MSME- Recoveries redefined; Working Capital Assistance by Professionals!

MSME- Recoveries redefined; Working Capital Assistance by Professionals!

MSME units are facing working capital issues because on one side they are facing challenges of timely credit from formal banking channels and paying the comparatively higher interest rates and on the other, they have to extend interest-free credit to their customers as well as delayed recovery which is ultimately triggering sickness in the MSME sector.

MSME Development Act (the Act) has incorporated necessary provisions for ensuring prompt and smooth flow of funds to MSMEs and measures also to ensure timely payment to the MSME sector.

As per provisions of the Act, the buyer is duty-bound to release payment on or before the agreed date or within a period of 45 days, whichever is earlier from the day of acceptance or deemed acceptance of supply of goods and services done by MSME. Further, if the payment to MSMEs is delayed beyond the agreed period of forty-five days, the buyer is liable to pay compound interest with monthly interest at the rate of 3 times the bank rate notified by the Reserve bank of India, for the delayed period.

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If the buyer fails to make the payment within the stipulated deadline, registered MSMEs can take up the issue directly with the Micro and Small Enterprises Facilitation Council of the state (created by respective state government’s) in which their unit is situated for recovery of dues along with interest on delayed payments.

MSE Facilitation Council acts as conciliator or arbitrator and is duty-bound to solve the issue within 90 days. MSEFC is gradually gaining prominence vis-a-vis recovery suit. Where the conciliation initiated is not successful and stands terminated without any settlement between the parties, the Council shall either itself take up the dispute for arbitration or refer it to any Institution or centre providing alternate dispute resolution services for such arbitration and the provisions of the Arbitration and Conciliation Act, 1996 shall then apply to the dispute as if the arbitration was in pursuance of an arbitration agreement referred to In sub-section (i) of section 7 of that Act.

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Every reference made under this section shall be decided within a period of ninety days from the date of making such reference.”

 An appeal (by any person other than supplier) against the award, decree or other orders of MSEFC or Centre or institution referred by the MSEFC can be entertained by any court only after deposition of 75% of the amount in terms of the decree, award to other order. Provided that pending disposal of the application to set aside the decree, award or order, the court shall order that such percentage of the amount deposited shall be paid to the supplier, as it considers reasonable under the circumstances of the case subject to such conditions as it deems necessary to impose. These provision has been validated by higher courts including Supreme Court.

In the years to come, MSEFC constituted by States will gain momentum and will become a decisive factor.

It is a great opportunity for CA in practice as they can play a vital role in hand holding the MSME sector to overcome their working capital issues and render professional services in helping them in approaching the MSE Facilitation Council for recovery of their overdue along with interest as specified in the Act. This will ultimately result in the growth of cliental, MSME sector and Nation.

Include CAs in the Vaccination and Professional Work Priority Group: KSCAA

Include CAs in the Vaccination and Professional Work Priority Group: KSCAA

The Karnataka State Chartered Accountants Association (R) (abbreviated as ‘KSCAA’) is a Chartered Accountants Association founded in 1957 under the Karnataka Societies Registration Act. KSCAA was established largely for the benefit of chartered accountants, and it represents them before various regulatory bodies in order to alleviate problems and hardships that they and the business community confront.

The Institute of Chartered Accountants of India (ICAI), a main statutory body formed by an Act of Parliament, The Chartered Accountants Act 1949 (Act No XXXVIII of 1949), for regulating the profession of Chartered Accountancy in India, is predominantly made up of Chartered Accountants. The ICAI is the world’s second-biggest professional organisation of chartered accountants, with a long history of public service to the Indian economy.

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We congratulate and praise the efforts of the Government of Karnataka and the whole State Administration in restricting the spread of the Coronavirus in the state, which has resulted in a steady and gradual drop in the number of Corona positive cases over the past few days.

It is important to note that we CAs have the professional expertise, extensive experience, and in-depth knowledge in the areas of financial controls, financial accounting, financial audit, and risk management and that these skill-sets could be very useful to the government in improving financial management in relation to Covid relief and containment activities.

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CAs should make an effort to fulfil their social obligations by delivering professional services outside of the business sector and to the general public while remaining faithful to their position as partners in national development. It would be an honour and privilege for us at KSCAA to work in the public interest in collaboration with the Government of Karnataka in the fight against Corona by assisting in the implementation and operation of financial discipline and financial controls in the mobilisation and use of public resources.

The Chartered Accountants (CA) profession has always worked to uphold the ethos of Partners in Nation Building, and it has been their constant effort to keep India’s economy and financial system afloat. The CAs work closely with the government and its regulatory bodies on the one hand, and the diligent and hardworking taxpayers of our country on the other, ensuring that taxpayers comply with all fiscal statutes, such as the GST and income tax, and pay their share of lawful taxes to the government in a lawful and timely manner. Aside from fiscal statutes, the CAs are also in charge of ensuring that persons and corporations follow other rules and regulations.

We are optimistic that your good selves will go to great lengths to ensure that necessary steps are taken in this regard to provide much-needed relief by classifying CAs as PRIORITY GROUP and thus help expedite vaccination of our CA members, their staff, and their families, as well as ensuring that our CA members and staff perform their functions in a very smooth, efficient manner.

CBDT sets March 31 deadline to complete Panama, Paradise Papers probe

CBDT is trying to complete this investigation early so that other investigative agencies can speed up their investigation. The Central Board of Direct Taxes (CBDT) is currently investigating on these cases in the Foreign Exchange Management Act, as soon as the tax department begins filing criminal cases CBDT will have the basis to convert these cases into the Money Laundering Act.

CBDT after completing the investigation may file prosecution charges against these entities,  to help other agencies to take action against those entities.

About 426 Indian companies with offshore accounts were under income tax department scrutiny in 2016. Over Rs, 1,000 crores of hidden income had been discovered by the department in Panama Papers alone, listing many famous personalities including KP Singh from DLF, Amitabh Bachhan, Aishwarya Rai, Sameer Gehlaut.

  • Around  714 companies and individuals had been identified in the case of Paradise Papers that came to light in 2017
  • Former state minister of Jharkhand Jayant Sinha is also named in this case who is a  member of the Hazaribagh parliament in Jharkhand state.

Appleby, A Bermuda-based legal services provider and Asiaciti based in Singapore, disclosed much of the data on   Paradise Papers which facilitated the establishment of low or zero tax rates on offshore firms.

Currently, CBDT is investigating these cases within the context of the Foreign Exchange Management Act. Once the tax department begins filing prosecution cases we have the basis to transform our case under the Money Laundering Prevention Act.

These cases are currently being investigated by the income tax department under the 2015 Black Money Act. Under this Act, if any person who is unable to justify the source of the funds in question will be required to pay a penalty of nearly 300 percent of the applicable tax liability on it.

These cases are not subject to domestic inquiry; the department is entirely dependent on foreign agencies for information. For the investigator as well as for the agency, therefore, setting a deadline for completing the investigation is not desirable.

Panama and the Paradise Papers mentioned only company names. Finding data from foreign agencies requires proper information that is not available to the department, thus slowing the investigation. Sometimes the department’s own machinery strikes down the request because the department has set unfulfilled SOPs.

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