New Schedule VI – New Balance Sheet and Profit and Loss A/c format applicable from F.Y. 2011-12

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Company Law : Section 642 of the Companies Act, 1956 – Schedules, forms and rules – Power of Central Government to make rules – Amendment in Notification No. S.O. 447(E), dated 28-2-2011

NOTIFICATION [F. NO. 2/6/2008-C.L-V], DATED 30-3-2011

In exercise of the powers conferred by clause(a) of sub-section(1) of section 642 read with sub-section(1) of section 210A and sub-section (3C) of section 211 of the Companies Act,1956, (1 of 1956), the Central Government hereby makes the following amendment to paragraph 2 of the notification No.447(E) dated the 28th February, 2011:-

“The notification shall come into force for the Balance Sheet and Profit and Loss Account to be prepared for the financial year commencing on or after 1.4.2011″.

Sebi to outsource processing of investor complaints

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Faced with the Herculean task of handling lakhs of investor complaints, market regulator Sebi plans to rope in third party agencies for processing and maintenance of these grievances. The decision to outsource processing and maintenance of investor grievances has been taken by Sebi to help it resolve these complaints on a fast-track basis, a senior official said.

Incidentally, Sebi is currently in the process of finalising a set of regulations for outsourcing of work by various market intermediaries such as brokers, mutual funds and investment bankers. The regulator is said to be against outsourcing of the market entities’ core and investor-sensitive acticities.

Sebi has decided to put in place stringent conditions for selection of the agency to be empaneled by it for handling the investor complaints and due care would be taken to safeguard the investors’ interest, the official added.

Introduction of Annual Return on Foreign Liabilities and Assets – Reporting by Indian Companies

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In terms of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000, Indian companies are required to report the details of Foreign Direct Investment (FDI) in Form FC-GPR to the Regional Office of RBI within whose jurisdiction the Registered Office of the Company operates, within 30 days of issue of shares.

The details of FDI are to be reported through the said FC – GPR, which contains Part A (relating to issue of securities by the Indian Companies by way of FDI) and Part B (relating to investments in the Indian company by direct/portfolio/re-invested earnings/any other mode.) The erstwhile due date of Part B was 31 July of every year, which pertained to investments made during the preceding financial year, April to March.

In order to capture the statistics relating to Foreign Direct Investment (FDI), both inward and outward in a more comprehensive manner as also to align it with international best practices, it has been decided by the Reserve Bank of India (RBI), vide its circular RBI/201 0-11/ 427 A.P. (DIR Series) Circular No. 45 dated 15 March 2011 to replace Part B of the Form FC-GPR by a introducing a separate ‘Annual Return on Foreign Liabilities and Assets.’

Accordingly, the return should be submitted by all the Indian companies which have received FDI and / or made FDI abroad (i.e. overseas investment) in the previous year(s) including the current year, by 15 July of every year.

Salient Features of Revised ‘Annual Return’

The Annual Return sets out three main sections, which inter-alia provide for more specific disclosures. Briefly, following are the disclosures to be made by the company, as shown in the table.

Section / Block

(if any)	Particulars
Section I	IDENTIFICATION PARTICULARS
	Name, Address, P.A.N., Registration number (ROC) and other details
	Nature of Business
	Whether the company is listed in India
	Whether the company has any Foreign Collaboration (Technical or Financial)
1
1A	Total Paid up Capital of Indian Company
1B	Free Reserves & Surplus and Retained Profit
Section II	FOREIGN LIABILITIES
2	Investments made under Foreign Direct Investment (FDI) scheme in India
2A	Foreign Direct Investment in India (10% or more Equity Participation)
2B	Foreign Direct Investment in India (Less than 10% Equity Holding)
3	Portfolio and Other Liabilities to Non-residents (i.e. position with unrelated parties)
3A	Portfolio Investment
3B	Financial Derivatives (with non-resident entities only)
3C	Other Investments
Section III	FOREIGN ASSETS
4	Direct Investments Abroad under Overseas Direct Investment Scheme
4A	Direct Investment Abroad (10% or more Equity holding)
4B	Foreign Direct Investment Abroad (Less than 10 % Equity holding)
5	Portfolio and Other Assets Abroad (i.e., position with unrelated parties)
5A	Portfolio Investment Abroad
5B	Financial Derivatives (with non-resident entities only)
5C	Other Investment (Outstanding claims of unrelated parties)
6	Equity Capital, Free Reserves & Surplus of Direct Investment Enterprise Abroad
7	Contingent Foreign Liabilities
8	Employee Information of reporting Indian company

Note: Figures for Block 2A, 2B, 4A, 4B and 5A should be disclosed for end- March & end-December of current financial year and for end- March of previous financial year.

Procedural Aspects

• Place of filing: The completed return along with a copy of the reporting company’s Balance Sheet for the latest year should be sent by 15 July every year at the following address:

The Director,

External Liabilities and Assets Statistics Division,

Department of Statistics and Information Management (DSIM), Reserve Bank of India,

C 8, Bandra-Kurla Complex,

Bandra (East) , Mumbai- 400 051.

• Reporting in Case of Group Company: In case of Group Companies, consolidated return covering all the Branches / Offices in India must be furnished.
• Balance Sheet: Balance Sheet for the reporting year of the company should be enclosed along with the return. In case balance sheet is not audited, the information based on un-audited figures should be submitted. The balance sheet may be forwarded in due course. After auditing, if there are major differences in the reported figures, revised return may be submitted along with a copy of balance sheet.

Govt plans to keep track of companies with common addresses

PrintPDF Concerned over growing corporate fraud, the government is considering to tighten its Early Warning System (EWS) to scrutinise activities of companies with same addresses and common directors. The Ministry of Corporate Affairs (MCA) plans to add two more parameters to its software-based fraud detecting system, called Early Warning System (EWS), which scans unusual developments in companies and alerts the Ministry of any possible wrongdoing.

With the EWS, the government scrutinises quarterly results of companies, their public announcements, filings with exchanges, tax returns, media reports, etc, and detect wrong doings.

If a company has more than 5 per cent of domestic sales through related party transaction, or if more than half of its directors have put in their papers in a year, or if there is a discrepancy in earning-per-share ratio, besides other parameters, a company comes in the MCA’s radar.

Finally, India card Rupay to replace Visa, Master Card

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After almost two years of planning, the National Payments Corporation has at last finalised the proposed unique India Card which once commercially launched would be an domestic alternative to the global real-time payment processing firms like Visa and MasterCard . “We have finalised name of the proposed card as Rupay at our board meeting here today. We have also finalised the logo for the same,” a senior official of the RBI-set up National Payments Corporation of India (NPCI), told media this evening. The official sought not to be named.

The official further said the leading financial consultancy firm Ernst & Young(E&Y) will develop and roll out the entire architecture, including the design and software for the Rupay card rollout.

A senior E&Y official confirmed the development to this agency. He further said, the NPCI will initially launch a domestic ATM/debit cards to begin with and then would hit the credit card market later on.

In 2009, the RBI had asked the Indian Banks Association to launch a not-for-profit company and design a rival card, then tentatively called India Card, that meets the requirements of the domestic banks.

And finally, RBI plan is materialising and Rupay will be like the Union Pay of China, which is the domestic real-time payment processing firm for Chinese banks, and was planned to be launched last year.

Banks to have extended working hours on March 30, 31- RBI

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The Reserve Bank of India asked banks to have extended working hours on March 30 and 31, 2011, to facilitate receipt of government revenue from members of public even at late hours. It has been decided in consultation with the Controller General of Accounts that all regional offices of RBI and branches of agency banks conducting government business will suitably extend the banking hours to conduct government business by keeping their counters open for the purpose on March 30 and 31, 2011, the central bank said in a statement.

This will facilitate receipt of revenue from members of public even at late hours, it said.

It will help in accounting of all the government transactions of the current financial year (2010-11) by March 31, 2011, it added.

Excise Duty on Readymade Garments- The magic figure of exempted turnover of Rs. 8.90 Crore

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While initiating debate on the Finance Bill-2011 the Finance Minister said that the garment traders had criticised the proposed 10 per cent excise duty on readymade garments saying it would hurt the small business. He added

1) “To address this concern, I propose to enhance the abatement of 40 per cent to 55 per cent on the retail sale price.

2) With this relief a unit will continue to be eligible for SSI exemption in 2011-12 even if it had a turnover based on retail sale price of Rs 8.90 crore in the current year”, the Minister said. (Current year means 31-03-2011)

The statement of the Finance Minister on the floor of the house sent some cheer waves across the spine of many garment manufacturers. With the increase in the rate of abatement from 40% to 55% , the manufacturer would now be required to pay duty only on 45% of the MRP of the product. To illustrate Point No. 1

Excise duty of Readymade garments	Before Change		After Change
MRP of Readymade Shirt	Rs.	1000	Rs.	1000
Abatement	40%		55%
Less: Value of abatement		400		550
Value for charging Duty		600		450
Excise Duty payable @10%		60		45
Effective Rate of Duty on MRP		6.00%		4.50%

On the second issue, he said “With this relief a unit will continue to be eligible for SSI exemption in 2011-12 even if it had a turnover based on retail sale price of Rs 8.90 crore in the current year”. This statement was understood by many in many different ways. Many persons thought that there is no excise duty now until you reach a turnover of Rs. 8.90 Crores in lieu of Rs. 1.50 Cr. Presently available to SSI. All were happy. It is not so. Let me explain:

At present under the scheme of excise for SSI, an SSI which does not have a turnover of Rs. 4.00 Crores during the year ending 31-03-2011 will not be liable to excise duty until he reaches a turnover of Rs. 1.50 Crores during the period ending 31-03-2012. If at any moment during the period ending 31-03-2012 the turnover crosses Rs. 1.50 Crores, his liability to excise starts notwithstanding the fact that his turnover during the year ending 31-03-2012 is less than Rs. 4.00 Crores. However he would become eligible to the SSI benefit for the year ending 31-03-2013 if the turnover was less than Rs. 4.00 Crore for 31-03-2012.

So what is this magic figure of turnover of Rs. 8.90 Crores to be eligible for SSI benefit.

Illustration

			Rs. Lakhs
1	Maximum turnover of taxable products permitted during the year ending 31-03-2011 for being eligible to SSI benefit during the year ending 31-03-2012 (Normal SSI)		400
2	Limit of SSI exemption during the year ending 31-03-2012		150
	For Readymade garment – SSI Unit		Rs.
1	MRP of the readymade garment	(a)	1000
2	Less: Abatement @ 55 %	(b)	550
3	Taxable value of the product	(c)	450
	Maximum permissible turnover of taxable products during the year ending 31-03-2011 as per next table.

—-

(a)	Maximum turnover permissible for normal SSI Rs. Lakhs	400
(b)	Taxable value of new product after abatement of 55%	45%
(c)	Permissible turnover for a taxable value of 45% of normal turnover	(a) X 100
		(b)
	That is	400 X 100
		45
(d)	Permissible value in Rs. Lacs	888
(e)	Rounded off to Rs. Crore	8.90

So don’t rejoice. If you cross the turnover figure of Rs. 8.90 Crore during the year ending 31-03-2011, then your liability to duty will commence from the point in time in the year 2011-12 at which your turnover crosses Rs. 1.50 Crore.