Government tightens screws on assets owned by deregistered companies

by | posted in: Company Incorporations, e-filing of MCA Returns, Corporate & Business Advisory Services, Corporate Updates, Economy, Business Updates, Corporate Affairs | 0
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.

Exporters can claim refund this week for GST paid in August, September

by | posted in: Corporate & Business Advisory Services, Corporate Updates, Economy, Business Updates, Corporate Affairs, Income Tax,e-Filing- Individuals, Firms, Companies | 0
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.

India should prioritise public banking sector reforms: IMF

by | posted in: Corporate & Business Advisory Services, Corporate Updates, Cross Border Transactions, M&As, Joint Ventures, Economy, Business Updates, Corporate Affairs, India & International - Corporate updates | 0
Country's growth is expected to accelerate in the medium-term as temporary disruptions due to demonetization and GST.
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.

 

Source: Deccan Chronicle

Banks begin to accept GST input claims to grant working capital

by | posted in: Corporate & Business Advisory Services, Corporate Updates, Economy, Business Updates, Corporate Affairs, Income Tax,e-Filing- Individuals, Firms, Companies | 0

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.

 

Source: Business Standard

GST: Tax department seeks details of transitional credit data

by | posted in: Corporate & Business Advisory Services, Corporate Updates, Economy, Business Updates, Corporate Affairs, Income Tax,e-Filing- Individuals, Firms, Companies | 0
Of the total Rs 95,000 crore GST collected in July, about Rs 65,000 crore was claimed in refunds or transitional credit.

The tax department has sought explanations from banks and financial institutions, including multinationals, on transitional credit claimed by them in July under the goods and services tax (GST) regime, two people with direct knowledge of the matter said. Deputy commissioners and assistant commissioners (central tax) have issued ‘information summons’ in the last seven days seeking data in five specific areas “by e-mail/hard copy”.

These include past sales tax records; summary of closing balance of tax (as of June); description of the nature of credits; details of vendor invoices prior to July 1; and details of payments made to vendors and service providers after July 1. Transitional credit refers to tax credits on sales tax, excise and valued-added tax accumulated before July 1 on pre-GST stock.

Such credit can be set off against liabilities of the July-started GST.

Taxmen suspect some companies are misusing the provision and have filed fake returns to claim high transitional credits. Of the total Rs 95,000 crore GST collected in July, about Rs 65,000 crore was claimed in refunds or transitional credit. The move comes about two weeks after tax officers questioned manufacturing companies on transitional credit claimed by them.

ET was the first to report on September 21that about 5,000 such companies had been questioned by the taxman over transitional credit claims. For now, tax officers are only scrutinising transition credit for sales tax and excise. The data obtained from the banks and financial institutions will be examined for any discrepancies.

The firms said they haven’t been given much time to provide the information. “We had received the notice few days back and haven’t been able to submit it due to the enormity of information sought,” said the finance head of a major multinational bank. “A tax officer called me today (on Friday) and asked me to submit the required documents by Saturday.”

The finance head cited the tax officer as saying the transitional credit claimed by the bank was high. “I tried to explain that transitional credit has to be viewed in the context of our monthly tax outgo. But we will be submitting the required information nevertheless by Saturday,” he said. Experts said many companies are yet to submit transitional credit details, which has to be done through the Transform.

“Since the date for filing the Tran-1 form has been extended to October 31, it would be prudent to commence any enquiries thereafter,” said MS Mani, partner, Deloitte India. “It is advisable to consider the data submitted in the Tran-1 form and then enquire into those cases where any anomalies are detected instead of subjecting the entire data submitted by erstwhile service tax payers to any form of scrutiny.”

The pressure on tax officials increased after a letter by a senior member of the Central Board of Excise and Customs (CBEC) was sent on Wednesday to all tax commissioners. ET has seen the letter. “In view of the urgency of the matter kindly have the verification of transitional credit completed on priority (in respect of list of taxpayers forwarded on 11/9/2017) and a report on the same to be sent on this office not later than 15/10/2017,” the letter read. The letter also asked tax officers to submit a detailed analysis of transitional credit claims. This is expected to be submitted by November 3.

The Central Board of Excise and Customs had in September sent a list to all commissioners and joint commissioners that included state-wise details of companies, the GST number and transition credit amount. Tax officers had started calling all the companies whose transitional credit numbers seemed high to them.

IMF favors three structural reforms in India

by | posted in: Corporate & Business Advisory Services, Corporate Updates, Economy, Business Updates, Corporate Affairs, India & International - Corporate updates | 0
According to IMF’s Regional Economic Outlook, India’s growth slowed in recent quarters due to the temporary disruptions from the currency exchange initiative– demonetisation and GST.

The IMF has suggested a three- pronged approach for structural reform in India that includes addressing the corporate and banking sector weaknesses, continued fiscal consolidation through revenue measure, and improving the efficiency of labour and product markets.

Deputy Director Asia Pacific Department of IMF, Kenneth Kang, said the favorable outlook for Asia was an important opportunity for India to push forward with difficult reforms.

“As such, there should be three policy priorities in the area of structural reforms,” Kang, Deputy Director Asia pacific Department IMF told reporters at a news conference here.

“First priority is to address the corporate and banking sector weaknesses, by accelerating the resolution of non- performing loans, rebuilding the capital buffers for the public sector banks, and enhancing banks’ debt recovery mechanisms,” he said.Secondly, Kang said, India should continue with the fiscal consolidation through revenue measures, as well as further reductions in subsidies.

“And lastly, it’s to maintain the strong momentum for structural reforms in addressing the infrastructure gaps, improving the efficiency of labour and product markets as well as furthering agricultural reforms,” said Kang.

Responding to a question on labour market reforms, Kang suggested reforming the market regulations in order to create a more favorable environment for investment and employment.

“There is a need to reduce the number of labour laws which currently number around 250 across the central and the state level,” said Kang.He said India should also focus on closing the gender gap which may help a great deal in boosting the employment opportunities for women in India.

“Improvements in infrastructure can be one important way to facilitate the entry of women into the labour force. But in addition, there is a need to strengthening the implementation of specific gender regulations, as well as to invest more in gender-specific training and education,” Kang said.

According to IMF’s Regional Economic Outlook, India’s growth slowed in recent quarters due to the temporary disruptions from the currency exchange initiative– demonetisation– that took place in November 2016, and the recent roll-out of the Goods and Services Tax (GST).

The report, however, went on to say that the 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.

Individual businesses to soon be under ambit of bankruptcy code

by | posted in: Accounting Standards, Audit, Due Diligence, Corporate & Business Advisory Services, Corporate Updates, Economy, Business Updates, Corporate Affairs | 0
Insolvency and Bankruptcy Board of India has published draft rules dealing with insolvency resolution process of individuals and firms on its website
Insolvency and Bankruptcy Board of India has published draft rules dealing with insolvency resolution process of individuals and firms on its website .                                    The existing insolvency and bankruptcy code, at present, applies only to corporate defaulters

The government on Tuesday expanded the scope of the new insolvency rules to bring individual businesses under its purview.

On Tuesday, the Insolvency and Bankruptcy Board of India (IBBI) published the draft rules dealing with insolvency resolution process of individuals and firms on its website (www.ibbi.gov.in) ; public comments can be submitted till 31 October.

Once notified, even individual businesses such as proprietorships will come under the bankruptcy regime. This will enable an orderly bankruptcy resolution within the purview of a transparent rules-based regime. The existing insolvency and bankruptcy code, at present, applies only to corporate defaulters.

“These rules shall apply to matters relating to the insolvency resolution process for individuals and firms under Part III of the code,” said the draft rules issued by IBBI.

Part III of the Insolvency and Bankruptcy Code, 2016, deals with insolvency and bankruptcy of individuals and partnership firms.

According to a statement issued by IBBI on Tuesday, the draft rules and regulations have been submitted by a working group which was formed to recommend the strategy and approach for implementation of the provisions of the Insolvency and Bankruptcy Code, 2016, dealing with insolvency and bankruptcy in respect of guarantors to corporate debtors, i.e., personal guarantors, and individuals having businesses.

“So far, the rules were only in respect of the Corporate Insolvency Resolution Process (CIRP) and the rules concerning individuals and partnership firms were yet to come,” said Satwinder Singh, partner at Vaish Associates, a law firm. “The jurisdiction for corporate, companies, limited liability partnership (LLP) lies before the National Company Law Tribunal (NCLT) and with the Debt Recovery Tribunal (DRT) for individuals and firms. The provisions relating to insolvency and bankruptcy of individuals and firms had not been notified earlier, so now the IBBI has come out with the draft rules.”

Harsh Pais, partner at law firm Trilegal, said, “It is a positive step towards consolidating the bankruptcy regime for individuals, for whom there was no systematic approach previously. For companies, at least there was recourse to the Companies Act, whereas for individuals there were only some archaic laws from the early 1900s, which were hardly relied upon in practice.”

Most of the small and medium enterprises (SMEs) take the legal form of either partnership or proprietorship firms. Though the loans are smaller in value, SME borrowers far outnumber companies, resulting in their borrowings exerting a significant influence in the financial sector’s stability.

Bankruptcy resolution is high on the agenda of the central government, which is keen to improve the ease of doing business in India and attract more private investments from domestic and overseas sources. An efficient exit route from failed projects is an essential factor that lenders consider before participating in projects.

 

Source: Live Mint