Should we, CA’s, ask for due date extension?

Should we, CA’s, ask for due date extension?

Remember when we filed the salary returns by June 30 and non-audit returns by July 31 and Tax Audit returns by Sept 30?

That time the accounts were all manual. Tallying the TB was the biggest challenge. We used to prepare final accounts with pencil and paper.

We had no 26AS, we had to get physical Form 16/16A,

We had to go to IT office and get the return forms  and challans from there, at time, we had to carry a request letter in our letterhead to get the forms!

We had to write the income tax returns by hand, attach final accounts and TDS certificates and physically file them before 5:00 PM. Remember how we did the comparison of figures with the draft and the type written one and made corrections with white ink and black pen!

At times, we used to keep a staff  in the queue at the IT office and others will shuttle between our office and IT office with filled up returns. Remember we did not have this much travel facilities that time.

And, we had to run to the bank several times to pay the taxes, that too before the banking time.

Still we managed to file most of the returns within due date!

Now compare the above with the current scenario.

TB tallying is only a nostalgic memory! ☺️

We can even get the Final accounts itself from the software. We can export it into the return filing software and get the return prepared.

We do not even need to remember the tax rate or surcharge applicability or rules of loss carried forward etc.

All will be taken care by the software.

Who is even opening the Income Ready Reckoner now?😜

We will get the TDS details and most of the income particulars from the Portal itself. We just need to download the same into our software.

We do not have to go to Bank to pay the tax

We do not have to go to IT office to file the ITR

We can even file the ITR upto 11:59 PM!

But, our client delivers the accounts at the last day only!☹️

What should you say to a salaried employee who gives you the Form 16 on 30th or 31st, where he must have got it at least 45 days before? Above all, he will be having share trading which he has not disclosed to us.

I do agree the intricacies and complexities of the business are increased manifold. But the facilities available to the clients also improved proportionately.

He has all other information in his figure tips. He will even teach us the income tax  and GST law. Everything is available to him through Internet.

It is sheer irresponsibility and don’t care attitude from the side of the client is the issue in most of the case. Now the responsibility of filing of return is CA’s responsibility, not theirs.

Rather, over the period, we made them think like that.😫

But the core fact is, the importance given by the businessman to the accounts have reduced over time and the responsibility and accountability have been very conveniently and subtly, shifted to our shoulder. And the respect given to our advices and directions also reduced.

Earlier, how they used to do the bank reconciliation from the manual bank passbook? How did they do the intra group reco? How did they do the customer / vendor reco? All these were done then also, in that paper – pencil era also. Now what prevents them from doing the same in time now, in this era of digital accounts and mobile & e-mail communication facilities?

And no client or trade bodies is bothered at all about all these. Only we, CA’s beg for extension. Why should we do so, when the delay is from the client side?

This is exactly what Gujrat High Court asked last year. Why CA’s only have this request, why trade associations not bothered?

Okay, if the delay is from our office, then we can’t blame IT department or client for that.☹️ Other than that, why should we take all the blame and responsibility on our shoulder?

I do agree that the client has so many other issues like complicated tax laws, changed business environment, increased competition et al. But they have equally beneficial opportunities also.

Secondly, the department also made them like that. Earlier there was an additional income tax if there is a tax demand. Interest rates were higher, there was more scrutiny. Now the assessee is the KING. 😳

Yes, the client has to learn good manners and discipline. (We also)☺️

Are you a director of a private limited company having a website?

 Are you a director of a private limited company having a website?

 Here are 3 disclosures that are mandatory else you may face dire penal consequences.

 

1.     Contact details on Home/Landing Page

a)     Name

b)    CIN

c)     Regd  Office Address

d)    Contact No., Name & Email of person to contact for grievances

 

2.     Notice of Shareholder Meeting (AGM & EGM)

Every Co. has to hold AGM (Annual General Meeting) every year for adopting financials etc. EGM is held on need basis. Notices of meetings are mandatorily required to be uploaded on website.

 

3.     Annual Return of the Company

Annual Return (Form MGT-7/7A) which is required to be filed with ROC (Registrar of Companies) every year is also required to be uploaded on website.

 

4.     Resignation of a Director

The fact of "Resignation of a Director" needs to be put up on the website within 30 days.

The above disclosures were mandatory website disclosures that apply to all companies irrespective of their type & size.

 

5.     Penalty for violation of the above:

		Penalty on Company			Penalty on each director
	Violation	Flat Amount	Variable Penalty per day	Maximum Limit	Flat Amount	Variable Penalty per day	Maximum Limit
1	Contact details NOT on Home/Landing Page	Nil	1000/-	1 lakh	Nil	1000/-	1 lakh
2	Notice of Shareholder Meeting NOT on website	10,000/-	1000/-	2 Lakhs	10,000/-	1000/-	50,000/-
3	Annual Return of the Company NOT on website	5,000/-	500/-	No Limit	5,000/-	500/-	No Limit
4	Resignation of Director NOT on website	10,000/-	1,000/-	2 lakhs	10,000/-	1,000/-	50,000/-

 

6.     Related Provisions

 

Sec 12 read with Rule 26 of Incorporation Rules

Sec 101 read with Rule 18 of Management & administration Rules

Sec 92

Sec 168 read with Rule 15 of Appointment & Qualification of Director Rules

Supreme Court decision Mohit Minerals decision for a layman’s understanding

 The earlier position for an importer was when he is importing and paying ocean freight for import, he might be paying the freight to a Non resident line and hence it was treated as an import of service. For import of service, importer was liable to pay IGST on Reverse Charge Basis and he could claim Input Tax Credit on the same (so there was no effect at all).

But when he is importing goods on a CIF basis, the freight was paid by then Non resident seller and importer is not paying any ocean freight. But department demanded that there is an import of service and hence importer has to pay IGST and he can take ITC also. But trade objected this because of 3 reasons – (1) the ocean freight cost is already loaded on the value of goods imported and hence paying tax on ocean freight again will result in double taxation and (2) as the non-resident seller is paying the ocean freight, they don’t even know the amount of ocean freight.  (3) When something is imported on CIF basis, service is received by the foreign seller and not the Indian importer. So there cannot be any import of service by the importer of goods.

So the matter went to Gujarat High Court and Gujarat High Court held that importers need not pay IGST on reverse charge basis on ocean freight when import was on CIF basis.

Department went in appeal before Supreme Court against this order and Supreme Court now held that the decision of the Gujarat High Court is valid.

Now the factual situation is like this:

Payment on FOB basis:

• ·       If shipping line is based in India, GST payable by shipping company under forward charge.
• ·       If shipping line is based outside India, GST payable by Importer under RCM.

Payment on CIF basis:

• ·       If shipping line is based in India, GST payable by shipping company under forward charge.
• ·       If shipping line is based outside India, NO GST payable as per Supreme Court Decision

Can we take ITC on Employee Uniforms?

 Can we take ITC on Employee Uniforms?

GST on any expenses incurred in the course or for furtherance of business, unless it is specifically blocked, can be claimed as ITC.

Uniforms are not covered under blocked credit u/s 17(5).

Uniforms are used by the employees only during office hours when attending official duties. They don’t wear it for personal functions or occasions. It is given to employees as per the internal policy of the company. It is printed with Company Logo. So, it is a part of brand identity of the company.  Hence, it is not for any personal consumption or gift to employee. It is purely a business expenses and hence ITC is available.

Summary of Sec 194Q

 Summary of Sec 194Q:

Tax to be deducted for:

·       Purchase of goods from a resident seller

·       Goods are purchased for a value or aggregate of value exceeding ₹50 lakhs in current FY

·       The person buying shall fall into the meaning of buyer as provided for this section (buyer means a person whose total turnover from business exceeds Rs. 10 crore during the FY immediately preceding the FY in which the purchase of goods is carried out – if the turnover exceeds Rs 10 cores in last FY, 194Q is applicable in this FY)

Time of Deduction:

Earlier of

·       Time of credit of such sum to the account of the Seller (when the invoice is accounted)

·       At the time of payment

Amount of on which to be deducted:

On such purchase consideration booked or paid, in excess of Rs 50 lakhs,

(Value on which TDS shall be deducted  = Total value of purchase (-) Rs.   50 lakhs)

Rate of TDS

0.1% (5% in case PAN is not furnished) of the purchase value exceeding first Rs. 50 lakhs.

Important announcement to Limited/Private Limited Companies

Important announcement to Limited/Private Limited Companies

Government has notified that if your company is using a software for accounting purpose, it should have an “Audit Trail”. This stipulation originally was proposed to implement from 1^st April 2021, but subsequently postponed.

Now, this will be applicable from 1^st April 2022.

The amendment says:

·       The software used should have an Audit Trail (Edit Log) facility

·       The same should be operated throughout the year for all transactions

·       The audit trail feature cannot be tampered with or disabled

·       It should be preserved for 8 years

Audit trail will record  edits made to the book of accounts along with the date when such an edit was made.

Though the feature is implemented as per the Companies Act, this will help GST, Income Tax and other departments also, to check whether any malpractices, falsification, editing, deletion etc., and if found out, it will lead to very serious repercussions.

For example, if you pay an amount which is more than Rs. 10,000/- for an expense in cash, and you subsequently edit the entry to split the payment into lower amounts on multiple dates to escape disallowance of such expenditure from income tax purpose, department can easily track this. This can lead not only to the disallowance of such expenditure but also to rejection of entire books of accounts and all the damages and penal provisions will follow.

Once, any department finds out an editing or deletion, then you will have to satisfactorily explain the reason and justification for such edit/deletion. Otherwise, the damage will be huge.

This new stipulation is brought in as amendment in the Companies (Accounts) Rules 2014 and Companies (Audit and Auditors) Rules 2014.

Hence, the auditor of your company is required to report whether the software is having audit trail facility, whether it is operated throughout the year for all transactions, whether they are tampered with or disabled and whether it is retained as required by law.

The only way forward is to have accountants having sufficient knowledge and efficiency in your accounts department and to keep the accounts plain, simple and straightforward. Any kind of malpractices can be suicidal.

So, you may please check with your software people and ensure that the software you use is having the audit trail feature as stipulated by the Ministry of Corporate Affairs.

The only way to escape from this stipulation is to have your accounts in old manual mode, which is totally impractical and inefficient in the current scenario.