NASSCOM Public Policy Monthly Newsletter: February 2021
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Enabling long-term remote working in the Special Economic Zones (SEZs),
Addressing concerns with respect to computation of Gratuity under the new labour codes; and
Submission of industry inputs on the emerging framework on the non-personal data (NPD) governance and data sharing.
We expect the Commerce ministry to make changes to the SEZ rules to address the first point soon. On the issue of Gratuity, we have highlighted the concerns to the labour ministry, and we continue to pursue this. On the NPD, we have submitted a comprehensive set of suggestions that should help address the gaps and we look forward to engaging with the Committee and MeitY on the next steps. Important developments are detailed below.
Submissions and Representations
MoLE: Easing of administrative burden under the Draft Model Standing Order for Services Sector
On 28 January, NASSCOM submitted its feedback on the draft Model Standing Order for the Service Industry published by the Ministry of Labour and Employment (MoLE) (available here). We highlighted several procedural as well as operational challenges in complying with various provisions of the draft Model Standing Order. For instance, we requested the requirement of publishing notices in physical formats for the matters pertaining to leaves, pay days, wage band etc., should not be made mandatory, instead, the employer should be given the discretion to choose to the most appropriate channel of communicating such information to workers including those working remotely. Similarly, we suggested the format for maintaining service records should be made simpler to reduce administrative burden.
MoC: Encouraging e-commerce exports and extension of SEIS under the Foreign Trade Policy
On 4 January, NASSCOM submitted a representation to the Commerce Secretary, requesting that certain actions be taken by the Government in the review of the current Foreign Trade Policy 2015 – 2020 (FTP) that will significantly boost the performance of IT/ITeS industry in India. The representation included, points on encouraging e-commerce exports by placing specific reference for the inclusion of e-commerce exports in the FTP, reviewing the list of IT assets that are allowed to be taken out of the premises of a unit for work by employees to help the SEZ units in carrying out functions and activities in a work from home (WFH) situation and extending Service Exports of India Scheme (SEIS) benefits to the new FTP as well as including STPI units within the benefits of SEIS (read more).
MoF: Requirement of greater certainty for the industry under the Income Tax Act, 1961 and GST laws to ensure long-term WFH for Units operating in SEZs
Given the available technologies and an impetus from the COVID-19 pandemic, IT-ITES industry is embracing a blended working model with both work from office and WFH as a permanent feature. Considering this, the Department of Telecom on 5 November 2020 made significant changes to the OSP terms and conditions and enabled the industry to work remotely. Since a significant work of our industry is carried out from the SEZs, we have made a detailed representation to Ministry of Finance (MoF) on 19 January. We have requested the MoF to clarify that services rendered by SEZ employees while working from home will be treated at par with as such services are rendered from SEZ under S. 10AA of Income Tax Act, 1961 and also clarify that units will be eligible to claim benefit of zero-rating benefit under GST in case of purchase of assets and direct dispatch to employee’s place. This is with a view to enable greater certainty for the industry and avoid litigations based on unforeseen interpretations of the provisions (read more).
SEBI: Easing challenges in complying with disclosure requirements in case of initiation of forensic audit on listed companies
Securities and Exchange Board of India (SEBI) recently issued Frequently Asked Questions (FAQs) to clarify some issues raised by NASSCOM relating to disclosure of information of forensic audit of listed entities. Based on inputs received from the industry, NASSCOM has made a further representation to SEBI on 5 January highlighting that immediate disclosure of initiation of forensic audit to stock exchanges (however immaterial or minor), may be premature and can result in negative market sentiment and speculative trading, leading to price volatility in the scrip. We have suggested that SEBI should require companies to submit summary of the issue along with the resolution of the same by Board of Directors for the purpose of public disclosure. This will enable company to disclose relevant information while ensuring appropriate treatment of the sensitive and confidential information (read more).
DGFT: Suggestions to improve the EOU, EHTP and STP schemes under the Foreign Trade Policy
On 20 January, NASSCOM submitted additional inputs to the Directorate General of Foreign Trade (DGFT) for review of Chapter 6 of the FTP for improving the Export Oriented Units (EOU), Electronics Hardware Technology Parks (EHTP) and Software Technology Parks (STP) schemes as given under Chapter 6 of the FTP. Our recommendations include, removal of restriction of export of spare/components to the same consignee, reduction in depreciation period for certain items from 10 years to 5 years, review of current list of IT assets for a ‘work-from home’ situation and introduction of a buyback scheme for import of duty-free capital goods (read more).
Committee on NPD: Suggestions to strengthen the proposed Non-Personal Data framework
Earlier in January, the Committee of Experts on Non-Personal Data Governance (CoE) released its revised recommendations on NPD Governance for public comments. NASSCOM conducted an industry interaction with the members of the CoE on 13 January and a consultation session on 27 January to aid the formulation of the industry’s viewpoint on the revised recommendations. NASSCOM submitted its inputs on the revised Report on 31 January. NASSCOM commended the CoE for taking on board several inputs provided by the industry and NASSCOM on the earlier iteration of the recommendations. In particular, NASSCOM appreciated the shift of focus from private NPD sharing to the creation of High-Value Data Sets (HVDs) and the provision of upfront exclusions to data-sharing obligations extended to certain categories of NPD. Our submission focusses on the following three aspects:
Issues addressing overlaps in the Personal Data Protection and NPD governance framework
Consent for anonymisation of Personal Data
Data residency requirements for Sensitive and Critical NPD
Harmonising separate framework for NPD Governance
The definition of “Public Good” for the purposes of identifying NPD for inclusion in HVD
Issues relating to the implementation of the framework
Additional clarity over exclusions from data sharing
Need for a phased approach to better informed roles of stakeholders, ensure appropriate institutional design, and regulation of potential market failures (read more).
DST: Suggestions to promote collaborative R&D under the Draft 5th National Science, Technology, and Innovation Policy (STIP)
On 31 December 2020, the Department of Science and Technology (DST) released the 5th National STIP for public consultation. The draft policy proposes various measures to make publicly funded scientific research open and equitable and to improve the competitiveness of Indian STI ecosystem. Based on feedback from the industry, we submitted our comments to DST on 31 January. In our feedback, among other things, we have suggested that collaborative R&D be promoted by incentivising clusters of innovation and the offset policy be used more broadly for technology transfer to Indian companies (read more).
Dialogue and Discussion
MoC: Enabling long-term WFH for IT-BPM companies that are operating in SEZs
NASSCOM along with industry representatives met the senior officials of Ministry of Commerce (MoC) and Department of Telecommunications (DoT) on 11 January to discuss the industry requirements related to long-term WFH for IT-BPM companies that are operating in SEZs. In our meeting, we reiterated our request on the need to bring necessary changes in the SEZ regulation to provide operational certainty to industry including, movement of assets required for purpose of WFH. We are pursuing this matter with MoC and shall keep the members updated on further developments.
Panel Discussion: Competition Issues in the Online Ecosystem and their Impact on Start-ups
On 29 January, NASSCOM organised an online Panel Discussion on Competition Issues in Digital Markets and their Impact on the Start-up Ecosystem. The Panel comprised of Jon J. Nathan, International Counsel Antitrust with the United States Federal Trade Commission (FTC), Payal Malik, Advisor (Economics) with the Competition Commission of India (CC), and Violeta Staykova, Case Officer with the Office of the Director-General (Competition), European Commission (EC). Ashish Aggarwal, Head of Public Policy at NASSCOM, moderated the discussion.
The session saw the Panellists provide their views on the expected regulatory priorities for the year ahead to address competition issues in digital markets. Recent legislative proposals, such as the Digital Markets Act proposed by the EC, were highlighted as critical initiatives towards understanding competition issues. Similar initiatives by the CCI, such as the market studies into e-Commerce and telecom and investigations into the practices in platform and digital markets, are expected to enable the CCI to formulate its regulatory strategy. Likewise, increased enforcement by FTC in digital markets is expected to prevent consumer harm and ensure sustained contestability of digital markets (read more).
Industry Discussion: Research Study by NITI Aayog on integrating e-Commerce platforms for small businesses
The focus of NITI Aayog’s study is to gather inputs towards helping MSMEs utilise the complete potential of ecommerce and gain access to both domestic and export markets by leveraging the existing infrastructure, technology, and wide-scale market access. On 18 January, NASSCOM conducted a stakeholder consultation to understand the perspectives and recommendations of the FinTech industry on their experience of dealing with MSMEs and what can the Government do to augment the FinTech ecosystem, which can benefit MSMEs in the digital economy. The feedback from this discussion will be used by PwC and NITI Aayog as input for the report.
GST Issues highlighted at the third meeting of Karnataka’s Grievance Redressal Committee
The Grievance Redressal Committee comprises of officials from Goods & Services Tax Network (GSTN), Office of Principal Chief Commissioner of Central Tax and some industry associations. including NASSCOM. At the meeting on 8 January, NASSCOM highlighted:
Issues relating to issuance of notices over email without uploading the same in the common GST portal,
Issuance of notices without providing reasons for rejecting the claim of the taxpayers,
Error while filing Statement 3A of Form GST RFD-01 in cases where realisation value is greater than the invoice value; and
Issuance of summons notices by Director General of GST Intelligence (DGGI) (read more).
OECD Public Consultation on Pillar I: Suggestions to enable a time bound certainty from the consensus-based solution of the OECD
The Organisation for Economic Co-operation and Development (OECD)/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) recently released Blueprints for public consultation on Pillar One and Pillar Two to develop a consensus-based solution to address tax challenges arising out of digitalisation of the economy. NASSCOM was invited by the OECD to be part of the public consultation event on 14 January, which focussed on “Tax Certainty and Administration”. Suchint Majmudar, Advisor to NASSCOM and Partner at Deloitte Haskins & Sells, represented NASSCOM at the OECD Panel Two discussion. We highlighted that constructive approach (understanding the business, working towards resolution) and time bound certainty are the two key expectations from the consensus-based solution of the OECD. From a development and administration point of view; studies should be conducted to understand user contribution, value of data as an input to businesses, value of users as an aspect of demand or in creating the market and the real indicators of participation of an enterprise in the economic life of a market for the purpose of designing tax policies (read more).
New and Upcoming
Call for Inputs: Post Budget Memorandum 2021-22
The Finance Bill, 2021 was introduced in Lok Sabha on 1 February, wherein tax proposals have been introduced as part of Union Budget 2021-22. We are preparing a Post Budget Memorandum that will be submitted to Ministry of Finance. In this regard, request you to send us your inputs/ suggestions relating to tax proposals provided in the Budget. Send your inputs before 10 February to firstname.lastname@example.org and Jayakumar@nasscom.in
Call for Inputs: Feedback to MeitY on the draft National Blockchain Strategy
The Ministry of Electronics and Information Technology (MeitY) has released a Draft National Blockchain Strategy for public consultation. The last date to submit feedback is 16 February. This Draft document provides an insight on the strategies for metamorphosing Indian Blockchain ecosystem to make India as one of the leading countries in terms of harnessing the benefits of this emerging technology. NASSCOM has been working closely with MeitY towards shaping the Blockchain Strategy. To continue its engagement, NASSCOM would like to invite comments from the industry on the draft National Blockchain Strategy document. Submit your inputs at email@example.com and firstname.lastname@example.org before 11 February (read more).
Call for Inputs: Draft Data Centre Policy of Haryana
Government of Haryana is in the process a formulating a state level Data Centre policy. Among other things, the policy envisages earmarking land parcels in various parts of the state for establishment of Data Centre parks, offers 75% net State GST reimbursement for a period of 10 years and provides for subsidised electricity. The key highlights of the draft policy are available here. Members are requested to share feedback to email@example.com, latest by 5 February.
Call for Inputs: RBI Working Group on digital lending platform/apps
The Reserve Bank of India has constituted a Working Group (WG) on digital lending; including lending through online platforms and mobile apps to study all aspects of digital lending activities, including the business conduct issues and the resultant concerns over customer service. The WG is also looking into the technological practices of such apps/ platforms. The terms of reference of the Group are available here. NASSCOM is conducting select industry consultation on this to understand the issues, which could be highlighted to the WG. Write to firstname.lastname@example.org and email@example.com with your inputs on this topic.
Webinar: Labour Reforms and its impact on the IT-BPM Industry
In the backdrop of the recent labour reforms undertaken by the Government, NASSCOM will be organising a webinar in the month of February to discuss the key provisions of the various labour codes and its impact on the tech industry including the way forward for the industry to ensure compliance. For more details and registration, kindly contact firstname.lastname@example.org.
Policy Roundtable: Improving India’s Export Control Framework Related to Intangible Technology Transfer
In the coming weeks, NASSCOM will be organising a policy roundtable on Improving India’s Export Control Framework Related to Intangible Technology Transfer. The policy roundtable will focus on discussing the Information Technology (IT) industry’s experiences with respect to the export control regime. The discussion should be useful in brainstorming possible measures for easing the compliance requirements, updating them in line with the technological developments in the industry and global best practices, and ensuring effective enforcement of export control laws in India. For more information and for participation in this roundtable, do reach out to email@example.com.
MCA: Companies permitted to conduct virtual board meetings until June end
In a step to enable health safety and business continuity, Ministry of Corporate Affairs (MCA) has now permitted companies to conduct virtual Board meetings for approval of annual financial statements, Board reports etc. This relaxation has been extended till 30 June vide issue of Notification No. GSR 806(E) dated 30 December 2020. Given the ongoing circumstance of surging COVID-19 infections, many countries around the world still have in place travel/visa restrictions and are taking continued taking steps to curtail international travel of people. In this regard, NASSCOM made a representation to MCA on 16 December 2020 requesting them to provide further relaxation in provisions relating to conduct of physical board meeting by companies. Our representation to MCA is available here(read more).
Kerala State Budget 2021-22
On 15 January, Kerala’s state finance minister Dr. T. M. Thomas Issac presented Kerala State Budget for the year 2021-22. It was proposed that the State G.S.T Department will be restructured by having separate wings for Taxpayer Services, Audit, Enforcement, and Intelligence. Further, the period of Kerala Flood Cess levied at 1% on GST implemented in the backdrop of the 2018 floods will be over by July 2021. This cess will not be levied further (read more).
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