Volume 12 Issue No. 231/2020

Hi Folks

Ask yourself ‘Why do I do what I do’. Confused ? Clear ? This was a simple ice-breaker question that a well known keynote speaker threw at us at a recent Talk Session. Infact he made each one of us ask our neighbour this question to understand him/her better. Actually looks simple but difficult to answer since in most cases we are not clear why we are into something. But this question not only broke ice but also helped us all do a split-second introspection into the quintessential existential question ‘Who am I ? What do I do ? Why do I do it?’. More often than not, we continue to do what we do without taking a moment to stop, pause and think. We get washed away in the deluge of life’s challenges and charms without stopping by to analyse if we are enjoying what we are doing or not.

This activity enabled not only self-introspection and articulation but also knowing the other person well enough to connect. It was interesting to see the diverse kind of responses this question got. Someone said “I do what I do because it gives me a kick, a sense of adventure and purpose. Helps me connect with people which I love the most”. Someone else said “I do it for a living”. I said “This is what I do best and I know nothing else”. Yet another said “I am not sure why I am doing this. I am an Engineer and so…..” Everyone laughed because most Engineers are burnt out and bored nowadays. Branching into other domains with most preferred being Food & Travel. A young student got up and boldly declared “I am studying commerce only to satisfy my father. But I love photography. I don’t like what I am doing” Reminded me of the struggle that Madhavan’s character had in 3 Idiots movie where he is studying engineering to please his dad but heart in heart desires to be a wildlife photographer. Yet another gentleman got up and shared what his neighbour was doing “He is a 82 year old Social Sciences Professor who has moved from teaching to serving the destitutes. He is clear why he is doing what he is doing. It is deeply satisfying to him at this stage in life”. Wow, in about 5 minutes, we knew each other but also realised how little we knew of ourselves ! How each person has a different purpose in life. How each one of us is either clear or confused about the purpose. What is driving whom. Who is doing what …well, the outcome was it is ok to do anything so long as you enjoy it. So long as there are no regrets. No complaints. Else it is time for you to ‘unbox’ yourself (in the speaker’s words) and find your calling. Find the courage to change course. Then and only then will you Live Life. Enjoy Life. Be Successful in Life. Then years seem like days, days seem like hours and hours like moments. Doesn’t matter if it is a normal year or a Leap year like 2020 ! If you find the answer to ‘Why I do what I do” you can leapfrog into success.

From deeper and difficult questions to more mundane things. Turn your attention to the labour law article titled “Engagement of People – Diverse Models” by Mr. Vittal Rao. In this issue he elaborates on the various HR engagement models adopted by companies and the consequences under labour laws. He says “……………………if the consultants / retainers carryout regular assignments in line with / at par with any permanent staff and if the work or assignments carried out are in connection with the business of the employer, then such contracts will be deemed to be Employment Contracts. Judiciary has held in a number of cases that such Employment Contracts will be governed by all labor legislations, as applicable to a permanent employee.” ………………Trainees are “workmen” under the Industrial Disputes Act. Judiciary has upheld the same for coverage under PF and ESI unless the engagement is proved otherwise”. Similarly “……………..Interns engaged by startups could also come under the ambit of PF, ESI etc. unless certain precautionary and methodological steps are taken”. Do take time to read the full article to understand the implications.

Highlight of the 231^st issue of Samhita is CARO2020 which must be adhered to in Auditors Report from the FY19-20 onwards. A few types of companies are exempt but it is clear Government is expecting more and more disclosures and transparency from corporate India and with it the responsibility of the Auditors as well to go deeper and report on a variety of matters.

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Happy Reading

Engagement of people – Diverse Models

The business world today, is highly dynamic and challenging with fast changing technology and innovations.Hence corporates need to explore opportunities through expansion, diversification, re-organization,restructuring and other varied methods or systems to succeed in the industry. Digitalization is on the offing and might pose as a Read more

MCA updates

Web Form SPICe+

SPICe+ form for incorporation of a company has been gazetted and deployed w.e.f. 23.02.2020. Following to be noted:

PART-A deals with application for name of a new company which was earlier in RUN Form. However if an existing Company wishes to change its name RUN form needs to be used for making an application to MCA.
PART-B of the form deals with other information required for incorporation of a company with an additional section for OPC companies to mention details regarding their Nominee.
The new AGILE- PRO form provides for registration under EPFO, ESIC and Professional Tax (only for Maharashtra).
Currently Bank account can be opened through this Form with only Punjab National Bank. Other banks are yet to be tagged.

In the current form SPICe+, still seems to have some issues and cannot be expected to make incorporation a seamless process. As always the Ministry has claimed it as an “Ease of doing business” initiative a little too early in the day.

CARO, 2020

Applicability :

MCA has released the Companies (Auditor’s Report) Order (CARO), 2020 dated 25.02.2020 which replaces CARO, 2016. It is applicable for FYs commencing from 01.04.2019 and to all companies except the following:

Banking Companies
Insurance Companies
Section 8 Companies
One Person Companies
Private limited Company not being a subsidiary or holding company of a public company having:

Paid up share capital and reserves and surplus not exceeding Rs. 1 Crore and,
Borrowing not exceeding Rs. 1 crore from any bank or financial institution and
Total revenue (including revenue from discontinued operations) not exceeding Rs.10 crores

Highlights of matters to be disclosed:

CARO, 2020 mandates wider and more diverse disclosures as compared to CARO, 2016. A few are listed below:

Whether the company is maintaining proper records with full particulars and quantitative details of Plant, Property and Equipment and intangible assets.
Whether physical verification of inventory has been conducted and the margin of discrepancy is 10% or more, in aggregate for each class of inventory, the auditor has to report if the same has been dealt properly in the books of Accounts.
Whether during the year the company has been sanctioned working capital limits in excess of Rs. 5 crores, in aggregate, from banks or financial institutions on the basis of security of current assets
Whether the company has granted any loan or given any advance or guarantees or made any investments. Any amount w.r.t. loans and advances overdue for more than 90 days should also be mentioned in the report.
Whether the company has defaulted in repayment of any loan and whether the loans were applied for the purpose they were obtained. If not such deviations must me highlighted
Whether the monies raised through IPO or FPO were applied for the purpose raised and whether the company has made any preferential allotment or private placement during the year
Whether the whistle-blower complaints if any have been considered in the report
Whether all related party transactions are in compliance with Sections 177 and 188 of the Companies Act, 2013
Whether there has been any resignation of statutory auditors during the year and whether issues or concerns raised by outgoing auditor has been considered
Whether there are any adverse remarks or qualifications in the consolidated financial statements

Where the answer to any of the listed questions is unfavourable, the Auditor’s Report should state the basis for such unfavourable or qualified answer. If he is unable to express an opinion on the same, his report should state the reasons for being unable to express an opinion.

The scope of audit and reporting has increased drastically and so also the responsibility of the Board to maintain the records thoroughly and ensure complete disclosure of information. The overall accountability has gone up.

MCA filings by IP, IRP and RPs under IBC, 2016

MCA has issued a series of steps to be followed for filing of e-forms on MCA website by Resolution Professionals under the Companies Act, 2013. Summary is as below:

IPs are required to file Form INC-28 under 3 circumstances:

Where a RP is appointed under the Insolvency and Bankruptcy Code (IBC), 2016 by the NCLT through an Order approving him as the Insolvency Professional (IP), lnterim Resolution Professional (lRP) or Resolution Professional (RP) or Liquidator. Once the Form is approved, the company’s master data on MCA will display that the said company is under Corporate Insolvency Resolution Process (CIRP) or Liquidation as the case may be and the name of the IP so appointed will be displayed as CEO. All filings required to be signed by the directors will then be signed by the IP as the CEO. Unless Form INC-28 is approved the IP cannot file any other form in the role of “designated CEO”.
Where the Resolution Plan is approved by the NCLT and a new management takes over or liquidation proceedings are initiated or application for CIRP is withdrawn.
Where admission of a company into CIRP or into liquidation is stayed. The status of the Company on MCA changes accordingly.

Nidhi Companies

According to Nidhi (Second Amendment) Rules, 2020, every existing Nidhi Company and every company so defined under the Act, shall file a Form with the Central Government declaring themselves as a Nidhi Company within a period of

1 year from the date of incorporation or
9 months from the date of commencement of Nidhi (Amendment) Rules, 2019, whichever is later. Earlier the period available was 6 months.

Ministry of Labour and Employment

Restoration to normal pension in cases of grant of commutation

As per the notification dated 20.02.2020, normal pension shall be restored for those members who availed the benefit of commutation of pension under the old Scheme on or before the 25^th day of September, 2008; after completion of fifteen years from the date of such commutation.

IT updates

Failure to intimate Aadhar number will render PAN inoperative

CBDT notifies Income Tax Rule 114AAA prescribing that PAN will become inoperative if a person, who has been allotted PAN as on 01.07.2017 and is required to intimate his Aadhaar number under section 139AA (2), has failed to intimate the same on or before 31.03.2020. His PAN of such person shall become inoperative immediately after the said date for the purposes of furnishing, intimating or quoting under the Income Tax Act.

Introduction of Forms 10-IC and 10-ID

Section 115BAA deals with new tax rate for domestic companies and Section 115BAB deals with Corporate tax rate for new manufacturing companies from FY 2019-20 onwards. Now CBDT has released FORM No. 10-IC for Application for exercise of option under sub-section (5) of section 115BAA of the Income tax Act, 1961 read with rule newly inserted Rule 21AE and FORM No. 10-ID for Application for exercise of option under sub-section (7) of section 115BAB of the Income-tax Act, 1961 read with newly inserted rule 21AF of Income-tax Rules, 1962.

GST updates

Due dates for filing of return in Form GSTR-3B

FORM GSTR-3B can be filed in a staggered manner for the months of January, February and March, 2020.

Applicability	Extended due date
Taxpayers having annual turnover of Rs.5 crores and above in the previous FY	20^th of the month
Taxpayers having annual turnover below Rs.5 crores have been divided into 2 categories:	22^ndof the following month
1. tax filers from 15 States/ UTs *	22^ndof the following month
2. remaining taxpayers **	24^th of the following month

*The tax filers from 15 States/ UTs, i.e., States of Chhattisgarh, Madhya Pradesh, Gujarat, Maharashtra, Karnataka, Goa, Kerala, Tamil Nadu, Telangana or Andhra Pradesh or the Union territories of Daman and Diu and Dadra and Nagar Haveli, Puducherry, Andaman and Nicobar Islands and Lakshadweep

**For the remaining taxpayers whose principal place of business is in the States of Himachal Pradesh, Punjab, Uttarakhand, Haryana, Rajasthan, Uttar Pradesh, Bihar, Sikkim, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura, Meghalaya, Assam, West Bengal, Jharkhand or Odisha or the Union territories of Jammu and Kashmir, Ladakh, Chandigarh and Delhi

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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