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Ministry of Finance – S.O. 2033(E).– In exercise of the powers conferred by sub-section (1) of section 3 of the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020

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S.O. 2033(E) – In exercise of the powers conferred by sub-section (1) of section 3 of the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (2 of 2020) (hereinafter referred to as the Ordinance), the Central Government hereby specifies, for the purposes of the said sub-section(1)- (i) the 31st day of December 2020 shall be the end date of the period during which the time limit specified in, or prescribed or notified under, the specified Act falls for the completion or compliance of such action as specified under the said sub-section; and (ii) the 31st day of March 2021 shall be the end date to which the time limit for completion or compliance of such action shall stand extended: Provided that where the specified Act is the Income-tax Act, 1961 and the compliance relates to- (i) furnishing of return under section 139 thereof, for the assessment year commencing on the - (a) 1st day of April 2019, the end date shall be extended to the 31st day of July 2020; (b) 1st day of April 2020, the end date shall be extended to the 30th day of November 2020; (ii) delivering of a statement of deduction of tax at source under sub-section (2A) of section 200 or statement of collection of tax at source under sub-section (3A) of section 206C thereof for the month of February or March 2020, or for the quarter ending on the 31st day of March 2020, as the case may be, the end date shall be extended to the 15th day of July 2020; (iii) delivering of a statement of deduction of tax at source under sub-section (3) of section 200 or statement of collection of tax at source under proviso to sub-section (3) of section 206C thereof for the month of February or March 2020, or for the quarter ending on the 31st day of March 2020, as the case may be, the end date shall be extended to the 31st day of July 2020; (iv) furnishing of a certificate under section 203 thereof in respect of deduction or payment of tax under section 192 of that Act for the financial year 2019-20, the end date shall be extended to the 15th day of August 2020; (v) section 54 or 54GB referred to in item (I) of sub-clause (i) of clause (c) of sub-section (1) of section 3 of the Ordinance or sub-clause (ii) of the said clause, the end date in respect of the time limit for the completion or compliance and the end date for making the said completion or compliance shall be the 29th day of September 2020 and the 30th day of September 2020 respectively; (vi) any provisions of Chapter VI-A under the heading “B.- Deductions in respect of certain payments” thereof, referred to in item (I) of sub-clause (i) of sub-section (1) of section 3 of the Ordinance, the end date in respect of the time limit for the completion or compliance and the end date for making the said completion or compliance, shall be the 30th day of July 2020 and the 31st day of July 2020 respectively. (vii) furnishing of a report of audit under any provision thereof for the assessment year commencing on the 1st day of April 2020, the end date shall be extended to the 31st day of October 2020: Provided further that the extension of the date as referred to in sub-clause (b) of clause (i) of the first proviso shall not apply to Explanation 1 to section 234A of the Income-tax Act, 1961 in cases where the amount of tax on the total income as reduced by the clauses (i) to (vi) of sub-section (1) of the said section exceeds one lakh rupees.

India’s growth story shall be written on the canvas of “Planned Urban Development”

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In view of the spread of Corona Virus (COVID-19) and subsequent Lock-Down in the country, all the Government Ministries, Departments, Attached / Subordinate Offices and other Organizations are requested to Register their Organization through the e-Publish option available on eGazette Portal for the purpose of e-Publishing of Gazette Notifications, so as to avoid the delivery of Authenticated Documents to the concerned Printing Press either through Messenger or through official email of JS & above as Approving Authority of the Notification along with Mobile No. (presently adopted in view of the Lock-Down for verification by concerned Press temporarily) to fast track the Notification uploading. Already registered Organizations are also requested to use the option of Submitting Notification through e-Gazette Portal using Digital Signature. Organizations / Departments / Offices may avail the help regarding pre-requisites and guide for the Registration through Help Option available in e-Publish / Organization Registration Menu.

Extending few of the time limits of compliance under Taxation & Other Laws (Relaxation of Certain Provisions) Ordinance, 2020

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CBDT has issued a notification today further extending few of the time limits of compliances under Taxation & Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 as under:
  1. The due date for filing Income Tax Return for F.Y 2018-19 has been extended to 31st July 2020.
  2. Waiver of interest u/s 234A in cases where self-assessment tax is up to Rs 1 lac.
  3. Deductions under Ch-VIA like Sec 80C, 80D, 80G, etc can now be made up to 31st July 2020.
  4. The date for furnishing of TDS/TCS statements for the quarter ending on 31st March 2020 has been extended to 31st July 2020.

Further extension of time for submission of financial results for the quarter/half year/financial year ending 31st March 2020 due to the continuing impact of the COVID-19 Pandemic

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  1. SEBI, vide circular No. SEBI/HO/CFD/CMD1/CIR/P/2020/38 dated March 19 2020, and circular No. SEBI/HO/DDHS/ON/P/2020/41 dated March 23, 2020, had extended the timeline for submission of financial results under regulations 33 and 52 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘LODR Regulations’) to June 30, 2020 (extension of one month) due to the impact of the COVID-19 pandemic.
  2. SEBI has received representations from listed entities, Chartered Accountant firms, and industry bodies/associations seeking further extension of time for preparation, finalization and submission of financial results for listed entities for the quarter/half-year/financial year ending 31st March 2020, due to many reasons, like the continuing lockdown, subsidiaries and associates situated in containment zones making the audit process challenging and other operational challenges due to the CPVID-19 pandemic.
  3. After taking into consideration the aforementioned issues, it has been decided to further extend the timeline for submission of financial results under Regulation 33 of the LODR Regulations, by a month, to July 31, 2020, for the quarter and the year ending 31st March 2020. Similarly, the timeline under Regulation 52 of the LODR for submission of half-yearly and/or annual financial results for the period ending March 31 2020, for entities that have listed NCDs, NCRPS’, CPs, MDS’ is also extended to July 31, 2020.
  4. This Circular shall come into force with immediate effect. Stock Exchanges are advised to bring the provisions of this circular to the notice of all listed entities and also disseminate on their websites.
  5. The Circular is issued in exercise of the powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992 read with Regulations 33, 52 and 101 of the LODR Regulations.
  6. This Circular is available at www.sebi.gov.in under the link “Legal > Circulars”.

India Inc on war footing to cut costs, conserve cash to offset Covid impact

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India Inc is on a war footing to cut costs and save cash to counter the dip in revenues and profits caused by the Covid-19 pandemic. The first spending item on the chopping block is a capital expenditure (CAPEX), followed by operating costs and overheads, including sales and marketing expenses. Aditya Birla Group flagship Grasim Industries, for example, has put all capacity expansion plans on hold, with the exception of routine maintenance CAPEX. Prior to the pandemic, the company was implementing a Rs 7,800-crore CAPEX programme in its viscose staple fibre and chemical divisions. https://www.business-standard.com/article/companies/india-inc-on-war-footing-to-cut-costs-conserve-cash-to-offset-covid-impact-120062100816_1.html

GST Authority must Open Common Portal by Friday to upload Form GST TRAN-1: Delhi HC

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CST & VAT / GST | FEATURED | HEADLINES | TOP STORIES GST Authority must Open Common Portal by Friday to upload Form GST TRAN-1: Delhi HC [Read Order] June 19, 2020, 10:31 am | By Taxscan Team The High court of Delhi directed the Goods and Service Tax (GST) Authority to enable the facility of online portals by Friday so as to ensure the uploading of Form GST TRAN-1, for claiming CENVAT tax credit. The petitioner, Mangla Hoist P. Ltd sought directions to the respondents/Union of India; Commissioner, CGST, Delhi South; Superintendent of Range and Goods and Services Tax Council to open the Portal to enable it to file its claim of CENVAT tax credit as on 30th June 2017, in Form TRAN-1. The second relief in the petition was for declaring Rule 117 of the CGST Rules, 2017 as ultra vires and quashing the same. The petitioner contended that despite repeated efforts made by the petitioner to upload its claim for credit in Form GST TRAN-1 on the portal of the respondents, it could not do so due to errors in their system including technical difficulties faced in uploading credit Form GST TRAN-1. It was further submitted that despite repeated requests made to the respondents by several parties to extend the last date for filing the claim of credit input in Form GST TRAN-1, the respondent authority refused to extend the deadline. “Recently, a Division Bench of this Court in W.P.(C) 11040/2018 entitled Brand Equity Treaties Limited vs. Union of India has held on 05.05.2020, that the time limit of 90 days prescribed in Rule 117 of the CGST Rules is not mandatory but the directory in nature. Further, the respondents have been directed to publicize the said judgment including by uploading it on their website so that all the Assessees, who were unable to upload Form/GST TRAN-1, could do so on or before 30th June 2020,” the order said. The division bench of Justice Hima Kohli and Justice Subramonium Prasad directed the Goods and Service Tax (GST) Authority to enable the facility of online portals by Friday so as to ensure the uploading of Form GST TRAN-1, for claiming CENVAT tax credit. “The respondents are under an obligation to abide by the directions issued therein by adequately publicizing the said decision and uploading it on their website as also by opening its common portal to enable the petitioner and all similarly placed parties to upload Form for claiming CENVAT tax credit,” the bench said. https://www.taxscan.in/gst-authority-must-open-common-portal-by-friday-to-upload-form-gst-tran-1-delhi-hc/61155/

Input Tax Credit cannot be availed on GST paid for Employees Cabs

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Companies will not be able to claim an Input Tax Credit (ITC) for GST paid on hiring commercial vehicles for transportation of employees, if providing such a service is not obligatory under any law, the Authority for Advance Ruling (AAR) has said. On an application filed by Prasar Bharti Broadcasting Corporation (All India Radio), Shimla, the Himachal Pradesh bench of AAR cited GST law to state ITC shall be available on fulfilment of one condition — "such goods or services or both shall be obligatory for an employer to provide to its employees under any law for the time being force". The applicant, who is a public service broadcaster, sought to know whether ITC will be available on taxi hiring services like pickup/drop-off staff, including ladies and handicapped employees, in odd hours. The company also hires a taxi for tour/OB recordings with the state. The AAR in its ruling said since the applicant failed to cite any law under which the service of providing transportation facility to its employees is obligatory, ITC will not be available. "If the facility provided by a taxpayer for transportation of employees is not obligatory under any law for the time being in force, then no ITC will be available to such a taxpayer," the AAR said. AMRG & Associates Senior Partner Rajat Mohan said Himachal Pradesh AAR has restricted the tax credit on services of hiring commercially licensed vehicles for the transportation of its employees. Thereby, businesses will have to forego the tax benefits availed on the hiring of vehicles for pick/drop facility being provided to lady employees, handicapped employees and other employees. "This will affect the perquisite value of benefits given to the workforce on account of transportation and would also result in increasing the levy of income tax on such additional costs incurred by the company," https://www.business-standard.com/article/economy-policy/input-tax-credit-cannot-be-availed-on-gst-paid-for-employees-cabs-120062200034_1.html

Forensic Accounting & Fraud Prevention

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Introduction  
  • Fraud is intentional deception made for personal gain or to damage another individual. Defrauding people or entities of money or valuables is a common purpose of fraud.
 
  • The term ‘forensic ‘has usually attracted an unfortunate connotation with the morbid world of forensic medicine. Forensic accounting shares only one thread common with forensic pathology. That common denominator is the pursuit of evidence that will stand the rigorous scrutiny that the rules of evidence and procedure demand for its admission as evidence before the courts.
               The integration of accounting, auditing and investigative skills yields the specialty known as Forensic Accounting.  It is the application of accounting methods to the tracking and collection of forensic evidence, usually for investigation and prosecution of criminal acts such as embezzlement or fraud. Forensic Accounting can sometimes be referred to as Forensic Auditing.  
  • Forensic Audit can be broadly classified into two categories:-
  • Encompassing litigation support &
  • Investigative accounting.
 
  • Other support services that traditionally come within the sphere of investigative services revolve – including corporate intelligence and fraud investigation services.
    Difference between Forensic Audit and other Audits The procedures for financial audits are designed to detect material misstatements, not immaterial frauds. The vast majority of frauds could not be detected with the use of financial audits. Reasons include the dependence of financial auditors on a sample & the auditor’s reliance on examining the audit trail versus examining the events and the activities behind the documents. The latter is simply resource prohibitive in terms of costs and time. Advantages of Forensic Audit Forensic audit involves examination of legalities by blending the techniques of propriety (Value for Money audit), regularity and investigative and financial audits.  

Use of Forensic Auditing:

The services rendered by the forensic auditors are in great demand in the following areas:
  1. Fraud detection where employees commit Fraud
  2. Criminal Investigation: Matters relating to financial implications the services of the forensic accountants are availed of.
  3. Cases relating to professional negligence
  4. Arbitration Service
  5. Settlement of Insurance Claims
  6. Dispute Settlements
engage a Forensic Auditor? Engaging an external party other than internal auditor & management team can have distinct advantages from conducting an internal investigation.
  • Objectivity & Credibility: An external party would be far more independent and objective than an internal auditor or company accountant as well as an established firm of forensic accountants would also have credibility stemming from the firm’s reputation, network and track record.
  • Accounting expertise and industry knowledge
  • Provision of valuable manpower resources
 Enhanced effectiveness and efficiency Forensic Accounting Concepts Fraud Triangle The fraud triangle developed by Donald Cressey, is a model for explaining the factors that cause someone to commit occupational fraud. It consists of 3 components which, together, lead to fraudulent behavior:  
  • Perceived pressure
  • Perceived opportunity
  • Rationalization
        Incentive/Pressure Certain risk factors are usefully considered in the evaluation of whether or not the organization is at a greater or lesser degree of risk, owing to incentives or pressures that could potentially lead to material misstatements.
  • Financial stability is threatened by economic, industry, or entity operating conditions.
  • Excessive pressure exists for management to meet debt requirements
  • Personal net worth is materially threatened
  Attitudes/ rationalization Fundamentally, rationalization and attitude are functions of the culture of an organization, the psychology of those who work in it, and the interaction between the two. Hard times in an industry or in overall economy may make it easier for some individuals to rationalize fraud.
  • A history of violations of laws is known
  • Little communication and support of the entity’s core values is evident.
  • Management has a practice of making overly aggressive or unrealistic forecasts.
  • Personal financial obligations create pressure to misappropriate assets.
  • Adverse relationship between management and employees motivate employees to misappropriate assets.
  • Disregard for the need to monitor or reduce risk of misappropriating assets exists.
  • There is a disregard for internal controls.
Opportunities An opportunity must exist to commit fraud. Opportunities may also be inherent in the nature, size, or structure of the business. Certain types of transactions lead themselves more than other to falsification or manipulation, as do certain kinds of balances or accounts.
  • There is presence of large amounts of cash on hand or inventory items.
  • There is an inadequate internal control over assets.
Fraud Tree Occupational Fraud has been defined under 3 branches:
  1. Fraudulent Statements
  2. Corruption
  3. Asset Misappropriation
Occupational frauds are:
  • Frauds that are done quickly and easily within the company
  • Are internal in nature, which means that they are perpetuated by employees
  • Include things like check fraud , revenue skimming , and false invoicing
Digital forensics Digital forensics has been defined as the use of scientifically derived and proven methods towards the preservation, collection, validation, identification, analysis, interpretation and presentation of digital evidence derived from digital sources for the purpose of facilitating or furthering the reconstruction of events found to be criminal or helping to anticipate the unauthorized actions shown to be disruptive to planned operations. It is the application of proven scientific methods and techniques in order to recover data from electronic/ digital media. Red Flags A red flag is a set of circumstances that are unusual in nature or vary from the normal activity. It is a signal that something is out of the ordinary and may need to be investigated further. Forensic Audit Process Broad stages of Forensic Audit:
  1. Accepting the investigation:
  • Forensic Auditors must ensure whether their firm has necessary skills and experience to accept the work.
  • Ideally statutory Auditors should not accept forensic auditing assignments of the same concern.
  1. Planning or Objectives of the investigation:
  • Identity type of fraud & Fraudsters
  • Quantify the loss
  • Gather Evidence
  • Provide advice to prevent the reoccurrence
  1. Gathering Evidence or Technique :
  • Testing internal controls
  • Use analytical procedures
  • Apply CAAT
  • Discussion and interviews with employees
  • Substantive techniques such as Reconciliation, Cash counts and Review of stocks.
  1. Reporting: Report contains-
  • Findings/ observation
  • Summary of evidences
  • Amount of loss
  • How fraudsters set up fraud scheme and which controls were circumvented
  • Recommend improvements of control
  1. Court Proceedings:
  • Members of investigation team are involved
  • Evidence gathering is presented
  • Simplify technical teams
Forensic Accountants do not testify that fraud has occurred but only present evidence. Forensic Audit tools & Techniques The seven recognized Investigative Tools and Techniques used by Forensic Specialist/ Fraud Examiners
  • Public Document Reviews and Background investigations – Public Databases, MCA Website, Corporate Records, internet etc.
  • Interviews of Knowledgeable Persons
  • Confidential Sources- Hotlines, E-mail, Letters, Current & Former Vendor, Customers & Employees.
  • Laboratory analysis of Physical and Electronic Evidence- physical examination, fingerprint analysis, forgeries, ink sampling , document dating, Computer Forensics
  • Hard disk Imaging
  • E-mail analysis
  • Search for erased files
  • Analyze use & possible misuse
  • Computer software to analyze data
  • Physical and Electronic Surveillance
  • Undercover operations
  • Analysis of Financial Transactions
Some of the Techniques that a Forensic Auditor may use are listed below:
  • General Audit Techniques
  1. Testing Defenses
Most businesses and other organizations have procedures and defenses set up to prevent the occurrence of fraud. A good initial forensic audit technique is to attempt to circumvent these defenses yourself.
  • Statistical & Mathematical Techniques
  1. Trend Analysis
  2. Ratio Analysis
  • Technology Based / Digital Forensics Techniques:
  1. Cross- drive analysis
  2. Live analysis
  3. Deleted files
  4. Stochastic forensics
  5. Steganography
  6. EnCase
  7. MD5
  8. Tracking Log Files
  9. PC System Log
  10. Free Log Tools
  • Computer Assisted Auditing Techniques (CAATs) / Computer Assisted Audit Techniques & Tools(CAATT)
Computer- assisted audit techniques (CAATs) or computer-assisted audit tools & techniques (CAATTs) are computer programs that the auditors use as part of audit procedures to process data of audit significance contained in a client’s information systems, without depending on him. CAAT help auditors to perform various auditing procedure such as:
  1. Testing details of transactions and balances
  2. Identifying inconsistencies or significant fluctuations
  3. Testing general as well as application control of computer systems
  4. Sampling programs to extract data for audit testing, and
  5. Redoing calculations performed by accounting systems.
Computer Aided Audit Tools or CAATs cab be broadly divided into
  • Generalized Audit Software’s (GAS) or
  • Common Software Tools (CST)
As a part of computer- aided audit, an auditor needs to do one or more of the following.
  1. Check Missings
  2. Check Duplicates
  3. Round numbers
  4. Repetitive Odd-Numbers
  5. Classification
  6. Stratification
  7. Single Transactions
  8. Isolated Outliers
  • Data Mining Techniques
It is a set of assisted technique designed to automatically mine large volumes of data for new, hidden or unexpected information or patterns. Data mining commonly involves four classes of task:
  • Classification- Arranges the data into predefined groups with the help of algorithms.
  • Clustering- Is like classification but the groups are not predefined, so the algorithm will try to group similar items together
  • Regression- Attempts to find a function which models the data with the least error. A common method is to use Genetic programming
Association rule learning- Searches for relationships between variables.

System Development Audit

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It is a process of setting and developing the application, the computer system, built on the basis on business requirement. As an IS Auditor, the following could be reviewed:
  1. System Planning & Feasibility Audit: Every application is designed after considering the various areas of feasibility and the factors ranging from Economic, Cost Benefit Analysis, Technical analysis Critical success factor methods, business system planning, etc.
  2. Development & Design Audit: Development is verified and policies are establishment and various controls are placed. Adherence to benchmark standards and Quality of output is to be ensured.
  • System Acceptance Audit: A comprehensive test should be conducted to achieve system planning
  1. System Maintenance Audit: This is to ensure that the systems are kept abreast and changing needs are considered.
Hardware & Software &Application Audit: Every system requires varied combinations of hardware and software configuration. Software could be customized or could be off the shelf. Care should be taken to verify the inputs, processing and the output controls governing the applications in addition to its security, network and infrastructure.   Security Audit
  1. Network data security audit
Network data security audit consists of audit of the network data security infrastructure and its safety management. Amongst the various aspects, the following would be covered:
  • Network Architecture
  • Client to Server, Peer to Peer
  • Network anti-virus technology and safety
  • Firewall technology,
  • Data encryption technology,
  • Authentication technology ranging from use of digital signature,   message digests digital certificate, etc
  • Authorization and the implementation of those technologies;
  • Review and analysis of the security log;
  • LAN / Wifi  Analysis / VPN Infrastructure
  • Review the implementation of relevant laws and regulations, such as “the safety protection regulations of computer information system”.
  1. Network Access Control Audit
The network access control audit majorly focuses on the access relating to network, the authority control and user authentication. This focuses more on the Authority control audit check mainly on whether there is authority when customer access resources nodes and user nodes. Resource nodes provide service or data, user nodes access resources services provided by the resource nodes. System Management Audit The goal is to guarantee the performance of the system and its usability; guarantee the integrity of data and other information resources; system security. The electronic commerce system management can be divided into three aspects:
  1. The system monitoring, system configuration and system operation management; whether to register and update the hardware and software; whether to schedule and apply job sequencing and job plan, etc.
  2. The event correlation and automation processing: overall analysis different reasons leading to error report, these reasons may be from network, server system, database or application logic; find the root causes and do corresponding disposal, such as giving a alarm or starting a engine procedures, etc.
  • Business impact management is a system management, which can guarantee the business service at a high level, and will connect the business system performance with all the possible influencing factors, which will help the user, find the change of the performance and the reason of these changes.
Internal Controls Audit Internal control auditing includes two aspects: the audit of general control and the audit of Application control. The auditor should check the risk of data processing in internal control activities. Namely, check the accuracy, integrity and security of the data, and goes as follows:
  1. The system and program can’t correctly deal with data, process the incorrect data or two circumstances coexist;
  2. Whether there is unauthorized access to data, it may lead to modifying or even damaging the data.
  • Whether there is unauthorized access phenomenon, which may damage original labor division in the e-commerce system.
  1. Without authorization, change the main document data.
  2. Without authorization, the adaption of system or program.
  3. Cannot do the necessary configuration or modify to programs.
  • Inappropriate human intervention.
  • May loss data or unable to access data.
  DRP & BCP Audit Disaster recovery and business continuity plan is a plan, which can prevent business behavior from interruption in the case of natural or man-made disasters. The main content of the audit test is: whether this plan has feasibility and validity or not. Confirm the related resources (hardware and software) would have been backup and evaluate its safety; whether the test results meet the expected requirements or not.  

Supply Chain Management

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  • The supply chain management encompasses all activities associated with the transformation of goods from the raw material stage to the final stage.
  • It involves planning, design and control of the flow of material, information and finance.
       Why is SCM strategy important for an Organization?
  • Supply Chain Strategies are the critical backbone to Business Organizations today.
  • Effective Market coverage, Availability of Products at locations that hold the key to revenue recognition depends upon the effectiveness of Supply Chain Strategy rolled out.
  • It is very simply stated, when a product is introduced in the market and advertised, the entire market in the country and all the sales counters need to have the product where the customer can buy and take delivery. Any glitch in the product not being available at the right time can result in the drop in customer interest and demand which can be disastrous. Transportation network design and management assume importance to support sales and marketing strategy.
Strategic Importance of Supply Chain Management
  • Opportunity to reduce cost
  • Transportation costs
  • Inventory holding costs
  • Provide value to customers by making the right merchandise is in the right place at the right time
  • Fewer stock outs
  • Greater assortment with less inventory
  • Improved ROI
 
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