LLP Settlement Scheme 2020

LLP settlement scheme 2020 would allow for a one-time condonation of the delay in filing with the Registrar statutory records. LLP Settlement Scheme, 2020 will come into effect on March 16, 2020, and remain in force until June 13, 2020.

It was found that due to the applicability of additional late filing fee, which could in effect become a financial burden in case of inordinate delay, a large number of Limited Liability Partnerships (LLPs) have remained non-compliant, primarily because of their inability to pay late fees for the accumulated delay period.

As part of the ongoing efforts by the government to encourage ease of doing business, it was agreed to grant the default LLPs a one-time relaxation in addition to an additional fee by filing pending documents and serve as a compliant LLP in the future.

Accordingly, the Central Government has decided to implement a scheme called “LLP Settlement Scheme, 2020” by providing for a one-time condonation of delay in the filing with the Registrar of statutory documents.

LLPs, who wish to take advantage of the scheme, may file pending documents/forms and rectify defaults in order to gain immunity from prosecution for such defaults.

limited liability partnership

The scheme shall come into force on March 16, 2020, and will remain in effect until June 13, 2020. It would apply to the default LLP in respect of the filing of late documents due for filing until 31 October 2019 for payment of a nominal additional fee of Rs 10/-per day for the period of delay, in addition to any fee payable for the filing of such document or return, subject to a maximum amount of Rs. 5,000/-as an additional fee per document.

The Scheme shall apply to the filing of the following documents:

  1. Form-3-Information on the limited liability partnership agreement and changes, if any, made therein;
  2. Form-4- Notice of appointment, termination, change of name/address/appointment of a designated partner or partner and consent to become a partner / appointed partner;
  3. Form-8-Statement of Account & Solvency (Annual or Interim)
  4. Form-11- Annual Return of Limited Liability Partnership (LLP).

This scheme shall not apply to LLPs which have made an application to the Registrar in Form 24 for the deletion of their name from the Register as per provision to Rule 37(1) of the LLP Rules of 2009.

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Changes via Company Auditor’s Report Order , 2020 CARO

CARO Reporting, 2020 being notified

MCA has notified particular issues being important & thereby should be reported as per particular norms with the financial statements for certain entities as a part of their audit reports for almost all companies except a few below.

Banking, Insurance, Charitable setups & small cos. or OPC has been kept out of this exercise. Also, some smaller setups with below norms are exempt from this as below –

  • Not a holding or subsidiary of a Public company
  • Paid-up Capital plus Reserves l< 1 Crore at the reporting date.
  • Borrowings less than or equal to Rs. 1 Crore at any time during the year
  • Revenue less than or equal to Rs. 10 Crores in the financial year

Key points of change suggest towards-

company laws
  • Whether the company is maintaining proper records showing full particulars of intangible assets
  • Reporting on revaluation of Property, Plant and Equipment’s by company
  • Reporting of proceedings under the *Benami Transactions* (Prohibition) Act, 1988. i.e. whether the company has appropriately disclosed the details in its financial statements
  • Reporting if the *stock statements filed with banks* are in line with books of accounts, if the company was sanctioned working capital limits in excess of five crore rupees or more from banks or financial institutions. To report any discrepancies of 10% or more in the aggregate for each class of inventory
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  • Report 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, give details
  • Reporting of *investments* in or providing of any *guarantee or security* or granting any loans or advances.
  • Loans overdue for more than 90 days, *evergreening of loans, reporting on any *loan default*, etc.
  • Report on evergreening of loans – specify the aggregate amount of such dues renewed or extended or settled by fresh loans and the percentage of the aggregate to the total loans or advances in the nature of loans granted during the year
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  • 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 but now surrendered or disclosed as income in the income tax proceedings.
  • Report on  balances outstanding at the balance sheet date with respect to such loans or advances and guarantees or security to subsidiaries, joint ventures, and associates
  • Reporting on treatment by the auditor of *whistle-blower complaints* received during the year by the company
  • Reporting on the internal audit system
  • Reporting on cash losses
  • Reporting on the resignation of the statutory auditors
  • Reporting on the uncertainty of company capable of meeting its liabilities
  • Reporting transfer of *unspent CSR* amount to Fund specified in Schedule VII
  • Investment, Guarantee & Security given has been covered now along with loans & Advances – in terms of benefits to the company
  • Clarification required for Non-Disclosure of Properties taken on Lease by the Lessee
  • Auditor has to specifically comment on coverage and procedure adopted as per audit approach Also Materiality has been  defined as 10% or more in each class of Inventory

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GST Reconciliation

GST reconciliation involves data matching as filed by the suppliers & purchase receipts as recorded and filed by the receiver of the supplies or services.

GSTR2A is populated based on information on purchases as recorded by the buyer of products or services from the supplier.

Suppliers also file their returns and basic GSTR 2A is generated based on suppliers’ data therein. So GSTR 2A is generated from the GSTR1 of the seller.

GSTR 2A is auto-generated for the following components:-

  • Supplier filing GSTR 1 & 5 and enters B2B transaction details
  • ITC distributed by ISD while filing GSTR 6
  • TDS and TCS details based on GSTR 7 & 8 filed by dealers who deducted TDS/ TCS.

Some of the reasons to reconcile Form GSTR-3B and Form GSTR-2A may include:-

  • GST Dept has been sending notices for mismatches of return filed for Purchases under GSTR3B last and the supplier generated GSTR 2A. It is imperative to respond to these notices as stringent actions are planned against the non- compliance.
  • Fake transactions are recorded in a bid to record the wrongful input credit claims

–       Any invoice missed inadvertently or a genuine error/ emissions are also giving rise to the option to course correct in respect of correct input credit claims

2A reconciliation often arise on the back some tech glitches-

  • The credit of IGST claimed on the import of goods and services
  •  GST paid on reverse charge mechanism
  • Transitional credit claimed in TRAN-I and TRAN-II.
  • ITC for goods and services received in FY 2017-18 but availed in FY 2018-19.

Validations:-

  • GSTR-2A is a read-only document and not everyone have access to the same.
  • The corrections should be made in GSTR-2 only.
  • Any late-filed 3B Returns will also have corresponding Late GST 2A and thus may need detailed reconciliation. For e.g., your seller delays in filing his GSTR-1 return of November and files it after the due date on 17th Nov. Meanwhile,  we may file your November GSTR-2 return and submit within 15th December. The information from his GSTR-1 will appear in your GSTR-2A of December.

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