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Hi Folks
It is the end of the day, end of the week, end of the month and end of the financial year. Some of you may have already headed towards cooler climes to beat the heat, thanks to the extended weekend. Some of you may be giving the last minute push to reach the year-end target, year-end billing or recovery. Many of you may be busy with the taxes, turnover, appraisal, budgets, inventory stock take, cash balance checking etc. I know for sure an year end editorial piece will not catch the attention. Yet, I want to leave you all with a few thoughts on Knowing Your Professionals. In the context of an entrepreneur, in particular – Knowing Your CA / CS / Lawyer. These are the ‘3 wise men’ who will guide you and safeguard your interests in the long run. As an entrepreneur you may be focussing on market, technology, people, funding etc. but unless you have the right set of people for your audit, compliances & legal advice, you will not be able to go far.
As part of my profession, I get to meet many, many entrepreneurs from diverse backgrounds, businesses, ideas & requirements. While the ‘senior seasoned ones’ know our importance (read CA/CS/Lawyer), the newbies find it ‘easy & economical’ to access our breed online. Many e-businesses have sprung up offering ‘one-stop-shop solutions’ for startups who want to hire an auditor, company secretary or get some legal document drafted. While this is not new, what is, is most of the times you don’t know who your auditor is, whois managing your confidential board and shareholder records, who is using your Digital Signature and who has drafted your legal documents or offered you legal advice. When I say who – I mean what is the professional’s credentials ? Have you ever done a due diligence or Know Your Professional check when you sign up for these so-called online services ?
Once I was shocked to hear from a young founder that he just knows a coordinator on a service portal through whom he gets all his advice, audit, compliances done. He doesn’t even know who his statutory auditor is – one whom he has appointed for a 5 year period ? should he not appoint such an important professional after a thorough due diligence and meeting him in person ? this may sound old fashioned and archaic but trust me, it is required. Else you are entrusting all your business details and books to a stranger who just signs once a year and uploads on the MCA or the IT dept. portal. Can you afford this, especially when changing an auditor is so difficult under the law ? when information is king and data security is not guaranteed ? same is true for the auditor too. Is it not risky signing a Balance Sheet without even knowing who the client is ? is a Know Your Customer not important ? I bet there are umpteen inbuilt processes and terms to check on all this but my advice would be never, ever to appoint a statutory auditor whom you have not met or interacted with. Know your Professional.
This brings me to another revelation I had recently. I came across a so-called ‘legal advice website’ which didn’t disclose who the team were, who were the professionals offering the advice, where it was based out of, how old it was etc. It claimed wide media publicity, awards, number of customers, multi-state presence etc. but just reading some very basic compliance steps for a Company that they put out was shocking. It was completely wrong and not as per law. Any naïve entrepreneur who is fed on ‘bootstrapping’ (read buy the cheapest professional services available !) is bound to sign up with them because of the dirt cheap prices (as if professional services are commodities to be tariffed !!). How does he know if he has got the right advice or not ? Not until another professional points out or a due diligence red flags it or a regulator issues a notice. By then the damage is done. In most cases irreversible.
As you step into a new financial year, as you renew your contracts – Know Your Professional well. Whether you engage online or through an offline reference, it pays to pay them well and get the right people. ROI is assured. As I leave you with this tip, I urge you to read this 185th issue of Samhita which carries several updates from MCA, DGFT, GST, CBDT, IBC etc.
For our earlier issues do visit the Resource Centre at sharadasc.com.

Happy Reading

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  • The Central Government has introduced The National Financial Reporting Authority (Manner of Appointment and other Terms and Conditions of Service of Chairperson and Members) Rules, 2018 w.e.f 21st March, 2018
  • Further, from the said date following sub-sections are effective:
    • –    Section 132 – Constitution of National Financial Reporting Authority (NFRA)
    • –    Section 132(3) – Composition of NFRA
    • –    Section 132(11) – Govt. to appoint secretary and other employees of NFRA
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The MCA has notified that w.e.f 24th March, 2018, stakeholders can now apply for 2 proposed names with option for 1 Resubmission within 15 days for rectification of the defects, while Reserving Unique Names for Companies through the RUN web service. This is intended to remove the difficulty faced earlier when only one name was permitted and no resubmission was allowed, leading to high number of rejections and consequent application fee each time.


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Companies (Filing of Documents and Forms in Extensible Business Reporting Language) Amendment Rules, 2018, notified on 8th March, 2018, specifies that companies once having filed their financial statements under XBRL Rules shall continue to do so though they may not fall under the class of companies specified therein in succeeding years.
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The MCA has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 w.e.f 1st April, 2018. Several changes have been made to the Companies (Indian Accounting Standards) Rules, 2015.
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The DGFT has notified that exemption from integrated tax and compensation cess under Advance Authorisation Scheme, EOU scheme and EPCG scheme of Foreign Trade Policy 2015-20 is extended up to 1st October, 2018.
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The process of Merchandise Exports from India Scheme (MEIS) application for SEZ exports has been simplified by removing the need for submitting physical copy of SEZ shipping bills in order to claim benefits under MEIS.
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Irrevocable LC confirmed by exporter’s Bank in relevant Bank Certificate of Export and Realization was hitherto treated as export proceeds realised for discharge of export obligation. DGFT has now deleted the relevant clause completely thereby making LC as an instrument of export realisation invalid.
Is this a fallout of the PNB fraud scam?
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DGFT has provided E-payment facility for all kinds of filings including composition fee, amendment of license, etc., which was till now possible only through manual payment. The Trade notice explains how the online payment is to be made and how DGFT acknowledgement is generated for the same. Both online and offline will be available until 15th April, 2018, after which only E-payment will be accepted.
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Para 4.07A has been inserted in the Handbook of Procedures, 2015-20 detailing the self-ratification scheme available for issue of Advance Authorisation in cases where SION is not fixed.
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W.e.f 1st April, 2018, following Regulations of the IBBI shall come into force.
  • IBBI (Insolvency Resolution Process for Corporate Persons) (Second Amendment) Regulations, 2018
    • ➢ A person to be appointed as an IP must be independent of the corporate debtor – this now includes Secretarial Auditor in place of Company Secretary in practice.
    • ➢ The Amendment mandates disclosure of costs and time limit for identification of the resolution applicant and clarifies the definition of expenses which includes the fee to be paid to various professionals.
  • IBBI (Insolvency Professionals) (Amendment) Regulations, 2018
    • ➢ The regulations of insolvency examinations, qualifications and experience, Certificate of registration, Recognition of Insolvency Professional Entities and also Form A for making an application for registration has been modified/inserted to keep pace with the changing dynamics w.r.t insolvency matters. Additional training is mandated for IPs and they are subjected to greater disclosure to rule out conflict of interest.
  • IBBI (Information Utilities) (Amendment) Regulations, 2018
    • ➢ Any information utility which is aggrieved by the order of the Board may appeal to National Company Law Appellate Tribunal in the manner as prescribed under “National Company Law Appellate Tribunal Rules, 2016” instead of “National Company Law Tribunal Rules, 2016”.
  • IBBI (Liquidation Process) (Amendment) Regulations, 2018
    • ➢ Liquidation cost is inserted under definitions. Eligibility for appointment as liquidator modified w.r.t Company Secretaries and Sale of corporate debtor as going concern as one of the manners of sale by liquidator has been introduced.
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The following provisions related to job work have been clarified:

  • (i)   Scope / ambit of job work;
  • (ii)  Requirement of registration for a principal / job worker;
  • (iii)  Supply of goods by the principal from the job worker’s place of business / premises;
  • (iv)  Movement of goods from the principal to the job worker and the documents and intimation required therefor;
  • (v)   Liability to issue invoice, determination of place of supply and payment of GST; and
  • (vi)   Availability of input tax credit to the principal and the job worker.
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The due dates for filing GSTR 3B have been notified as follows:
Sl. No. Month Last date for filing GSTR 3B / payment of tax
1 April 2018 20th May 2018
2 May 2018 20th June 2018
3 June 2018 20th July 2018
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The E-way bills Sub-rules (ii) [other than clause (7)], (iii), (iv), (v), (vi) and (vii) of Rule 2 shall be applicable w.e.f 1st April, 2018.
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Certain Rules related to job work have been amended to state that where goods are sent by one job worker to another, the challan may be issued either by the job worker or the principal, provided that the challan issued by the principal may be endorsed by the job worker indicating the quantity and description of goods where the goods are sent by one job worker to another or returned to the principal. Further, the challan endorsed by a job worker may further be endorsed by another job worker indicating the quantity and description of goods which are sent to another job worker or the principal.
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An exemption is provided to registered persons from paying CGST under reverse charge on supply of goods or services from unregistered person to registered person till 30.6.2018. Similarly reverse charge under UTGST and IGST have also been suspended until 30.6.2018.
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Several representations were received seeking clarifications on issues relating to refund. Government has clarified the issues with a view to ensure uniformity in the implementation of the provisions. Some of them are –
1. Non-availment of drawback
2. Exports without Letter of Undertaking
3. Exports after specified period
4. Refund of transitional credit
5. Discrepancy between values of GST invoice and shipping bill/bill of export
6. Refund of taxes paid under existing laws
7. BRC or FIRC for export of goods
8. Supplies to Merchant Exporters


Note: The contents of this Newsletter are only a summary and has not dealt with any issue in detail. Any action taken or proposed to be taken must be in consultation with professionals and not merely based on the articles / news updates. S. C. Sharada & Associates disclaims all liability on action taken without professional advice.
 


S. C. Sharada & Associates, Company Secretaries. #405, 7th Cross, IV Block, Koramangala, Bangalore – 560 034
sharadasc.com Phone : +91 80 25534374 , +91 80 25536618 Email: [email protected]

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