NASSCOM : Public Policy | Volume 3 | Issue 03

Goods and Services Tax (GST): Memorandum on issues faced by IT-BPM and eCommerce industry

NASSCOM suggested to the Department of Revenue and GST Council detailed measures to unlock working capital, improve ease of doing business and provide certainty to the industry with respect to the treatment under the GST law. Our suggestions include (a) extending the turnover threshold benefit on intra-state supplies made by sellers selling through online marketplaces; (b) issuing guidelines for effective implementation of Circulars issued to clarify scope of Intermediary services and export position on services provided by subsidiaries to their overseas affiliate; (c) clarifying that supply of gift cards / vouchers will attract GST only at the stage of redemption, amongst others.

TRAI: Submission on regulatory framework on digital infrastructure

NASSCOM made a submission to Telecom Regulatory Authority of India (TRAI) on the consultation paper titled 'Regulatory framework for promoting data economy through establishment of data centres, content delivery networks, and interconnect exchanges in India' (available here). On the regulatory treatment of the content delivery network providers, we suggested that TRAI should avoid any regulatory intervention as it could adversely affect their growth in India. Further, we suggested that the Government should enable Data Centre companies to procure and lay dark fiber for captive purposes, etc.

MeitY: Inputs for the Tech and Internet Economy Advisory Group

A meeting of the Tech and Internet Economy Advisory Group was held in December 2021 under the chairmanship of Hon'ble Minister of State (Electronics & Information Technology). Further to that meeting, we submitted additional input to MeitY. Our suggestions include: (a) bringing parity among e-commerce sellers and offline sellers in terms of GST administration, to encourage more MSME sellers to sell online; and (b) create market opportunities in India for start-ups by encouraging them to find innovative solutions for social challenges faced by the government. For more information, kindly contact garima@nasscom.in.

OECD: Feedback on Nexus and Revenue Sourcing Rules

The Organisation for Economic Co-operation and Development (OECD), in February 2022, released a public consultation document consisting of draft Model Rules for nexus and revenue sourcing for Amount A. NASSCOM made a detailed submission to the OECD and Ministry of Finance (MoF). We highlighted that the draft rules should be identical across all customers as it would become administratively difficult to track the list of large business customers separately. We have also requested that clear guidelines be provided as to what would construe as "reasonable steps" for application of allocation keys.

Feedback to MeitY: India Digital Ecosystem Architecture 2.0 (IndEA 2.0)

MeitY's proposed IndEA 2.0 framework provides a set of architecture reference models aimed at a holistic and integrated approach to e-governance. We suggested following measures to strengthen the framework:

allowing private sector in designing, developing, and maintaining core building blocks

designing a well-planned migration strategy to reduce disruption to existing systems and to make
transition to new system smooth, and

provide clarity on the proposed testing process

MSME: Suggestions on the Draft National Policy for MSMEs

We suggested the following measures to the Ministry of Micro, Small and Medium Enterprises (MSME) to strengthen the Draft National Policy for MSMEs:

setting-up a helpdesk at the local (town or city) level that can serve as a one-stop shop for guiding
MSMEs through their legal and regulatory queries, information on government benefits and schemes etc.

leveraging the digital economy for enabling access to credit: encourage regulated digital lending
platforms to disburse loans to MSMEs; and

leveraging various online platforms such as digital payment apps, e-commerce platforms etc. for helping
more MSMEs to get registered on the Udyam platform.

Ministry of Finance: Representation on reporting under Employee Stock Purchase Scheme

Persons residing outside India are only permitted to repatriate sale proceeds overseas after meeting reporting requirements under Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments) Regulations, 2019 (FEMA regulations). Employee stock purchase scheme (ESPS) are not considered as an eligible instrument and no separate form is prescribed for reporting of shares allotted under ESPS. Since May 2021, RBI has been rejecting filings concerning reporting for grant of shares under ESPS. We have requested the MoF to advise the RBI to treat ESPS as an eligible instrument under FEMA in order to ensure timely approvals to the industry.

Haryana: Suggestions for State Budget 2022-23

NASSCOM has requested the state government to establish a fund of INR 10 crores to provide seed funding to deep-tech start-ups incorporated in the state of Haryana. In the previous year Budget, the State had announced formulation of a Data Centre Policy to provide impetus to the development and growth of the Data Centre Industry. NASSCOM had provided detailed suggestions and had participated in the consultation process. However, the Data Centre policy has not yet been finalised. We have requested the State to expedite notification of the Data Centre policy.

Data Centre & Cloud policy: Industry Consultation with MeitY

NASSCOM helped organise a public consultation on Data Centre & Cloud policy in Chennai on February 25, 2022. The meeting was chaired by Shri Rajeev Chandrasekhar, Minister of State, MeitY and about twenty-five companies participated in the consultation and shared their views. The key suggestions included promotion of renewable energy. We requested MeitY to champion this cause with the Ministry of Renewable Energy. Further, given that Data Centres run on a 24x7 basis, we suggested that continuous industry status be provided to the industry. This will ensure that the regulatory constraints under various laws that prevent the industry function 24x7 will not be applicable for the Data Centre industry.

Presentation to Members of Parliament on Union Budget and Start-ups

On February 15, 2022, we made a presentation to the Members of Parliament on the topic 'Budget 2022: Start-up Ecosystem - Ease of Doing Business, Challenges, and Way Forward'. We made detailed tax policy suggestions towards:

attracting more domestic investment by harmonising the tax rate applicable to Long Term Capital Gains
for resident and non-resident investors.

making tax policy on Employee Stock Ownership Plan (ESOP) more conducive to retain talent and
remove cash-flow difficulties for start-ups, and

giving Indian start-ups an easy way to access deep-pools of capital available in foreign capital markets,
by allowing direct listing of equity in foreign stock exchanges without having to first list in India.

For more information, kindly contact policy@nasscom.in .

Tamil Nadu: Pre-Budget consultation with Finance Minister

We participated in a meeting chaired by the Finance Minister of Tamil Nadu and attended by the Minister of Industries and Minister for MSME. Our key suggestion to the State was to roll out an Engineering Research & Development (ER&D) Policy to attract investments in the State. We also suggested that the State Government should set up a separate venture fund for investing in Deep Tech start-ups within the state and adopt the Model RFP to streamline procurement of IT systems.

Call for input: Fairness assessment framework for Artificial Intelligence (AI)/ Machine Learning (ML)

The Telecommunication Engineering Centre (TEC) has invited suggestions for framing procedures for assessing fairness for different types of AI/ ML systems. Given the wide range of applications and use cases of AI/ML, TEC is looking at developing an assessment framework towards ensuring that systems that are based on AI/ML are fair and unbiased, and therefore can help build public trust. We have requested the industry to share input before 7 March 2022 to jayakumar@nasscom.in and deepak@nasscom.in.

Call for input: India Data Accessibility and Use Policy

MeitY has recently invited comments on the draft India Data Accessibility and Use Policy aimed at establishing a governance framework on the sharing and licensing of public sector data. As per the background note, the policy is aimed at building atop existing efforts, such as the Open Government Data platform, and policy documents, such as the National Data Sharing and Accessibility Policy, to unlock the potential of public sector data in India. MeitY has sought comments by 18 March 2022 (read more). In this context, we request you to kindly share your detailed inputs with suitable justifications before 11 March 2022 to varun@nasscom.in , apurva@nasscom.in and jayakumar@nasscom.in

Assessing the impact of UK-India FTA on digital trade

As part of our engagement with the industry and the government in both India and UK for the upcoming India-UK Free Trade Agreement (FTA), we are seeking inputs from the industry on the following: (1) top priorities for a future trade deal between India and UK, especially pertaining to digital trade; (2) challenges being faced while trading with the UK; (3) recommendations for improving digital trade between India and the UK, and (4) estimated impact of India-UK trade deal on the industry. We are gathering input via a survey and interviews, as appropriate. The survey can be accessed here. For more information, write to garima@nasscom.in.

OECD: Consultation Paper on Model Rules for determination of tax base under Pillar One

The OECD has released a public consultation document consisting of Model Rules for determination of tax base under Pillar One. The Model Rules on Tax Base are designed to calculate the profit (or loss) of a Covered Group that will be used for Amount A calculation purposes. The tax base is therefore the measure of profit that forms the basis for partial reallocation under Amount A rules. The last date to respond to OECD was March 4, 2022, and we have provided our feedback to the OECD. Our suggestions include (a) providing an exhaustive list of all expenses that will be disallowed while calculating the financial accounting profit and (b) including profit shortfalls (i.e., less than threshold profit) for carry forward purposes.

SEBI: Consultation Paper for disclosure of "Basis of Issue Price" section in Offer Document

In view of an increase in filing of offer documents for Initial Public Offerings (IPO) by new age technology companies, Securities and Exchange Board of India (SEBI) released a consultation paper proposing to mandate disclosure of key performance indicators of the business of the Issuer Company that have been considered / have a bearing for arriving at the issue price. We have requested input from the industry, and we will be sharing our feedback with SEBI. For more information, write to garima@nasscom.in and tejasvi@nasscom.in.

European Union: Release of Draft Data Act on Non-Personal Data

On 23 February 2022, the European Commission published the Draft Data Act. The Draft Data Act aims to make non-personal data (NPD) more accessible and make the data economy fairer and more innovative. Its scope is wide, covering public sector access to data, B2C and B2B data sharing, governance of international transfers of non-personal data, switching between data processing services, and protections for MSMEs to reduce their compliance burden. The draft Act can be accessed here. We are tracking this important new draft law proposed by the EU. For more information, write to varun@nasscom.in and apurva@nasscom.in.

MoCA: No license required for operating drones

The Ministry of Civil Aviation (MoCA) has scrapped the requirement of drone pilot license for operating drones by amending the Drone Rules, 2021. As a result, the remote pilot certificates (RPC) issued by any approved drone schools through the DigiSky Portal shall be valid to operate a drone. Further, the RPC would not be required to operate a drone less than 2kgs for non-commercial purposes. For more information, write to apurva@nasscom.in.

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