Sandeep Ahuja & Co.

Established in the year 1986, we are a leading chartered accountancy firm based in Delhi & NCR rendering comprehensive professional services which include statutory audit, internal audit, direct tax, transfer pricing, GST, bank audit, propriety audit, cost accounting, internal financial controls and risk advisory.

Wednesday, April 1, 2020

Companies Fresh Start Scheme 2020

To provide relief from additional fees on delayed filing of documents and forms with the ROC, the Ministry of Corporate Affairs (MCA) has come up with the Companies Fresh Start Scheme, 2020 (CFSS-2020) for an initial period of 6 months from 01-Apr-2020 to 30-Sep-2020 vide its General Circular No.12/2020 dated 30-Mar-2020. This is an opportunity for all defaulting companies to file all belated documents without any additional fees.

Defaulting company” means a company defined under the Companies Act, 2013, and which has made a default in filing any of the documents, statement, returns, etc. including annual statutory documents (AOC-4 & MGT- 7) on the MCA-21 registry on due time.

Inactive Company” means a company which has not been carrying on any business or operation, or has not made any significant accounting transaction during the last two financial years, or has not filed financial statements and annual returns during the last two financial years;

Applicability and Forms Covered: all defaulting companies as defined above will be permitted to file all belated documents which were due for filing, without any additional fees (excluding delayed filing of Form SH-7 for increase in authorized capital and charge related documents), including the following:

Forms Covered under CFSS
- Form MGT-7: Annual Return
- Form AOC-4: Annual Financial Statements
- Form INC-22A: Active Company Tagging Identities and Verification (ACTIVE)
- Form INC-20A: Declaration for commencement of business
- Form PAS-3: Return of Allotment
- Form ADT-1: Appointment of Auditor
- Form MGT-14: Filing of Resolutions and agreements to the Registrar
- Form DIR-12: Particulars of appointment of Directors and the key managerial personnel and the changes among them

Forms Not Covered under CFSS
- Form SH-7: Increase in Authorised Share Capital
- Forms CHG-1, 4, 8, 9: Charger related documents

Not Applicable on Following Companies

- Companies against which action for final notice for striking off the name u/s 248 of the act have already been initiated by the Designated Authority;
- Companies which have already filed STK-2 for strike off of Company with ROC;
- Amalgamated Companies;
- Already filed application for obtaining dormant status;
- Company with an appeal pending before the court of law;
- Company having management disputes that are pending before any court of law or tribunal;
- Companies which are convicted by any court in any matter and no appeal has been preferred against such orders of the Court before this Scheme has come into force;
- Companies upon which an order passed for imposing penalty by an adjudicating authority under the Act, and no appeal has been preferred against such orders of the Adjudicating Authority before this Scheme has come into force.

Benefits of CFSS

- Condonation of all additional fees for filing of belated documents;
- Immunity from prosecution;
- Withdrawal of proceedings of adjudication of penalties u/s 454.

Note: Immunity from Prosecution and Proceeding shall be provided only to the extent such prosecution or proceedings for imposing penalty under the Companies Act pertain to any delay associated with filing of belated documents. Any other consequential proceedings, including any proceedings involving interests of any shareholder or any other person qua the company or its directors or key managerial personnel would not be covered by such immunity.

Procedure for Claiming Scheme Benefit

1. Defaulting company to file the overdue documents in respective prescribed e-Forms by paying the normal statutory filing fee without any additional fee within due immunity period.

2. Subsequently file Form CFSB-2020 after making good all the defaults and after closure of the Scheme but not after the expiry of six months from the date of closure of the Scheme. There is no filing fees of Form CFSB-2020. It is a self declaration based form certified by the Director.

3. Following which the ROC will issue an Immunity Certificate.

Companies can simultaneously apply to get themselves declared as Dormant Company under section 455 of the Companies Act, 2013 by filing e-Form MSC-1, or choose to file for striking off the name of the company by filing e-Form STK-2.

Letter to Tenant Allowing Delayed Payment of Rent

To <tenants>
Sub: Allowing Delayed Payment of Rent for April 2020

**********

Dear Sir,

At the very outset, I would like to wish safety and hope for better days ahead to your company and all its staff members and their families.

This has reference to the sudden shock that has befallen all of us due to the Covid-19 outbreak, which has put most of our business and the industry on halt.

In the capacity of not just the landlord in the current context, but also being a fellow business owner, I can imagine the financial hardship that may have befallen your organization. Our company is a medium-scale enterprise in the already bleeding auto-parts industry. We are currently in the midst of collecting all our pending receivables so that we can manage enough liquidity to ensure that our labor workforce, who are daily wage earners, are paid in time so that they can last this period of shutdown without having to go empty stomach or having to resort to the streets in want of basic necessities and work.

In the meanwhile, we have also written to our bankers to enhance our credit facilities so as to provide support as referred to by the RBI in its relief measures announced on the 27th of March, 2020.

We understand that your business must be facing similar challenges.

Thus, as a goodwill gesture, we are allowing you to pay us rent for the property located at ______________, for the month of April 2020 by 30th April, 2020 instead of by 7th April, 2020.

We would also not be charging you any interest on delayed payment of rent.

Thanking you and wishing safety on you all.
Sincerely,

________________

Director
________________ Ltd.

Letter to Vendors for Enhanced Credit Period During Covid-19

To <vendors in BCC or specifically to each major vendor>
Sub: Request for Enhanced Credit Period

**************************

Dear Sir,

At the very outset, we would like to wish safety and hope for better days ahead to your company and all its staff members and their families.

This has reference to the sudden shock that has befallen all of us due to the Covid-19 outbreak, which has put most of our business and the industry on halt.

Our company is a medium-scale enterprise in an already bleeding industry facing a slowdown. We are currently in the midst of collecting all our pending receivables from clients who are cash-rich global enterprises so that we can manage enough liquidity to ensure that our labor workforce, who are daily wage earners, are paid in time so that they can last this period of shutdown without having to go empty stomach or having to resort to the streets in want of basic necessities and work.

In the meanwhile, we have also written to our bankers to enhance our credit facilities so as to provide support as referred to by the RBI in its relief measures announced on the 27th of March, 2020.

In these tough times, we would want to make the following requests to you.

1. Enhancement of Credit Period: If any payments for supplies made before 31st March 2020 are falling due to you within the months of April or May 2020, we would request you to bear with us for our factory and office to be opened after the lockdown, so that we can get our operations running once again and start releasing all payments in a planned manner to all vendors.

2. Non-Charging of Interest: We are trying our level best to ensure all our vendors are paid in time and there is no hardship to anyone due to us. In our attempt to do so, we seek your support and would request you to not raise any debit notes on us for delay in payments in the form of interest or penalty charges, as we will be unable to bear any such additional costs in these tough times.

3. Confirm before Depositing Cheques Issued: If our company has issued you post-dated cheques which are due for encashment between 1-Apr to 31-May-2020, we would request you to speak with the undersigned before depositing them with the bank, so that we can ensure there are adequate funds available in the bank account and the cheques are not dishonored. In case of non-availability of funds, we may ask you to wait for a few days till funds are arranged for from our bankers and few cash-rich customers. We assure you that we will be working hard towards planning your payment on priority in our fund flow plan.

We seek your support in these testing times and are hopeful that the business community will be able to collectively sustain these difficult times with mutual support.

Thanking you and wishing safety on you all.

Sincerely,

________________

Director
________________ Ltd.

Letter to Bankers for Deferment of Payment During Covid-19

To <bankers>
Sub: Deferred Payment for Loan ID / CC Facility No. _______

**************************

Dear ______ Bank Team,

This has reference to your bank's policy honoring the regulatory measures and relief announced by the RBI vide Circular DOR.No.BP.BC.47/21.04.048/2019-20 dated 27-Mar-2020 in view of the Covid-19 outbreak.

We would like to take the benefit of the following relief measures for our term loan and other short term working capital facilities, including but not limited to cash credit limits, buyer's credit, letters of credit, etc. sanctioned vide letter dated ________, and all other borrowing facilities taken by our company from your bank.

1. Term Loan Moratorium: Moratorium of three months on payment of all term loan instalments falling due up to 30-Jun-2020 for all term loans. Kindly do not deduct EMIs from our accounts till the said date.

2. Defer Interest on CC/ WCDL/ BC/ LC, etc: Kindly defer the recovery of interest applied in respect of all working capital facilities during the period from 01-Mar-2020 up to 30-Jun-2020 in respect of facilities sanctioned in the form of cash credit / over-draft (CC/OD).

3. Expansion of Drawing Power: Kindly recompute our drawing power. Let us know the additional amount that we can overdraw from our already sanctioned facilities and we would also request you to let the overdrawn amount be fully utilized up to 30-Jun-2020.

4. Reduction in Margin/Liberal Expansion of Facility: Kindly also expand our borrowing facility in the available limits for Cash Credit or WCDL, which is free for us to use in any way to meet current working capital requirements. We would request you to not appropriate them in the proportion of the various facilities such as for Buyer's Credit, Bill Discounting, Letters of Credit, etc. Instead, please allow the expanded drawing power in CC/WCDL only.

5. Reduction in Lending Rates of Interest: Since the RBI has reduced its rates, we would request you to pass on the benefit to us by suitably reducing the borrowing rates on our term loans and other facilities with immediate effect. We hope correlated relief will be offered in the form of floating rates to us immediately.

6. Credit Card Dues: The same benefits may also be extended to our corporate credit cards, the repayment for due amounts on which shall be done after the abovementioned moratorium period on other facilities.

7. No Penal Interest: Please ensure no penal interest for delay is charged to our accounts. We shall try and repay the outstanding amounts as soon as our business operations are back in running after the lockdown is lifted and we can resume work.

8. Maintaining our Asset Classification and Credit Rating: Kindly maintain our asset classification with the bank as standard assets as we have so far not defaulted on any of our debt servicing payments, and would continue servicing our debts timely, soon after 30th June, 2020.

9. Our Eligibility for Relief: We are eligible for the abovementioned relief measures due to the following reasons:
(i) rescheduling of orders
(ii) shutdown of work place
(iii) non-availability of manpower and transportation to complete current orders
(iv) non-realization of debtors due to lockdown on the nation
(v) we are not under IBC proceedings
(vi) we are classified as a standard asset, servicing our loan repayments on time

10. Communication for Honoring Payments: In the unforeseen case in the next two months when the account balance limits maybe low and the facilities fully overdrawn, we would request you to speak with the undersigned before dishonoring any cheque presented for payment, so that the company can arrange for the required funds immediately to ensure no hardship to any vendors to whom post-dated cheques had been issued.

We shall be happy to provide any documentation in this regard as soon as the lockdown is lifted.

Please consider our request to be granted with immediate effect. Kindly acknowledge receipt.

Thanking you and wishing safety on you all.

Sincerely,

______________

Director
____________ Ltd.

Tuesday, March 31, 2020

Tax & Compliance Relief Announced - Covid-19

The following reliefs have been announced Indian Finance Minister, in a press conference held on 24th March 2020, to deal with the economic crash due to Coronavirus Pandemic:
1. Extension of Due Dates –

Revised Due Date
Regarding Income Tax

Income Tax Returns for FY 2018-19
30th June, 2020
Aadhaar PAN linking
30th June, 2020
Vivad se Vishwas Scheme
30th June, 2020
Issue of notice, intimation, filing of appeal, submission of income tax return and any other document or compliance matter by the tax payer including saving instruments or capital gains under Income Tax Act, Wealth Tax Act, Benami Property Act, STT Law, CTT Law, Vivaad se Vishwas Law, where the time limit was expiring in March
30th June, 2020
Regarding GST

GST returns of March, April and May
30th June, 2020
Opting of Composition Scheme
30th June, 2020

2. Interest Rates Reduction

Earlier
Reduced to
Income Tax:


Payment made under Vivad se Vishwas Scheme by June 30, 2020.
10% Amount
NIL
Delayed payments of advanced tax, self-assessment tax, regular tax, made between
20th March 2020 and 30th June 2020
12%/18%
9%
(No late fee/ penalty to be charged)
Delayed payments of TDS, TCS, equalization levy, STT, CTT made between
20th March 2020 and 30th June 2020
12%/18%
9%
(No late fee/ penalty to be charged)
GST:


Delayed payment of GST made between 20th March 2020 and 30th June 2020 by those having turnover less than Rs. 5 crore
18%
NIL
(No late fee/ penalty to be charged)
Delayed payment of GST made between 20th March 2020 and 30th June 2020 by those having turnover more than Rs. 5 crore
18%
9%
(No late fee/ penalty to be charged)
MCA:


Late filing of any document, return, statement etc., required to be filed in the MCA-21 Registry, irrespective of its due date

No additional Fees

3. Other Reliefs –

a. Mandatory requirement of holding meetings of the Board of the companies within prescribed interval, shall be extended by a period of 60 days till next two quarters i.e., till 30th September.

b. Applicability of Companies (Auditor’s Report) Order, 2020 shall be made applicable from the financial year 2020-2021

c. If the Independent Directors of a company have not been able to hold even one meeting in the financial year 2019-20, the same shall not be viewed as a violation.

d. Non-compliance of minimum residency in India for a period of at least 182 days by at least one director of every company shall not be treated as a violation.

e. Custom Clearance will serve 24 x 7.

f. Debit cardholders to withdraw cash for free from any other banks’ ATM for 3 months.

g. Waiver of minimum balance fee.

h. Reduced bank charges for digital trade transactions for all trade finance consumers.

i. Raise the threshold of default under section 4 of the IBC 2016 to Rs 1 crore (from the existing threshold of Rs 1 lakh). This will by and large prevent triggering of insolvency proceedings against MSMEs. If the current situation continues beyond 30th of April 2020, the government may consider suspending section 7, 9 and 10 of the IBC 2016 for a period of 6 months.

Friday, March 20, 2020

Demand notices, responses, replies and corrective actions


Demand Notices and their corrective actions

-          What is Demand in the terms of taxation?
The Income Tax Department (IT Department) checks the income declarations and tax paid to see if all these details match. Only then the IT Department will accept the tax return filed as per Section 143(1). If the taxes paid are found to be less than what you owe, they will issue you a demand notice.
-     Why a Taxpayer get a notice?

1.      For delay filing IT return
2.      Misreporting of LTCG for equity
3.      For TDS claimed not matched with 26AS
4.      For Non-Disclosure of income
5.      For not declaring investment made in the name of the spouse
6.      For filing defective return
7.      If you done high value transactions
8.      If your return picked up for scrutiny
9.      For setting off refunds against remaining tax payable
10. For tax evasion of earlier years

-       TYPES OF INCOME TAX NOTICES

-       SECTION 139(9) : Defective income tax return
-       SECTION 142(1) : Preliminary Enquiry before an assessment
-       SECTION 143(2) : Follow up of notice under section 142(1)
-       SECTION 148 : Income escaped assessment
-       SECTION 156 : Notice of Demand
-       SECTION 245 : Refund adjusted against the tax demand

-          Possible resolution in case of tax mismatch:
a.      Credit Available in FORM 26AS but not given in the intimation order
-          Invalid TAN entered in the return
-          SAT/AT details are entered wrongly
-          No data error in TAN/SAT/AT details
-          No data error in particular entered in TDS/TCS schedule
b.      Credit not available in form 26AS
-          Mismatch of TDS/TCS amounts claimed compared to form 26AS
-          Mismatch of SAT/AT
This indicates that principal demand is already adjusted/ paid, and interest demand is the only outstanding value. For the demand against which there is "No Submit response option" available such demand is already confirmed by the Assessing Officer.


Outstanding Tax Demand Status

The Taxpayer can submit the response online to the outstanding demand by either choosing to Agree or Disagree with the demand.
Perform the following steps for Responding to the Outstanding Demand.
1.       Logon to ‘e-Filing’ Portal www.incometaxindiaefiling.gov.in
2.       Go to the ‘e-File’ menu, Click ‘Response to Outstanding Demand’.
3.       All outstanding demands will be displayed here. Click on 'View' hyperlink under 'Response' column. 







                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              Intimation in SECTION 143(1)
The intimation of demand made by the income tax department is under section 143(1) and assessee must respond it within 30days. A copy of notice is attached below:
Reasons for Notice under Section143(1)(a)
Many taxpayers are currently receiving intimations under section 143(1)(a) due to a mismatch between Form 26AS and the ITR Form.





In most cases, there will be no change in tax calculations. The department is only asking for more information.

Circumstance under the notice of Section 143(1)

Reason/ Purpose
Action to be taken
Notice under Section 143(1)(a)

Due to discrepancy/mismatch found and there is a tax liability
If you agree - Pay the taxes & Revise the return
If you disagree - Respond on income tax portal




Respond to an Outstanding Demand

  The Taxpayer can submit the response online to the outstanding demand by either choosing to    ‘Agree’ or ‘Disagree’ with the demand.

Perform the following steps for Responding to the Outstanding Demand.
1.       Logon to ‘e-Filing’ Portal www.incometaxindiaefiling.gov.in
2.       Go to the ‘e-File’ menu and Click ‘Response to Outstanding Demand’
3.   Click the hyperlink 'Submit' located under 'Response' column (To respond for the Outstanding Demand)
4.       Choose any one of the listed responses.
-           Agree
-          Not agree
-          Disagree
-          Demand is not correct but ready for adjustments
   
     5.        A success message along with Transaction ID is displayed on successful submission of the response, in case of agree or partially agree for demand:   














If you disagree - Respond on income tax portal

Step1: Go to http://portal.inco metaxindiaefiling.gov.in/home and click onLogin here
Step2: Enter UserID, Password and Captcha to proceed logging in
Step3: On successfully logging in, click on the‘e-proceeding’tab
Step 4: Click on ‘Adjustment u/s 143(1)(a)’
Step5: When the e-proceeding tab opens, click on ‘Submit’ under the‘Response’tab
Step 6: This page summarizes the discrepancies due to which the notice has been issued.
        If you agree or partially agree with the department, then you must file a revised return.
        If you disagree,click on the disagree’ response andContinue’

Step7A:  When you disagree with the notice issued by  the department, you can provide a justification for the same on this page.

Step7B: If there is  any income which has been taxed in the notice but is exempt under section 10, you must select the option from the drop down list.
Step7CIf you do not find your reasons in  the options  specified,then specify it in the tab for‘any other reason’



                                                                        

        Step6
The Dynamic Reconciliation Statement will auto populate, then click on ‘Submit’.



Above mentioned steps in a nutshell:


-         STEP 1:Ascertain the Outstanding Tax Demand
-          STEP 2: Draft a letter for cancellation of Demand
-         STEP 3: Send to Income tax department and get the Acknowledgment Number
-         STEP 4: Scan the above letter, draft grievance and prepare the attachments.
PRECAUTIONS WHILE DRAFTING GRIEVENCE
Ø While drafting Grievance for the letter NO SPECIAL CHARACTERS can be used (%,*.#,+,-,@ etc.)
Ø Attachments : one file – one name -No space and no special characters and must be upto  50MB.

-         STEP 5: Scan the Documents and upload on e-filing portal.

Notice of under Section 245

Why did Assessee receive Intimation under Section 245?

This intimation is received when you have a tax demand pending from the IT department or when you have claimed a refund from them for some other assessment year. Section 245 of the Income Tax Act empowers the assessing officer (AO) to adjust the refund (or a part of the refund) against any tax demand that is outstanding from the taxpayer. In simple words, the IT department wants to adjust the refund due against a demand due from you. This demand may pertain to an earlier assessment year.

Adjustments against Refund under section 245

-          Section 245 Notice

-          Adjustment under section 143(1) of another year

-          Adjustment against demand in Refund Vouchers


1.   Section 245 Notice

-   Generally, the response of notice of section 245 shall be filed within 15days.
-   Response to the notice must be either:
·         Agree                                                                                                                 
·         Disagree
·         Partially agree
·         Not agree but ready for adjustments

i.      If assessee agree to the notice and demand,then the assessee simply login to the portal and submit the demand and pay the amount.
ii.    If the assessee disagree then s/he will respond to the reasons for being Disagree to the Demand raised.
iii.  Partially Agree: in this case the assessee must submit the XML or may revise the return and submit it again.                      Or
The Assessee must file rectification in such a circumstance.
iv.   Not agree but ready for adjustments : In such an assessee is not Agreed with the demand raised by the department but assessee just for a way-out take such decision for not to block the entire refund with the department.

Rectification request under section 154


rectification request under section 154(1) is allowed by the Income Tax Department for correcting mistakes when there is an apparent mistake in your Income Tax Return. an error due to overlooking compulsory provisions of law.
 Order rectified under section 154.
Mistake apparent from records, and income tax department may-
-Amend any order passed under any provisions of the Income-tax Act
-Amend any intimation or deemed intimation sent under section 143(1)
- Amend any intimation sent under section 200A (1)- TDS return
- amend any intimation under section 206CB- Processing of TCS statement

Submitting the request for Rectification

The return filed by the taxpayer will be processed by Income Tax Department (ITD) and intimation will be sent to the assessee under section 143(1) based on details disclosed by the taxpayer and rules deployed at the processing centre of ITD. In case if the taxpayer wants to seek rectification of a mistake in an order or intimation, which is apparent from the record, then the taxpayer can seek ‘Rectification under Section 154’.
STEPS:
1.       Logon to ‘e-Filing’ Portal www.incometaxindiaefiling.gov.in
2.       Go to the ‘e-File’ menu and Click ‘Rectification’ link
3.       Choose the options of ‘Order/Intimation to be rectified’ and ‘Assessment Year’ from the dropdown list. Click ‘Continue’
4.       Select any one of the following options of ‘Request Type’ from drop down list.
5.       To ViewthesubmittedRectificationRequest :

-          Logon to ‘e-Filing’ Portal www.incometaxindiaefiling.gov.in
-          Go to the ‘My Account’ menu located at upper-left side of the page ↓ Click ‘View e-Filed Returns/Forms’
-          Select ‘Rectification Status’ from drop down list¯Click ‘Submit’


View Refund/ Demand Status

To check the refund status, follow the steps:
Step1: Login to e-Filing website with User ID, Password, Date of Birth / Date of Incorporation and Captcha.
Step2: Go to My Account and click on "Refund/Demand Status"
Step3: following details would be displayed
-          Assessment year
-          Status
-          Reasons for refund failure (if any),
-          Mode of payment is displayed


APPEALS

taxpayer aggrieved by various actions of Assessing Officer can appeal before Commissioner of Income Tax (Appeals). Further appeal can be preferred before the Income Tax Appellate Tribunal. On substantial question of law, further appeal can be filed before the High Court and even to the Supreme Court.


Compiled By : Abhilasha at Sandeep Ahuja & Co