BLACK MONEY BILL

1) Definition of Black Money

Black money is unaccounted money, illegally acquired wealth or other assets made through accepting bribery or other morally deprived acts and as such is not taxed.

2) Black Money Bill

THE UNDISCLOSED FOREIGN INCOME AND ASSETS (IMPOSITION OF TAX) BILL, 2015 also known as Black money Bill which shall come into force on the 1^st Aril, 2016 for those who stashed away black money in Foreign Accounts.

3)Applicability

The persons who are resident in India under the Income Tax Act, 1961 other than the persons who are not ordinarily resident in India.

4)Taxation Rate

Undisclosed foreign Income shall be taxed at 30%.

5) Basis of Charge

A tax shall be charged on total undisclosed income and asset located outside India which has not been disclosed in return of income.

6) Penalty

The penalty of non disclosure shall be equal to 3 times of tax payable thereon.

Other penalties:-

a) Failure to furnish return in respect of Foreign income or assets- Rs.10.00 Lacs

(However, it is not applicable in case of an asset, being one or more bank accounts having an aggregate balance which does not exceed a value equivalent to five hundred thousand rupees at any time during the previous year)

     b) Failure to furnish any details or furnishing inaccurate details regarding assets located outside India-  Rs.10.00  Lacs

(However, it is not applicable in case of an asset, being one or more bank accounts having an aggregate balance which does not exceed a value equivalent to five hundred thousand rupees at any time during the previous year)

c)  Default in payment of tax Arrear- Amount of Tax Arrear

   

     d)  Default in answering any question put to him by a tax authority, sign any statement made by him in the course of any proceedings which a tax authority may legally require him to sign, attend or produce books of account or documents -Not  less than fifty thousand rupees but which may extend to two lakh rupees.

7) Prosecution-

a) Failure to furnish in due time the return of income in relation to foreign income and assets- 6 Months to 7 Years.

b) Failure to furnish in return any information related to assets located outside India- 6 Months to 7 Years.

c) Willful attempt to evade tax, penalty or interest- 3 Years to 10 Years.

d) Willful attempt to evade payment of tax, interest or penalty- 3 Months to 3 Years.

e) False Statement in verification- 6 Months to 7 years.

f) Any abatement of any other person to file false return or false account or false statement- 6 Months to 7 years.

8) Other safeguards and internal control mechanisms

a) One time compliance opportunity – The Bill also provides a onetime compliance opportunity for a limited period to persons who have any undisclosed foreign assets which have hitherto not been disclosed for the purposes of Income-tax. Such persons may file a declaration before the specified tax authority within a specified period, followed by payment of tax at the rate of 30 percent and an equal amount by way of penalty. Such persons will not be prosecuted under the stringent provisions of the new Act. It is to be noted that this is not an amnesty scheme as no immunity from penalty is being offered. It is merely an opportunity for persons to come clean and become compliant before the stringent provisions of the new Act come into force. 

b) Amendment of PMLA – The Bill also proposes to amend Prevention of Money Laundering Act (PMLA), 2002 to include offence of tax evasion under the proposed legislation as a scheduled offence under PMLA. Thus, in keeping with the commitment of the government for focussed action on black money front, an unprecedented and multi‐pronged attack has been launched to root out the menace of black money.  The Government is confident that this new law will act as a strong deterrent and curb the menace of black money stashed abroad by Indians. Disclosure of foreign assets and liabilities has already been introduced in Income Tax Returns for all assessee by Income Tax department which needs to be carefully filled and filed. 

BY CA Shivani Agarwal

Annual Report - An Insight as per New Companies Act, 2013..........(Series 1)

Companies Act, 2013 castes a hell lot of responsibilities in the form of numerous disclosures and presentation requirements which has resulted in a lot of complexities to the auditors and Board of Directors of the company. To add further, MCA has been issuing notifications in the form of providing amendments, clarifications etc. and regularly updating oneself with such changes is also an uphill task. With audit season round the corner, we must appraise ourselves with the new reporting requirements. Let me summarize few of them: 

Financial Statements shall consist of -

1. Balance Sheet
2. Profit and Loss A/c (or Income and Expenditure A/c)    
3. Cash Flow Statement      [Note 1]
4. Statement of Changes In Equity (if applicable)     [Note 2]
5. Explanatory notes attached thereto

Note 1: Cash Flow statements are not required to be prepared by following class of companies-

• One Person Company
• Small Companies ( Companies having paid up share capital not exceeding Rs. 50 lacs               and turnover not exceeding Rs. 2 crores)
• Dormant Companies

Note 2: Statement of Changes on Equity is required to be prepared by those companies on which IND AS applies.

Further, following procedure shall be followed regarding authentication of Financial Statements-

1. In case of Private Company, Financial Statement should be signed by at least 2 directors of the company.
2. After the signature it should be submitted to the auditor for his report thereon.
3. Directors who are signing the annual report should be present in the meeting.

Financial statement should be circulated to all of the following-

1. Every member of the company,
2. To every trustee of the debenture holder,
3. To all persons other than as mentioned above, entitled to receive financials like financial institutions, representative nominees etc.

Time period for Circulation of financials-

The financial statements (including consolidated financial statements, if any) auditor's report, director's report any every other documents required by law to be annexed or attached to financial statements , which are to be laid before members in the AGM shall be sent "Not Less Than 21 clear days" before the date of the meeting (except in case of meeting on short notice).

I have tried to summarize as concise as possible. In case of any query, you can mail me your queries at mahershi@akvassociate.com. For further updates, refer to my upcoming articles. 

  

Exemption to Private Companies under Section 462 of Companies Act, 2013

MCA has provided exemption to Private Companies other than subsidiary of public companies under section 462 of the Companies Act 2013 as follows:

1) RELATED PARTY TRANSACTIONS

The definition of related parties under Section 2(76)(viii) not to include the following w.r.t a private company:

a) Holding Company

b) Subsidiary Company

c) Associate Company

d) Fellow subsidiaries

2) PARTICIPATION OF INTERESTED DIRECTORS

Section 184(2) to apply on private companies with the exception that interested directors can participate and vote on matters in which they are interested after providing the disclosure of interest.

3) PARTICIPATION OF RELATED SHAREHOLDERS

Second proviso to Section 188(1) not to apply on private company which states that no member of the company shall vote on such special resolution, to approve any contract or arrangement which may be entered in to by the company, if such member is a related party.

4)  OF SHARE CAPITAL AND VOTING RIGHTS

 Section 43 and 47 of the Act, dealing with kinds of share capital and voting rights respectively, shall not apply to private companies if Memorandum and Articles of Association so provide.

5) RELAXATION IN PROVISIONS OF RIGHT ISSUE

With respect to Section 62, the notification provides that if 90% of members of a private company provide their    consent in writing or in electronic mode, then the company can:

a) Disregard the limit on time period of offer may be;

b) Dispatch notice of a less than 3 days prior to the opening of the issue.

Note: The time limits cannot be increased, they can only be reduced. –

6) LENDING AGAINST THE SHARES OF THE COMPANY

Section 67(1) clearly prohibits buy back of shares and lending against its own shares by a   company. The notification provides exemption to private company from lending against  its own shares subject to the following:

a) there is no body corporate shareholder in the lending/guaranteeing company;

b) the lending company’s aggregate borrowings from other bodies corporate or banks or financial institutions is less than to:

i) twice of net worth of company; or

ii) Rs 50 crores

Whichever is lower;

c) Such a company is not in default in repayment of such borrowings subsisting at the time of making transactions under this section.

7) ACCEPTANCE OF DEPOSITS FROM MEMBERS

Earlier Private Limited Company could accept deposits from the Member after follow up the procedure mention under Section 73. –

Now Private Limited Company can accept deposit from the Members upto 100% of  aggregate of the paid up share capital and free reserves without the followings:

a) Issuance of Circular

b) Filing of circular with ROC

c) Maintaining deposit repayment reserve

d) Providing deposit insurance

8) GENERAL MEETING PROVISIONS (SECTIONS 101 TO 107 AND 109)

If anything else mentioned in AOA then AOA prevail over the section 101-107 & 109.

a) Content & Length of Notice (Section 101)

b) Explanatory Statement (section 102)

c) Quorum (Section 103)

d) Chairman (Section 104)

e) Proxies (Section 105)

f) Restriction on Voting Rights (Section 106)

g) Show of Hands & Poll (Sections 107 and 109)

9) FILING OF FORM MGT-14 FOR BOARD RESOLUTIONS (SECTION 117(3)(G))

Now there is NO NEED TO FILE FORM MGT-14 for the purposes of resolutions passed u/s 179(3) read with rule 8 of Companies (Meeting of Board & its power) Rules, 2014 – After a complete year of filing MGT-14 with the MCA, the private companies are now exempt from such filing with respect to board resolutions.

10) RELIEF IN LIMITS OF STATUTORY AUDIT

Earlier Auditor can’t be appoint as auditor in more than 20 (Twenty) Companies.

Section 141(3)(g) permitted the audit of 20 companies per partner of an audit firm. Now under the limit of 20 (Twenty) Companies following will not include 2013.

a) One person companies;

b) Dormant companies;

c) Small companies;

d) Private companies having a paid up share capital of less than 100 crores.

11) CANDIDATURE NOT REQUIRED FOR APPOINTMENT OF DIRECTOR AT GENERAL MEETING

Section 160 dealing with any person other than a retiring director or any member of the company to propose candidature of such person for directorship along with deposit of    Rs. 1 lac shall not apply on private company. It means Now there is no need to deposit Rs.      100,000/- by the Director at the time of appointment

12) APPOINTMENT of Directors vide single resolution (Section 162)

Appointment of directors needs not to be voted individually in private company. Accordingly, more than one director can be appointed via single resolution in private company.

13) NO RESTRICTION ON POWERS OF BOARD

Section 180 of the Act has been finally aligned with its corresponding section of the erstwhile Act, 1956, i.e., Section 293. The Board of private companies shall now be free to address and decide upon matters mentioned under Section 180 and the requirement for  shareholders’ approval has been dispensed with.

Following are the matters are prescribed under Section 180:

a) Selling, leasing or otherwise disposing whole or substantially the whole of undertaking of the company;

b) Investing the compensation amount received by it as a result of any merger or amalgamation;

c) Borrowing money in excess of its paid up capital and free reserves;

d) Remitting or giving time for repayment of any debt due from a director.

14) RELAXATION IN LOAN TO DIRECTORS

Loan to directors under Section 185 are allowed for private company if it fulfills the below mentioned conditions:

a) Body Corporate should not be Shareholder

b)Not borrowed money from Bank/ Financial Institution/ Body Corporate exceeding lower of the following:-

i) Twice it’s paid up capital

ii) Rs. 50  crores

c)  No repayment default subsisting of such borrowings at time of giving loan.

15) Appointment of MD, WTD and Manager

Now there is no need to Pass Resolution in General Meeting for appointment of      Managerial Personnel and no need to file form MR-1. Managerial Personnel can be    appointed in Private limited Company without:

a)  Shareholders’ ratification;

b)  Schedule V not applicable.

c)  Filing of MR-1 with ROC;

d) No need to mention Terms & Conditions of appointment and remuneration in the resolution.

RETURN FILING UNDER SERVICE TAX

The Person who is liable to pay Service Tax has to submit half yearly return i.e. 1st April to 30^th September and 1^st October to 31^st March of Financial Year in Form-ST-3 within 25 days of the end of the Half Year.

Note: Input Service Distributor is also required to file half yearly returns, even if he is not liable to pay service tax.

Assessee providing more than one services

If assessee is providing more than one taxable service, he should file only one return. However, details of each taxable shall be shown separately.

Nil return essential even if no turnover

Even if there was no business during the period, assessee will have to file ‘Nil’ return as long as registration certificate is valid.

Last date for filing return is a Bank Holiday

If last date of payment and filing return is a public holiday, tax can be paid and return can be submitted on next working day.

Revised Return

Rule 7B allows an assessee to rectify mistakes and file revised return within 90 days from the date of filing of the original return.

No requirement of filing return for period prior to registration

Assessees applying late for registration are liable to pay service tax for the period prior to registration with interest. He should then inform the department giving details of such payment as per provisions of Section 73(3) of Finance Act, 1994.

It is neither necessary not possible to file return for the period prior to registration. Intimation is sufficient.

Mandatory Electronic Filing of Service Tax Return

E- Filing of return has been made mandatory w.e.f. 1-10-2011 vide Notification No.43/2011-ST dated 25^th August 2011 for all assessees whereas e-payment of taxes has been made mandatory w.e.f. 1-10-2014 for all assessees.

Late Fee and Penalty for filing Late Return

 Section 70(1) of Finance Act, 1994 provides that in case where returns are filed after due date, late fee not exceeding Rs.20000.00 is payable for delayed filing of return , as may be prescribed.

The late fee payable is as follows:-

a) Delay up to 15 days: Rs.500.00

b) Beyond 15 days but up to 30 days: Rs.1000.00

c) Delay beyond 30 days: Rs.1000.00 plus Rs.100 per day of delay beyond 30 days, from 31^st day onwards. This Rs.100.00 per day continues till limit of Rs.20000.00 is reached.

By CA Shivani Agarwal

shivani@akvassociate.com