Thursday, November 20, 2014

Relaxation in Several Provisions of Companies Act,2013

Introduction of New Companies Act, 2013 has brought harsh provisions however it was expected to simplify the provisions. Industry has started calling it non business friendly and there are provisions which are draconian and must be relaxed. It brought lot of restrictions on doing business. Professionals were also not happy for some harsh penal provisions. Now it is proposed by Ministry of Corporate Affairs to provide various Exemptions to Private Limited Companies. If it approve there will be lot of relaxation to private companies and many public companies will convert themselves into Private Companies.
Proposed amendment in Companies Rules to lighten the harsh provisions are :
1.      According to the proposal floated by the MCA
·        the provisions invoking criminality in offences like mis-statement of prospectus or non-disclosure of financial statements will be made less severe.
2.      Further, as per the draft Cabinet note circulated by the ministry
·        the provisions regarding related-party transactions will be relaxed.
·        The Act under Section 188 (1) says that related-party transactions of specified nature require approval by a board resolution or special resolution.
·        It also bars a related-party member of the company from voting on special resolution.
3.   The industry has been saying that this is not business-friendly especially where holding companies and their wholly owned subsidiaries are involved. So for such transactions, the provision will be amended to make it more pro-industry.
4.  For late disclosure, not keeping books of accounts, or financial statements not giving true and fair value, the “punishment of imprisonment is being done away with as the criminality of this kind is already dealt with in the Code of Criminal Procedure”. Currently, u/s 147, for such contraventions, the company is be punishable with fine up to Rs 5 lakh while every officer of the company who is in default is punishable with imprisonment of up to one year along with a fine up to Rs 1 lakh or both.
 5. The MCA has also proposed to do away with the condition of mandatory appointment of independent directors on the board of a private or closely-held company which has no public involvement.
The Cabinet note also provides a breather to auditors regarding their responsibility of reporting frauds to the government.
Materiality of fraud is defined in terms of percentage or absolute value as a threshold above which the auditors would be required to report to the government. Below that threshold, the auditors will need not report to the government,
They will just have to inform the audit committee of the company,” the source added.
The industry sources that this will be a huge reprieve to the auditors who currently have to report all frauds to the secretary,
MCA, adding to the compliance cost. The amendments proposed also address the issue of maintaining confidentiality of information especially those pertaining to board resolution.
According to Section 179(3), several items including pure HR issues, require a board resolution.

Contributed by Tanya Gagneja

Friday, November 14, 2014


MCA has further extended the date of Company Law Settlement Scheme,2014 till 31st December, 2014 vide circular number 44/2014. It is so decided in continuation to the MCA Circular No.34/2014 dated 12/08/2014 and Circular 40/2014 dated 15/10/2014

Thursday, November 6, 2014

Reporting on Internal Financial Control deferred for one year

Reporting on Internal Financial Control u/s 143 (3) (i) of the Companies Act, 2013 has been deferred for one year i.e., up to 31.03.2015 vide amendment  made by  Ministry of Corporate Affairs in  Rules Chapter 10 (Audit and Auditors) of the Companies Act, 2013.
The auditor may voluntarily report on Internal Financial Control for the year from 01.04.2014 to 31.03.2015.The auditor shall report on the existence of adequate internal financial control and its operational effectiveness for the financial years on or after 01.04.2015.

Monday, November 3, 2014

Statutory Compliance Calendar: November 2014

Statutory Act
Applicable Form
Service Tax
Challan No.GAR-7
Last date for E- payment of Service Tax in case of companies for the month October 
Income Tax
Challan No.ITNS-281
Payment of TDS deducted/TCS collected in October
D-VAT Return (20 & Form 1); DVAT 56
Extended Due Date for DVAT Return for Quarter ended on 30.09.14; Submission of DVAT Return Verification Form
ER-1 and ER-2
Return for Non-SSI Units and EOU’s for October
Service Tax
Extended Due Date for Return of the Half Year ended on 30.09.2014
Income Tax
Form 16A & 27D
Quarterly TDS certificate by a person being an office of the Government for the quarter ending September 30, 2014

MCA – CLSS 2014
Annual Return, Balance Sheet  (Form 23AC-ACA, 20B)
Extended due date under CLSS 2014 for Annual Return of the Company, Balance Sheet  for earlier years to be filed (Due before 30.06.14 and  if not filed till date) under CLSS-2014 Scheme
Deposit of DVAT TDS for October
Provident Fund
Electronic Challan Cum Return(ECR)
E-Payment of PF for October (Cheques to be cleared by 20th)
ESI Challan
Payment of ESI of October
D-VAT-20 & Central
Deposit of VAT & CST for October for Monthly Dealers
Income Tax
Form 3CD, 3CA/3CB
Filing of Income Tax Return AY 2014-15 for Tax Audit Cases (audit u/s 44AB) and filing of Tax Audit Report
Income Tax
Form No. 3CEB
Filing of Income Tax Return and Audit Report u/s 92E for entities on which Transfer Pricing provisions are applicable
Wealth Tax
Form BB
Filing of Wealth Tax Return where Tax Audit applicable
Annual Return for units paying duty over Rs. 1 crore (CENVAT + PLA)

Madras high court stays on the levy of interest U/S 234A for Asst Year 14-15 for Income Tax Returns where due date is extended

The CBDT vide order dated 20th August, 2014 extended the due date for obtaining and furnishing of Tax Audit Report under section 44AB of the Act for AY 2014-15 from 30.09.14 to 30.11.14. Subsequently, a number of requests were made for extension of the due date for furnishing of return of income also. Writ petitions were also filed in various High Courts for directing the CBDT to extend the due date ffrom 30.09.14 to 30.11.14 for furnishing of return of income  in conformity with the extension of the due date for filing of Tax Audit Report.

It was logical to also extend the due date for filing of the I-T return to 30.11.14 as the due date for filing of the tax audit report was extended till November 30  (due to late Introduction of several changes  in Form 3CD),
However, such extension was granted subject to charge of interest under Section 234A for the period commencing from 01-10-2014 and up to the actual date of filling the return of income. Interest under section 234A will not be levied if taxpayer covered under tax audit provisions pays the tax on or before 30.09.2014.

The levy of interest under section 234A of the Income Tax Act,1961 is unjustified and against the provisions of the law. If the penalty was levied, the purpose of extending the due date of filing the I-T return itself was defeated. The Madras high court granted an interim stay on the levy of interest U/S 234A for Interest from 1.10.14 till filing of Return. It held, “I-T returns shall be accepted by tax authorities without any levy of interest under section 234A.”