The Companies (Amendment) Ordinance, 2019 – highlights

The Companies (Amendment) Ordinance, 2019 was promulgated on January 12, 2019.

It repeals and replaces the Companies (Amendment) Ordinance, 2018 promulgated on November 2, 2018.

The 2019 Ordinance amends several provisions in the Companies Act, 2013 relating to penalties, among others.

 

Key Highlights

  • Commencement of business – Declaration by the Director: The Ordinance states that a company may not commence business, unless it (i) files a declaration within 180 days of incorporation, confirming that every subscriber to the Memorandum of the company has paid the value of shares agreed to be taken by him, and (ii) files a verification of its registered office address with the Registrar of Companies within 30 days of incorporation.  If a company fails to comply with these provisions and is found not to be carrying out any business, the name of the Company may be removed from the Register of Companies.

Any default in complying with the said will invite a fine of INR 50,000 to be paid by the company.

 

  • Removal of a Company’s name from the register – If the Registrar has enough reason to believe that a company is not carrying on business then he, after a physical verification of the registered office, can remove the company’s name from the register of companies. The ROC can strike off a company if the address of Registered Office is bogus or an incomplete/ improper address.

 

  • Issue of shares at a discount: The Act prohibits a company from issuing shares at a discount, except in certain cases.  On failure to comply, the company is liable to pay a fine between one lakh rupees and five lakh rupees every officer in default may be punished with imprisonment up to six months or fine between one lakh rupees and five lakh rupees.  The Ordinance changes this to remove imprisonment for officers as a punishment.

 

  • Further, the company and every officer in default will be liable to pay a penalty equal to the amount raised by the issue of shares at a discount or five lakh rupees, whichever is lower. The company will also be liable to refund the money received with interest at 12% per annum from the date of issue of the shares.

 

  • Alteration of Articles – After this amendment, any conversion of a Public Company to a Private Company will not be valid unless approved by an order of the Central Government. Previously, the power to issue such an order was with the Tribunal.

 

  • Registration of charges: The Act requires companies to register charges (such as mortgages) on their property within 30 days of creation of charge.  The Registrar may permit the registration within 300 days of creation.
  • The Ordinance changes this to permit registration of charges: (i) within 300 days if the charge is created before the Ordinance, or (ii) within 60 days if the charge is created after the Ordinance. If the charge under the first category is not registered within 300 days, it must be completed within six months from the date of the Ordinance.  If the charge under the second category is not registered within 60 days, the Registrar may grant another 60 days for registration.

 

  • Annual Return:  Annual Return should be filed within 60 days from the date of the AGM, failure to this, penalty of Rs. 100 per day to Company + directors maximum Rs. 5 Lakh apart from ROC delay charges is applicable.

 

  • Penalty of Rs. 5 lakhs to Company secretary certifying wrong Annual Return.

 

  • Annual Financial Statement: Filing of Balance sheet with ROC within time limit- failure is costly for Company + Directors both. Penalty of Rs.100 per day + Rs. 1 lakh to Company + Director each.

 

  • Resignation of Auditor: The Return must be filed by the resigning Auditor within 30 days, failure to which the resigning Auditor is liable for penalty of Rs. 50,000 plus Rs. 500 per day.

 

  • Disqualification of Directors: A director can not become director in more than 20 companies. If he continues, he becomes disqualified now.

 

  • Company Secretary: Appointment of Company Secretary on the payroll (Private Companies having paid-up capital Rs. 5 crores & above) is mandatory. Default is now very costly- penalty increased substantially.

 

  • ROC may strike off a company if subscribers have not paid initial share capital after incorporation of a Company within 6 months.

 

  • Financial Year: The Indian subsidiary or associate or holding company of the foreign company may be allowed to follow any period as its financial period on an application made by such company if it is required for consolidation of its financials with the foreign company. Also the such period may or may not be one year.

 

  • Change in approving authority: Under the Act, change in period of financial year for a company associated with a foreign company, has to be approved by the National Company Law Tribunal.  Similarly, any alteration in the incorporation document of a public company which has the effect of converting it to a private company, has to be approved by the Tribunal.  Under the Ordinance, these powers have been transferred to central government.

 

  • Declaration of beneficial ownership: If a person holds beneficial interest of at least 25% shares in a company or exercises significant influence or control over the company, he is required to make a declaration of his interest. Under the Act, failure to declare this interest is punishable with a fine between one lakh rupees and ten lakh rupees, along with a continuing fine for every day of default.  The Ordinance provides that such person may either be fined, or imprisoned for up to one year, or both.

 

  • Resolutions and agreements to be filed – If the company fails to file a resolution and agreement before the specified time, the company shall be liable to pay INR 1,00,000 as penalty and in case of a continuing failure it will be extended further by INR 500 per day subject to a maximum penalty of 25 lakhs. For any officer who is liable, the penalty is of INR 50,000, and in case of a continuing failure it will be extended further by INR 500 per day subject to a maximum penalty of 5 lakhs.

 

  • Penalties in different sections – In section 191, the penalty is increased from a minimum of INR 25,000 to a minimum of one lakh rupees. In section 441, The maximum limit is increased from 5 lakh rupees to 25 lakh rupees.

 

Read the Ordinance Text  Companies-Amendment-Ordinance-2019

HIGHLIGHTS OF BUDGET 2019

HIGHLIGHTS OF BUDGET 2019

1. Within 2 years, Tax assessment will be done electronically
2. IT returns processing in just 24 hours
3. Minimum 14% revenue of GST to states by Central Govt.
4. Custom duty has been abolished from 36 Capital Goods
5. Recommendations to GST council for reducing GST rates for home buyers
6. Full Tax rebate upto 5 lakh annual income after all deductions.
7. Standard deduction has been increased from Rs. 40,000 to Rs. 50,000
8. Exemption of tax on second self-occupied house
9. Ceiling Limit of TDS u/s 194A has increased from Rs.10,000 to Rs. 40,000
10. Ceiling Limit of TDS u/s 194I has increased from Rs. 1,80,000 to Rs. 2,40,000
11. Capital Gains Tax Benefit u/s 54 has increased from investment in one residential house to two residential houses.
12. Benefit u/s 80IB has increased to one more year i.e. 2020
13. Benefit has been given to unsold inventory has increased to one year to two years.

Other Areas

14. State share has increased to 42%
15. PCA restriction has abolished from 3 major banks
16. 2 lakhs seats will increase for the reservation of 10%
17. 60000 crores for MANREGA
18. 1.7 Lakh crore to ensure food for all
19. 22nd AIIMS has to be opened in Haryana
20. Approval has to be given to PM Kisan Yojana
21. Rs. 6,000 per annum to be given to every farmer having upto 2 hectare land. Applicable from Sept 2018. Amount will be transferred in 3 installments
22. National Kamdhenu Ayog for cows. Rs. 750 crores for National Gokul Mission
23. 2% interest subvention for farmers pursuing animal husbandry and also create separate department for fisheries.
24. 2% interest subvention for farmers affected by natural calamities and additional 3% interest subvention for timely payment.
25. Tax free Gratuity limit increase to Rs. 20 Lakhs from Rs. 10 Lakhs
26. Bonus will be applicable for workers earning Rs. 21,000 monthly
27. The scheme, called Pradhan Mantri Shram Yogi Mandhan, will provide assured monthly pension of Rs. 3,000 with contribution of Rs. 100 per month for workers in unorganized sector after 60 years of age.
28. Government delivered 6 crores free LPG connections under Ujjawala scheme
29. 2% interest relief for MSME GST registered person
30. 26 weeks of Maternity Leaves to empower the women
31. More than 3 Lakhs crores for defence
32. One lakh digital villages in next 5 years
33. Single window for approval of India film maker.

Get income tax refund in one day from 2020

Highlights
– The Cabinet on Wednesday cleared an ambitious Rs 4,242 crore project for e-filling and centralised processing of income tax return, which will allow taxpayers to get a refund in one day through a pre-filled tax return form, the Times of India reported.
– Currently, the average time taken for return processing and giving a refund is 63 days, which will get reduced to one day, Railway Minister Piyush Goyal, said.

By 2020 taxpayers will have their income tax filing system run not by “Sarkari” IT teams but by IT major Infosys. The union cabinet on Wednesday cleared a Rs 4240 crore worth proposal that promises to trim down processing of returns from the current average of 63 days to just one day.

In a post cabinet briefing, Railways Minister Piyush Goyal said that the “Integrated E-filing and Centralised Processing Centre 2.0 Project” of the Income Tax Department is likely to be completed in 18 months. He added that the system will be launched for operations after a three month testing period.

The minister said that Infosys was not handpicked but was selected after a bidding process was carried out.

They key element of the proposed system is that it cuts down the physical intervention by the Income Tax department in the return filing and refund process.

The government feels that smoother, transparent and accountable tax filing system with less official interface will go a far way in improving tax compliance.

The government handled an unprecedented volume of tax returns in the current fiscal. Goyal said a whopping amount of 1.83 lakh crore has been issued as tax refund. Refunds are issued after a cumbersome scrutiny process. The government is bound to pay interest in case of a delay. The new system will result in speedy refunds which will be credited directly to taxpayers’ bank account. The faster system will reduce refund time for taxpayers and cut down government’s outgo.

The taxpayer friendly.e-filing and Centralised Processing Centre (CPC) projects will have end-to-end automation of all processes within the I-T Department. Goyal said that the idea is to “promote voluntary compliance”.

The old system CPC-ITR 1.0 has been given an extension and sanction of Rs 1450 crore for the year 2018-2019. This system will be used till the new one becomes operational.

 

Source: Times of India

Auditors barred from putting a value on companies they are auditing

An income tax tribunal has barred auditors from issuing valuation certificates to the companies they are auditing. This is set to impact several tax disputes around valuations in companies including angel tax disputes involving start-ups.

The Bangalore Income Tax Appellate Tribunal (ITAT) said that auditors of a company cannot double up as accountants especially in situations while dealing with “share valuation for the purpose of excess share-premium taxability.”

In several cases the income tax department has disputed valuations of companies around the time of investments.

The ITAT ruling came in a case where the tax department had challenged valuation of a company by its auditor.

In most cases, valuations of startups were challenged by the tax department, leading to “angel tax.” The angel tax controversy surrounds the valuations during various rounds of startup funding. In several cases, the revenues at startups kept reducing or remained stagnant, but their valuations increased. The taxman is questioning the premiums paid by the investors and wants to categorise them as income that would be taxable at 30%. In most cases, the investments made by angel investors, venture capital funds or any other investor have been challenged by the taxman.

Many accountants and valuers are already facing heat from the tax department. ET had, on December 25, reported that the tax department has started issuing show-cause notices to valuation experts, questioning the premiums several startups fetched during their investments rounds.

Valuation experts, however, say that they merely projected and calculated future growth, using the facts and figures provided by the startups. Many tax experts point out that the tax department’s approach to the fair value as a benchmark for calculating premiums may not be accurate in the context of startups.

Income tax officers claim that the scrutiny on startups is mainly due to concerns that black money may have changed hands.

ITAT Ruling

32nd GST Council Meeting – Key Takeaways

32nd GST Council Meeting took decision with respect to GST turnover limit – Rs 40 lakhs (from Rs. 20 lakhs) and composition scheme limit raised to Rs. 1.5 crore – changes would be effective from 1st April 2019. The Government took steps provide compliance relief to small businesses.

Outcome of 32nd GST Council Meeting -The highlights of the reliefs announced by FM Arun Jaitley are as below:

1. Threshold limit for GST Registration increased to 40 Lakhs
Effective April 1, the GST exemption threshold has been raised from Rs 20 lakh to Rs 40 lakh. For hilly states and those in the North East, the threshold has been doubled to Rs 20 lakh.

Earlier in a press talk AP FM said increased to 50lakhs, but it is increased to 40lakhs only as said by FM

2. Power to states
Now states will be able to choose if they want to keep the GST exemption limit at Rs 20 lakh or Rs 40 lakh, Jaitley said.

3. Composition limit increased to 1.5Cr from the present 1 Cr

The existing Composition Scheme turnover threshold raised to Rs 1.5 crore.

GST turnover limit and composition scheme changes would be effective from 1st April 2019.

4 Quarterly payment and Annual Return
Now Composition tax payers will pay tax quarterly, but file returns annually.

5 New Composition scheme for Services providers
Those providing services or mixed supplies (goods and services) with a turnover up to Rs 50 lakhs will now be entitled to avail composition scheme.

6 Rate for services under comp scheme @ 6%
Compounding rate for services under composition scheme is fixed at 6 percent.

7 Real Estate
A committee has been set up to consider real estate GST rates, a consensus is yet to be achieved, says FM Arun Jaitley.

8 Consensus for Calamity cess in Kerela @1%
GST Council has given approval to  Kerala to levy Disaster / Calamity cess of 1%  on all intra-state supplies of goods and services within Kerala, for up to 2 years.

GST Council extends Due Dates for Annual Returns and other GST Returns

GST Council grants mega relief to taxpayers – ITC for last FY invoices allowed upto March 31, 2019 + New GST Return to be launched on trial basis from April 1, 2019 + amendment in Sec 50 to allow payment of interest on net cash liability

The 31st GST Council meeting concluded today under the guidance of Union Minister Arun Jaitley has taken some important decisions including the due date extension for GST Annual Returns and some other Returns.

As per the recommendation of the Council, the due date for furnishing the annual returns in FORM GSTR-9, FORM GSTR-9A and reconciliation statement in FORM GSTR-9C for the Financial Year 2017 – 2018 shall be further extended till 30.06.2019.

Further, the due date for furnishing FORM GSTR-8 by e-commerce operators for the months of October, November and December 2018 shall be extended till 31.01.2019.

The due date for submitting FORM GST ITC-04 for the period July 2017 to December 2018 shall be extended till 31.03.2019. ITC in relation to invoices issued by the supplier during FY 2017-18 may be availed by the recipient till the due date for furnishing of FORM GSTR-3B for the month of March 2019, subject to specified conditions.

All the supporting documents/invoices in relation to a claim for refund in FORM GST RFD-01A shall be uploaded electronically on the common portal at the time of filing of the refund application itself, thereby obviating the need for a taxpayer to physically visit a tax office for submission of a refund application.

GSTN will enable this functionality on the common portal shortly. The due date for the taxpayers who did not file the complete FORM GST REG-26 but received only a Provisional ID (PID) till 31.12.2017 for furnishing the requisite details to the jurisdictional nodal officer shall be extended till 31.01.2019.

Also, the due date for furnishing FORM GSTR-3B and FORM GSTR-1 for the period July 2017 to February, 2019/quarters July 2017 to December 2018 by such taxpayers shall be extended till 31.03.2019

Late fee shall be completely waived for all taxpayers in case FORM GSTR-1, FORM GSTR-3B &FORM GSTR-4 for the months/quarters July, 2017 to September, 2018, are furnished after 22.12.2018 but on or before 31.03.2019.

 

Source: Recommendations-made-during-31st-Meeting-of-the-GST Council

 

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CBDT warns Cash Transactions above Permissible Limits

CBDT warns Cash Transactions above Permissible Limits

With a view to promoting cashless transactions, the Central Board of Direct Taxes ( CBDT ) has issued an advisory on its official website regarding cash transactions over and above the prescribed limits specified under the law.

 

The advisory issued by the Board remind the taxpayers to not accept cash of two lakh or more in aggregate from a single person in a day or for one or more transactions relating to one event or occasion.

 

One of the major steps introduced by the Government after the demonetization was to restrict cash transaction above Rs. 2 lakh rupees.

 

Under the Finance Act, 2017, the amounts in excess of Rs. 20,000 or more shall be received or repaid in cash for transfer of Immovable Property and amount more than Rs. 10,000/- in cash relating to the expenditure of business/profession was also banned.

 

Further, amount in excess of Rs. 2,000/- in cash cannot be donated to a registered trust /political party.

 

The department further reminded that the contravention may result in the levy of tax/ penalty.

 

The CBDT advisory said that any payment made in cash on account of the premium on health insurance facilities is not allowable as a deduction under section 80D of the Income Tax Act.

 

“Any information regarding black money including information about undisclosed income/ assets (both in India as well as abroad) and Benami transactions can be given to the jurisdictional Director General/ Pr. General of Income Tax (Investigation),” it said.

 

The CBDT has recently announced a new scheme called Income Tax Informants Rewards Scheme 2018 through which the department will reward up to 5 crore rupees to informants.

 

The scheme regulates grant and payment of reward to a person who is an informant under this scheme.

 

Also, the Benami Transactions Informants Reward Scheme 2018 has been announced for regulating grant for informants giving information relating to benami property actionable under Prohibition of Benami Property Transactions Act, 1988, as amended by Benami Transactions (Prohibition) Amendment Act, 2016.