POSH Act & Requirement of filing Annual report

 

POSH Act & Requirement of filing Annual report for 2023 by 31st January, 2024

The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act was passed in 2013 and it got amended in 2023 with certain important stipulations. As an employer, it is very important for you to be aware of the provisions, the compliance requirements and the penalties for non-compliance.

 

As gender equality and women’s rights are in the forefront of the social and governance attention, any lapse in the compliance may have far-reaching implications.

 

Let us see a gist of the POSH Act compliance.

 

The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act was passed in 2013, laying down the procedures for a complaint and inquiry, and the action to be taken.

 

1.    POSH Act is applicable on every Company, workspace, establishment or organization employing 10 or more employees whether full time, part time, interns or on contract, irrespective of its nature of industry of location.

 

It is applicable to all including proprietary, firms, companies or any other entity.

 

2. Internal Committee: Internal Complaints Committee has to be mandatory set up in each establishment with 1 Presiding Member, 2 Employee Members and  & 1 external members in case of bigger entities.

 

Presiding Officer who shall be a woman employed at a senior level at workplace from amongst the employees and at least one-half of the total Members so shall be women.

 

3.     Formulation of Internal POSH Policy.

 

Entity should formulate a POSH Policy and circulate it amongst its employees.

 

4.  Workshops, Awareness and Orientation Programs has to be Organized by the employer to the employees.

 

5.   Submitting Reports under the Act: The Internal Complaints Committee or the Local Committee, in every calendar year, shall prepare and submit an annual report to employer and district officer.

 

There is a specific format for this Annual Report.

 

The due date to file the report with the District Officer is 31st of January for every year for the preceding calendar year.

 

6.     Penalties: When the employer fails to constitute an Internal Committee or breaches provisions of this Act or any rules made thereunder, they shall be punishable with fine of fifty thousand rupees.

Extended penalties shall be:

·       Cancellation or withdrawal of his license.

·       Non-renewal, or cancellation of the registration.

·    The employer shall be punishable with fine which may extend to Rs. 50,000/- for the first offence.

 

7.     Disclosure regarding the POSH act compliances must be reported every year in Board report of the Company.

Very important amendment in Income Tax relating to MSME

You buy goods or services from an MSME:

You have to pay the amount _within 45 days from the date of acceptance of goods of services_ (or within such shorter time as agreed between the parties)

But If you fail to pay the amount due to an MSME within 45 days, then what is the consequence?

1.  You have to pay interest @ 20.25% from the 45^th day till the date of payment.

(This interest is not deductible as an expenses under Income Tax Act)

2. But most importantly, there is an amendment in the Income Tax Act from FY 2023-24 which says “YOU CANNOT CLAIM THAT PURCHASE OF GOODS OR SERVICES AS AN EXPENSE”. But you can claim the expense in the year in which you have paid the MSME.

 For example, if you buy Rs. 10 lakhs worth of goods from an MSME which is overdue for more than 45 days and is outstanding as on 31^st March,  then you will have to pay about Rs. 3.40 lakhs plus interest additionally, as Income Tax.

You have to identify, out of your creditors,  who all are MSMEs and ensure that their dues are settled in time.

So please take care that you pay all your MSME creditors within 45 days and clear the all dues to MSME outstanding for more than 45 days before March 31^st.

To MSME suppliers : Do not forget to mention your MSME registration number in your quotes, contracts, invoice and other communications with your customers.

 

 

• •     Are you a company (Private Limited or Limited)?
• •     Are you using any software for maintaining your accounts?
• •    Then you are required to ensure that your software has the feature of Audit Trail from April 1, 2023.

 

What is audit trail?

 

Simply speaking, it the record that tells you:

• •    When was a particular entry made in the software
• •    Who has done it
• •  If that entry is subsequently modified, when was it modified, who made the modification, what was the modification.
• •   If that entry is subsequently deleted, when was it deleted, who made the deletion, what was the entry before deletion.

 

Modification can be in any field including date, party name, particulars, narration, inventory values, amount etc. – any correction or change or deletion in any of the data already entered.

 

Importantly, the audit trail feature should not be disabled or deleted.

 

What can be the possible impact of this?

 

This requirement is as per direction of Ministry of Corporate Affairs. But, once your software has the audit trail feature, any other department including Income Tax, GST or ED can verify the audit trail – which means they will come to know what modifications/ deletions you have made in the accounts.

 

So, you will have to be extra cautious when you make:

•       A back dated entry

•       Any modification of data already entered, including splitting of entries

•       Any cancellation or deletion of entry already made

 

You will have to explain why it happened and have to establish that such entries/modification/deletion are made for genuine reasons and not for the purpose of any tax evasion or not for covering up any violation of law.

 

Only exemption to this requirement is that you are maintaining books of accounts manually. But how far it is possible is a question.

 

So make sure that your accounting is uptodate, accurate and complies with all laws that are applicable. If you have any doubts, consult your CA before making the entry.

 

You should not pass an entry, modify it or delete it at your whims and fancies. Ensure that the entry is correct in all respects,  before passing it.

 

Any subsequent correction / deletion may invite unnecessary questions. It may open a pandora’s box, in many cases!

 

- CA. James Antony