Skip to main content

Centre to crack whip on firms not filing cost audits

Centre to crack whip on firms not filing cost audits
The Ministry of Corporate Affairs is planning to pull the plug on companies that do not file cost audits to ensure these businesses pay accurate corporation taxes and consumers know the pricing of products.

A senior official said the ministry will examine companies across 10 sectors to identify companies that do not hire cost accountants and file reports. Textiles, machinery, insecticides, milk powder, glass, tea and coffee are some of the sectors that will be monitored.

The move will ensure firms do not evade corporation tax, the official explained. Cost audit, which reflects efficiency of the company concerned, also provides the consumer an idea about the fair price of products.

The official stated the plan is being thought of in the interest of investors as well. “Filing of cost audits will tell us if companies are fudging numbers, and will also tell investors what the company’s costing plan is,” the official added.

At present, there are 5,000 firms that need to file cost audits. However, only 1,000 companies actually do so. The government intends to start surprise checks to track and trace companies that do not comply. Any company that has an annual turnover of Rs 35 crore or more has to file a cost audit.

Meanwhile, sources also said the ministry plans to ask banks to ensure that audit reports of companies are used for analysing the credibility of companies.

The ministry has identified 300,000 shell companies post demonetisation. Sources said after demonetisation, the government had conducted a 50-day special audit of account movement before tracing these shell companies. According to the Reserve Bank of India numbers, the loss incurred by banks due to fraud increased 72 per cent to Rs 16,770 crore in 2016-17, from Rs 9,750 crore in 2012-13.
The government has cracked the whip on shell companies by deregistering them, disqualifying their directors, and freezing their bank accounts. Banks have also been asked to check with the government before lending to companies not filing statutory returns. Banks need to now ensure that the firm they are lending to is not part of the disqualified list. Investigative agencies such as the Serious Fraud Investigation Office are investigating these directors. More than 100,000 directors associated with shell firms have been disqualified by the Ministry of Corporate Affairs.
Action is also being taken against chartered accountants involved with these firms. The ministry is planning an early warning system for the authorities to take action against firms that are non-compliant.

The Business Standard, New Delhi, 04th October 2017

Comments

Popular posts from this blog

Deposit gush:-CA Institute Bats for Special Audit

Obligation for the Month of May 2017

Obligation for the Month of May 2017 Event DateActApplicable FormObligation6-May-2017Service TaxChallan No.GAR-7E-Payment of Service Tax for April by Cos7-May-2017Income TaxForm No.27C (TCS)Submission of Forms received in Apr  to IT Commissioner7-May-2017Income TaxChallan No.ITNS-281Payment of TDS/TCS deducted/collected in Apr10-May-2017ExciseER-1Return for Non SSI assessees for Apr10-May-2017ExciseER-2Return for EOUs for Apr10-May-2017ExciseER-6Return by units paying duty >  1 crore (CENVAT + PLA) for Apr12-May-2017D-VATBE - 2Advance information for 2nd fortnight of May of functions with booking cost > Rs 1 lakh in Banquet Halls,hotels etc. in Delhi15-May-2017D-VATDVAT-20Deposit of DVAT TDS for  Apr15-May-2017Income TaxForm 27EQTCS Returns by ALL Collectors15-May-2017Providend FundElectronic Challan cum Return (ECR)E-Payment of PF for Apr15-May-2017D-VATDVAT-48 Return of DVAT TDS for quarter ending March21-May-2017ESIESI ChallanPayment of ESI of Apr21-May-2017M-VATMVAT ChallanPa…

RBI minutes show MPC members flagged upside risks to inflation

RBI minutes show MPC members flagged upside risks to inflation Concerns about economic growth and easing inflation prompted five of the six monetary policy committee (MPC) members to call for a cut in the repo rate, but most warned that prices could start accelerating, show the minutes of the panel’s last meeting, released on Wednesday. The comments reflected a tone of caution and flagged upside risks to inflation from farm loan waivers, rise in food prices, especially vegetables, price revisions withheld ahead of the goods and services tax, implementation of house rent allowance under the 7th pay commission and fading of favourable base effect, among others. On 2 August, the panel chose to cut the repurchase rate—the rate at which the central bank infuses liquidity in the banking system—by 25 basis points to 6%. One basis point is one-hundredth of a percentage point. Pami Dua, professor at the Delhi School of Economics, wrote that her analysis showed “a fading economic growth outlook, as …