As SEBI reforms startup listing, SMEs must ensure funds are not misused

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SME ExchangeAmid SEBI banning as many as 239 entities for alleged money laundering, taxation consultancy PwC has called for a three-year locking-in for the entire pre-listing capital held by promoters to curb tax evasion and other illegal activities through market platforms.

The agency has called for imposing a similar lock-in even for preferential allotments, as prescribed under the capital and disclosure requirement (ICDR) norms so that only serious investors access the market. The PwC report is part of a BSE-mandated review of SME listing process.

The premier bourse last week said that 100 entities were trading on its SME platform. The regulator Securities and Exchange Board (SEBI) on June 29 banned four publicly traded SMEs and 235 other related entities for alledgely misusing the exchange’s platform for money laundering and tax evasion.

The SEBI, in an interim order alleged that these entities made Rs 614 crore in illegal gains through suspected money laundering and tax evasion activities. The four companies banned are EcoFriendly Food Processing Park, Esteem Bio Organic Food Processing, Channel Nine Entertainment and HPC Biosciences. These are traded on the BSE SME Platform.

“The institutional trading platform (ITP) could be utilised as a tool for tax planning by staying invested in an SME for a period more than 12 months and exiting at a very high stock price thereby making huge gains with no tax liability,” PwC said in the report.

Accordingly, the report has suggested that the entire pre-listing capital held by promoters should be locked in for three years as “such restrictive conditions would discourage people from accessing the platform only for tax planning”. The BSE had launched ITP for its SME platform to facilitate start-ups and other SMEs to list without the mandatory IPO process which is time-consuming and capital intensive that small companies can hardly afford.

According to PTI, in addition to allowing SMEs and start-up companies to raise capital, the BSE SME platrfom also provides easier entry and exit options for informed investors like angel investors, venture capitalists and private equity players, apart from offering better visibility and wider investor base and tax benefits to long-term investors.

Meanwhile, the report also called for a reduction in trading lot size and shorter interval for review of lot size after many SMEs, merchant bankers and market-makers cited this as a disincentive for entering the market. The report said market participants want the timeframe to review the lot size to be reduced from the current six months and lower the trading lot requirement of Rs 1 lakh to attract retail investors to the segment.

As SEBI continues to make business easier, it is important SMEs do not eye illegal gains through suspected money laundering and tax evasion activities.

 

CBIC to weed out a million assessees from GST tax net

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Move to weed out the assessees from GST net will ensure effective tax base

The Central Board of Indirect Taxes and Customs (CBIC) has initiated a process to weed out approximately 12 lakh Goods and Services Tax (GST) assessees who have fallen off the tax map.

“The CBIC has communicated to field officers to take the process further. Now, field officers will issue show-cause notices, which is just a formality but a requirement under the law, and then complete the process for deregistration,” a Finance Ministry official told BusinessLine.

Currently, there are over 1 crore registered assessees on the GST Nework (GSTN), but the number of those who file returns is much less.

Under GST rules, any entity registered under the previous Sales Tax–VAT (Value-Added Tax), Central Excise Duty of Service Tax regulations was required to be enrolled under the GST and get provisional certificates.

However, if the turnover of the entity is less than the GST threshold and he/she is not willing to go for voluntary registrations, such assessees had the option to get the provisional registration cancelled and move out of the GST net. However, many assessees fail to complete the process, and so they continued to be a part of the GST-assessee base.

GST was implemented from July 1 last year. In the very first year, the number of registered assessees increased by 72.5 per cent to 1.14 crore. Of these, 66.17 lakh were existing taxpayers, that is, those registered under previous VAT/Sales Tax, Central Excise or Service Tax regime; the remaining were new ones. The Government believes that the new assessees came into the net as a result of demonetisation, which resulted in the formalisation of the economy, prompting more and more people to get registered.

During the pre-GST regime, States had different slabs for registration under VAT/ST, which was as low as ₹1 lakh and could go up to ₹10 lakh: the thresholds for Service Tax and Central Excise were ₹10 lakh and ₹1.5 crore, respectively. Now the universal threshold is ₹20 lakh (or ₹10 lakh in some States), which means there will be fewer people paying tax and filing returns.

Another Finance Ministry official said that while a wider tax base is good, there is also a need to ensure an ‘effective’ tax base; the latest initiative will help achieve that. This kind of a tax base will serve two purposes: it will lighten the burden on the GSTN, and it will give a real picture of the indirect tax regime.

Source: Business Line

Surge in filing of Income Tax Returns by 71% upto 31st August,2018

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Filing of Income Tax Returns registers an upsurge of 71% up to 31st August,2018

There has been a marked improvement in the number of Income Tax Returns (ITRs) filed during FY 2018 (upto 31/08/2018, the extended due date of filing) compared to the corresponding period in the preceding year.

The total number of ITRs e-filed upto 31/08/2018 was 5.42 crore as against 3.17 crore upto 31/08/2017, marking an increase of 70.86%.

Almost 34.95 lakh returns were uploaded on 31/08/2018 itself, being the last date of the extended due date of filing of ITRs.

A remarkable increase is seen in the number of ITRs in 2 categories ie ITRs filed by salaried Individuals (ITR-1& 2) as also those availing the benefit of the Presumptive Taxation Scheme (ITR-4).

The total number of e-returns of salaried Individual taxpayers filed till 31/08/2018 increased to 3.37 crore from 2.19 crore returns filed during the corresponding period of 2017, registering an increase of 1.18 crore returns translating into a growth of almost 54%.

A commendable growth has been witnessed in the number of returns e-filed by persons availing the benefit of Presumptive Tax, with 1.17 crore returns having been filed upto 31st August, 2018 compared to 14.93 lakh returns upto 31st August, 2017 registering a massive increase of 681.69%.

The increase in the number of returns reveals a marked improvement in the level of voluntary compliance of taxpayers which can be attributed to several factors, including the impact of demonetisation, enhanced persuasion & education of taxpayers as also the impending provision of late fee which would be effective on late filing of returns.

This is indicative of an India moving steadily towards a more tax compliant society & reflects the impact of continuous leveraging of technology to improve taxpayer service delivery.

 

MCA extends due date of DIR-3KYC / E-KYC of Directors

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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. (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.
  2. 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.

 

Last date to submit ITR extended to August, 31 2018 – CBDT

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CBDT extended the last date to August 31 to file income tax return

The Central Board of Direct Taxes (CBDT) has extended the due date for filing of Income Tax Returns (ITR) to 31st August, 2018.  Earlier, the due date for filing of ITR for Assessment Year 2018-19 was July 31, 2018.

As the due date has been coming closer, the Board had received several requests from the tax practitioners body and the Institute of Chartered Accountants of India (ICAI) requesting a due date extension due to several reasons.

CBDT stated in a circular issued today, “The due date for filing of Income Tax Returns for Assessment Year 2018-19 is 31.07.2018 for certain categories of taxpayers. Upon consideration of the matter, the Central Board of Direct Taxes (CBDT) extends the ‘due date’ for filing of Income Tax Returns from 31st July, 2018 to 31st August, 2018 in respect of the said categories of taxpayers.

Generally, the income tax department extends the deadline by only a few days, but this year the deadline has been extended by full one month.

 

 

 

 

Kuldip Kumar, partner and leader, personal tax, PwC India, said, “Although due date extended.. those who have taxes to pay should pay before July 31 to save additional one month interest under section 234B.”

So, now if you don’t file ITR by the end of July then it won’t be treated as a belated return, as the new deadline is August 31, 2018.  But if you miss the deadline of August 31, then according to the Income Tax Act, for returns pertaining to any financial year the last date for late return would be the end of the relevant assessment year. For example: For Financial Year 2017-18 (AY 2018-19), the last date would be 31 March 2019, and it would be your last opportunity to file the return.

From the current Assessment Year onwards, non-filing of ITR before due date will invite late fee of Rs. 1,000/5,000/10,000 as the case may be, under section 234F of the Income Tax Act.

The Board had notified the new Income Tax Return forms for the assessment year 2018-19 on April 5. The income Tax department has launched all the income tax forms for e-filing after more than a month of them being notified.

Further, due to GST and the over burden of compliance procedure, the tax practitioners were unable to finish their IT works. It is in this background, the people urged the Board to extend due date.

Read the Notification Circular: CBDT Notification