Nasscom Public Policy Highlights, Vol 4, Issue 6, June 2023

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Nasscom Public Policy Highlights, Vol 4, Issue 6, June 2023

Vertika Misra

@vertika@nasscom.in

June 2, 2023

Public Policy Monthly Newsletters

329

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Nasscom Public Policy Monthly Mailer | Volume 4, Issue 6 | June 2023

in Focus

nasscom

AI Policy roundtable

Over thirty industry leaders participated in an industry policy roundtable organized at the nasscom head office on May 17, 2023. The treatment of AI use cases in the upcoming digital personal data protection bill was discussed along with a draft of an Industry led initiative to develop responsible AI guidelines. The participants also discussed the global experiences with regulatory developments to deal with AI, including Generative AI. Earlier, the deliberations focused on the way forward with respect to the hybrid work model in the SEZs, new labour codes, the upcoming Digital India Act and the local content requirements for software and cloud public in procurement requirements. For more information or sending inputs on any of these issues, please write to policy@nasscom.in.

REPRESENTATIONS

UIDAI

Amendments to Aadhaar authentication for good governance

In our feedback on draft amendments to Aadhaar authentication for good governance (social welfare, innovation, knowledge) rules 2000, we suggested a clearer definition of the 'Purposes for Aadhaar authentication' and recommended a simplified process for entities seeking to use Aadhaar authentication. We also suggested a streamlined evaluation and approval process through a single window system, inclusion of feedback mechanism for rejected proposals and introduction of new guidelines for non-governmental entities.

STPI

Filing of Annual Performance Report by STPI Units

We have requested the STPI authorities to extend the deadline for filing APR from 90 days to 180 days. Instead of companies filing APR based on financial provisional statements and then resubmitting once the accounts are closed, we have requested the STPI to provide adequate time so that APR filing can be done once with final financial statement. We have highlighted that the units in SEZ already enjoy the extended deadline and aligning STPI regulations with SEZ regulations would promote ease of doing business in India.

CBIC

Guidelines for special drive against fake GST registrations

A special all-India drive was launched by all Central and State Tax administrations from May 16 to July 15, 2023 to detect suspicious / fake GSTINs and to conduct requisite verification and take remedial action to weed out fake billers from GST eco-system as well as to safeguard government revenue. In this context, we have highlighted industry concerns to the CBIC regarding the verification process resulting suspension or cancellation of genuine small sellers’ registrations. We have recommended awareness and training for tax officers about existing business models of e-commerce sellers. Additionally, a fair and transparent investigation process and timely resolution mechanism should be implemented to protect the interests of genuine taxpayers and MSMEs.

DIALOGUE & DISCUSSION

Haryana Government

Roundtable on Proposed IT policy

We, along with our membership team, organised a roundtable with the Haryana government and industry to discuss suggestions for the new IT policy for the state of Haryana. Senior officials from department of industries and commerce participated in the meeting. We presented an overview of the tech sector with special focus on Haryana and shared the best practices being followed by other states. The government officials also presented certain proposals to boost IT infrastructure in the state. For more information or sharing inputs on this, please write to policy@nasscom.in.

Punjab Government

Awareness Session on e-commerce under GST

We conducted an awareness session for officials of Punjab government on the business models of e-commerce companies in order to enable greater efficiency in enforcement of GST provisions with an understanding of industry working. The focus of the session was to apprise the officials about the working of the e-commerce sector in India, the operational and business models prevalent and types of services received by sellers from an e-commerce operator. Aspects related to GST refunds, TCS, etc. were discussed in detail. The session saw participation from more than 90 officials from the Punjab government.

Industry workshop

Implementing Decentralised Autonomous Organisations in India

We conducted a workshop to discuss the implementation of DAOs in India from a technology, legal and tax perspective. The experts provided insights on how setting up DAOs as a governance framework could be explored in India. It was noted that using DAOs as an entity to receive cross-border payments in cryptocurrencies would present complexities with respect to legal and tax compliance.

SEBI

Discussion on allowing direct listing of foreign companies on Indian stock exchanges

We met with senior officials of SEBI to discuss the status of the 2018 committee recommendations on allowing direct listing of foreign companies on stock exchanges in India. SEBI has requested us to share more information on the likely impact of this recommendation, the number of Indian start-ups likely to list using direct listing route, etc. For more information or sharing inputs on this, please write to policy@nasscom.in.

Export Controls

Event on Intangible Transfers of Strategic Technology and Emerging Technology

We were invited by the US-Export Control and Border Security program to present the booklet on 'Elements of an Effective Internal Compliance Programme for Export of Dual-Use Items' published by nasscom in December 2022. The event covered discussions on how different countries are managing export control compliance in intangible technology transfers, trends in managing export of emerging technologies and experience of the industry in complying with export control obligations.

NEW & UPCOMING

CBDT

Call for Inputs: Proposed changes to income tax rules in respect of angel tax

CBDT has proposed changes to the income tax rules pertaining to angel tax. Proposed changes include inclusion of new valuation methods for start-ups and provision to exempt angel tax when investment is made at the same valuation as that done by a VC or notified entities. We are in discussion with the industry on the suggestions to be submitted to the government by June 5, 2023. To engage with us on this topic kindly write to policy@nasscom.in by June 3, 2023.

OTHER UPDATES

GSTN

e-invoicing time limit

Pursuant to a representation made by nasscom, GSTN has issued an advisory on the GST portal to provide that that the proposal to implement a time limit of 7 days for generating e-invoice has been deferred by 3 months. In April 2023, GSTN had imposed a timeline for businesses with turnover of INR 100 crore and above for uploading e-invoices on the Invoice Registration Portal (IRP) within 7 days of the issue of such invoices, beginning May 1, 2023. This resulted in technological and operational challenges for the registered taxpayers.

EPFO

Employer’s Contribution to Pension Fund under COSS Enhanced

The Government has made effective specific sections of the COSS related to provident fund provisions, increasing the employer's contribution towards EPS - 1995 from 8.33% to 9.49% of basic wages. This change is in line with the Supreme Court's directions. The COSS allows the Central Government to decide the rate of contributions allocated to the Pension Scheme. This change may lead to a reduction in the accumulated corpus under the EPF and subsequently affect the lump-sum amount available on retirement or specified events.

CERT-In

Advisory on AI Language Based Applications

On May 9, 2023, CERT-In issued an advisory on "Security Implications of AI Language Based Applications". It discusses Large Language Models based applications (cites ChatGPT, Bard, etc.) and ways in which these can be misused ('threats'), and safety measures that can be adopted by developers and users.

CBDT

Amendment in Angel Tax provisions

The CBDT is considering amending rule 11UA of the Income Tax rules and notifying excluded entities from the applicability of section 56(2)(viib) on angel tax. This is a positive development for the start-ups given that the Finance Act, 2023 had raised concerns about considering excess consideration received from non-residents as angel tax. As noted above in this mailer, we are now engaged with the industry to make suggestions on the draft rules. The proposed changes include the inclusion of additional valuation methods for non-resident investors, acceptance of a valuation report from a merchant banker, and the provision of a 10% safe harbour for valuation fluctuations.

List of Acronyms

AI	Artificial Intelligence
CBDT	Central Board of Direct Taxes
CBIC	Central Board of Indirect Taxes and Customs
COSS	Code on Social Security
DIA	Digital India Act
DAO	Decentralised Autonomous Organisation
DPIIT	Department for Promotion of Industry and Internal Trade
EPS	Employee Pension Scheme
GST	Goods & Service Tax

IT	Information Technology
MEITY	Ministry of Electronics & Information Technology
MOF	Ministry of Finance
MCA	Ministry of Corporate Affairs
SEZ	Permanent Account Number
STPI	Software Technology Parks of India
TCS	Tax Collection at Source
RBI	Reserve Bank of India
SEBI	Securities Exchange Board of India

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Vertika Misra

Director - Public Policy

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