So far 13 banks have provided information to the government on 13,140 accounts of 5,820 deregistered companies, with the most startling details emerging from IDBI Bank, Bank of Baroda and Canara Bank.
The corporate affairs ministry is likely to ask the department of financial services to take action against the banks which have continued lending to companies that have been deregistered.
The ministry is also likely to raise the issue of banks not showing urgency in sharing information on transactions of these companies before and after the announcement of demonetisation on November 8 last year.
The Registrar of Companies, which comes under the corporate affairs ministry, had struck off 2.09 lakh companies from the list of active establishments after they failed to comply with regulatory requirements. Banking transactions of these companies are restricted only for settling liabilities.
Despite this, according to sources, one government-owned bank has lent more than Rs 280 crore to a company after it was deregistered. Such transactions are likely to have occurred among other public sector banks as well, but the government still doesn’t have detailed data on the dealings, they said. “There is a need for greater transparency. We are simply waiting for the banks to come up with more information. Only a few have shared (the information) so far,” a senior government official said.
So far 13 banks have provided information to the government on 13,140 accounts of 5,820 deregistered companies, with the most startling details emerging from IDBI Bank, Bank of Baroda and Canara Bank.
Earlier this month, the government said these 5,820 companies had deposited Rs 4,573 crore post demonetisation in banks and withdrew Rs 4,552 crore, even as they held balances of just Rs 22 crore on the day demonetisation was announced. This number is likely to go up manifold once the banks share more data.
The government is probing accounts of all the 2.09 lakh companies that were struck off the registry, which previously had about 13 lakh companies.
Four banks — Qatar National Bank, Doha Bank, Emirates NBD Bank and Punjab Gramin Bank — stated that they didn’t hold any accounts of the suspect companies.
A few companies were found to be having multiple accounts in some banks, like Bank of Baroda, where one company held as many as 915 accounts.
Increasing the fear of an unravelling of the exercise of invoices-matching, which is crucial to realising the presumed merits of the goods and services tax (GST), like reduction of tax evasion and cascades, three-fourths of the 60 lakh eligible taxpayers haven’t completed the formalities of filing.
Increasing the fear of an unravelling of the exercise of invoices-matching, which is crucial to realising the presumed merits of the goods and services tax (GST), like reduction of tax evasion and cascades, three-fourths of the 60 lakh eligible taxpayers haven’t completed the formalities of filing both the inward and outward supplies-based returns for July till a day before the October 31 deadline. This has forced the government to give another window till November-end “to facilitate about 30.81 lakh taxpayers” to file details of inward supplies (GSTR-2). The triplicate comprehensive returns for July, the first month since GST’s launch, were originally required to be filed in the subsequent month itself, but due to the GST Network’s technical glitches and low levels of compliance, the deadlines have been extended multiple times. The schedule for filing these returns for August onwards has not even been announced yet, as this was to follow from the July-cycle learning. While invoice-matching is getting unduly delayed, piling up a huge job for the taxmen, the consequent blockage of input tax credits is bound to hit the working capital for large sections of the industry.
Since the launch of GST, small and medium enterprises have faced cash crunch, while exporters have got the refunds of July and August taxes only recently. Of course, the government has allowed industries with turnover up to Rs 1.5 crore to file the detailed returns on a quarterly basis while assuring them of prompt release of input tax credits claimed via monthly interim returns, but the deferment of invoices-matching would mean large-scale adjustments of the tax and ITC figures later. The government has faced much criticism for the imperfections of the GST it launched (multiple rates, high peak rates, exclusion of real estate and five petro- leum products etc). Also, since the GST was introduced, it has had to make more compromises that besmirched the new tax further. While dozens of items saw rate changes post-July, the GST Council, on October 6, accorded virtual tax waiver for exporters till March 31, 2018, despite exemptions running contrary to the GST’s basic tenet.
Besides, units with up to Rs 1.5 crore turnover were allowed to file quarterly instead of monthly returns, a move that would allow 90% of the non-composition GST registrants to shift to the easier system of filing returns every quarter, but could make prompt invoices-matching difficult. As reported by FE on Monday, the council may allow all taxpayers to move to quarterly mode of filing returns as it meets at Guwahati on November 10. The composition scheme — that allows businesses to pay taxes as a small percentage of turnover annually — is set to be made available to units with turnover up to Rs 1.5 crore, in what could effectively exclude 90% of the taxpayers from being part of the multi-point destination-based tax chain.
GST Network, which is the IT backbone of GST, estimates that about 80 crore invoices would be uploaded on to the system every month. A tax official said that even if 2-3 crore of the invoices don’t match, it will lead to numerous disputes, which would be arduous to resolve. “Besides, tax evasion takes place when transactions are off-book which will never be captured through invoices. The government needs precise and visible enforcement to minimise tax evasion,” the official said. To begin with, GST Council should have implemented matching at the GST level where sale and purchase are matched on the basis of the unique GST registration number of each taxpayer. Invoice matching should ideally have been brought in a few months later after the system stabilised. Now that some taxpayers are allowed to file returns only quarterly, the matching should also be harmonised with it and not be carried out every month.
These steps alone will make the process smoother,” Rahul Renavikar, managing director of Acuris Advisors said. Aditya Singhania, of Taxmann, said: “The matching concept is a much appreciated step for allowing input tax credit which is regulated by the GSTR 1, 2 and 3 mechanism. But with the brilliant concept, the IT platform of GST i.e. www.gst.gov.in should equally work in same wavelength for achieving the objective. Due to certain bugs and frictions, coupled with totally new forms of returns, taxpayers were unable to file the (returns) on time.” While industrialised states like Maharashtra, Gujarat and Karnataka among others had invoice-matching systems prior to GST, although these were not granular-level matching. A Maharashtra tax official, who requested anonymity, said that matching at the level of VAT number –much simpler than invoice-level matching – had enabled identification of 80% mismatches, which enabled the tax department to take action against hawala operations.
However, some tax officials have doubted the efficacy of invoice-matching, saying this wasn’t much of a success in any country with GST-type tax. “The first two month would pose immense challenges on how to deal with invoice mismatches and the provision may eventually have to be done away with,” a revenue department officials told FE on the condition of anonymity. The tax department is also worried that about 40% of taxpayers who filed the returns for July have claimed nil-tax liability. “It is indeed a large number. If enforcement is required, we will carry it out, though not in the nature of search and seizure. We may opt for discreet inquiries and meetings with such groups of taxpayers, to find out the reasons for the trend,” revenue secretary Hasmukh Adhia had told FE earlier.
MCA has relaxed additional fees and extended the last date of filing of AOC-4 XBRL & non-XBRL e-filing for the companies.
Ministry of Corporate Affairs has extended the due date for filing the Audited Financial Statement for Financial Year 2016-17 till November 28,2017.
Keeping in view the requests received from various stakeholders, for allowing extension of time for filing of financial statements for the financial year ended 3I.03.2017 on account of various factors, it has been decided to extend the time for liling e-forms AOC-4 and AOC-4 (XBRL non-Ind AS) and the corresponding AOC-4 CFC e-forms up to 28.11.20l7 without levying additional fee.
The official circular in this regard is appended below.
F No. 01/34/2013-CL-V
Government of India
Ministry of Corporate Affairs
5th Floor, A Wing, Shastri Bhawan,
Dr. R.P. Road, New Delhi – 110001
Dated:- 27th October, 2017
To
All Regional Directors,
All Registrar of Companies,
All stakeholders
Subject: Relaxation of additional fees and extension of last date of filing of AOC-4 and AOC-4 (XBRL Non-IndAS) under the Companies Act, 2013 – reg.
The Ministry of Corporate Affairs has extended the date of filing of AOC-4 (XBRL E-Forms using Ind AS) for the financial Year 2016-17 without additional fees till 31.03.2018 vide General Circular No. 13/2017 dt 26.10.2017. Keeping in view the requests received from various stakeholders, for allowing extension of time for filing of financial statements for the financial year ending on 31.03.2017 on account of various factors, it has been decided to extend the time of filing e-forms AOC-4 and AOC-4 (XBRL Non-IndAS) and the corresponding AOC-4 CFC e-forms upto 28.11.2017 without levying additional fees.
This issues with the approval of competent authority.
According to the minister, since the country-wide land records have been computerised, it would not take much time for the states to provide the requisite information to the district authorities and the central government.
The corporate affairs ministry today asked states to complete identification of properties owned by deregistered companies at the earliest and ensure district administrations prevent transactions in those assets.
Amid intensifying efforts to fight the black money menace, the ministry has also urged the states to initiate disciplinary action against the officials concerned in case such transactions go through.
The names of around 2.25 lakh companies which have not been carrying out business activities for long have been struck off the official records and a number of directors associated with such firms have been disqualified.
Against this backdrop, Minister of State for Corporate Affairs P P Chaudhary today held a review meeting with representatives from various states on action taken with respect to properties belonging to around 2.09 lakh deregistered companies.
During the meeting, Chaudhary asked the states’ representatives to complete the process of identification and tracking of properties belonging to such companies at the earliest, according to an official release.
In this regard, the states have been requested to share information with the ministry in a time-bound manner.
On September 12, the ministry had sent a letter to states for identification and tracking of properties belonging to around 2.09 lakh companies that were deregistered. Now, the number of such firms is about 2.25 lakh.
Additional state-wise information pertaining to such companies was also shared with the state representatives.
According to the minister, since the country-wide land records have been computerised, it would not take much time for the states to provide the requisite information to the district authorities and the central government.
Since the names of the companies have been struck off, any transaction pertaining to properties owned by them, their directors or authorised signatories would be “void ab initio and a nullity till such companies are restored by an order of the National Company Law Tribunal (NCLT), the release said.
“In fact, by virtue of the company’s name having been struck off from the Register of Companies under the Companies Act, 2013, its identity as a legal person had been lost and hence, the legal ownership of properties belonging to such a company was non-existent,” it added.
Chaudhary advised the representatives to ensure that requisite directions are urgently issued to all the district authorities dealing with registration of properties to put in place appropriate mechanism to prevent transactions in properties belonging to the deregistered companies.
Officials allowing registration of transactions in such properties by ignoring the requisite directions may be subjected to disciplinary action, he told the representatives.
Emphasising that tackling of shell companies is an imperative element in the fight against black money, Chaudhary said such a drive would help unearth benami properties and discourage illegal practices, which would create a healthy economic environment for honest businessmen.
GST Network (GSTN), the company handling IT infrastructure for the indirect tax regime, has from October 10 started issuing refunds to exporters for Integrated GST (IGST).
Exporters can soon start claiming refunds for GST paid in August and September as GSTN will this week launch an online application for processing of refund, its Chief Executive Officer Prakash Kumar said today.
GST Network (GSTN), the company handling IT infrastructure for the indirect tax regime, has from October 10 started issuing refunds to exporters for Integrated GST (IGST) they paid for the month of July, after matching GSTR-3B and GSTR-1.
For August and September, while the initial return GSTR- 3B has already been filed, the final return GSTR-1 has not yet been filed.
“A separate online app for claiming Integrated GST (IGST) refunds for August and September would be made available on GSTN portal this week,” Kumar told .
GSTN has developed the app wherein exporters can save and upload their sales data which are part of GSTR-1 after filling up export details in Table 6A.
The table will be then extracted separately and after exporters digitally sign it, it would automatically go to the customs department.
The customs department will then validate the information provided in the table with the shipping bill data and also the taxes paid in GSTR-3B. The refund amount would be either credited to exporter’s bank account through ECS or a cheque would be issued.
As per data, 55.87 lakh GSTR-3B returns were filed for July, 51.37 lakh for August and over 42 lakh for September. Preliminary returns GSTR-3B for a month is filed on the 20th day of the next month after paying due taxes.
Thereafter, final returns in form GSTR-1, 2, 3 are filed by businesses giving invoice wise details of sales. The final return filing for August and September has not started yet.
Over July-August, an estimated Rs 67,000 crore has accumulated as the Integrated GST (IGST), of which only about Rs 5,000-10,000 crore will be due as refunds to exporters.
The Goods and Services Tax (GST), the amalgamation of over a dozen indirect taxes like excise duty and VAT, does not provide for any exemption, and so exporters are required to first pay Integrated-GST (IGST) on manufactured goods and claim refunds after exporting them. This had put severe liquidity crunch, particularly on aggregators or merchant exporters.
To ease their problems, the GST Council earlier this month decided a package for them that includes extending the Advance Authorisation / Export Promotion Capital Goods (EPCG) / 100 per cent EOU (Export Oriented Unit) schemes to sourcing inputs from abroad as well as domestic suppliers till March 31, thus not requiring to pay IGST.
The government is aiming to clear pending GST refunds of exporters by November-end. The first cheque after processing of July refunds was issued on October 10.
Country’s growth is expected to accelerate in the medium-term as temporary disruptions due to demonetization and GST.
India must prioritise implementation of public banking sector structural reforms, enhance the efficiency of labour and product markets, and modernise agriculture sector to accelerate its growth, the IMF said Friday.
The country’s growth is expected to accelerate in the medium-term as temporary disruptions due to demonetisation and the Goods and Services Tax (GST) fade, the International Monetary Fund said in its Asia and Pacific Regional Economic Outlook Update.
The economic growth slowed in India in recent quarters due to the temporary disruptions from the currency exchange initiative demonetisation that took place in November 2016, and the recent rollout of the GST, it said.
The GST is a landmark tax reform that should help unify the domestic market and encourage businesses to move from the informal to the formal sector, the IMF noted.
Inflation has been low compared with the mid-point target in recent months, driven by lower food prices, allowing the central bank to cut its policy rate in August, it added.
“Growth in 2017 was revised downward to reflect the recent slowdown, but is expected to accelerate in the medium term as these temporary disruptions fade,” it said.
In India, growth was revised down to 6.7 per cent in FY2017 and to 7.4 per cent in FY2018.
“Growth will be underpinned by private consumption, which has benefited from low food and energy prices, as well as civil service allowance increases,” IMF said.
Headline inflation is projected to stay close to the midpoint of the target band (4 per cent 2 per cent) in FY2017, while moving to the upper half of the target band in the medium term as food prices recover, it said.
The current account deficit should remain modest, financed by robust foreign direct investment inflows, it noted.
According to the outlook, in India, priorities should be strengthening public banks loss-absorbing buffers, implementing further public banking sector structural reforms, and enhancing public banks debt recovery mechanisms.
“Reform efforts should aim at tackling supply bottlenecks, enhancing the efficiency of labour and product markets, and modernising the agricultural sector,” the IMF said, adding that labour market reforms should be a priority to facilitate greater and higher-quality job creation.
More than 90 days after the roll-out of the goods and services tax (GST), lenders are gravitating to sanctioning working capital loans, especially to micro and small units, against documents used in the new tax regime.
They are no longer looking at just sales of the units concerned to decide on loan sanctions.
Banks are looking at input credit in deciding how much working capital loans they should advance.
The country’s largest lender, State Bank of India, and Union Bank of India, also a public sector bank, have started giving loans, especially to micro, small and medium enterprises (MSMEs) after assessing their input tax credit claims.
A public sector bank executive said the large number of small and medium enterprises (SMEs) had been included under the ambit of formal trade with the introduction of the GST.
SMEs are facing a working capital crunch because in the absence of proper financial returns, they are unable to access bank credit.
In the traditional route, banks make working capital assessments based on sales, as indicated in the balance sheet.
Besides this, entrepreneurs are facing a credit crunch because in the GST regime SMEs are entitled to input tax credit, and it is stretching their operating cycle.
A Punjab National Bank (PNB) official said the banking system is shifting to looking at the history of transactions such as GST credit-based decisions about credit, especially for SMEs.
SBI Chief General Manager (SME) V Ramling said using GST claims by banks would give SMEs the time to manage their working capital requirements till the time they got input tax credit. It will also help stabilise SMEs to run their operations without any hurdles.
SBI said the loan would be sanctioned outside Assessed Bank Finance (ABF) at 20 per cent of the existing fund-based working capital limit or 80 per cent of input tax claim due on purchases, whichever is lower.
Units and companies seeking a loan under the product need to give a certificate from their chartered accountant, confirming the input credit claims.
So far 13 banks have provided information to the government on 13,140 accounts of 5,820 deregistered companies, with the most startling details emerging from IDBI Bank, Bank of Baroda and Canara Bank.
