MCA extends due date of DIR -3KYC / E-KYC of Directors
The government is considering giving another opportunity to 2.1 million company directors who have failed to comply with the ‘know your customer’ (KYC) norms, according to a senior official.
The government could give another 15 days for meeting the compliance norms or reduce the penalty for late filing, the official said, requesting not to be named. In June, the corporate affairs ministry had decided to seek KYC for all 3.3 million active directors. The last date for complying with the new norms by way of submitting form ‘DIR-3 KYC’ without fee ended on September 15.
Only 1.2 million directors were able to complete KYC. The post of remaining 2.1million can be re-activated only after a fee payment of Rs 5,000 along with requisite form. “We are looking at the option of either providing a window of 15 days or reducing late fee. The situation has been reviewed by corporate affairs minister Arun Jaitley. A lot of these people are genuine directors who could not complete the process,” the official said. “Decision on providing another window could be taken once the corporate affairs secretary, who’s currently traveling, is back.”
The Institute of Chartered Account of India and several other corporate bodies have also made representations to the ministry, requesting them to extend the period by another 15 days.
“The website wasn’t functioning properly between September 13 and September 15. Also, there were glitches in uploading the digital signatures,” ICAI president Naveen ND Gupta wrote in a recent letter to the ministry. Among those whose director identification number (DIN)—a unique number allotted to individuals eligible to have directorship on boards of registered companies— is being de-activated for non-compliance is a Union minister, a person in the know said. As a part of the KYC drive, company directors had to provide their passport, PAN and contact details, such as phone number and email address. They were required to link their Aadhaar and PAN with the DIN.
The move is aimed at weeding out fake names being listed as genuine directors.
This was a part of the government’s larger strategy to clamp down on shell companies. The government is currently in the process of de-registering 200,000 such companies. These companies have been struck off for not carrying out any business or operation in the last two years.
MCA extends due date of DIR -3KYC / E-KYC of Directors
In order to update the Directors database of The Ministry of Corporate Affairs(MCA), MCA has requested all Directors holding a DIN to complete DIN KYC before 15th September 2018.
To complete DIN KYC, the Director would be required to file a form known as DIR-3 KYC or DIN e-KYC.
The notification issued by Ministry of Corporate Affairs has been reproduced below:
Government of India MINISTRY OF CORPORATE AFFAIRS
Notification
New Delhi, dated 21st August 2018
G.S.R. …… (E).-In exercise of the powers conferred by sections 396,398,399, 403 and 404 read with sub-sections (1) and (2) of section ‘1-69 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following rules further to amend the Companies (Registration Offices and Fees) Rules, 2014, namely:-
(1) These rules may be called the Companies (Registration Offices and Fees) Fourth Amendment Rules, 2018.
(2) They shall come into force from the date of their publication in the Official Gazette.
In the Companies (Registration Offices and Fees) Rules, 2014, in the Annexure, under the head VII, for note below Fee for filing e-form DIR-3 KYC, the following note shall be substituted, namely:-
“for the current financial (2018-2019), no fee shall be chargeable till
the 15th September 2018 and fee of Rs.5000 shall be payable on or after the 16th September 2018”.
[F. No. 01/16/2013 CL-V (Pt-I)]
Sd/-
K.V.R MURTY, JOINT SECRETARY
Purpose of E-form DIR-3 KYC
The main purpose of e-form DIR-3 KYC is to collect the latest information about the directors of all companies. The information to be provided while completing eKYC procedures include Aadhar, PAN, Passport number, address, phone and email. The information submitted must be authenticated by completing one-time-password (OTP) verification and by signing with Digital Signature of Director and a practising Chartered Accountant.
Applicability
All directors having a DIN as on 31st March of 2018 must file e-form DIR-3 KYC on or before 15th September of 2018. For all Directors who obtained DIN after 31st March, 2018, DIR e-KYC must be filed next year.
Documents Required
The following are the documents required to file E-form DIR-3 KYC:
PAN Card for identity proof
Aadhar Card for address proof
Recent passport size photographs
Personal Mobile Number and E-mail ID of director for OTP Verification
Digital Signature Certificate of the director (DSC) that must be registered on MCA Portal
Passport (if the person holds a foreign citizenship)
Certifying Authority
The E-form DIR-3 KYC has to be duly certified by the Practicing Chartered Accountant (PCA), Practicing Company Secretary (PCS) or Practicing Cost Accountant.
Penalties
If the DIN holders do not file DIR-3, the MCA will mark them as deactivated. If the DIN holder files e-form DIR-3 KYC after 31st August 2018, a fee of Rs. 5,000 will be charged.
Time Limit
All directors to whom DIN has been allocated as of March 2018, the e-form DIR-3 KYC has to be filed by September 15, 2018. Originally, the MCA had provided a due date of 31st August which was subsequently changed to 15th September.
As part of updating its registry, MCA would be conducting KYC of all Directors of all companies annually through a new eform viz. DIR-3 KYC to be notified and deployed shortly.
Accordingly, every Director who has been allotted DIN on or before 31st March, 2018 and whose DIN is in ‘Approved’ status, would be mandatorily required to file form DIR-3 KYC on or before 31st August,2018.
While filing the form,the Unique Personal Mobile Number and Personal Email ID would have to be mandatorily indicated and would be duly verified by One Time Password(OTP).
The form should be filed by every Director using his own DSC and should be duly certified by a practicing professional (CA/CS/CMA).
Filing of DIR-3 KYC would be mandatory for Disqualified Directors also.
After expiry of the due date by which the KYC form is to be filed,the MCA21 system will mark all approved DINs (allotted on or before 31st March 2018) against which DIR-3 KYC form has not been filed as ‘Deactivated’ with reason as ‘Non-filing of DIR-3 KYC’.
After the due date filing of DIR-3 KYC in respect of such deactivated DINs shall be allowed upon payment of a specified fee only, without prejudice to any other action that may be taken.
Last week, the Parliament cleared a bill to further amend the Companies Act.
The financial statements and annual returns of all company must be filed on time with the ROC / MCA each year. As per Companies Act, 2013, non-filing of annual return is an offence, consequences of which affect the directors, as well as the company.
Hence, it is a must for every company to file with the MCA:
1. The annual return within 60 days of the Annual General Meeting and
2. The Financial Statement, within 30 days of the Annual General Meeting.
The various consequences and the penalties for not filing annual return of a company (Forms MGT-7 & AOC-4) are highlighted here.
A. Consequences – for Directors
The Directors of a company are responsible for ensuring the compliance of the company with all applicable rules and regulations. When a company defaults on compliance or dues payable, the Directors are held responsible for the default. The following are penal consequences for a Director of a company for default of non-filing of the Annual Return.
Director Disqualification
In case a company has not been filed its Annual Return for three continuous financial years, then every person who has been a director or is currently the director of the specific company could be disqualified under the Companies Act, 2013. If a Director is disqualified, his/her DIN would become inactive and the person would not be eligible to be appointed as a Director of any company for a period of five years from the date of disqualification. Further, disqualified Directors would not also be allowed to incorporate another company for a period of five years.
Fine & Imprisonment
A director of the company can be punished if the company has not been filed even after 270 days from the date when the company should have originally filed with additional penalty. Any Director who has defaulted in the filing of annual return of a company can also be penalized with an imprisonment of a term extended up to six months or with a fine of an amount not lesser than fifty thousand rupees and it might extend up to five lakh rupees, or with both imprisonment and fine. However, this provision provided under the Companies Act, 2013 is rarely used.
In addition, if any information filed by a Director or any other person in the annual return is false by any nature or if he/she failed to mention any fact or material that is true can be punished with imprisonment for a term which is not lesser than six months and which could extend up to 10 years. Further, he/she can also be liable for payment of a fine which is not lesser than the amount subject to the fraud involved and it may extend to an amount three times of the sum concerned with the fraud.
B. Consequences of Default – For Company
The following are some of the penal consequences for a company that has not filed its annual return:
Penalty
Normally, the Government fee for filing or registering any document under the Companies Act required or authorized to be filed with the Registrar is Rs.200. A private limited company would be required to file form MGT-7 and form AOC-4 each year and the government fee applicable if filed on time would be Rs.400. In case of delay in filing of annual return, the penalty as mentioned would be applicable:
The penalty for not filing a company’s annual return (Form MGT-7 and Form AOC-4) is increased to Rs.100 per day w.e.f.July 1, 2018.
Strike-Off
In case the company has not filed its Annual Return for the last two financial years continuously, then such companies would be termed as an “inactive company”. On such a classification, the bank account of the company could be frozen. Further, the Registrar could also issue a notice to the Company and initiate strike-off of the company from the MCA records.
In case you need any assistance to file annual return for your company, you can contact us at Director@Sunkrish.com
The Union Budget 2018-19 has rationalised the I-T Act provision relating to prosecution for failure to furnish returns.
Seeking to crackdown on shell companies, the government has proposed to remove exemption available to firms with tax liability of up to Rs 3,000 from filing I-T returns beginning next fiscal.
The Union Budget 2018-19 has rationalised the I-T Act provision relating to prosecution for failure to furnish returns.
Thus, a managing director or a director in charge of the company during a particular financial year could be liable for prosecution in case of any lapse in filing I-T returns for any financial year beginning April 1.
“The income tax departments would now track investments by these companies. Also, the focus will be on those firms that show less profit and also those who file I-T returns for the first time,” a senior finance ministry official said.
There are around 12 lakh active companies in the country, out of which about 7 lakh are filing their returns, including annual audited report, with the ministry of corporate affairs. Of this, about 3 lakh companies show ‘nil’ income.
The Section 276CC of the Income Tax Act provided that if a person wilfully fails to furnish in due time the return of income, he shall be punishable with imprisonment and fine.
However, no prosecution could be initiated if the tax liability of an assessee does not exceed Rs 3,000.
The government has amended the provision with effect from April 1, 2018 and removed the exemption available to companies.
“In order to prevent abuse of the said proviso by shell companies or by companies holding benami properties, it is proposed to amend the provisions… so as to provide that the said sub-clause shall not apply in respect of a company,” it said.
The official said that as many as 5 lakh are companies not filing returns and they could be a potential source of money laundering. “These could be small firms which are engaged in honest business, but there could be some which are a potential threat. We have to look into the data.”
Nangia & Co Managing Partner Rakesh Nangia said though the amendment has been brought about to prevent abuse by shell companies/benami properties, checks similar to those placed in the law for invoking GAAR, should be in place to avoid genuine hardship.
“Though the taxman may be driven by compulsions to ensure proper tax compliance, care must be taken while taking such action. In most developing countries, prosecution for tax matters is applied only in cases of serious tax frauds and not in general compliance matters,” Nangia said.
The Budget announcement follows the recommendation of the task force on shell companies, which was set up in February last year.
In the government’s fight against black money, shell companies have come to the fore as they are seen as potential for money laundering.
Till the end of December 2017, over 2.26 lakh companies were deregistered by the MCA for various non-compliances and being inactive for long.
Shell companies are characterised by nominal paid-up capital, high reserves and surplus on account of receipt of high share premium, investment in unlisted companies, no dividend income and high cash in hand.
Also, private companies as majority shareholders, low turnover and operating income, nominal expenses, nominal statutory payments and stock in trade, minimum fixed asset are some of the other characteristics.
Since last year, the Central Board of Direct Taxes (CBDT) — the apex policy making body of the I-T department — has been sharing with the MCA specific information like PAN data of corporates, Income Tax returns (ITRs), audit reports and statement of financial transactions (SFT) received from banks.
Budget 2018 has been presented by the Finance Minister Arun Jaitley and here are the key takeaways:
Personal tax
While the personal income tax structure remains the same-that is no new tax slab and no higher exemption limits-as a as a small concession, Jaitley has announced a standard deduction of Rs 40,000 for salaried taxpayers. This will be in lieu of the existing transport allowance and medical expense reimbursement. However, other medical reimbursements in case of hospitalisation will continue.
According to him, the existing allowances amount to Rs 30,000 so the actual tax benefit here on would be Rs 10,000 more for each taxpayer. This move is expected to benefit 2.5 crore people-25-30% of the total taxpayer base–and reduce paperwork along the way. The revenue cost of this concession is pegged at Rs 8,000 crore.
But if he is putting money in your wallets, his other hand is also taking cash away. The education cess levied on the tax you pay (also applicable on corporation tax) has gone up by 1%. The new 4% Health and Education Cess is expected to help the government collect an additional amount of Rs 11,000 crore.
Senior citizens
Apart from farmers and the gareeb nagrik, it is the older demographic that stands to gain the most from the latest Budget. To begin with, tax exemption of interest income from bank deposits has been raised to Rs 50,000 from the current Rs 10,000. He has also proposed to raise the deduction under health insurance premium under Section 80D of the Income Tax Act to Rs 50,000 (from Rs 30,000 currently). In case of senior citizens with critical illnesses the deduction will be Rs 1 lakh. Moreover, Fixed Deposit/Post office interest to be exempt till Rs 50,000. These concessions are expected to give senior citizens extra tax benefit of Rs 4,000 crore.
In addition to tax concessions, the government has proposed to extend the Pradhan Mantri Vaya Vandana Yojana up to March 2020 under which an assured return of 8% is given by Life Insurance Corporation of India (LIC). The existing limit on investment of Rs 7.5 lakh per senior citizen under this scheme is also being enhanced to Rs 15 lakh.
Corporate tax
Jaitley has announced that companies with a turnover of up to Rs 250 crore will now be taxed at 25% (from 30%). According to him, this move will benefit 99% of companies and the revenue foregone is pegged at Rs 7,000 crore in 2018-19. After this, out of about 7 lakh companies filing returns, only about 7,000 companies will remain in 30% tax slab.
The other bit of bad news is that the FM proposed to tax long term capital gains exceeding Rs 1 lakh on sale of equity shares/units of Equity oriented Fund at 10%, without allowing any indexation benefit. To justify his move, he pointed out that the total amount of exempted capital gains had surged to nearly Rs 360,000 crore, as per returns filed for assessment year 2017-18, and that the return on equity was attractive even without exemptions. A major part of this gain has reportedly accrued to corporates and LLPs. So while retail investors will also be hurt by this move, the impact will be most felt by corporates.
However, existing investors will be exempted from capital gains tax up to January 31, 2018. All gains made thereafter this cut-off date will be taxed. This move could earn the government Rs 20,000 crore in revenue in the first year. The revenues in subsequent years may be more.
Petrol/diesel prices
In a rejig of excise duty on petroleum products, the union government has cut basic excise duty on petrol and diesel by Rs 2. The Modi government has also abolished additional excise duty on fuel by Rs 6. Despite that petrol prices are likely to remain the same as a new road cess of Rs 8 per litre has been introduced.
Farmers
The Union Budget 2018 seems to have been the shot in arm it was predicted to be for the slowing agricultural sector of India. Staying true to government’s electoral promise of doubling farmers’ income by 2022, Jaitley kept the minimum support price (MSP) of kharif crops and all rabi crops at one and a half times the production cost of the crops. Currently, most of the rabi crops get that benefit.
In addition, an Agri-Market Infrastructure Fund of Rs 2000 crore will be set up for developing agricultural markets. Jaitley further allotted Rs 500 crore under Operation Greens-to be launched on the lines of ‘Operation Flood’-to address price volatility of perishable commodities and to promote Farmer Producers Organizations (FPOs), agri-logistics, processing facilities and more.
As per provisions of Budget 2018, government will encourage organic farming by FPOs and Village Producers Organizations (VPOs) in large clusters, preferably of 1000 hectares each. Women Self Help Groups will also be encouraged to take up organic agriculture in clusters under National Rural Livelihood Programme. Also, a sum of Rs 200 crore have been allocated to support organized cultivation of highly specialized medicinal and aromatic plants and aid small and cottage industries that manufacture perfumes, essential oils and other associated products.
Significantly, calling bamboo “green gold”, the finance minister announced the launch of a restructured National Bamboo Mission with an allocation of Rs 1,290 crore. The government will also set up two new funds for the fisheries sector and animal husbandry sector with a total corpus of Rs 10,000 crore.
Explaining that India’s agri-exports potential is as high as $100 billion against current exports of $30 billion, Jaitley wants export of agri-commodities to be liberalized. “I also propose to set up state-of-the-art testing facilities in all the forty two Mega Food Parks,” he added.
Lastly, the Budget not only proposed to raise institutional credit for agriculture to Rs 11 lakh crore for 2018-19 (up from Rs 10 lakh in the current fiscal) but also addressed the issue of air pollution due to burning crop residue. The Finance Ministry said that a special scheme will be implemented to support the efforts of the governments of Haryana, Punjab, Uttar Pradesh and the NCT of Delhi to address air pollution and to subsidize machinery required for disposal of crop residue.
The icing on the cake is the announcement of 100% tax deduction for first five years to companies registered as farmer producer companies with a turnover of Rs 100 crore and above.
Poor families
“From ease of doing business, our government has moved to ease of living for the poor and middle class,” Jaitley said in his speech. But he actually meant only poor families, who have been extended a plethora of schemes and allocations. Take the new National Health Protection Scheme under which annual health coverage of up to Rs 5 lakh per family will be offered for secondary and tertiary care hospitalization. This is expected to benefit over 10 crore vulnerable and under-privileged families. “This will be the world’s largest government funded health care programme,” Prime Minister Narendra Modi said in his address soon after the Budget speech.
The government will also establish 1.5 lakh Health and Wellness Centres under the Ayushman Bharat programme to provide comprehensive health care-including for non-communicable diseases and maternal and child health services-free essential drugs and diagnostic services. The Budget has earmarked Rs 1200 crore for this flagship programme.
In line with the government’s “Housing for All by 2022” promise, Jaitley announced that a dedicated Affordable Housing Fund will be set up, funded from priority sector lending shortfall and fully serviced bonds authorized by the government.
Also on the cards are free LPG connections to 8 crore poor women-up from the initial target of 5 crore beneficiaries-under the Ujjwala Scheme; two crore more toilets under Swachh Bharat mission, and a whopping Rs 16,000 crore allocation for the Saubhagya Yojana, under which four crore poor households are being provided with electricity connection free of charge.
Railways
Jaitley has proposed an ambitious plan for Indian Railways with a focus on modifications and safety rather than new train lines. He announced a capital expenditure allocation of Rs 1.48 lakh crore-the highest ever-for capacity expansion, maintenance of tracks, transforming almost the entire network into broad gauge, redevelopment of railway stations, producing upend coaches, the bullet train project, safety policies and more.
The FM announced that Wi-Fi, CCTVs will be provided in every station and escalators will be provided in stations with more than 25,000 footfalls. In the coming year, there will be a focus on upgradation of signalling and use of fog safety devices. He added that 600 railway stations across the country have been picked for modernisation and 4,000 km of railway network is set to be commissioned for electrification.
According to him, the coming year will be dedicated to building world-class trains and a railway institute will be set up in Vadodara, where the workforce behind high speed railway projects would be trained. There will also be a special focus on the upliftment of suburban trains in Mumbai and Bengaluru.
Education
“In order to further enhance accessibility of quality medical education and health care, we will be setting up 24 new Government Medical Colleges and Hospitals by upgrading existing district hospitals in the country. This would ensure that there is at least one medical college for every three parliamentary constituencies and at least one government medical college in each state,” said Jaitley.
Significantly, by 2022, every block with more than 50% scheduled tribe population and at least 20,000 tribal people will have ‘Ekalavya’ school at par with Navodaya Vidyalas. Jaitley also announced a new scheme for revitalizing school infrastructure, with an allocation of Rs 1 lakh crore over four years. He added that an integrated BEd programme will be initiated for teachers, to improve the quality of teachers.
Custom duties
Custom duty on mobile phones increased from 15% to 20%. The duty applicable on some mobile phone parts and accessories has been hiked to 15% and that on certain parts of TVs to 15%. “To help the cashew processing industry, I propose to reduce customs duty on raw cashew from 5% to 2.5%,” added Jaitley.
Significantly, Budget 2018 has levied a “social welfare surcharge” at 3-10% on imports in place of the Education Cess and Secondary and Higher Education Cess currently in place.
Non-corporate taxpayers operating in IFSC to be charged alternate minimum tax at concessional rate of 9% at par with minimum alternate tax applicable for Corporates.
In order to promote trade in stock exchanges located in International Financial Services Centre (IFSC), the Union Finance and Corporate Affairs Minister Arun Jaitley proposed to provide two more concessions for IFSC.
Presenting the General Budget 2018-19 in Parliament Jaitley proposed to exempt transfer of derivatives and certain securities by non-residents from capital gains tax. Further, the Finance Minister added that non-corporate taxpayers operating in IFSC shall be charged Alternate Minimum Tax (AMT) at concessional rate of 9% at par with Minimum Alternate Tax (MAT) applicable for corporates.
The Government had endeavored to develop a world class international financial services centre in India. In recent years, various measures including tax incentives have been provided in order to fulfil this objective.
