NASSCOM Public Policy, Vol 4, Issue 2, February 2023

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NASSCOM Public Policy, Vol 4, Issue 2, February 2023

Vertika Misra

@vertika@nasscom.in

February 3, 2023

Monthly Newsletters

267

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NASSCOM : Public Policy | Volume 4 | Issue 2 | February 2023

Union Budget 2023-24

The Budget lays strong emphasis on technology-driven and knowledge-based economy with strong public finances and a robust financial sector. Highlights of the budget include extension of tax holiday for startups incorporated till March 2024, carry forward and set-off of losses by eligible start-ups incurred within 10 years of incorporation, proposal to set up Central Processing Centre and unified filing process, centres of excellence for Artificial Intelligence (AI), amongst others.

On February 2, 2022, NASSCOM conducted an interactive panel discussion on ‘Analysis of Union Budget 2023-24: A Tech Industry Perspective’.

Recording of the discussion is available here.

NASSCOM will be submitting a detailed post budget memorandum highlighting concerns and recommendations to strengthen the budget proposals. Kindly share your inputs before February 8, 2023 to tejasvi@nasscom.in.

MEITY: Draft Digital Personal Data Protection Bill 2022

We submitted our feedback on January 2, 2022 (see here). Amongst other submissions, we stated that: the transfer regime should be made more certain & flexible, and additional transfer mechanisms be recognised in the Bill; purpose limitation and data minimisation be shifted from the Explanatory Note into the Bill; that data breach reporting to the Board and data principals should only be on data fiduciaries; and that the need for written requests for government agencies to access personal data be continued from the existing 2011 rules under section 43A of the IT Act. For more information, kindly write to varun@nasscom.in .

DGFT: Pending Claims under the Services Export Incentive Scheme (SEIS)

We have shared information received from the industry on pending claims under SEIS to the DGFT, for their consideration. We continue to seek industry’s feedback on challenges related to SEIS. For engaging with us on this topic, kindly write to garima@nasscom.in.

MEITY: Draft Rules on Online Gaming

We submitted our feedback including two main submissions: (a) a calibrated and proportionate due diligence obligations must be placed on intermediaries according to their role, services offered, etc., and (b) ‘online gaming’ should be defined appropriately to include only those games that are intended to be regulated by these rules, i.e., real money online games.

RBI: Challenges related to the Digital Lending (DL) Guidelines

We highlighted the impact of the broad data localisation mandate under the RBI's DL Guidelines on the Information Technology (IT)/IT enabled Services (ITeS) industry. Under this mandate, providing technology services to fintech companies who are in the business of digital lending at competitive prices is a challenge. We have requested RBI to relook at this mandate.

DoT: Simplify Regulatory Regime for Hosted Contact Centres

We made a representation on simplifying the regulatory regime for Hosted Contact Service Providers (HCCSPs) and treat them similar to OSPs. In line with international practice, we recommended the discontinuation of obligation of 8% license fee on audiotext licensees with immediate effect. For more information, kindly write to vertika@nasscom.in or sudipto@nasscom.in.

TEC: Draft Rules on Power to Prescribe Standards under the Telecom Bill

In our feedback to Telecommunication Engineering Centre (TEC), our principal recommendation was that it would be appropriate for TEC to release the draft Rules for public consultation, only after the Bill gets enacted. We also submitted that draft Rules need to include the existing standard setting processes followed by TEC. For more information, kindly write to vertika@nasscom.in or sudipto@nasscom.in.

NHA: Operationalising the Unified Health interface (UHI) in India

In our feedback on the Consultation Paper released by the National Health Authority (NHA), we recommended an oversight mechanism like periodic audit of Network Participants to check that protocols under the Network Policy are being followed. We also highlighted the need for clear demarcation of responsibilities between the NPs and the nature of grievances that can be redressed under the UHI network.

MoF: Clarifications relating to Significant Economic Presence (SEP)

As part of our submission, we have requested MoF to: a) introduce rules for attribution of profits/ income in respect of SEP; b) exclude payments which qualify as royalty/ FTS under the IT Act, whether taxable or not due to an exemption in the IT Act or tax treaty benefit, from the ambit of SEP provisions; c) provide guidance to interpret the term ‘users’ in order to analyse the applicability of SEP provisions, amongst others.

OECD: Draft Multilateral Convention Provisions on Digital Services Taxes (DSTs)

In our submission, we highlighted that certain countries have introduced measures to bring Multi-National Enterprises (MNE) group under tax net in a market jurisdiction where their user base, revenue, data usage/ software downloads, etc. exceeds the prescribed threshold, leading to problem of double taxation. Such digital presence-based nexus rules should be included in the definition of ‘DST or relevant similar measure’ for removal of existing measures.

OECD: Submission on Amount B under Pillar One

We requested OECD and MoF to include transactions undertaken in relation to intangibles and services within the scope of Amount B of Pillar One. In such cases, the scope should be limited to buy-sell transactions and transactions where licensees have the limited right to replicate the software or provide keys to the users. OECD should also prescribe lower margins for marketing and distribution activities.

MOCI: Challenges in applying for DTA Services Procurement Form

We made a submission with request to accord one-time approval to each supplier for services rendered to SEZ units, similar to the one that exists under service tax regime. Like the API based integration of GST system with other departments/agencies, there should be one for SEZ online, to help in getting data of supplies from SEZ to taxpayers located in DTA for sharing of IGST paid on such supplies.

BIS: Glossary of Terms for Services Sector

In our feedback, we highlighted that glossary of terms must be developed in conjunction with the substantive standards, because the definitions/terms would have to be read in the context of the substantive standards. It is difficult for industry to provide inputs in the absence of the context. For more information, kindly write to garima@nasscom.in.

TEC: Draft Standard for Assessing and Rating Artificial Intelligence Systems for Fairness

TEC released the draft on December 29, 2022, based on NITI Ayog’s broad ethical AI principles and aims to develop a set of SOPs that would be used to assess and arrive at fairness scores for different fairness metrics and a combined fairness score. Comments are due to the TEC by February 13, 2023. Please share your feedback on the draft standards to sudipto@nasscom.in or priyanshi@nasscom.in by February 08, 2023.

MEITY: Draft Amendments to IT Rules on Fake News

On January 17, 2023, draft amendments to Rule 3(1)(b)(v) of the IT Rules were issued). On January 25, MEITY extended the time to submit comments by February 25, 2023. Please share your feedback to garima@nasscom.in or varun@nasscom.in by February 20, 2023.

TRAI: Consultation Paper on Convergence of Broadcasting & Telecom Services

The Consultation Paper has been issued on January 30, 2023. It introduces the idea of convergence, technological trends leading towards convergence, types of convergence, current framework and challenges of present licensing regimes, etc. Comments are due to the TRAI by February 27, 2023. Please share your feedback on the consultation paper to vertika@nasscom.in or sudipto@nasscom.in in by February 20, 2023.

MEITY: Establishment of Grievance Appellate Committees under IT Rules

Pursuant to the amendments introduced in 2022 to the IT Rules, on January 27, 2023, three Grievance Appellate Committees (GACs) were established. The notification also includes the members of the GACs . For more information, kindly write to varun@nasscom.in.

MOC: Jan Vishwas (Amendment of Provisions) Bill of 2022 (JVB)

In December 2022, the MOC introduced the JVB in the Lok Sabha and referred it to a joint parliamentary committee (JVB JPC ). The JVB amends 42 laws - decriminalising certain offences and revising fines and penalties across them and also modifyies regulatory structures in some cases. The JVB JPC is currently meeting relevant ministries. Its report is expected tentatively, by March 10, 2023.

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