is drawn under the SEBI Act, 1992; and 2. The face value of the shares to be allotted under the scheme to

non-resident employees did not exceed 5% of the paid up capital of the issuing company.

This circular now provides that an Indian company can issue “employees’ stock option” and / or “sweat equity shares” to its employees / directors or employees / directors of its holding company or joint venture or wholly owned overseas subsidiary / subsidiaries who are resident outside India, if: -1. The scheme has been drawn either under: - (a) The Securities Exchange Board of India Act, 1992; or (b) The Companies (Share Capital and Debentures) Rules, 2014.2. The “employee’s stock option”/ “sweat equity shares” are in

compliance with the sectoral cap applicable to the said company. 3. Issue of “employee’s stock option” / “sweat equity shares” in a

company where foreign investment is under the approval route will require prior approval of FIPB.

4. Issue of “employee’s stock option” / “sweat equity shares” under the applicable rules / regulations to an employee / director who is a citizen of Bangladesh / Pakistan will require prior approval of FIPB.

5. The issuing company must furnish a return as per the Form-ESOP (Annexed to this circular) to the concerned Regional Office of RBI within 30 days from the date of issue of employees’ stock option or sweat equity shares.

A. P. (DIR Series) Circular No. 5 dated July 16, 2015Export factoring on non-recourse basisThis circular now permits banks to factor export receivables on a “non-recourse” basis (as against the present practice of factoring of export receivables on “with recourse” basis), subject to certain terms and conditions.

The following is the gist of the terms and conditions: -

a) Banks must ensure that their client is not over financed and the invoices purchased must be genuine trade invoices.

b) Where export financing has not been done by the Export Factor, the Export Factor must pass on the net value to the financing bank / Institution after realizing the export proceeds.

c) The bank that is the Export Factor, must have an arrangement with the Import Factor for credit evaluation & collection of payment.

d) Notation must be made on the invoice to the effect that the importer must make payment to the Import Factor.

e) After factoring, the Export Factor must close the export bills and report the same in the EDPMS to RBI.

f) When an Import Factor overseas is not involved, the Export Factor must obtain credit evaluation details from the correspondent bank abroad.

g) Export Factor must conduct due diligence of the exporter.

A. P. (DIR Series) Circular No. 6 dated July 16, 2015Foreign Investment in India by Foreign Portfolio Investors

This circular clarifies that in the case of investment by FPI in security receipts (SR) issued by the Asset Reconstruction Companies (ARC): -1. Restriction on investments with less than three years residual

maturity will not be applicable. 2. Investment in SR must be within the overall limit prescribed for

corporate debt from time to time.

DIPP – undatedClarification on FDI Policy on Single Brand Retail Trading

This clarification issued in respect of FDI in Single Brand Retail Trade – para 6.2.16.3 of Consolidated FDI Policy Circular of 2015, states as under:

Issue Clarification / Comment

Can the brand owner or non-resident entity/entities undertake single brand retail trading of the specific brand through more than one company in India?

A non-resident entity or entities, whether owner of the brand or otherwise, shall be permitted to undertake ‘single brand’ product retail trading in the country for the specific brand, directly or through a legally tenable agreement with the brand owner for undertaking single brand product retail trading. Such non-resident entity or entities can undertake single brand retail trading business through one or more wholly owned subsidiaries or joint ventures.

Does the FDI policy on single brand retail trading apply to Indian brands seeking foreign investment?

It is clarified that FDI policy on single brand retail trading as contained in para 6.2.16.3 of Consolidated FDI Policy Circular of 2015 equally applies to Indian brands.

A. P. (DIR Series) Circular No. 7 dated August 6, 2015Exim Bank’s GoI supported Line of Credit of USD 18.08 million to the Government of Republic of Chad

Exim Bank has made available, subject to certain terms and conditions, to the Government of the Republic of Chad a Line of Credit of US $ 18.08 million for financing veterinary pharmaceutical manufacturing plant in the Republic of Chad. Eligible goods and services including consultancy services of the value of at least 75% of the contract price must be supplied by the sellers from India, while the remaining 25% of the goods and services (other than consultancy services) can be procured by the sellers from outside India.

11AUGUST 2015

The last date for opening of Letters of Credit and Disbursement for project exports will be 48 months from the scheduled completion date of the contract and 72 months from the execution date of the credit agreement (i.e. from August 6, 2014) in case of supply contracts.

DIPP – Press Note No. 8 (2015 Series) dated July 30, 2015Introduction of Composite Caps for Simplification of Foreign Direct Investment (FDI) policy to attract foreign investments

This Press Note has made the following amendments to the Consolidated FDI Policy issued on May 12, 2015, with immediate effect: -

2. Para 3.6.2 (vi) of the Consolidated FDI Policy Circular of 2015, is amended to read as under:

3.6.2 (vi) It is also clarified that Foreign investment shall include all types of foreign investments, direct and indirect , regardless of whether the said investments have been made under Schedule 1 (FDI), 2 (FII), 2A (FPI), 3 (NRI), 6 (FVCI), 8 (QFI), 9 (LLPs) and 10 (DRs) of FEMA (Transfer or Issue of Security by Persons Resident Outside India) Regulations. FCCBs and DRs having underlying of instruments which can be issued under Schedule 5, being in the nature of debt, shall not be treated as foreign investment. However, any equity holding by a personresident outside India resulting from conversion of any debt instrument under any arrangement shall be reckoned as foreign investment.

3. Para 4.1.2 of the Consolidated FDI Policy Circular of 2015, is amended to read as under:

4.1.2 For the purpose of computation of indirect foreign investment, foreign investment in an Indian company shall include all types of foreign investments regardless of whether the said investments have been made under Schedule 1 (FDI), 2 (FII holding as on March 31), 2A (FPI holding as on March 31), 3 (NRI), 6 (FVCI), 8 (QFI holding as on March 31), 9 (LLPs) and 10 (DRs) of FEMA (Transfer or Issue of Security by Persons Resident Outside India) Regulations. FCCBs and DRs having underlying of instruments which can be issued under Schedule 5, being in the nature of debt, shall not be treated as foreign investment. However, anyequity holding by a person resident outside India resulting from conversion of any debt instrument under any arrangement shall be reckoned as foreign investment.

4. Para 3.1.4 (i) of the Consolidated FDI Policy Circular of 2015, is amended to read as under:

3.1.4 (i) An FII/FPI/QFI (Schedule 2, 2A and 8 of FEMA (Transfer or Issue of Security by Persons Resident Outside India) Regulations, as the case may be) may invest in the capital of an Indian company under the Portfolio Investment Scheme which limits the individual holding of an FII/FPI/QFI below 10% of the capital of the company and the aggregate limit for HI/FPI/OR investment to 24% ofthe capital of the company. This aggregate limit of 24% can be increased to the sectoral cap/statutory ceiling, as applicable, by the Indian company concerned through a resolution by its Board of Directors followed by a special resolution to that effect by its General Body and subject to prior intimation to RBI. The aggregate FII/FPI/QFI investment, individually or in conjunction with other kinds of foreign investment, will not exceed sectoral/statutory cap.

5. Para 6.2 of the Consolidated FDI Policy Circular of 2015 is amended to read as under:

a) In the sectors/activities as per Annexure, foreign investment up to the limit indicated against each sector/activity is allowed, subject to the conditions of the extant policy on specified sectors and applicable laws/regulations; security and other conditionalities. In sectors/activities not listed therein, foreign investment is permitted up to 100% on the automatic route, subject to applicable laws/regulations; security and other conditionalities. Wherever there is a requirement of minimum capitalization, it

shall include share premium received along with the face value of the share, only when it is received by the company upon issue of the shares to the non-resident investor. Amount paid by the transferee during post-issue transfer of shares beyond the issue price of the share, cannot be taken into account while calculating minimum capitalization requirement.

b) Sectoral cap i.e. the maximum amount which can be invested by foreign investors in an entity, unless provided otherwise, is composite and includes all types of foreign investments, direct and indirect, regardless of whether the said investments have been made under Schedule 1 (FDI), 2 (FII), 2A (FPI), 3 (NRI), 6 (FVCI), 8 (QFI), 9 (LLPs) and 10 (DRs) of FEMA (Transfer or Issue of Security by Persons Resident Outside India) Regulations. FCCBs and DRs having underlying of instruments which can be issued under Schedule 5, being in the nature of debt, shall not be treated as foreign investment. However, any equity holding by aperson resident outside India resulting from conversion of any debt instrument under any arrangement shall be reckoned as foreign investment under the composite cap. Sectoral cap is as per Annexure referred above.

c) Foreign investment in sectors under Government approval route resulting in transfer of ownership and/or control of Indian entities from resident Indian citizens to non-resident entities will be subject to Government approval. Foreign investment in sectors under automatic route but with conditionalities, resulting in transfer of ownership and/or control of Indian entities from resident Indian citizens to non-resident entities, will be subject to compliance of such conditionalities.

d) The sectors which are already under 100% automatic route and are without conditionalities would not be affected.

e) Notwithstanding anything contained in paragraphs a) and c) above, portfolio investment, upto aggregate foreign investment level of 49% or sectoral/statutory cap, whichever is lower, will not be subject to either Government approval or compliance of sectoral conditions, as the case may be, if such investment does not result in transfer of ownership and/or control of Indian entities from resident Indian citizens to non-resident entities. Other foreign investments will be subject to conditions of Government approval and compliance of sectoral conditions as laid down in the FDI policy.

f) Total foreign investment, direct and indirect, in an entity will not exceed the sectoral/statutory cap.

g) Any existing foreign investment already made in accordance with the policy in existence would not require any modification to conform to these amendments.

h) The onus of compliance of above provisions will be on the investee company.

6. It is clarified that there are no sub-limits of portfolio investment and other kinds of foreign investments in commodity exchanges, credit information companies, infrastructure companies in the securities market and power exchanges.

7 In Defence sector, portfolio investment by FPIs/FIls/NRIs/QFIs and investments by FVCIs together will not exceed 24% of the total equity of the investee/joint venture company. Portfolio investments will be under automatic route.

8. In Banking- Private sector, where sectoral cap is 74%, FII/ FPI/ QFI investment limits will continue to be within 49% of the total paid up capital of the company.

9. There is no change in the entry route i.e. Government approval requirement to bring foreign investment in a particular sector/ activity. Further, subject to the amendments mentioned in this Press Note, there is no change in other conditions mentioned in the Consolidated FDI Policy Circular of 2015 and subsequent Press Notes.

10. Relevant provisions of the FDI policy and subsequent Press Notes will be read in harmony with the above amendments in Consolidated FDI Policy Circular of 2015.

12 AUGUST 2015

Registered with the Registrar of Newspapers for India under R.N. 68365/98 Regd. No. MCS/093/2015-17Posted at Mumbai Patrika Channel Sorting Office, Mumbai-1Published on 15th of every month • Posted on 15th & 16th of every month

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