Big Changes by Ministry of Company Affairs wef 1st April 2021 to enhance transparency

Schedule III of the Companies Act 2013 contains the general instructions for preparation of the Balance Sheet and Statement of Profit and Loss of a Company.

Following are the changes made in the financials/ notes to accounts on account of amendments in Schedule III brought about by MCA:

1. Now companies have to round off the figures appearing in the financial statements, hitherto it was optional. Further, the criteria for rounding off shall be based on “total income” in place of “turnover”.

2. Company shall disclose the Shareholding of Promoters.

3. Current maturities of Long term borrowings shall be disclosed separately.

4. Trade Payables ageing schedule to be given.

5. Trade Receivables ageing schedule to be given.

6. Security deposits shall not be disclosed under ‘Long term loans and advances’ but disclosed under ‘Other non-current assets’.

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7. The company shall disclose the reason for the utilization of funds for purposes other than for which they were borrowed and shall also disclose the purposes for which the funds were utilised.

8. Company needs to disclose if the books of accounts are tallied with the quarterly or monthly returns filed with a banker in cases where the company has borrowed funds from banks on the basis of securities of current assets, or else a separate reco statement needs to be provided.

9. The company shall provide the details of all the immovable property (other than properties where the Company is the lessee and the lease agreements are duly executed in favour of the lessee) whose title deeds are not held and where such immovable property is jointly held with others, details are required to be given to the extent of the company’s share.

10. In cases where revaluation has been done in the case of Property Plant and Equipment, the company shall disclose if the valuation was done by a registered valuer.

 

SEBI – Approved amendments in SEBI LODR Regulations Board Meeting


11. Disclosures to be made where Loans or Advances in the nature of loans are granted to promoters, directors, KMPs and related parties (loans given to promoters as a % of total loans)

12. For Capital-work-in progress, an ageing schedule shall be given

13. For Intangible assets under development, an ageing schedule to be given.

14. Disclosure of any proceedings initiated or pending against the company for holding any Benami property under the Benami Transactions (Prohibition)Act, 1988 to be made.

15. Where a company is a declared wilful defaulter by any bank or financial institution or other lender, details to be given.

16. Disclosure of any transactions with companies struck off

17. Where any charges or satisfaction yet to be registered with Registrar of Companies beyond the statutory period, details and reasons thereof shall be disclosed.

18. Following Ratios to be disclosed:

(a) Current Ratio,(b)Debt-Equity Ratio,(c)Debt Service Coverage Ratio, (d) Return on Equity Ratio,(e) Inventory turnover ratio,(f)Trade Receivables turnover ratio, (g) Trade payables turnover ratio, (h) Net capital turnover ratio, (i) Net profit ratio, (j)Return on Capital employed, (k) Return on investment
(xv) Disclosure of Utilisation of Borrowed funds and share premium to be given
An explanation is required if there’s a change of more than 25% as compared to the preceding financial year.

19. Further disclosures shall be made where the company has received funds from any persons or entities including foreign entities to further lend or invest or provide any guarantee, security to third parties.

20. Where a scheme of arrangement has been approved, disclosure shall be made of the effect of the same on the books of accounts and any deviation from the accounting standards for the same.

Direct tax revenue will soon slip in the financial year 2019-20

Direct tax revenue will soon slip in the financial year 2019-20

You must have read in the newspaper that direct tax revenue will soon slip in the financial year 2019-20. The Income Tax Department is conducting Survey U / s 133A of the Income Tax Act on assessee’s business premises in order to recover higher tax sums and to meet budgeted tax collection. The income tax department will even conduct a tax recovery survey and TDS test to recover higher taxes.

In view of the above situation, we request you to take necessary steps:

(1) keep books of account updated
(2) Unwanted chits/papers/ noting always create a problem. So you should not keep such papers in your drawer/computer/ laptop/personal diary. Please destroy it.
(3) keep advance tax working ready for the installment of March 2020
(4) pay advance tax on the basis of booking of flats/ shops made during the year
(5) ledger confirmations of all sundry Creditors should be always obtained.
(6) Name and address of loan depositor with PAN should be always readily available at your office.
(7) provisions of the Benami Property Act are very severe and therefore never enter into such transactions. “ Hawala Loan “ transactions are covered under the Benami Property Act
(8) Always pay tax as per Law
(9) Pay TDS, Advance tax, GST within the time limit allowed under Law.
(10) keep the Labour Contract agreement ready.
(11) partners should have complete knowledge in relation to transactions entered in books of accounts
(12) Please note that income declared under section 68 to 69D of income tax Act is liable to tax at 75% provision of section 115BBE of Income-tax Act.

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How to maintain an Innovation Culture : From Budget 2019 to 2020

How to maintain an Innovation Culture: From Budget 2019 to 2020

Recognizing the efforts of the government to remove the bottlenecks for entrepreneurs is critical. Under the current ‘ Startup India Vision 2024 ‘ scheme, the government has announced the establishment by 2024 of at least 50,000 new startups500 new incubators, and 100 innovation zones.

With the beginning of new year, maybe now is timely time to take stock of how the 2019 Union Budget has influenced the startup community. Six months later, let’s remember the start-up budget highlights.

Among the sop bonanza provided to startups was the freedom from the angel’s tax heat. In an attempt to alleviate the difficulties arising from the controversial Angel Tax, the Minister of Finance declared that paragraph 56(2)(viib) of the Income Tax Act does not extend to a startup registered with the Department of Industry and Internal Trade (DPIIT). In order to further simplify the Angel Tax issue, the budget also stipulated that startups and their investors who file required declarations and provide information on their returns will not be subject to any sort of scrutiny with regard to sharing premium valuations. In fact, companies receiving funds from private equity firms and real estate funds are now excluded from oversight, in order to meet the demands of the burgeoning investment community.

In a positive turn for eligible startups carrying forward losses from previous years, the budget relaxed norms on meeting either of the two conditions: continuity of 51 percent shareholding or continuity of 100 percent original shareholders. The new provision will help start-ups offset tax liabilities until they start making profits, as well as recognizing that their shareholding pattern may change as start-ups mature.

The budget has given an enormous boost to women entrepreneurs  which is appreciated. In addition to giving more loans with lower interest rates, the Stand Up India Scheme for Women Entrepreneurs was extended until 2025.

Other happy news for entrepreneurs includes an e-verification system to save start-ups from further scrutiny from the Income Tax Department, a dedicated television channel for start-ups, the creation of a grievance redress platform for start-ups and the extension of capital gains exemptions from the selling of a residential house for start-up-centered investments until FY 2021. Efforts are under way to update and streamline the complex structure of labor law in India into a consolidated bill.

Setting up new business opportunities

Recent efforts by the government to remove bottlenecks for entrepreneurs must be noted. Under the current ‘ Startup India Vision 2024 ‘ strategy, the government has announced the establishment by 2024 of at least 50,000 new startups, 500 new incubators, and 100 innovation zones.

In an attempt to provide superior infrastructure or platform for potential innovators, the Reserve Bank of India (RBI) has announced the release of a proper system for real-time testing of financial products. As the platform proposed would serve as an instrument for entrepreneurs to test their business models, the highest priority will be given to protecting consumer interests

Eliminating Startup Speed-breakers

While the government can rightly claim that the budget is move in the right direction to keep India at the forefront of the start-up revolution, there are still many challenges for entrepreneurs. The startup community believes, for example, that more can be done to relax the angel tax regulations and further improve the program.

The government also has to tackle pending ambiguities about the Income Tax problems of startups. For starters, investors are worried about the high 28.5 percent tax they will have to pay for startup investments.

Although angel tax will not apply to companies registered with the DPIIT, the law has not been eliminated entirely. While the government is in principle changing the taxation environment for entrepreneurs, according to PwC India, in practice startups can still be penalized for non-payment and evasion of the angel levy. Entrepreneurs are seeking further clarification as to whether the angel tax still applies to companies which have received IT notifications.

Building a robust innovation roadmap

Given the current challenges, the outlook for India’s technology industry looks bright. The Fourth Industrial Revolution has certainly created a goldmine of prospects for business people all over the world. While India is poised to harness new technologies like AI (Artificial Intelligence), machine learning, IoT (Internet of Things), and blockchain, startups need to comply with the new digital period. Main players for India to achieve its $5 trillion economic dream.

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