MORE CREDIT FACILITIES FOR MSMES WOULD BE MADE AVAILABLE UNDER THE FACTORING REGULATION BILL
The Factoring Regulation (Amendment) Bill, 2020, is now passed by Parliament as a modified version of the Factoring Regulation Act, 2011. Now more non-banking financial organizations (NBFCs) would now be authorized to offer factoring services to MSMEs, the new rule is projected to boost the credit availability to micro, small, and medium-sized enterprises (MSMEs). As NBFCs are willing to take on the risk of collecting past-due receivables, MSME business owners have more options. Many MSME owners, may not want to wait for payments and may be willing to sell at a discount. As a result of the increased availability of factoring services, new entrepreneurs may be able to enter the market. Over 9,000 NBFCs will enter the factoring market as a result of the new rule. Previously, the Reserve Bank of India (RBI) only allowed NBFCs to offer factoring services if their core business was factoring receivables and their balance sheet contained more than 50% factoring-related assets.
THE CBDT HAS ISSUED NEW RULES 21AI AND 21AJ, AND NEW FORMS 10IG AND 10IH
A new set of rules to update the existing Income-tax Rules, 1962, that will take effect as soon as they are published in the Official Gazette. The purpose of this modification is to add two new regulations following rule 21AH and two new forms following Form No.10IF, namely:
The Income Tax Amendment (22nd Amendment) Rules, 2021, introduced new rules:
- Rule 21 AI– Calculation of exempt income of a defined fund for the purposes of section 10 clause (4D)
- Rule 21 AJ – Under section 115AD, sub-section (1A), the revenue of a specified fund attributable to units held by non-residents is determined.
Income Tax Amendment (22nd Amendment), Rules, 2021 introduces new forms:
- Form No. 10IG – Statement of Exempt Income under Clause (4D) of Section 10 of the Income-tax Act of 1961.
- Form No. 10IH- Income statement for a Specified fund eligible for concessional taxation under section 115AD of the Income Tax Act of 1961.