Companies and LLPs confirm their readiness towards COVID-19: MCA

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Advisory on Preventive measures to contain the spread of COVID19
Advisory on Preventive measures to contain the spread of COVID19

The Ministry of Corporate Affairs ( MCA ) is in the process of developing and deploying a simple web form named CAR (Company Affirmation of Readiness towards COVID-19) for companies/LLPs to confirm their readiness to deal with the COVID-19 threat.

Since the wake of the Novel Coronavirus(COVID-19) affecting over 110 countries including India, the WHO had declared it a Pandemic. Apart from human suffering, it is also causing major economic disruptions. In order to contain the spreading of the virus, the corporate sector is required to play a key role in implementing the strategic policy decision of social distancing, which is most crucial in reducing the rate and extent of disease transmission at the community level.

Taking cognizance of the gravity of the public health situation, the Government in the Ministry of Corporate Affairs has relaxed the rules with respect of Board and dispensed with the necessity of holding physical meetings on matters relating to approval of financial statements, board report, restructuring etc., up to 30th June, 2020. They are also examining any other relaxation under the Companies Act, 2013 that may be necessitated on account of COVID-19.

As part of disaster management to meet this urgent and severe health exigency, all companies/LLPs are strongly advised to put in place an immediate plan to implement the “Work from Home” in the Headquarters and field offices to the maximum extent possible, including by conduct of meeting through video conference or other electronic/telephonic/computerized means. They further instructed that even with the essential staff on duty, staggered timings may be followed so as to minimize physical interaction. Apart from that, the preventive measures including the Do’s and Don’t’s advised by the public health authorities are to be strictly followed.

The Webform named CAR will be deployed on 23rd March 2020. All companies/LLPs are requested to using compliance with the web form named CAR on the 23rd of March instant while following all possible preventive measures to contain the disease and its contagious effect.

Frequently Asked Questions on (CAR) – 2020

1. To whom is this form applicable?

To All Companies / LLP including small companies, private companies, One Person Company (OPC) .All Companies/LLP include the companies, whether incorporated in India or not, but having operations in India.

2. When will the form be deployed?

The form is expected to be deployed on 23rd March, 2020 and is required to be submitted by 30th March, 2020 (extended by a week).

3. Is there any fees for filing the form?

No.

4. Who can file the form on behalf of Companies / LLP?

CS, CFO, Managing Director, Director, Designated Partners or Authorized person who has been authorised for such purposes.

5. Whose Mobile number has to be entered in the form?

In case of Director / Designated Partner signing the form their mobile number will be automatically prefilled from database. In all other case, the Mobile Number shall be editable should be that of the person who is authenticating the form as it has to be verified by a One Time Password (OTP).

6. What if my organization does not have a whole time / permanent employee?

The form still has to be filed, but the Company / LLP will be eased of future compliance burden, if any.

7. Till when does such policy needs to be in place?

The policy needs to be in place till 31st March, 2020 as per present scenario but may be extended based on the review made by appropriate Govt. Authorities.

8. What if I do not adhere to filing of such web form?

There has not been any information on the same but going by the intent of the form, non – filing of it may not lead to any penal outcome.

9. On what basis can I prepare “Work from Home” policy?

This shall be prepared based on the guidelines and advisory issued by the Government from time to time to check the spread of COVID – 19.

10. How to track the filing of form?

Once the form is filed, a system based acknowledgement will be sent to:

  • Email id of the Company / LLP
  • Email Id of the person affirming the form
  • Email id of FO user submitting the affirmation.

39th GST Council Meeting: Highlights

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Infosys Nilekani gave GST Network presentation to Council.

Council ask Infosys to improve GST Network by July.

Filing to be mandatory for taxpayers over Rs 5cr of annual turnover

Decides to extend deadline for filing of GSTR9 & GSTR9C for FY18-19 till June 30, 2020,

GST Council to continue with 3B till September & defer the new return system.    

Council defers the proposal on taxability of economic surplus of brand owners of alcohol for human consumption,

Reassures states towards payment of compensation dues,

Where Cancellation have been cancelled till March 14, application for cancellation of revocation can be filed till March 31, 2020.

GSTR-1 to be made compulsory only for making B2B supplies, exports & amendments

B2C & non-filers of GSTR-3B to be exempted from filing GSTR-1

Before 10th for turnover greater than Rs 1.5 cr

Before 13th for turnover lesser than Rs 1.5 cr

GSTR-2A to be generated on 14th of every month

Council approves “Know your Supplier” Scheme

Major Reliefs:  

Interest for delay in GST payment will now be charged on next cash liability under Section 50, to be applicable from July 2017              

GST on mobile phones and specified parts was increased from 12% to 18%. This decision was taken to avoid difficulties due to the inverted duty structure.


All types of matches have been rationalised to a single GST rate of 12%. Till now, the handmade ones were taxed at 5% and the rest was taxed at 18%.


GST on Maintenance, Repair and Overhaul (MRO) service in respect to aircraft was reduced from 18% to 5% with full ITC.

All these rate changes will come into effect from 01 April 2020.

A new scheme called ‘Know your Supplier’ has been introduced so that the taxpayers are informed about the basic details of the suppliers with whom they transact or propose to conduct business.

RBI digs into Yes Bank’s past, questions auditor

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RBI is also likely to question the auditor on whether the SBI proposal would have any ‘material impact’ on the existing accounts of Yes Bank

The Reserve Bank of India will check if troubled lender Yes Bank’s auditor had raised any alarm in the past year. The apex bank has been in touch with the auditor and will look into whether they had specifically issued any warning in the past 12 months.

According to a report in The Economic Times, RBI has been in touch with auditor BSR & Co and wants to know if it had raised any red flag relating to the health of Yes Bank or any other issue. The auditor is part of KPMG India. The central bank is also likely to question the auditor on whether the SBI proposal would have any ‘material impact’ on the existing accounts of Yes Bank.

On Friday, the RBI announced a reconstruction scheme for the bank. It said that SBI that has expressed interest to invest in the troubled bank would do so to the extent of holding 49 per cent shareholding. The apex bank said that SBI’s investment in Yes Bank would not impact the employees and their current terms of employment.

BSR and Co was appointed as Yes Bank’s auditor after RBI banned SR Batliboi & Co for a year. The RBI had stated that the firm that was part of EY was banned due to “lapses identified in a statutory audit assignment carried out by the firm”.

RBI put restrictions on Yes Bank on March 6, allowing its customers to withdraw only Rs 50,000 for a month. The apex bank relaxed the guidelines subsequently. On Tuesday, the bank permitted its credit card customers to pay their credit card dues and loan obligations from other bank accounts. It allowed NEFT payments to clear loan EMIs and make credit card payments. The bank had, before that, allowed customers to withdraw money from ATMs of other banks.

Source: Business Today

MCA notifies Companies (Auditor’s Report) Order 2020 – CARO 2020.

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The government had issued new norms for auditors, seeking more disclosures in reports, a move which comes after a series of corporate scams and frauds surfaced over the past few years.

CARO 2020 – Companies (Auditor’s Report) Order, 2020

MCA in place of existing the Companies (Auditor’s Report) Order, 2016, has notified CARO 2020 after consultation with the National Financial Reporting Authority constituted under section 132 of the Companies Act, 2013.

Auditor’s report to contain matters specified in paragraphs 3 and 4. – Every report made by the auditor under section 143 of the Companies Act on the accounts of every company audited by him, to which this Order applies, for the financial years commencing on or after the 1st April, 2019, shall in addition, contain the matters specified in paragraphs 3 and 4, of the CARO 2020.

Provided this Order shall not apply to the auditor’s report on consolidated financial statements except clause (xxi) of paragraph 3.

It shall come into force on the date of its publication in the Official Gazette.

CARO 2020 – Key changes/highlights

Matters to be included in auditor’s report, in CARO 2020 – the reporting clauses are more extensive and detailed than were in CARO2016

Unlike CARO 2016, which required reporting on all fixed assets, new reporting requirements pays attention to Property, Plant, Equipment and intangible assets.

Reporting on revaluation of Property, Plant and Equipments by company

Reporting of proceedings under the Benami Transactions (Prohibition) Act, 1988.

Reporting of compliances if company was sanctioned working capital limits in excess of Rs.5 crores or more from banks or financial institutions.

 – whether the quarterly returns or statements filed by the company with such banks or financial institutions are in agreement with the books of account of the Company, if not, to give details;

Reporting of investments in or in providing of any guarantee or security or granting any loans or advances to companies, firms, Limited Liability Partnerships or any other parties.

Reporting of compliances with RBI directives and the provisions the Companies Act with respect to deemed deposits.

Reporting with respect to transactions not recorded in the books of account surrendered or disclosed as income in the income tax proceedings.

Comprehensive reporting requirement for default in the repayment of loans / other borrowings or in the payment of interest

 – whether the company is a declared wilful defaulter by any bank or  financial institution or other lender; 

 – whether term loans were applied for the purpose for which the loans were obtained; if not, the amount of loan so diverted and the purpose for which it is used may be reported; 

 – whether funds raised on short term basis have been utilised for long term purposes,  if yes, the nature and amount to be indicated

Reporting on treatment by auditor of whistle-blower complaints received during the year by the company 

Reporting on internal audit system

 – whether the company has an internal audit system commensurate with the size and nature of its business; 

 – whether the reports of the Internal Auditors for the period under audit were considered by the statutory auditor;   

Reporting on cash losses

Reporting on resignation of the statutory auditors

Reporting on uncertainty of company capable of meeting its liabilities

Reporting transfer of unspent CSR amount to Fund specified in Schedule VII

Reporting on qualifications or adverse remarks by the auditors in the CARO reports of companies included in the consolidated financial statements

It is expected that CARO, 2020 will improve the overall quality of reporting by the auditors and thereby lead to “greater transparency and faith in the financial affairs of the companies.”

Read : CARO 2020 dated 25.02.2020

30 important Key features of GST New Return System:

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First 15 features (1-15 points) as PART-I:-

  1. Supplier can upload the Tax Invoices on real time basis in Anx-1.
  1. Recipient can view his purchase Invoices on near real time basis.
  1. Recipient can also view whether supplier has filed his return or not.
  1. Supplier has to upload the Tax Invoices latest by 10th of Next Month.
  1. However, recipient can claim ITC on missing invoices also subject to certain conditions.
  1. In case, Invoice uploaded by the supplier in Anx-1, but RET-1 is not filed, uploading of invoices in Anx-1 will be treated as self-admitted liability and recovery proceedings will be initiated against the supplier, except in certain specified situations where recipient will be liable to pay.
  1. Recipient has to pay the amount of ITC availed on missing invoices after specified period. (Missing invoices means, invoices not uploaded in Anx-1)
  1. To find out missing invoices, Offline IT Tool will be provided for matching invoices in Anx-2 with invoices in the accounting system of recipient.
  1. Payment of tax shall be discharged full at the time of filing of RET-1 or SAHAJ or SUGAM itself.
  1. In case of Quarterly returns, tax shall be paid on monthly basis.
  1. Recipient can do the following actions on the invoices appearing in Anx-2 (auto drafted Purchase Invoice):

Accept  also called as locking

Reject (eg. Invoice not related to the recipient)

Pending

  1. If no action is taken on a particular invoice, it will be deemed by the system as accepted and ITC will be available against these invoices.
  1. Once invoice is accepted by the recipient, i.e., locked by the recipient, supplier cannot amend those invoices.
  1. Locked Invoice should be unlocked by the recipient only, for making any amendment by the supplier.
  1. Supplier will be able to issue Debit Note or Credit Note on locked invoices also. If credit/debit note is issued against any pending invoice, then system will club the credit/debit note with pending invoice.

Second set of 15 features (16-30 points) as PART-II:-

  1. Missing invoices shall be reported in RET-1 of the current month.
  1. System will calculate the interest automatically. Once the tax and interest is paid, the missing invoice will be clubbed with the monthly return to which it relates.
  1. For amendments, separate Return Form is available.
  1. Maximum 2 amendments return can be filed for any one month.
  1. “NIL” Return can be filed by “SMS”.
  1. Negative liability if any shall be carried forward to next month regular return.
  1. Higher late fee for amendment return if change in liability is more than 10%
  1. Shipping Bill details also should be entered in Anx-1 by the exporters.
  1. If the shipping bill details are not available by the time of filing the return, the same can be entered later on also.
  1. The export data then will be transmitted to ICEGATE portal for cross verification purposes.
  1. Until the facility is ready to pull the data from ICEGATE portal, importers can avail ITC on imports and supplies from SEZ on self-declaration basis.
  1. New concept of suspension of registration will be introduced. From the date of suspension till the date of cancellation, tax payer need not file returns and invoice uploading also will not be allowed.
  1. HSN should be reported at 4 digit level in monthly return.
  1. The tables in the return will be opened based on the profile of the tax payer.
  1. For all return obligations offline utility tools are made available to make filing process as easy as possible.

Budget 2020 highlights: New income tax slabs, DDT gone..

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In the union budget 2020, the following section 115BAC shall be inserted in the Income Tax Act, with effect from the 1st day of April, 2021, with  new income tax slabs and lower rates. These income tax rates are optional and are available to those who are willing to forego some exemptions and some deductions.

Direct Taxes
1. Tax rate reduced for new companies to 22% and for manufacturing companies 15%
2. New simplified personal tax regime for Individual tax payers. The revised slab can be availed if they do not claim deductions and certain exemptions.
For income :
Upto 5,00,000 nil
Rs 5,00,000 -7,50,000: 10%
Rs 7,50,000 – 10,00,000 : 15%
Rs10,00,000 – Rs 12,50,000 20%
Rs 12,50,000- Rs 15,00,000 : 25%
More than Rs 15,00,000 : 30%
3. Companies not required to deduct dividend distribution tax and will be taxed only in the hands of the recipient. Parent company to be allowed deduction of dividend received subsidiary
4. Concessional tax rate of 15% extended to power generation companies
5. Investment made in Infrastructure and other specified sectors
6. Tax rate of 194LC at 5% for interest payment to non resident in respect of money borrowed or bond issued upto June 30,2023 and for 194LD at 5% for interest on borrowing from foreign institutional or qualified investor and municipal bonds
7. Interest payment on bonds listed on exchange by ILFS – 4%
8. Option to Cooperative societies to pay tax at 22% with no exemption or deduction. Exempt from alternative minimum tax
9. Affordable housing tax breaks extended by one year. Additional 1.5 lakhs tax benefit on interest paid on affordable housing loans to March 2021
10. Turnover threshold for tax audit raised to Rs 5 crore from Rs 1 crore
11. 100% tax concession to sovereign wealth funds on investment in infra projects
12. Income from Charitable institutions fully exempt from taxation. Donation to such institution allowed as deduction.
13. Registration of charity institutions to be made completely electronic, donations made to be pre-filled in IT return form to claim exemptions for donations easily.
14. Faceless appeals against tax orders on lines of faceless assessments
15. For tax payers who have appeals pending only disputed tax is to be paid by tax payer and no interest or penalty if the same is paid within March 31,2020. Post March 31,2020 certain amount levied uptill June 30,2020
16. Startup ESOP taxes deferred by 5 years
Other Areas
1. New scheme to provide subordinate debt to MSME
2. Decriminalise some norm violations in Companies Act
3. Increase the bank deposit insurance from Rs 1 lakh to Rs 5 lakh
4. New system for instant allotment of PAN
5. A new scheme NIRVIK to be launched this year itself for exporters
6. A debt ETF consisting of government securities will be launched.
7. For NBFCs and HFCs, liqduity constraints will be addressed.
8. FPI Limit in corporate bonds will be raised to 15% from 9%.
9. LIC to be listed at stock exchanges

Two important changes in Income tax (TDS/TCS)
— TCS to be collected by seller whose turnover exceeds Rs. 10 cr. In previous year from each buyer on amount exceeding 50 lacs @0.1% for sale of goods.

-TDS rate u/s 194J for technical payment changed from 10% to 2% to avoid litigations in respect of 194J Vs 194C