Move to bring in transparency and enable tracking of unusual receipts or amounts
The Corporate Affairs Ministry (MCA) has given Corporate India time until end-June to furnish a one-time return, spelling out the details of all money receipts or loans taken by them from April 1, 2014, which are otherwise not considered deposits.
A few weeks ago, the government specified March 31, 2019 as the cut-off date, providing 90 more days from this date for furnishing the one-time return. The format of the return has also been specified this time round.
Prior to this change, India Inc — all companies other than government companies — had to furnish these details by third week of April. “Given that the MCA has given more time for corporates to comply, this move can be seen as a relief,” said Shafaq Uraizee, Executive Partner, Lakshmikumaran & Sridharan, a law firm.
“At the same time, this disclosure norm is likely to impose an additional burden on companies as they compile information and get it certified by the auditors,” she added.
She said, “While the intent behind requiring corporates to provide such declarations is not provided anywhere, one can assume that these would find their raison d’être in the government’s bid to curb black money, restrict unregulated deposits and money laundering schemes.”
Moreover, to get data from 2014 is cumbersome with deadlines that clash with other compliances amidst the hustle of the financial year closing, said Uraizee. Ashok Haldia, former Secretary of CA Institute, said that the move seeks to extend filing of one-time return on outstanding money and loans, other than deposits with effect from April 1, 2014 to March 31, 2019 instead of till the date of issuance of earlier notification. “It would cover outstanding amount and, not those raised and paid back before March 31, for which particulars have to be given”, he said.
There is already a strict reporting regime for companies that accept deposits. This disclosure norm on non-deposit receipts, an annual feature, is seen by critics as part of ‘surveillance capitalism’, a phenomenon widespread in the West.
Haldia said the latest MCA move is intended to bring in transparency and enable tracking unusual receipts or amounts, such as from foreign sources, inter-corporate deposits, from promoters, associates, directors or in a form of unsecured loans.