Applicability of Tax & Various Other Provisions for FY. 2019-20

In this article, we would be discussing the applicability of Company (Audit Report) Order, 2016, Cash Flow Statement (CFS), Internal Financial Control (IFC), Tax Audit under the Income Tax Act applicable for Financial Year 2019-2020 (Assessment Year 2020-21).

Contents:

1) Applicability of CARO, 2016

2) Cash Flow statement (CFS)

3) Internal Financial Control (IFC)

4) Tax Audit under Income Tax Act, 1961

1) Applicability of CARO, 2016

1. This Order may be called the Companies (Auditor’s Report)Order, 2016.

2. It shall apply to every company including a foreign company as defined in clause (42) of section 2 of the Companies Act, 2013 (18 of 2013) [hereinafter referred to as the Companies Act], except–

(i) a banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949);

(ii) an insurance company as defined under the Insurance Act,1938 (4 of 1938);

(iii) a company licensed to operate under section 8 of the Companies Act;

(iv) a One Person Company as defined under clause (62) of section 2 of the Companies Act and a small company as defined under clause (85) of section 2 of the Companies Act; and

(v) a private limited company, not being a subsidiary or holding company of a public company, having a paid-up capital and reserves and surplus, not more than rupees one crore as on the balance sheet date;

and

which does not have total borrowings exceeding rupees one crore from any bank or financial institution at any point of time during the financial year

and

which does not have a total revenue as disclosed in Scheduled III to the Companies Act, 2013 (including revenue from discontinuing operations) exceeding rupees ten crore during the financial year as per the financial statements.

Note:- As per Section 2(85) of Companies Act, 2013, Small company means a company, other than a public company — 

(i) paid-up share capital of which does not exceed fifty lakh rupees or such higher amount as may be prescribed which shall not be more than five crore rupees; or

(ii) turnover of which as per its last profit and loss account does not exceed two crore rupees or such higher amount as may be prescribed which shall not be more than twenty crore rupees:

Provided that nothing in this clause shall apply to—

(A) a holding company or a subsidiary company;

(B) a company registered under section 8; or

(C) a company or body corporate governed by any special Act;

2) Cash Flow Statement (CFS)

Followings companies are exempt from the applicability of the Cash Flow Statement.

a) One Person Company (OPC) – means a company that has only one single person as to its member.

b) Small Companies – Small Company means a company, other than a public company, whose paid-up capital does not exceed Rs. 50 lacs and Turnover (as per preceding financial year) does not exceed Rs. 2 crores.

c) Dormant Companies (Section 455 of Companies Act, 2013)– these are inactive companies formed for any future projects or only to hold assets and has no significant transactions.

d) Start-up Private Companies – A start-up company means a private company incorporated under the Companies Act, 2013 or The Companies Act, 1956, and recognized as star-up in accordance with the notification issued by Industrial Policy and Promotion, Ministry of Commerce and Industry.

Therefore, apart from the above-mentioned companies, all public limited companies, listed companies and private limited companies are required to include cash flow statement in their financial statements.

3) Internal Financial Control (IFC)

Reporting of Internal Financial Control shall be as per section 143(3)(i) of Companies Act, 2013. Reporting on Internal Financial Control is applicable to all companies except:-

a) One Person Company or
b)  Small Company or
c)  A company whose turnover is less than fifty crores as per the latest audited financial statement

And;

whose aggregate borrowing from banks, financial institutions or body corporate at any point of time during the financial year is less than twenty-five crores.

4) Tax Audit under Income Tax Act, 1961

Tax Audit is compulsory in the followings cases:-

a) In case of Business: If Turnover > Rs. 1 Crore during P.Y.

b) In case of Profession:  If Gross Receipts > Rs. 50 Lakhs during the P.Y.

c) If the assessee is covered by Section 44AD or Section 44ADA and assessee claimed income less than 8% / 6% or 50% and his Total Income is more than Basic Exemption.

d) If the assessee is covered by Section 44AE, 44BB, 44BBB and assessee claimed income less than PGBP deemed under those sections.

Note:-

1) Section 44AD: Profit and Gains of Business on Presumptive Business

2) Section 44ADA: PGBP on Presumptive for Professional 

3) Section 44AE: Presumptive Taxation for Transporter

4) Section 44BB: Presumptive Basis Taxation for Non Resident engaged in Shipping Business

5) Section 44BBB: Presumptive Basis Taxation for Foreign Company engaged in the business of civil construction or the business of erection of Plant & Machinery or Testing Or Commissioning thereof, in connection with turnkey power Projects approved by the CG.

 

Thanks & Regards

Deepesh Goyal
WhatsApp: 7404793540

Want to Feature your own Article? Click Here to SUBMIT ARTICLE.

One thought on “Applicability of Tax & Various Other Provisions for FY. 2019-20

Leave a Reply

Your email address will not be published. Required fields are marked *