Sec 185 of the Companies Act 2013

Section 185 of Companies Act, 2013 has ben completely substituted by New Section 185 under Companies Amendment Act, 2017 (CA, 2017 got president assent on 3^rd January, 2018 and was notified on 07^th May 18.  Due to Complete substitution there are many changes under this section as mentioned below.

Crux of new amendment

Who can avail the Loan/ guarantee/ Security from a Company	Old Provision	New Provision
Any Private Company in which such Director is a Director or Member	NO	YES (subject to condition)
Any Body Corporate at the general meeting of which at least 25% of voting capital is exercisable by any such Director or 2 or more of such Director	NO	YES (subject to conditions)
Any Body Corporate the Director, MD, Manager are accustomed to act in accordance with the directions of the Board or any Director or Directors of the lending Company	NO	YES (subject to conditions)

Section 2 of Companies Act, 2013, does not define “loan”.

Section 185(1): This sub-section restrict only for Loan/ Guarantee/ Securities to Individuals not Companies or Body Corporates.

Section 185(2): This Sub section allows by passing of Special Resoluion to give loan to (Private Company, Body Corporate in which directors of lender Company are Directors or Shareholders) (inserted via CA,2017)

Section 185(3): This sub section permits loans by Holding to wholly owned subsidary without complying with conditions given u/s 185(2).

Language of Section 185:

(1)  No Company ( Private & Public)

·         Directly or Indirectly

·         Advanced any loan, including Book Debt

·         Or any Guarantee or provide any security in connection with any loan taken by

Following Persons

        i.            Any director of Company, or

      ii.            Any director of a Company which is its Holding Company, or

    iii.            Any partner of Director of lender company, or

    iv.            Any relative of Directors of Lender Company, or

      v.            Any firm in which any of Director of Lending Company is Director, or

    vi.            Any firm in which any relative of Director of lending Company is Director.

Points to be Kept in Mind while Complying according to this Section

a)      This Subsection applicable on Public Limited as well as Private Limited Company (whether small, OPC, Start ups etc.)

b)      Guarantee or Security in respect of only ‘Loan’ is covered.

c)      Only individuals/ firms are covered in sub section 1. Companies / body corporates are not covered in above sub section

(2)  Following loan can be given by company to Any Person in whom directors are interested after fulfilling the Conditions mentioned below:

·        Advance any loan, including loan represented by a book debt

·        Give any guarantee in connection with any loan taken

·        Provide any security in connection with any loan taken

Any Person:

        i.            Any Private Company of which any such Director is a Director or member;

      ii.            Body Corporate in which 25% or more voting power rests with one or more directors;

    iii.            Body Corporate whose Board accustomed to act on directions of BOD or Directors of lending company

Conditions:

        i.            Special Resolution passed by the Company in General Meeting.

      ii.            The loans are utilized by the borrowing company for its principal business activities.

(3)  Restrictions of Sub Section (1) and (2) shall not be applicable on following transactions:

        i.            Any loan made by a Holding Company to its Wholly own Subsidiary Company or any guarantee given or security provided by a Holding Company in respect of any loan made to its wholly own subsidiary Company Give any guarantee in connection with any loan taken

     ii.            Any guarantee given or security provided by a Holding Company in respect of Loan made by any Bank or financial institution to its subsidiary Company.

Check whether loan is in limit u/s 186(2) if not then whether Special Resolution for such has been passed or not. Limites as mentioned below:

§  60% of Paid up share capital + Free Reserve + Securities Premium Account OR

§  100% of Free Reserve + Securities Premium Account

As per Section 186(4) Company shall disclose in the Financial statement full particular of Loan/ G/ S and purpose for which such L/G/S is proposed to be utilised by borrower

Interest on Loan u/s 186 (7): Loan shall be given at a rate of interest not lower than the prevailing yield of one year, three year, five year or then year Government security closest to the tenor of the laon.

Other sections

  Section 177 (4) (v): Every Audit Committee shall scrutiny of inter-corporate loans and investments.

  Section 179(3) (e): The Board of Directors of a company shall exercise the power to invest the funds of the company by means of resolutions passed at meetings of the Board,

(Credits: This article was originally published by CS Divesh Goyal)

How to file GST 9/ GSTR 9

Stage 1 : Gather the documents required for preparing GSTR 9

Prerequisites of filing GST 9

1)    Go to Services>Returns>Annual Return>Select FY>GSTR9>Prepare online>

Select No for Nil return

a)    Download GSTR9 System Computer summary (Before downloading click on compute liabilities, as it updates many fields in GSTR9)

b)    Download GSTR-1 Summary

c)    Download GSTR-3B summary

Please note that all the PDF files downloaded will have annual data for applicable fields only. If data is nil for any field the respective field will not be generated in pdf file.

2)    Download Comparison of Liability declared & ITC claimed Report for FY 2017-18: Services > Returns > Returns Dashboard > FY 2017-18 : March > Comparison of Liability declared & ITC claimed > View > Click on Refresh Button> Click on download button ( This will be master report)

• Download Credit & Liability Statement along with 4 Reports available i.e.

1. Liability other than Export/Reverse Charge
2. Liability Due to Export and SEZ Supplies
3. Liability due to Reverse Charge
4. ITC Credit Claimed & Due

Stage 2 : Analyse the Documents gathered in Stage 1

Once you have all the documents downloaded in stage 1 , you will observe that there are lot of differences in figures of sales, output liability and Input credit.

Commonly observed mismatches are as follows

1)    From Master report sheet (Liability declared & ITC claimed)

 Tax liability as per GSTR3B should be equal or higher than as per GSTR1.

(Do not look at difference for ITC claimed as it is combined. The same should be analysed from report generated at point 4 above.

2)   ITC Credit Claimed & Due

Look out for the positive figures. Positive figures reflect ITC claimed higher in GSTR 3B and appearing lower in GSTR 2A.

 

Freeze and zero in to correct figures of

1. Sales : IGST- CGST- SGST
2. NIL Rated Sales, Exempt Sales
3. RCM Liability : IGST- CGST- SGST
4. Input Claimed : IGST- CGST- SGST
5. Input Reversed : IGST- CGST- SGST
6. Input as per GSTR 2A : IGST- CGST- SGST

Differences/Mismatch may arise due to following

1. Differential reporting in GSTR 3B & GSTR 1 – Pay additional Liability through DRC -03
2. Under/Over reporting of Outward Supplies in GST Returns – Show only Correct Amounts in GSTR 9 – Refer Point 3 to 5 below
3. Amendments done during the same Financial Year – Show in Table 4 –Point K & L
4. Amendments done during the subsequent Financial Year – Show in Amendments Table 10 & 11.
5. Non-reporting of Sales Invoices altogether – Add in Table 4 & Table 5 & Pay Tax on Differential amount with Interest
6. Non-availment of ITC – ITC not availed upto prescribed deadline will lapse
7. Delayed availment of ITC in Next FY – Show in Table 8 – Point C
8. Excess availment of ITC – Bifurcate only Correct ITC in Table 6 & pay interest on excess availment.

Possible Errors	Possible Solutions
Sales pertaining to this year shown in next financial year.	Show Sales & its Tax in Table 10 Supplies / tax declared through Amendments (+) (net of debit notes) No need to show such sales in Table 4 If no other Difference in Sales, the 5N+10-11 = Total Sales & Its Tax for the year 2017-18
ITC in GSTR2A being higher than that claimed in GSTR 3B	Show such ITC in 8E: ITC available but not availed.
Excess-Reporting of ITC in GSTR 3B Not rectified within the same FY	File DRC 3 Services>User Services>My Application> Select period> Select Voluntary> Select Sec 73(5).
Under reporting of GST Payable	File DRC 3 Services>User Services>My Application> Select period> Select Voluntary> Select Sec 73(5).

Stage 3 File/fill the correcting figures as arrived in Step 2 

1) In Table 6  Bifurcate the total ITC claimed as per GSTR-3B. Bifurcation to be provided in table 6 GSTR-9. Bifurcate Input Claimed into Inputs, Input Services & Capital Goods.
2)  Pay special attention to Table 9: The effect of any ammendment made in GSTR 9 has to be manually entered in GST payable in Table 9. Ideally payable figure should match Total of Point 13 (5N+10-11) - Table 14(paid). But the same is not auto computed and you have to check if the figure is same or not.

3) In Table 17 & 18: Fill HSN code wise summary for outward and inward supplies.

Click on Compute liabilities to see if any thing appears in Table 19.

Verify all the Details & Submit the return by Computing Liabilities & File with OTP/DSC

Credits: Aforesaid information has been complied based on inputs from CA Sagar Gambhir, Ludhiana (casagargambhir@gmail.com).