As we restart the economy, let’s have a look at the provisions introduced by the government for the ease of compliance for business continuity. It will be good to assess if these measures can strengthen our governance, risk management and compliance framework or not, can it also aid in efficiently managing the capital, which is already stretched because of the COVID situation.
While most of the Direct Tax compliances and yearly compliances date has been extended to 30th June 2020, Corporate affairs and IBC measures have been eased out. It is important to note that extensions have been made only for those compliances that are prescribed under the statute and not to the dates by which amendments to the respective statutes are effective.
Due dates for filing of audit reports/ tax returns for FY 2019-20 have not been extended but, given the situation, Government is expected to come up with similar relaxation for filing of tax returns for FY 2019-20 as well. However, its impact on time baring assessments is still not envisaged.
Moratorium is granted to additional fees payable to MCA for those companies who are non-complaint that has helped in reducing the financial burden at large. If one has non-complied with the filings they can take this opportunity and regularize the same without any additional fees with the current MCA scheme. This might allow regularizing past compliance issues for corporates.
The taxpayers will be allowed to file their GST returns for February, March, and April 2020 towards the end of June 2020 [staggered due dates around 30 June 2020] without any interest [subject to below], late fee and penalty. Though in case of businesses with an aggregated turnover of more than INR 50 million, there will be a levy of interest at a reduced rate of 9% p.a. which ideally should be waived off. Still, the project sales, seasonal sales, service sales as well as expenses should be planned to ease out the capital requirement in the coming quarter. Further, if the relaxation in GST compliance requirements and the bank EMI deferred allowance can be planned through co-created conversation with the Vendors and Staff, it can ease out the pressure on working capital cycle.
Extension in due dates for notices, applications of filing an appeal or time limit for any compliance under the GST, customs, and other allied laws where the time limit is expiring between 20 March 2020 to 29 June 2020 has been extended to 30 June 2020. This allows the corporate to strengthen their GRC framework.
Following should be kept in mind while designing the Framework for GRC
- Enforcement is slowing down but not going away, with the government short on resources there is a possibility that Enforcement will further intensify
- The Company Risk Profile will become further challenging once the global currency printed during COVID crisis, which is already devalued, will comes into circulation.
- With most of the workforce for the balance of the year is envisaged to work from home, there will be serious challenges of fostering a unified, cohesive culture. Hence an effective, agreed by all stakeholders and well-defined compliance program becomes essential.
- Internal employee communication and external stakeholders in the corporates including banks, regulatory bodies shall become even more important. Also, structures to enable communication will require conscious focus.
In the time of crisis, the Governance, Risk and Compliance process should be strengthened to align with organizational goals. This time should be used wisely to set up priorities which might not have been in the focus when the short-term business opportunities were appearing.The Fundamentals of GRC explains that all the Governance is an oversight role and the process by which companies manage and mitigate business risks. Risk management enables an organization to evaluate all relevant business and regulatory risks, controls and monitors mitigation actions in a structured manner. Compliance ensures that an organization has the processes and internal controls to meet the requirements imposed by governmental bodies, regulators, industry mandates or internal policies.
Thus this is a good opportunity and time to get complied and plan for the long term goals with the defined way along with governance and risk management.