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Karnataka Cabinet Defers Draft Ordinance on 28% GST on Real-money Gaming

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The Karnataka cabinet has temporarily deferred the approval of a draft ordinance proposing a 28 percent GST (Goods and Services Tax) on online real-money gaming, casinos, and racecourses. The decision, which was expected to receive approval during a recent cabinet meeting, has been postponed to the next session.

The draft ordinance, prepared by the finance department, is currently under scrutiny by the law department. While some sources claim the cabinet has given tentative approval, there seems to be division within the government. Karnataka’s IT-BT Minister, Priyank Kharge, has openly expressed opposition to the proposed GST rate, arguing that it could hinder India’s ambitious $1-trillion digital economy target.

The GST Council had originally suggested a 28 percent GST on the entire face value of gaming transactions, regardless of whether they involved skill or chance. However, the council recommended that GST be applied to deposits rather than individual bets to prevent double taxation. Currently, gaming platforms are subject to an 18 percent GST on platform fees.

The GST Council has urged all states to implement the new tax rates by October 1, 2023, with a review scheduled six months after the implementation. The amendments to GST laws have already been passed at the central level, and some states like Haryana and Arunachal Pradesh have followed suit with similar amendments to their state GST laws. The fate of the proposed 28 percent GST on real-money gaming in Karnataka remains uncertain, pending further cabinet discussions.

RBI to Discontinue Incremental Cash Reserve Ratio in a Phased Manner

In a recent development, the Reserve Bank of India (RBI) announced its decision to gradually discontinue the Incremental Cash Reserve Ratio (I-CRR). The central bank aims to implement this change in a phased manner to ensure the stability of the financial system and prevent any abrupt disruptions in the money markets.

The RBI stated that the amounts held under the I-CRR would be released in stages. This approach is designed to avoid sudden shocks to the system’s liquidity and to maintain the orderly functioning of the money markets. Here’s the release schedule:

September 9, 2023: The RBI will release 25 percent of the I-CRR maintained.

September 23, 2023: Another 25 percent of the I-CRR will be released.

October 7, 2023: The remaining 50 percent of the I-CRR will be released.

This decision follows the RBI’s earlier directive, which required banks to maintain a 10 percent Incremental Cash Reserve Ratio (ICRR) starting from August 12. This move was part of the central bank’s strategy to manage excess liquidity in the banking system, particularly in the wake of the withdrawal of the ₹ 2,000 currency note.

RBI Governor Das emphasised that the imposition of the ICRR was a prudent step taken to safeguard financial and price stability. He reassured that banks would still have sufficient liquidity to continue their lending operations.

‘The incremental CRR was considered necessary in the background of the liquidity overhang. We considered it desirable in the interest of financial and price stability. It will have an impact on inflation also. It is a purely temporary measure,’ Das explained.

The RBI’s decision to withdraw the ₹ 2,000 note in May and the subsequent return of a significant portion of these notes to the banking system by July 31 played a pivotal role in the central bank’s approach to managing liquidity. This move underscores the RBI’s commitment to maintaining stability in the financial markets while adapting to changing economic conditions.

New State Law Protecting Independent Contractors in Fee Disputes Can Lead To Hefty Damages

In a recent legislative development, Illinois has emerged as a pioneer by enacting the Freelance Worker Protection Act, aimed at safeguarding freelance independent contractors (ICs) from non-payment of fees. This groundbreaking legislation carries both advantages and significant drawbacks for businesses engaging ICs. This article examines key aspects of Illinois’ new law, the changing landscape of similar legislation across different regions, and its potential implications for businesses.

Legislative Developments: Freelance Worker Protection Act

Effective Date and Scope

The Freelance Worker Protection Act is scheduled to take effect on July 1, 2024, positioning Illinois at the forefront of freelance contractor protection. However, its primary coverage is limited to sole proprietors and may not extend to corporations or single-member LLCs.

Contractual Requirements

Under the new law, companies engaging freelance independent contractors are required to provide a detailed contract that includes specific elements such as the nature of services, compensation terms, contract value, and contact information. Crucially, this contract must specify a payment date, typically within 30 days after service completion. However, this strict 30-day payment requirement may present challenges for businesses with different accounts payable processes, and any payment delays beyond this timeframe trigger severe consequences.

Penalties and Damages

The Illinois law introduces two significant categories of damages for non-compliance. Firstly, exceeding the 30-day payment limit, regardless of the reason, triggers an automatic civil penalty, doubling the amount of underpayments. This provision allows little room for businesses to dispute payments, even when legitimate concerns about service quality arise. Secondly, failure to provide a written contract upon request or omitting required information can entitle the freelancer to statutory damages, either equivalent to the underlying contract’s value or a minimum of $500, along with other remedies. These punitive provisions create a high-stakes environment for companies engaging independent contractors in Illinois.

Non-Discrimination and Non-Retaliation Provisions

The new law also encompasses provisions related to non-discrimination and non-retaliation. Violations of these provisions can result in damages equivalent to the underlying contract’s value, along with legal costs and attorney fees. The law permits freelancers to file complaints with the Illinois Department of Labor or initiate court actions, including class actions.

Implications for Businesses

The Freelance Worker Protection Act presents challenges for businesses using independent contractors in Illinois. The stringent payment deadlines, coupled with the potential for substantial damages and penalties, establish a complex compliance landscape. Companies must carefully review and adjust their accounts payable procedures to align with the 30-day payment requirement. Furthermore, they must ensure the provision of written contracts containing all necessary information to avoid exposure to statutory damages.

Crypto in E-commerce: Benefits and Drawbacks

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The integration of cryptocurrency into the realm of e-commerce has sparked considerable interest in recent years. As digital currencies like Bitcoin, Ethereum, and numerous altcoins continue to gain traction, businesses in the e-commerce sector are exploring the potential advantages and challenges of incorporating cryptocurrencies into their payment systems. This article delves into the world of crypto in e-commerce, dissecting its benefits and drawbacks to provide a comprehensive understanding of its impact on the industry.

Understanding Cryptocurrency in E-commerce

Cryptocurrency, a digital or virtual form of currency, relies on cryptography for security. Unlike traditional currencies issued by governments and central banks, cryptocurrencies are decentralised and operate on a technology called blockchain. Blockchain is a distributed ledger that records all transactions across a network of computers, ensuring transparency, immutability, and security.

E-commerce in the Digital Age

E-commerce has experienced exponential growth in the digital age. With the convenience of online shopping, consumers can browse and purchase products from the comfort of their homes. As a result, businesses have shifted their focus to the digital realm, creating a competitive landscape where convenience and security are paramount.

Benefits of Crypto in E-commerce

Enhanced Security

One of the foremost advantages of cryptocurrency in e-commerce is enhanced security. Traditional payment methods, such as credit cards, are susceptible to fraud and chargebacks. Cryptocurrency transactions, on the other hand, are highly secure due to the cryptographic protocols embedded in blockchain technology. This reduces the risk of fraudulent activities, benefiting both merchants and customers.

Lower Transaction Fees

Cryptocurrency transactions often come with lower fees compared to traditional payment methods. Traditional financial intermediaries, like banks and payment processors, charge fees for processing transactions. With crypto, these intermediaries are eliminated or minimised, resulting in cost savings for e-commerce businesses. Additionally, cryptocurrencies offer a cost-effective solution for cross-border transactions, avoiding the high exchange and transfer fees associated with fiat currencies.

Global Accessibility

Cryptocurrencies transcend geographical boundaries, providing global accessibility to e-commerce businesses. This accessibility is particularly advantageous for businesses looking to expand their customer base beyond their local markets. Customers from around the world can make purchases using their preferred cryptocurrency, fostering inclusivity and growth.

Drawbacks of Crypto in E-commerce

Price Volatility

Cryptocurrencies are notorious for their price volatility. The value of cryptocurrencies can fluctuate dramatically within a short period. For e-commerce businesses, this poses a risk as the value of a cryptocurrency received as payment may decrease significantly before it can be converted to fiat currency. Merchants may need to employ risk mitigation strategies to counteract this volatility.

Limited Adoption and Customer Awareness

While cryptocurrency adoption is on the rise, it is not yet mainstream. Many potential customers may not be familiar with cryptocurrencies or may be hesitant to use them for online purchases. E-commerce businesses considering cryptocurrency payments must invest in educating their customer base to foster acceptance and trust.

Regulatory Uncertainty

The regulatory landscape surrounding cryptocurrencies is constantly evolving. E-commerce businesses must navigate a complex web of regulations and compliance requirements, which can vary significantly from one jurisdiction to another. Failure to adhere to these regulations can result in legal consequences, making it essential for businesses to stay informed and compliant.

Conclusion

The integration of cryptocurrency into e-commerce offers a myriad of benefits, including enhanced security, lower transaction fees, global accessibility, faster transactions, and financial inclusion. However, these advantages come with their own set of challenges, such as price volatility, limited adoption, regulatory uncertainty, the absence of a chargeback mechanism, and technical complexities.

Facing ITR Refund Delays? Income Tax Department Encounters Challenges Processing Refunds in These Two Categories

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In a concerted effort to streamline its operations and enhance taxpayer services, the Income Tax Department reaffirmed its dedication to expeditiously processing Income Tax Returns (ITR). In the ongoing assessment year 2023-24, a total of 6.98 crore ITRs have been submitted, with an impressive 6.84 crore ITRs already verified and processed by the department.

According to the Central Board of Direct Taxes (CBDT), the apex body overseeing taxation matters, more than 6 crore ITRs have been efficiently processed in line with the department’s commitment to provide seamless services to taxpayers. Highlighting its remarkable progress, the department revealed that it has already disbursed over 2.45 crore refunds for the assessment year 2023-24, underscoring its determination to expedite the financial dealings of taxpayers.

As part of ongoing efforts to improve efficiency, the CBDT reported a significant reduction in the average processing time for ITRs post-verification. For returns filed for the assessment year 2023-24, this processing time has been slashed to just 10 days. This substantial improvement stands in stark contrast to the 82 days it took for ITRs in AY 2019-20 and the 16 days for AY 2022-23, demonstrating the department’s unwavering commitment to providing a more efficient and responsive service.

However, despite these impressive strides, the Income Tax Department faces challenges in processing certain categories of ITRs. Specifically, the department is currently unable to process two distinct types of ITRs. 

The first category comprises ITRs where verification is pending. As of now, there are approximately 14 lakh ITRs for the assessment year 2023-24 that have been filed but not yet verified by the taxpayers. The second category encompasses ITRs for which the department has requested additional information from taxpayers and is awaiting their response. Currently, there are 12 lakh such ITRs, with the department eagerly anticipating the necessary data to move forward with processing.

Additionally, the Income Tax Department has identified cases in which refunds have been calculated but remain unissued. This is primarily due to taxpayers failing to validate their bank account details with the department. To address this, the department urges taxpayers to promptly validate their bank accounts through the e-filing portal, ensuring the swift and efficient disbursement of refunds.

From a tax expert’s perspective at Vakilsearch, we acknowledge the Income Tax Department’s efforts to expedite Income Tax Returns (ITR) processing and enhance the taxpayer experience. The reduction in average processing times and the issuance of over 2.45 crore refunds for the assessment year 2023-24 are noteworthy achievements. However, to streamline operations, we provide timely verification and response to department queries. Additionally, we simplify verification procedures, optimising information requests, encouraging bank account validation, and continuous technology upgrades which  can significantly enhance the efficiency and effectiveness of the ITR processing system, benefiting all the taxpayers.

Leading Child Rights Organisation, Save The Children, Faces FCRA License Rejection Amid Government Scrutiny

Save The Children, a prominent child rights organisation operating in 116 countries with a presence in India since 2008 under the name Bal Raksha Bharat, finds itself in a challenging situation as its Foreign Contribution Regulation Act (FCRA) license renewal has been rejected by the Ministry of Home Affairs (MHA). This decision comes in the wake of the organisation’s previous run-in with the government over a malnutrition fundraising campaign, which the Ministry of Women and Child Development objected to, citing their active pursuit of the issue through government schemes.

Multiple sources within the civil society sector have confirmed that Save The Children’s request for FCRA license renewal was denied, and their name no longer appears on the list of organisations with valid FCRA registration on the MHA’s website.

In response to the rejection, a spokesperson for Bal Raksha Bharat expressed surprise, saying, ‘The non-renewal of our FCRA application has come as a surprise to us. We will work with the government and are hopeful of resolving this situation at the earliest. In the meantime, we will continue to provide critical services to the community and children’.

Previously, the organisation’s FCRA registration was valid until November 2021. Still, the Ministry of Home Affairs had extended the validity for NGOs until 31 March 2022, as long as their renewal requests had not been refused and were submitted within six months of the registration’s expiry, with a deadline of 31 December 2021. This deadline was subsequently extended several times, with the latest cutoff being 30 September 2023.

The FCRA registration is a crucial requirement for organisations to receive foreign funds. In the last five years, the government has revoked the FCRA registration of 1,827 NGOs, as per the information provided by Minister of State for Home Affairs Nityanand Rai in the Rajya Sabha in March 2023. Notable organisations affected include Oxfam International and the think-tank Centre for Policy Research.

The Ministry of Women and Child Development had raised concerns regarding Save The Children’s campaign to raise funds from the general public to combat malnutrition among tribal children. They labelled it as ‘misleading’ and emphasised that the government was actively addressing the issue through its Saksham Anganwadi and Poshan 2.0 scheme. Additionally, the National Commission for Protection of Child Rights had previously criticised the depiction of vulnerable children in distressing conditions for fundraising activities, warning that such actions could violate the Juvenile Justice Act of 2015.

From a legal perspective, Save The Children’s FCRA license rejection is in line with the government’s authority under FCRA regulations. FCRA licenses require periodic renewal, and they can be denied if there are concerns about non-compliance, financial discrepancies, or activities conflicting with national interests. In this case, the objection by the Ministry of Women and Child Development to the organisation’s malnutrition fundraising campaign may have influenced the decision. NGOs like Save The Children should maintain transparency, follow FCRA guidelines, and cooperate with authorities to address concerns and potentially appeal license rejections with the help of legal experts, aiming for collaboration with the government to effectively address societal issues.

New GST Mandate Demands Accurate HSN Codes From October 2023

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In a significant development, the GST landscape is set for a transformation as the government introduces stringent rules pertaining to the inclusion of Harmonised System Nomenclature (HSN) codes in e-invoices and e-Waybills. The move comes following a notification issued on 15 October 2020, stating that taxpayers with an aggregate annual turnover exceeding ₹5 Crore must incorporate a 6-digit HSN code, while others should include at least a 4-digit HSN code. Taxpayers are already gearing up for compliance with this change, which becomes mandatory from 1st October 2023 for all e-Waybills and e-Invoices. Stay tuned for the full details on these latest GST updates!

From the perspective of GST experts, these updates mark a significant shift in the compliance landscape. While the government’s decision to mandate precise HSN codes in e-invoices and e-Waybills aims at streamlining the taxation process, it poses a substantial challenge for businesses. Companies will need to ensure they have accurate HSN codes for their products, and any errors could result in compliance issues.  Our GST experts advise businesses to proactively adapt to this change by updating their systems and processes to avoid potential penalties and ensure a smooth transition to the new regulations.

From a customer’s perspective, the requirement for precise HSN codes in e-invoices and e-Waybills is a significant win. It brings much-needed transparency to the pricing structure, ensuring that customers have a clear understanding of the taxes included in their purchases. This transparency not only empowers consumers to make informed decisions but also reduces the likelihood of disputes over incorrect tax calculations, leading to smoother and more trustworthy transactions.

Furthermore, accurate HSN codes help streamline customs processes for international trade, leading to quicker clearance and fewer delays in receiving imported goods. Overall, these measures not only protect consumers but also enhance their shopping experience, making it a positive step towards a more consumer-friendly and efficient marketplace.

Supreme Court Unleashes Direct Divorce Power Via Article 142: The Inside Scoop

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In a groundbreaking development, spouses facing tumultuous marriages may find respite through a newfound legal avenue. A petition for divorce by mutual consent, typically subject to a year-long waiting period, can now be expedited thanks to an invoked provision in the Hindu Marriage Act of 1955. 

Section 14 of the Hindu Marriage Act, 1955 a lesser-known clause, has emerged as a lifeline for those enduring extraordinary hardships or witnessing exceptional depravity from their partners. This clause grants the option of a quicker divorce, even before the standard one-year waiting period, should such circumstances arise.

Exemption Applications Unlock a Faster Route

To harness the power of this provision, aggrieved individuals can submit an exemption application before the family court. This application, under Section 13B(2), serves as a waiver for the customary six-month cooling-off period that usually accompanies divorce proceedings.

Supreme Court Sets Precedent in 2021

The Supreme Court of India made a pivotal decision in 2021 in the case of Amit Kumar vs. Suman Beniwal. The court emphasised the importance of reconciliation, stating that when there is a glimmer of hope for reuniting the couple, no matter how slight, the standard six-month cooling-off period must be enforced. However, the court’s judgement also highlighted that if reconciliation is an impossibility, prolonging the agony of the marriage parties serves no purpose.

Overcoming Time-Consuming Divorce Proceedings

With the ‘exceptional hardship’ clause in the Hindu Marriage Act of 1955, now gaining recognition and applicability, it offers hope to individuals facing dire circumstances within their marriages. This provision’s activation has the potential to significantly reduce the time and emotional toll typically associated with divorce proceedings, bringing relief to those in need.

As this groundbreaking legal avenue becomes more widely known and understood, it is anticipated that more individuals may seek an expedited divorce route, ultimately leading to a shift in the landscape of divorce proceedings in India.

A lawyer from Vakilsearch, shares their perspective on this recent development. They believe that the recognition of the ‘exceptional hardship’ clause is a game-changer for those trapped in tumultuous marriages. By allowing expedited divorces in cases of extreme hardship or depravity, this legal provision offers a lifeline to those in need, potentially revolutionising the divorce landscape and easing the burden on our already overburdened family courts.

Delhi RERA Makes RERA Registration Mandatory for Lease of Commercial Real Estate Projects

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New Delhi, 5 September 2023 – In a significant move aimed at enhancing transparency and accountability in the real estate sector, the Real Estate Regulatory Authority of Delhi (Delhi RERA) has now made it mandatory for developers to register their commercial real estate projects, even if the intention is to lease the space rather than sell it. This decision has far-reaching implications for the real estate industry, particularly for developers and tenants of office and retail spaces.

Previously, developers were required to register their projects with RERA if the development exceeded 500 square metres or involved more than eight units for sale. However, Delhi RERA has clarified that this registration requirement now extends to commercial projects intended for lease as well.

Delhi RERA Chairperson Anand Kumar emphasised, ‘The definition of allottee in the RERA Act is clear and covers property given on rent as well. In Delhi, many government bodies lease land to developers who, in turn, lease it further. In such cases, RERA registration is now mandatory.’

This move comes in response to the increasing trend of developers leasing commercial properties, such as office and retail spaces, for both short and long terms. Prominent real estate players like Bharti Realty have announced plans to create approximately 6.5 million square feet of office and retail space as part of the second phase of Aerocity’s development, all of which will now fall under the ambit of RERA.

Even Delhi Metro, which leases land to developers like Eldeco, Pacific, and Unity Group, will need to adhere to the new registration requirement. Harsh Vardhan Bansal, Chairman of CII Delhi Sub-Committee on Infrastructure, Real Estate & Urban Development and Co-Founder of Unity Group, stating, ‘Most developers who lease property do so for the short term, usually after the building’s completion. The primary objective of RERA is to ensure timely delivery to buyers, which may not be applicable in lease agreements. In long-term leases, RERA registration may be mandated, but in short-term leases, it should not be required’.

Section 3 of the RERA Act, 2016, clearly stipulates that all real estate projects developed in the National Capital Territory (NCT) of Delhi, falling under certain categories, must be registered with RERA. These categories include projects developed on plots larger than 500 square metres for sale or lease, projects involving the construction of more than eight flats, apartments, floors, shops, or commercial units for sale or lease, and projects encompassing plotting on areas exceeding 500 square metres for sale or lease.

Delhi RERA has also issued a stern warning, stating, ‘Non-registration of such projects can invite penalties of up to 10% of the estimated project cost or imprisonment for up to 3 years, or both’.

Gagan Randev, Executive Director of India Sotheby’s International Realty, lauded the move, saying, ‘This adds transparency and strengthens the real estate sector in Delhi. These reforms hold the potential to significantly enhance the market conditions for both investors and tenants, fostering a more favorable environment.’

This regulatory change is expected to have a profound impact on the Delhi real estate market, ensuring greater accountability and transparency in the leasing of commercial real estate projects. Developers, tenants, and investors will need to adapt to this new requirement, which aims to protect the interests of all stakeholders in the industry.

When enquired about this with our legal experts, they mentioned ‘This recent development by Delhi RERA to mandate registration for leased commercial real estate projects is a significant step towards ensuring transparency and compliance in the sector. It underscores the authority’s commitment to safeguarding the interests of both developers and tenants. For businesses looking to lease commercial spaces in Delhi, timely RERA registration is now essential.

Further they added ‘At Vakilsearch, our experienced team can guide you through the intricacies of compliance, ensuring a smooth transition into this new regulatory framework, and helping you navigate the evolving real estate landscape with confidence. 

Delhi High Court Reverses Order in Trademark Infringement Battle: Dabur’s Cool King Thanda Tel Hair Oil to Continue Sales

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In a significant legal development, the Delhi High Court’s division bench, presided over by Justice Yashwant Varma, has overturned a prior judgement issued by a single judge. The earlier ruling had compelled Dabur Ltd to halt the sale of its ‘Cool King Thanda Tel’ hair oil due to allegations of trademark infringement filed by Emami India concerning their renowned ‘Navratna’ hair oil product.

The original verdict, delivered by Justice C. Hari Shankar just a month ago, had granted partial interim relief to Emami, asserting that Dabur had deliberately copied the core attributes of Emami India’s Navratna hair oil in an attempt to seize the market that Emami had cultivated since 1989.

Justice Shankar’s pronouncement had emphasised the striking similarities between the two products, stating, ‘ It is prima facie apparent, in my considered opinion, that the defendant (Dabur) has consciously imitated nearly every essential and distinctive feature of the plaintiff’s (Emami) product, apparently to capitalise on the goodwill and reputation earned by the plaintiff’s product over a period of time.’ The judge noted that the variations in shape were so subtle that they would likely go unnoticed by an average consumer.

However, this recent ruling by the division bench, led by Justice Yashwant Varma, has set aside Justice Shankar’s order, allowing Dabur Ltd to continue selling its ‘Cool King Thanda Tel’  hair oil. The decision has thrown a lifeline to Dabur in the ongoing legal battle over alleged trademark infringement, highlighting the complexity and nuances of intellectual property disputes in the consumer goods industry.

Our trademark experts stress the need for businesses to establish distinctive trademarks to avert potential infringement issues.  They emphasise the delicate balance between market competition and imitation, highlighting the courts’ crucial role in scrutinising disputes. Intellectual property protection, including trademark registration, is advised to safeguard assets, and experts underline the role of market reputation and consumer perception in trademark disputes, encouraging businesses to navigate trademark law intricacies to protect their valuable brands.