On 1st April 2020, we stepped into a new financial year. Usually, this would be a time for hope and excitement. But due to the Coronavirus global crisis, this has now become a time for worry and anxiety.
- How will I run my business?
- Support my clients?
- File my returns?
- Complete all regulatory compliance formalities?
These are all questions that are uppermost in the minds of businesspersons all over the country.
The Government of India has taken cognisance of these worries and come up with a bunch of initiatives to support businesses during the current challenging times.
One such scheme is the Companies Fresh Start Scheme (CFSS) 2020. CFSS will provide complete penalty waiver and prosecution immunity for company Directors and Promoters to help them reduce their compliance and financial burden during the Coronavirus global crisis. Lapses, if any, in appointing auditors, filing annual returns with the MCA and completing other statutory filing formalities will be forgiven without any penalty. Further, once compliance is regularised, Directors can continue to maintain compliance, file for dormant status or even apply for strike-off. If compliance is not regularised under this scheme, the ROC may initiate prosecution against defaulting companies. But companies that do avail the benefits under CFSS will be provided a discharge certificate. Know more [link to article MCA Announcement: Companies Fresh Start Scheme 2020]
Another scheme that was recently introduced is the LLP Settlement Scheme. This scheme is similar to the Fresh Start scheme but it applies to LLPs only (and only if they are registered under the Limited Liability Partnership Act, 2008). LLPs that have defaulted on any compliance requirements such as filing of LLP agreement or annual returns can now meet these requirements without any penalty. The scheme is also applicable for filing the following delayed documents as per the LLP Act:
- Form-3: related to information about the LLP agreement and changes
- Form-4: related to the notice of cessation or appointment, or changes in name/address/ consent to become partner/designation of partner
- Form-8: related to the Statement of Account and Solvency
- Form-11: related to annual returns filing
Prosecution immunity and penalty waiver for LLPs is also available under this scheme. This scheme came into force on 16th March 2020 and will remain in force until 13th June 2020.
A third scheme introduced by the Government relates to DIN KYC Compliance. DIN holders marked as ‘Deactivated’ due to non-filing of DIR-3KYC/DIR-3 KYC-Web are now allowed to complete the compliance without any penalty or punitive action.
Regularising compliance for a defaulting company or LLP involves various steps including bookkeeping, preparation of accounts, reconciliation of data, obtaining NOC (in some cases), preparation of board resolutions, signing of annual return and filing of returns for each year of operation. We suggest that you begin the compliance regularisation process at the earliest to ensure that the timelines provided in the above schemes are met. Failure to meet these deadlines could lead to penalties worth lakhs of rupees and may even invite legal action. For questions or assistance around these schemes, please get in touch with MyTaxguru at 9224618250 or firstname.lastname@example.org
Disclaimer: The information is provided purely for informational and educational purposes only. It should not be misconstrued as legal advice. MyTaxguru cannot take any responsibility for the result or consequences of any attempt to use or adopt any of the information presented herein.
Lion Amir Virani