How to Generate EVC on the e-Filing Portal?

The service to generate the electronic verification code is only applicable to the individuals registered on the e-filing portal. This article explains how to generate EVC on the e-filing portal. This service provides the following functions to the users:

Prerequisites

  • Registered user on e-Filing portal as Individual Taxpayer with valid user ID and password
  • Validated and EVC enabled bank account in the e-Filing portal (For Bank Account option)
  • Validated and EVC enabled demat account in the e-Filing portal (For Demat Account option)
  • PAN linked with bank account (For Net banking option)
  • Valid debit card (For Bank ATM option)
  • Respective bank account should be linked with PAN and same should be registered at e-Filing (For Bank ATM option)

How to Generate EVC?

  1. Login to the e-filing portal

    Visit the e-filing portal and login using the user ID and password.

  2. Generating EVC

    Click on Services > Generate EVC from the dashboard.

  3. Procedure to Generate the electronic verification code

    On Generate EVC page, select PAN / TAN and click Continue.

  4. Methods to generate the electronic verification code

    Here are the following methods:
    Net Banking
    Bank Account
    Demat Account and Bank ATM

  5. Net Banking

    Upon selecting this option, you will be asked to login via net banking. Select the appropriate bank.

  6. Generate EVC via Net Banking

    Sign in to your bank account using net banking and click on the link to log in to the e-Filing portal. On your Dashboard, click Services > Generate EVC

  7. EVC Generated Successfully

    You will receive the generated EVC on your mobile number and e-mail ID registered on the e-Filing portal and success message will be displayed.

  8. Generating EVC via Bank Account

    On the Generate EVC page, select Through Bank Account and click Continue. A success message will be displayed, and you will receive the EVC on your mobile number and email ID verified by the bank.

  9. Generating EVC via Demat Account

    Select the option to generate EVC via Demat account and click on continue and repeat the above mentioned process. Hence, you will receive a success message with your EVC on your mobile number and email ID verified by NSDL / CDSL.

You can also generate an EVC in an offline mode by visiting your nearest ATM, entering your PIN and selecting the “Generate EVC for Income Tax Filing“. You will receive an EVC on your mobile number and email ID registered with the e-filing portal.

FAQs

What is an EVC?

An Electronic Verification Code (EVC) is a 10 digit alphanumeric code that is sent to the registered mobile number of the tax filer while filing his/her returns online.

How long is the EVC valid for?

EVC is valid for 72 hours.

Details to be considered while Preparing Projected Financial Statements

Projected financial statements are mainly used to analyze the financial performance of the business. It is widely used in the field of finance where businesses wish to avail loans from the banks or NBFCs. From projected financial statements, lenders can analyse the creditworthiness, future performance and growth of the business. The meaning of “Projected” here is different from provisional or estimated. Let us understand this in detail.

Line Items to be considered while preparing projected Profit & Loss Accounts and Balance Sheet

Projected P&L Statement

The following are the main accounts:

  1. Sales Revenue
  2. Cost of goods sold
  3. Gross Profit
  4. Sales, General and Administrative expenses
  5. Depreciation 
  6. Interest cost
  7. Tax expenses 

By including all the above main factors, one can derive the Net Profit in Projected Profit & Loss statement.

Projected Balance Sheet

The following are the main accounts:

  • Assets
    • Account receivable
    • Inventory
    • PPE (Property, Plant & Equipment
    • Other current assets 
    • Long term assets such as investments, deposits etc.
  • Liability
    • Trade Payables
    • Other current liability 
    • Long term debt (Loans, Debentures etc.)
  • Equity
    • Share capital
    • Retained earnings 

Difference between Projected, Estimated & Provision Financial Statement

Projected Financial Statements

Projected P&L and Balance sheet is prepared on the basis of projection i.e. for which period is not started. 

Estimated Financial Statements

Estimated Balance Sheet is prepared for future Data (for which the period is started but not completed) on the basis of projection i.e. for the period which already started but not completed.

Example

Suppose, for CC limit extension or taking fresh loans,  Bank demands financial statements of current year i.e. still not completed. In such a case, on projection (on the basis of past performance) we provide to bank an estimated financial statements.

Provisional Financial Statements

Provisional financial statements are unaudited in nature. It is prepared on the basis of actual or past data i.e. for the period which is already completed.

Example

Suppose the balance sheet is prepared for FY 2020-21 as on 31st March 2021, which is not yet finalized, but banks or financial institutions demand for the balance sheet, then we provide them with a provisional balance sheet.

FAQs

What is financial statement projection?

Projected financial statements incorporate current trends and expectations to arrive at a financial picture that management believes it can attain as of a future date. At a minimum, projected financial statements will show a summary-level income statement and balance sheet.

What is the goal in projecting balance sheet?

Unlike a past balance sheet that shows a business’s actual, historical financial positions, a projected balance sheet communicates expected changes in future asset investments, outstanding liabilities and equity financing.

Section 269ST – Clarification on the repayment of Loan Instalments in Cash

What is Section 269ST?

Section 269ST is considered as one of the important sections which were introduced by the Government with the intention of restricting Cash Transactions to curb Black Money and Tax Theft in the industry. Though this section simple in the front end but has various different angles which people faced in their practical life at the time of implementing this section.

Applicability of Section 269ST

The section 269ST states that, no person shall receive an amount of INR 2L or more:

  • In aggregate from a person in a day or,
  • In respect of a single transaction or,
  • respect of transactions relating to one event or occasion from a person

otherwise than by an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account.

Exclusions in Section 269ST

This section will not apply to-

  • Government
  • any banking company
  • post office savings bank
  • co-operative bank
  • other persons/receipts as may be notified

Transactions referred to in section 269SS (attracted when we accept a loan from any person) will be excluded from the scope of the new section 269ST.

Penalty

  • If any person does not comply with section 269ST then they have to bear the penalty specified U/s 271DA.
  • They shall be liable to pay any amount as a penalty equal to such amount receipt
  • However, there is an exception to section 271DA; According to section 271DA if a person proves that there were good and sufficient reasons for contravention of section 269ST then no person shall be liable

FAQs

What is difference between 269SS and 269ST?

Except for the transactions referred to in Section 269SS and other receipts as exempted by Central Government by notification, Section 269ST of the Act shall apply to every receipt whether taxable or tax free, whether capital or revenue.

What is the limit for cash receipt?

Income Tax Act restricts any person to receive an amount of INR 2L or more in cash, from a person in a day, in respect of a single transaction or in respect of transactions relating to one event or occasion from a person, under Section 269ST.

Are cash payments illegal?

Paying wages in cash is legal and maybe more convenient. Some businesses deliberately use cash transactions to avoid meeting their tax and employee responsibilities. If you receive cash for work you do, you need to: be paid (at least) the correct award wages.

Section 269SS & Section 269T – Repayment of Loan

Section 269SS & Section 269T deal with cash payment and repayment of loans and deposits. Both the sections were introduced to curb the black money. Tax evasion is one of the serious problems in India causing economic disparities. In other words, these sections were introduced to curb the increasing cash transactions which are leading to the accumulation of black money as these sections restrict such cash payments.

What is Section 269SS

An individual cannot accept loan or deposit or any other specified sum from another person via an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account if:

  • Amount of loan or deposit or specified sum is INR 20,000 or more, or
  • Sum total amount of loan, deposit, and the specified sum is INR 20,000 or more. For example, an individual wants to take a loan of INR 6,000, a deposit of INR 9,000, and an advance of INR 7,000 from his friend, he cannot accept it in cash because of the total sum is INR 22,000
  • In a case where a person had already received a loan, deposit, or specified sum from the depositor but the loan or deposit or specified sum hasn’t been paid back in such case, if the unpaid loan or deposit or-specified sum is INR 20,000 or more, or
  • Sum total amount of (1), (2), and (3) is INR 20,000 or more. Therefore, a person cannot accept a cash loan or deposit of INR 20,000 or more from another person

Exceptions to Section 269SS

  • Any loan taken or accepted from or taken or accepted by the following entities:
    • Government
    • Any banking company, post office savings bank, or cooperative bank
    • Corporations established by a Central, State, or Provincial Act
    • Any government company as defined in clause (45) of section 2 of the Companies Act, 2013 (18 of 2013)
    • Any institution or body or class of institutions notified in the Official Gazette

Thus, if any person accepts any loan or deposit or specified sum from the above-mentioned entities, or the entities accept any loan or deposit or specified sum from any person, provisions of Section 269SS will not apply.

  • A person earning only agriculture income accepts a loan or deposit from  another person also earning only agriculture income
  • Receiving cash from relatives during emergencies. In such cases, the intention should not be to evade the taxes
  • Partners contributing cash capital into a partnership firm

Penalty for Violation of Section 269SS

100% of the loan or deposit amount will be the quantum of penalty that can be levied by the assessing officer.

What is Section 269T

Section 269T prohibits any person to repay the loan or deposit or specified sum otherwise than by an account payee cheque or account payee bank draft or by use of electronic clearing system through a bank account, if:

  • The amount of loan or deposit, including interest amount, is INR 20,000 or more, or
  • The aggregate amount of loans or deposits, including the interest amount, held by such person in his own name, or jointly with any person, is INR 20,000 or more

In other words, a person cannot repay the loan or deposit in cash, if the amount is above INR 20,000.

Exceptions to Section 269T

An individual paying INR 20,000 or more towards repayment of loan or deposit does not have to comply with Section 269T if he/she pays to the following parties:

  • The government
  • Any banking company, post office savings bank, or co-operative bank
  • Other notified institutions
  • Any Government company as defined in section 617 of the Companies Act, 1956
  • Any corporation established by a Central, State or Provincial Act

Penalty for Violation of Section 269T

100% of the loan or deposit amount will be the penalty leviable by the assessing officer.

FAQs

Can I repay a loan amounting to more than INR 20,000 in cash? Can I repay a loan amounting to more than INR 20,000 in cash?

No, this will be a violation of section 269T i.e. a person cannot repay a loan amounting to more than INR 20,000 in cash.

What is difference between 269SS and 269ST?

Except for the transactions referred to in Section 269SS and other receipts as exempted by Central Government by notification, Section 269ST of the Act shall apply to every receipt whether taxable or tax free, whether capital or revenue.

Can property be purchased in cash?

The income tax act restricts accepting cash in excess of INR 20,000 in a real estate transaction. So, you cannot accept cash consideration on sale of the property. The property is to be registered at actual sales consideration.

Joint Declaration Form: Change details in PF account

Many a time it happens that a withdrawal claim is denied if the Provident Fund account of the applicant does not reflect the correct information. Errors like having a typo in the name on your PF account or an incorrect date of birth seem like a minute error but can lead to a lot of hassle at the time of withdrawal.

It is important that your PF account displays the correct information. If your PF account is reflecting incorrect details, there are two ways to rectify them. Basic details can be rectified from the UAN portal itself, whereas some changes need to be made by filling a joint declaration form.

Updating details through UAN portal

EPFO has made it mandatory to link Aadhaar Card with UAN. Once the UAN is linked to Aadhaar, it is difficult to make any changes to the PF account.

However, some basic changes can still be made directly from the UAN portal even if the Aadhaar Card is verified. These details include change in qualification, marital status, salutation and address.

Here’s how you can change these details on the UAN portal:

  1. Login to your UAN Account
  2. Next, Navigate to “View” and click on “Profile”
  3. Lastly, click o the edit icon against the details you want to change and save the changes made.

Joint Declaration Form

For certain details like name, father’s name, etc., a Joint Declaration form is to be filed since these details are verified against the user’s Aadhaar and are not easily editable.

The details that can be changed/ corrected through a Joint Declaration form are:

  • Name
  • Father/ Husband’s Name
  • PF/ EPS Account No.
  • Date of Birth
  • Joining Date
  • Date of leaving

How to fill a Joint Declaration form

It is mandatory to physically submit the Joint Declaration form to the PF Office with which the establishment is registered.

  1. The Joint Declaration Letter is to be physically submitted to the PF Office with which the establishment is registered. The jurisdiction of the PF office with which your establishment is registered can be viewed on the homepage after logging in to the EPFO Portal.
  2. Mention the name of the employee whose details you want to rectify along with the name of the establishment.
  3. Next, enter the correct details, i.e. the details you want to be reflected on your PF account.
  4. In the next column, mention the details that are erroneous, i.e. the ones you want to correct.
  5. Attach self-attested proofs as may be required to support the correction claim you are making. Example: If you want to change errors in your name, you can attach a self-attested copy of PAN Card or Aadhaar Card.
  6. Lastly, get the form signed by the applicant and authorised signatory for the establishment and submit the form to your PF office.
Joint Declaration Form
Download the joint declaration form here
Download
Joint Declaration Form
Download the joint declaration form here
Download

EPF Return: Make Provident Fund payment online

Employee’s Provident Fund (EPF) is a scheme introduced by EPFO through which the employees and their employer contribute a part of their salaries towards the PF fund in order to build a corpus for retirement.

In order to contribute towards the EPF Scheme, an establishment first needs to get itself registered on the EPFO Portal which in maintained by Ministry of Labour & Employment, Government of India.

The EPFO Portal allows the establishment to make the PF payment online.

Steps to file monthly PF return online

In order to make the PF payment online through the EPFO Portal, the following procedure is to be followed:

  1. Login to EPFO Portal

    Login to the EPFO portal using the credentials sent on your email Id upon successful sign up with Unified Shram Suvidha Portal.

  2. Download the ECR File

    Navigate to Payment and click on ‘ECR/Return Filing’. Next, click on ‘ECR Upload’, go to ‘Download ECR File’, select the wage month for which you want to file PF return, select the file type as ‘ECR’ and click on ‘ECR File Download’. An ECR file containing the list of employees against their UAN will be downloaded.

  3. Enter wage details

    Fill in the details regarding:
    a) Gross wages: Gross wages are the
    b) EPF wages: Basic Wages + Dearness Allowance
    c) EPS wages: Basic Wages + Dearness Allowance
    d) EDLI wages: Same as EPS wages
    e) EPF Contribution remitted: 12% of EPF wages (or as decided by organization)
    f) EPS Contribution remitted: 8.33% of EPS wages
    g) EPF EPS difference remitted: Difference between (e) and (f)
    h) NCP Days: Non-Contributing Period i.e. Absent days
    i) Refund of Advances

  4. Save as Text Document

    Next, save the excel file as a CSV file. Make sure to delete the first column with the particulars. Now, open the CSV file and remove all the extra commas, if any. Next, replace all the commas (,) between two fields with #~# and save the file as a text document.

  5. Upload the ECR file

    Now, login to the EPFO Portal, got to Payments> ECR Filing> ECR Upload. Select the Wage Month for which you are filing the return and other required details and upload the Text file.

  6. Generate TRRN and make payment

    Next, verify the ECR uploaded and a Temporary Return Reference Number (TRRN) will be generated. Further, click on “Prepare Challan” and fill in the EPF and EDLI charges as applicable. Also, enter the number of employees, excluded number of employees and their salary. Now, click on “Generate Challan”> “Finalize” and make the payment by clicking on “Pay”.

Due date of PF payment and return

PF Payment: The due date for PF Payment, i.e. the date by which employees’ PF shall be deducted is on or before 15th of the next month.

PF Return: The due date of filing PF return on the EPFO portal is on or before the 15th of every month.

Penalty for late filing of return

When there is a delay in filing of PF return, the following interest/ penalty is levied:

  • Interest under Section 7Q: An interest of 12% per annum, for every single day is levied on the employer if there is a delay in filing PF return.
  • Penalties under Section 14B in case there is a delay in making the challan payment:
    • 5% interest per annum for a delay upto 2 months
    • 10% interest per annum for a delay of 2-4 months
    • 15% interest per annum for a delay of 4-6 months
    • 25% interest per annum for a delay of more than 6 months
Can an employee contribute more than 12%?

Yes, an employee can contribute more than 12% towards PF contribution

Can an establishment go for voluntary PF registration?

Yes, an establishment can opt for voluntary PF registration even if they are not employing more than 20 employees.

Custom Duty and Import Duty in India

Custom Duty in India

Custom Duty is levied when goods are transported across borders between countries. It is the tax that governments impose on export and import of goods. The tax imposed on the import of goods is known as the import duty. Whereas, the tax imposed on the export of goods is known as the export duty. Customs Duty is beneficial for many reasons. For instance, it ensures a country’s economic stability, jobs, environment, among others. It regulates the movement of goods in and out of the country. It keeps a check on restricted items.

In the past few months, the government of India brought a major change in the tax systems of the nation. They introduced GST (Goods and Services Tax), a new tax collection system, which is a destination-based tax, which implies that the consumers are liable to pay tax when they use any goods and services.

GST has three categories –

  1. CGST (Central Goods and Services Tax),
  2. SGST (States Goods and Services Tax) and
  3. IGST (Integrated Goods and Services Tax).

Both CGST and SGST are applicable on the intra-state transactions whereas the IGST is applicable on the inter-state transactions. If the business is in the union territory, then UTGST will apply in place of SGST. The custom duty is now replaced by IGST, which means that instead of the custom duty, IGST tax is applicable (along with other applicable customs duties) on every import and export of goods and services. Let us understand IGST tax better.

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IGST: GST for Importers

Earlier, the tax system was complex and custom duty was levied to export and import goods and services. Multiple taxes such as countervailing duty (CVD), basic custom duty, anti-dumping duty, and safeguard duty were imposed on every import of goods and services. Under GST, these multiple taxes have been replaced by just one tax known as IGST (Integrated Goods and Services Tax). Only the integrated tax and the basic customs duty will be chargeable on the import of goods.

Import of goods refers to bringing merchandise into India from anywhere outside of India as per the IGST Act 2017. All the imports will be regarded as inter-state supplies and integrated tax will be imposed on them along with other applicable customs duties.

Calculation of IGST

GST can be calculated simply by multiplying the Taxable amount by GST rate. One must know that the tax on goods is imposed as per the size, mass, and extent of the imported and exported goods. The IGST tax for imports will be received by the State where the goods or services are consumed and not by the state where they are manufactured. Mentioned below is an example of the calculation of IGST on the import of goods:

For example,

The assessable value of an imported item is INR 10000/-
Basic Customs Duty = 10%
Integrated Tax Rate = 18%
The taxes will be calculated as follows:
Assessable Value = INR 10000/-
Basic Customs Duty = INR 1000/-
The value to impose integrated tax = INR 11000/- (10000 + 1000 = 11000)
Integrated tax = 18% of INR 11000 = INR 1980/-
Sum of Taxes = INR 1000 + INR 1980 = INR 2980/-

In addition to the above IGST, cess as per the GST Cess Act, 2017 may also be applicable on the goods. In such a case, the cess will be collected on the value taken for imposing the integrated tax. According to the example given above, the cess will be calculated on INR 11000.

Importers will not be liable to pay integrated taxes at the time of moving of commodities from a custom station to warehouse.

Input Tax Credit

Input Tax Credit under GST means the credit of input tax paid on import/purchases. A registered importer can claim the credit of the IGST imposed on him as the input tax credit under the GST system. The importer can offset the same input tax credit against the tax on the outward supply of goods. However, the Basic Customs Duty (BCD) paid will not be allowed to be claimed as the input tax credit. Along with the input tax credit, the importer can also benefit from the GST Compensation Cess before transmitting it to the ones in the supply chain. It is compulsory for the importers to mention the GSTIN (GST Registration Number) in the Bill of Entry in order to get the input tax credit of GST Compensation Cess and IGST.

Calculate Input Tax Credit online: ITC calculator
Input Tax Credit under GST means the credit of input tax paid on purchases. ITC can be used to set of against the CGST, SGST and IGST outward tax liabiliy.
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Calculate Input Tax Credit online: ITC calculator
Input Tax Credit under GST means the credit of input tax paid on purchases. ITC can be used to set of against the CGST, SGST and IGST outward tax liabiliy.
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What is the Import of Service under GST?

Import Of Service

Import of services as per the IGST Act 2017 means the supply of any service where:

  1. The supplier of service is located outside India
  2. The recipient of service is located in India, and
  3. The place of supply of service is in India

As per the provisions of Section 7(1) (b) of the CGST Act, 2017, import of services with consideration whether or not in the course or furtherance of business, will be considered as supply. In simple terms, the services that are imported without consideration will not be considered as a supply. However, the business test is not obligatory for the imported services to be deemed as a supply.

Import of services by a taxable person between related entities in the course or furtherance of business will be treated as supply, even if it is made without any consideration. Thus, import of some services by an Indian branch or foreign subsidiary from their parent company, in the course or furtherance of business, even without consideration, will be a supply and shall be subject to GST.

OIDAR Services

OIDAR services or Online Information and Database Access or Retrieval Services attract GST. Persons providing OIDAR services should mandatorily acquire GST registration. Also, a person who is importing services will be liable to pay tax on a reverse charge basis. However, in respect of the import of online information and database access or retrieval services (OIDAR) by unregistered, non-taxable recipients, the supplier located outside India will be responsible for the payment of taxes. The supplier will either have to take registration or assign a person in India for paying the taxes.

Supply to SEZ

Supply of goods or services or both to a Special Economic Zone Developer or an SEZ unit shall apply as inter-state supply and will be subject to levy of IGST.

GST Number Search: Verify GST Number or GSTIN online
Enter GST number or GSTIN (GST Identification Number) and verify GST details online. GST Number or GSTIN is a unqiue 15 digit number allotted after GST Registration.
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GST Number Search: Verify GST Number or GSTIN online
Enter GST number or GSTIN (GST Identification Number) and verify GST details online. GST Number or GSTIN is a unqiue 15 digit number allotted after GST Registration.
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GST for Exporters

Before GST was introduced, duties were imposed even on the export of goods and services. However, as per the new tax system, the export of goods and services from India to any other place outside the country are to be treated as ‘zero-rated supplies’. This means that no GST is applicable for the exporters. The registered taxable individuals that are exporting goods or services to places outside the country can claim refund.

FAQ

How IGST credit can be used?

According to the tax offsetting rules under GST, IGST credit needs to be used first to offset IGST tax liability. Whatever IGST credit is left can be used against CGST liability, then against SGST liability (in that order).

What is zero rated supply under GST?

Under GST, exports and supplies to SEZ are zero rated as per Section 16 of the IGST Act, 2017. By zero rating, it is meant that the entire supply chain of a particular supply is tax free, i.e., there is no burden of tax either on the input side or output side.

Secretarial Audit as per Companies Act, 2013

What is Secretarial Audit:

Secretarial Audit is the audit of non-financial aspects of the company. Secretarial Audit covers non-financial aspects of the business impact on the performance of the company and verifies compliances of applicable laws, regulations and guidelines.

Basically, Secretarial Audit is an independent verification of the records, books, papers and documents by a Company Secretary to check the compliance status of the company and also to ensure the compliance of legal and procedural requirements and processes followed by the company.

Objectives:

  • Ensure compliance of various legislations and regulations
  • Helps detect non-compliance and facilitates taking corrective measures to avoid future risks.
  • Assures the stakeholders of the Company that the compliances are being adhered to.
  • To ensure that the companies have an effective compliance management program so they have a lesser chance of receiving penalties.

Applicability:

As per Section 204 (1) of the Companies Act, 2013 read with rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, Secretarial Audit is applicable to the following companies:

  1. Every listed company
  2. Every public company having paid up share capital of Rs. 50 crore or more.
  3. Every public company having a turnover of Rs. 250 crore or more.
  4. Every company having outstanding loans or borrowings from banks or public financial institutions of Rs. 100 crore or more.

These companies shall annex with their Board’s Report , a Secretarial Audit Report in form MR-3.

Note: The paid up share capital, turnover, or outstanding loans or borrowings as the case may be, existing on the last date of latest audited financial statement shall be taken into account.

Appointment of a Secretarial Auditor:

Only a member of the ICSI holding a certificate of practice can conduct Secretarial Audit and furnish the Report.

As per rule 8 of the Companies (Meetings of Board and its Powers) Rules, 2014, secretarial auditor is required to be appointed by means of a board resolution. Such resolution shall be filed with the Registrar in e-Form MGT-14 within 30 days of passing the resolution.

It is recommended that a Secretarial Auditor be appointed at the beginning of financial year. The Secretarial Auditor can submit quarterly reports to the Board regarding the compliance of various legislations and regulations.

Secretarial Audit Report

The Secretarial Audit Report shall only be prepared by a Practising Company Secretary appointed for this purpose.

Secretarial Audit Report shall be prepared in Form MR. 3 and shall be annex with the Board’s Report of the Company.

Scope of Secretarial Audit

In terms of Form MR-3, the Secretarial auditor needs to examine and report the compliance of the following five specific laws:

  1. The Companies Act, 2013 (the Act) and the rules made thereunder;
  2. The Securities Contracts (Regulation) Act, 1956 (‘SCRA’) and the rules made thereunder;
  3. The Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder;
  4. Foreign Exchange Management Act, 1999 and the rules and regulations made thereunder to the extent of Foreign Direct Investment, Overseas Direct Investment and External Commercial Borrowings;
  5. The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 (‘SEBI Act’):-
    1. The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011;
    2. The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992/ SEBI (Prohibition of Insider Trading) Regulations, 2015;
    3. The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009;
    4. The Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999/ SEBI (Share Based Employee Benefits) Regulations, 2014;
    5. The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008;
    6. The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 regarding the Companies Act and dealing with client;
    7. The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009; and
    8. The Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998;
    9. SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

In addition, the form MR-3, point (vi) also refers to ‘Other laws as may be applicable specifically to the company.’

Moreover, it may be noted that the scope of MR- 3 includes ‘The Securities and Exchange Board of India (Listing obligations and Disclosures requirements) Regulations, 2015’.

Other Areas that need to be checked

Secretarial Auditor needs to examine and report on the compliance with the applicable clauses of the following:

  1. Secretarial Standards issued by The Institute of Company Secretaries of India.
  2. The Listing Agreements entered into by the Company with ….. Stock Exchange(s), if applicable;

Further, Secretarial Audit report also requires reporting on whether –

  • The Board of Directors of the Company is duly constituted with proper balance of Executive Directors, Non-Executive Directors, Independent Directors, and Women Director.
  • The changes in the composition of the Board of Directors that took place during the period under review were carried out in compliance with the provisions of the Act.
  • Adequate notice is given to all directors to schedule the Board Meetings, agenda and detailed notes on agenda were sent at least seven days in advance. A system exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting.
  • Majority decision is carried through while the dissenting members’ views are captured and recorded as part of the minutes.
  • There are adequate systems and processes in the company commensurate with the size and operations of the company to monitor and ensure compliance with all applicable laws including general rules like labour laws, competition law, Environmental laws, regulations and guidelines.

Moreover, Secretarial Auditor is required to report and provide details of specific events and actions that occurred during the reporting period having major bearing on the affairs of the company in pursuance of above referred laws/ rules & regulations.

Sample of Form MR.3

Secretarial Audit Report (MR - 3)
Download the template of MR-3
Download
Secretarial Audit Report (MR - 3)
Download the template of MR-3
Download

Excise Duty in India

Excise Duty is a tax levied on the goods manufactured in the country. It is a form of Indirect Tax that is collected by the seller or the intermediary from their consumers and is then paid to the government. The Central Board of Indirect Taxes and Customs (CBIC), functioning under the leadership of the Finance Minister, is the national authority responsible for collecting it.

After the introduction of Goods and Service Tax (GST) in India, almost all the indirect taxes have been subsumed into one tax, that is, GST. Hence, excise duty technically does not exist in India anymore except on few items like liquor and petroleum.

Acts and Rules

Majorly, there are two acts governing the legal framework of Excise Duty:

  • Central Excise Act, 1944: This Act provides all the definitions related to Excise.
  • Central Excise Tariff Act, 1985: The Act defines the rate of the Central Excise Duty and the elaborate schedule of excisable goods.

Types of Excise Duty

The following are the three types of Excise Duty in India:

  1. Basic Excise Duty: The duty imposed on goods classified under the first schedule of the Central Excise Tariff Act, 1985 and under Section 3(1)(a) of the Central Excise Act, 1944. It is levied on all excisable goods in India except Salt.
  2. Additional Excise Duty: This tax levied on few specific goods as a substitute for the sales tax and is charged by the central and state government. Furthermore, it is imposed under Schedule 1 of Section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 and the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978.
  3. Special Excise Duty: This is imposed on special goods under the 2nd Schedule of the Central Excise Tariff Act, 1985.

When is Excise Duty paid?

Rule 4 of the Central Excise (Amendment) Act, 2002 implies that this tax should be levied on manufactured goods and must be paid when the goods in reference are ‘removed’. Moreover, it also says that the removal of goods for sale is not a taxable event but the production of such goods is.

Additionally, rule 8 of the Central Excise (Amendment) Act, 2002 says that the tax must be paid on the 5th of the following month after the goods are removed from the factory or warehouse for sale. Although, if this payment is made through Netbanking, then the deadline is the 6th of the following month. If the payment is for the month of March, it can be made by the 31st.

Who is liable to pay Excise Duty?

As we have already established, excise duty is levied on manufactured goods in the country therefore, the producer of such goods is liable to pay the tax to the government. The following three parties are responsible to pay:

  • The establishment that produced the goods
  • The party that got the goods manufactured by hiring labor
  • The entity that got the goods manufactured by other parties

How to pay Excise Duty?

The payment of the tax can be made through Netbanking by using the official CBIC payment gateway called Electronic Accounting System in Excise and Service Tax (EASIEST).

You can follow the following steps to make the payment through EASIEST:

  1. Visit the NSDL-EASIEST website

    Select option “E-payment (Excise and Service Tax)

  2. Enter the 15 digit Assessee Code allotted by jurisdictional Commissionerate

    Then, validate the Assessee code

  3. Verify the Assessee details as present in the Assessee Code Master

    The type of tax will be automatically selected on the basis of the Assessee Code.

  4. Select the type of duty/ tax to be paid

    Click on the button “Select Accounting Codes for Excise

  5. Select Accounting Codes

    At a time, the assessee can select up to six Accounting codes.

  6. Select appropriate Bank

    Once the data is validated in the NSDL central system, select the assessee’s choice of Bank from the drop-down button.

  7. Confirm the Data entered

    After that, you will be redirected to the Net banking site of the chosen Bank.

  8. Login to Net banking

    Next, make the payment at the Bank site and download the Challan as proof of payment.

  9. Confirm Payment status

    At last, Confirm the e-payment status of EASIEST (NSDL) website by clicking on “Challan Status Enquiry

Difference between Excise and Custom Duty

Excise Duty Custom Duty
  • It is levied on goods produced in India
  • Whereas custom duty is imposed on goods sold in India but were produced in a different country
  •  This is paid by the manufacturer and not the consumer
  • On the other hand, custom duty is paid by the importer of goods

FAQs

What are the consequences of evading Excise Duty?

According to the law, non-payment of duty can lead to a penalty of 25% to 50% of the tax evaded. This would be a substantial amount as the duty itself is a big amount.

Is duty levied by the state government?

No, it is imposed by the Central government except on goods such as narcotics and alcohol.

What are the types of Excise Duties in India?

There are mainly three types: Basic, Special and Additional.