Industries await further relief measures

FICCI and ASSOCHAM welcomed the Government’s tax relief announced on 24 Mar 2020 by Finance Minister Nirmala Sitharaman, especially the halting the IBC procedure for six months

“FICCI welcomes the relief measures announced by the Finance Minister with respect to the tax and statutory compliances amid the lockdown imposed to contain Covid-19,” said its President Dr Sangita Reddy on 24 Mar 2020.

But “we look forward to further announcements by the Minister on economic package and further relief measures to keep the economic engine going,” said Dr Reddy.

Moratorium of six months to companies for filing of disclosures on MCA portal and extension of time for holding board/Independent Directors meeting within prescribed timelines will bring relief to corporates, all of which are facing complete disruption in functioning.

“Taking cognizance of the liquidity issues being currently faced by corporates, deferment of Deposit Reserve and statutory investment for debenture redemption is a welcome step,” said Dr Reddy.

Announcements on the tax front will give reprieve on compliance front, she added.

“MSME sector, which is precariously reeling under the impact of Covid19, would greatly benefit from the increase in the threshold for triggering IBC against delay in payments. FM’s assurance that if situation prolongs, government may consider suspending IBC is a welcome announcement,” said Dr Reddy.

FICCI has represented many other issues to the Ministry of Corporate Affairs over the past few days and would like to re-iterate the following for immediate action:

Corporates are finding it extremely challenging to ensure compliance with the requirement of Companies Act 2013 and Rules framed thereunder and are at a risk of non-compliance for no fault of theirs. Examples include timely conduct of board evaluation, discharge of CSR obligation, transfer to IEPF, addressing shareholders’ requests for demat etc. on a time bound basis. Allowing an additional period of 3 months to companies to ensure timely compliance without any penalties being imposed would be very encouraging in the current situation.

Extension of financial year to a period of 15 months will also enable companies to close the books as on 30th June 2020 instead of 31st March 2020. Financial Statements as on 30th June 2020 would reflect a true and fair value of the affairs of reporting entities as compared to the books drawn on 31st March 2020.

Lauding the extension of regulatory deadline to June 30 from March 31,2020 for most of the compliances relating to taxation and statutory corporate filings, the ASSOCHAM said 24 Mar 2020.

Assurance for halting the IBC procedure for six months is a major takeaway from the relief measures announced by Minister in the aftermath of Coronavirus crisis, said ASSOCHAM Secretary General Deepak Sood.

“As the financial year is coming to close in a few days, anxiety had only increased amongst the corporates and the individual taxpayers about the statutory compliances relating to income tax, Goods and Services Tax, MCA-21 and other Company law issues,” said Sood.

Widespread disruptions caused by the countrywide lockdown had made it impossible for the businesses and individuals to fulfill their compliances.

The extension of deadlines for most of these compliances is laudable, with the hope that the unprecedented health and economic crisis blows over fast, he hoped.

He said while the trigger clause for taking a company to the insolvency procedure, under the IBC has been rightly raised to Rs.1 crore, the Finance Minister has given an assurance about considering the moratorium on the initiation of the procedure itself for the next six months, after keeping a watch till April 30.

The IBC should be kept in abeyance at least for six months, as part of the package from immediate effect. This is because in the wake of production halts, suspension of trade, hospitality, tourism, airlines, road transport, the debt servicing in time may not be possible and the threat of companies going the IBC way should be removed now itself, Sood explained.

The ASSOCHAM is awaiting the big package that is expected to give forbearance on all bank loans, so that businesses which are solvent but facing liquidity crisis, do not become non-performing assets, adding to the problems of the banks as well. 

Also, the industry is also expecting a big unscheduled cut in the interest rates by the RBI and direct transfer of cash support to the economically weaker sections.

“The regulatory compliance deadlines have rightly been addressed,” believes Sood.


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