Income Tax in the United States

Income Tax in the United States
In the United States, a tax is imposed on income by the federal, most state, and many local governments. The income tax is determined by applying a tax rate, which may increase as income increases, to taxable income as defined. Individuals and corporations are directly taxable, and estates and trusts may be taxable on undistributed income.
Partnerships are not taxed, but their partners are taxed on their shares of partnership income. Residents and citizens are taxed on worldwide income, while nonresidents are taxed only on income within the jurisdiction. Several types of credits reduce tax, and some types of credits may exceed tax before credits. An alternative tax applies at the federal and some state levels.
Taxable income is total income less allowable deductions. Income is broadly defined. Most business expenses are deductible. Individuals may also deduct a personal allowance (exemption) and certain personal expenses, including home mortgage interest, state taxes, contributions to charity, and some other items. Some deductions are subject to limits.
Capital gains are taxable, and capital losses reduce taxable income to the extent of gains (plus, in certain cases, $3,000 or $1,500 of ordinary income). Individuals currently pay a lower rate of tax on capital gains and certain corporate dividends.
Taxpayers generally must self assess income tax by filing tax returns. Advance payments of tax are required in the form of withholding tax or estimated tax payments. Taxes are determined separately by each jurisdiction imposing tax. Due dates and other administrative procedures vary by jurisdiction. April 15 following the tax year is the last day for individuals to file tax returns for federal and many state and local returns. Tax as determined by the taxpayer may be adjusted by the taxing jurisdiction.

Corporate Income tax - two types -S Corp Vs C Corp

C corporations are subject to double taxation; that is, one tax at the corporate level on the corporation's net income, and another tax to the shareholders when the profits are distributed. S corporations have only one level of taxation. All of their income is allocated to the shareholders.

United States tax code allows certain types of entities to utilize pass-through taxation. This effectively shifts the income tax liability from the entity earning the income to those who have a beneficial interest in it. The Schedule K-1 is the form that reports the amounts that are passed through to each party that has an interest in the entity.

Similar to a partnership, S corporations must file an annual tax return on Form 1120S.The S corporation provides Schedule K-1s that reports each shareholder’s share of income, losses, deductions and credits. The shareholders use the information on the K-1 to report the same thing on their separate tax returns.

Itemised Deductions in 1040

The Tax Cuts and Jobs Act 2018 made a lot of changes to the existing tax code. Most of them begin in 2018 and they’re a lot to get your mind around. If you’ve historically chosen to itemize rather than take the standard deduction, here's what you need to know in the years going forward. 

The TCJA tweaks and even eliminates a good many itemized deductions, but most of the changes are temporary. They’ll expire in 2025 unless Congress votes to keep some or all of them. Meanwhile, you might want to plan accordingly if you’ve normally claimed some or all of these deductions.

The Medical Expenses Deduction 

The changes to the itemized deduction for medical expenses is actually pro-taxpayer, at least for a short time.  

You could only claim a deduction for the portion of your expenses that exceeded 10 percent of your adjusted gross income through the 2016 tax year. The TCJA reduces that threshold to 7.5 percent, although only for tax years 2017 and 2018. This provision is retroactive, so you get a little gift as you go about preparing your 2017 return—you’ll be able to deduct somewhat more in medical expenses.

The other rules remain the same. You can claim expenses incurred for yourself, your spouse, or your dependents, and you must have paid them in the same year you claim them as a deduction. The 7.5 percent threshold is scheduled to increase back up to 10 percent in 2019, so you might want to spend the money now rather than later if you’re considering elective procedures that are deductible under the law. Just keep in mind that cosmetic-type surgeries and treatments are not deductible, although those that are preventative and those that treat existing problems are.

The State and Local Taxes Deduction (SALT)

This deduction was a matter of hot debate as the TCJA made its way through Congress at the end of 2017. It used to be unlimited, and it covered a range of taxes: property, sales, and income, although you did have to choose between deducting sales taxes or income taxes. You couldn’t claim a deduction for both.

That’s still the rule, but now there’s an overall limit to how much you can deduct. It caps out at $10,000 under the terms of the TCJA. If you pay $6,000 in property taxes and $5,000 in income taxes for a total of $11,000, you’ll lose $1,000 of that deduction beginning in 2018. You can either claim $5,000 in property taxes or $4,000 in income taxes, but that other $1,000 for the full $11,000 you paid is no longer available. This will be a real blow to those who live in states with high income tax rates or areas with high property tax rates, such as New York, New Jersey, California and the District of Columbia.

And if you’re married and file a separate return, you must cut that $10,000 figure in half. These filers are entitled to only a $5,000 deduction in state, property and local taxes. This rule doesn’t apply to single or head of household filers, however—they can claim the full $10,000.

Foreign real property taxes can’t be deducted anymore, either. The TCJA eliminates that tax law provision.

Can You Prepay Your Taxes to Get the Old Deduction?

This aspect of the new tax bill had many taxpayers storming their local property tax assessment offices at the end of 2017. hoping to prepay their 2018 taxes so they could still claim a deduction for the full amount. But on December 27, 2017, the Internal Revenue Service effectively said, “Not so fast.” If you did prepay your 2018 property taxes in December, they’re only deductible in 2017 to the extent that they were already assessed. In other words, you actually received a bill for your 2018 taxes—and paid them—before December 31, 2017.

You can’t claim a 2017 deduction for what the IRS has called “anticipated” 2018 taxes.

The Deduction for Home Mortgage Interest
This deduction hasn’t been eliminated either, but it’s suffered. It’s more restricted now, but to be fair, many taxpayers won’t feel the bite. Only those who can afford particularly sizeable mortgages will be affected.
Through 2017, you could deduct interest on mortgage loans of up to $1 million if they were used to acquire a first or second residence, or $500,000 if you were married and filed a separate return. You could also deduct interest on home equity loans of up to $100,000. The TCJA cuts this to acquisition loans topping out at $750,000, or $375,000 for married taxpayers filing separately, and you can no longer deduct interest on home equity loans.
In other words, unless you can qualify for a $750,000-plus mortgage, not much changes for you.
The applicable dates aren’t as clear cut with the amendments to this deduction. The old $1 million limit doesn’t quite last until December 31, 2017. It applies only to mortgages contracted for before December 14, 2017, and you must close on the property by April 1, 2018. 
And here’s another wrinkle: You can refinance an existing mortgage that you took out before December 14 in tax year 2018 or later and you can still deduct the interest, but only if the refinanced amount isn’t greater than your old loan balance. Remember, the deduction for interest on home equity loans has been eliminated, but if you’re not taking any cash out, you’re fine.
Deductions Affecting Workers
The TCJA also eliminates two advantageous deductions for the working class. It used to be that you could deduct certain moving expenses if you had to relocate for work-related reasons, subject to several qualifying rules. Hopefully, you moved before December 31, 2017 or you can hold off on doing so until the TCJA expires in 2025, because this deduction is no more.
Technically, this was an above-the-line deduction, an “add-on” to your itemized deductions or your standard deduction. And this change does not affect active duty military personnel. They can still claim this deduction when and if they’re forced to move for service-related reasons.
Those miscellaneous itemized deductions you used to be able to claim for expenses you had to make for work-related purposes are gone, too. Some miscellaneous deductions have survived the TCJA, but not this one. On the bright side, these were only deductible to the extent that they exceeded 2 percent of your AGI anyway, and if they were not reimbursed by your employer.
The Casualty and Theft Losses Deduction
The casualty and theft losses itemized deduction survived…sort of, but it’s been pared way back. Beginning in 2018, you can only claim this deduction if you suffered a loss due to a federally-declared disaster. The U.S. President must cite the event as a disaster. Fortunately, this covers most catastrophic events like hurricanes, but you’re out of luck if your neighbor steals your brand new laptop.
No More Pease Limitations
Charitable deductions are still alive and well and they remain unchanged, and here’s a bit of good news. This deduction—as well as the home mortgage interest deduction—was subject to something called the Pease limitations through 2017. For those with high incomes, these limitations reduced itemized deductions by 3 percent for every dollar of taxable income over certain thresholds and ultimately up to 80 percent of their itemized deductions. 
The TCJA repeals the Pease limitations, so go ahead and donate to your favorite charity no matter how much you earn. You can still claim this tax deduction in full.
The Standard Deduction vs. Itemized Deductions
It might not be all doom and gloom for some taxpayers. Yes, you're losing a handful of itemized deductions and other deductions have been limited. But the TCJA almost doubles standard deductions for all filing statuses: from $6,350 to $12,000 for single taxpayers, from $12,700 to $24,000 for married taxpayers who file jointly, and from $9,350 to $18,000 for those who qualify to file as head of household. So while your available itemized deductions might shrink, your available standard deduction will mushroom, potentially offsetting the loss.
You might find that you come out in much the same tax situation as before, or you might even come out ahead under the new rules. If you and your spouse were historically able to amass $20,000 in deductions, or if your itemized deductions are reduced to under $24,000 in 2018 by the new law, you’d actually lose money by itemizing. 

Capital Gains Tax

Tax Rates 2017 vs 2018(filing in 2019)

Sweeping Tax Overhaul 2018

The House-Senate Conference Committee revealed their agreed-upon tax reform package late on Friday, December 15th. As we write this, the Act has not yet become law, but we expect the House and Senate to separately pass it quickly and send it to President Trump shortly thereafter. While the devil is in the details, we wanted to pass along some of the key provisions.
Individual Tax Rates. The Conference bill calls for a maximum individual tax rate of 37 percent, down from 39.6 percent, but did not change the number of brackets as expected. To give you an idea of the changes, here is a 2017 – 2018 comparison for married filing jointly:
Capital Gains Rates. The Conference bill generally retains the present-law maximum rates on net long-term capital gains and qualified dividends: 15 percent and 20 percent depending on income levels.
Standard Deduction and Personal Exemptions. The standard deduction will nearly double in 2018 to $24,000 for joint filers, $18,000 for head-of-household filers, and $12,000 for all other individuals, indexed for inflation for tax years after 2018. However, personal exemptions of over $4,050 per eligible person will be eliminated.
Mortgage Interest Deduction. The Conference bill limits the mortgage interest deduction to interest on $750,000 of “acquisition indebtedness” ($375,000 in the case of married taxpayers filing separately), beginning in 2018. For acquisition indebtedness incurred before December 15, 2017, the current-law limitations of $1,000,000 ($500,000 in the case of married taxpayers filing separately) remain. However, no interest deduction is allowed for interest on home equity indebtedness after 2017.
State and Local Taxes. The Conference bill limits deductions for nonbusiness state and local tax expenses, including property and income taxes, to $10,000 ($5,000 for married filing separately). Moreover, taxpayers will not be able to deduct any 2018 taxes prepaid in 2017 on their 2017 tax returns.
Other Itemized Deductions Under the Conference Bill:
Charitable Contributions. Generally kept the same as 2017 except the deduction for certain contributions is limited to 60 percent of adjusted gross income rather than 50 percent. Also, a deduction will no longer be allowed for contributions made to gain seating rights for college sports.
Miscellaneous Itemized Deductions. Repealed.
Medical expenses. Not only retained but enhanced for 2017 and 2018 in that the threshold for the deduction was lowered to 7.5 percent of adjusted gross income for all taxpayers.
Casualty LossesAllowed but only for losses attributable to federally-declared disaster areas.
Alimony. The Conference bill repeals the deduction for alimony payments and the inclusion in the income of the recipient, but only for divorces executed after December 31, 2018.
Moving Expense Deduction. The Conference bill repeals moving expense provisions, except for members of the military required to move.
Dependent Tax Credits. The Conference bill increases the child tax credit to $2,000 per qualifying child, up to $1,400 of which may be refundable. There is also a $500 nonrefundable credit for qualifying dependents other than qualifying children. The adjusted gross income threshold for phasing out the credits is increased to $400,000 for joint filers and $200,000 for others.
Alternative Minimum Tax (AMT). The Conference bill keeps AMT for individuals but increases the exemption (to $109,400 for joint filers) and exemption phase-out thresholds (to $1 million for joint filers) to reduce the number of taxpayers subject to it. The corporation AMT is repealed.
Section 529 Plans. The Conference bill enhances Section 529 college savings plans by allowing up to $10,000 of distributions per student during the year to be used for elementary or secondary school.
Estate and Gift Taxes. The Conference bill does not repeal the estate tax as once expected but it doubles the estate and gift tax exemption for estates of decedents dying and gifts made after 2017.
C Corporation Tax Rate. The Conference bill provides for a 21 percent corporate rate effective for taxable years beginning after December 31, 2017. This rate also applies to personal service corporations.
Depreciation Rules. The Conference bill generally increases the 50 percent “bonus depreciation” allowance to 100 percent for new AND used property placed in service after September 27, 2017, and before January 1, 2023. Business passenger automobiles will also be eligible for more favorable depreciation rules. In addition, among Section 179 changes, HVAC equipment is now eligible for Section 179 expensing.
Deduction for Pass-through Businesses. The Conference bill effectively lowers the tax rate for individual and trust owners of certain “qualified” S Corporations, LLCs, partnerships and sole proprietorships by providing a 20 percent deduction on qualified business income. The deduction is limited to 50 percent of the W-2 wages with respect to such business, or if greater, the sum of 25 percent of the W-2 wages plus 2.5 percent of the cost of qualified property acquired during the year. Owners of “specified service businesses” where the principal asset of the business is the reputation or skill of one or more of its employees or owners, such as businesses in the fields of health, law, consulting, and financial services, are generally not eligible for the 20 percent deduction. However, there is a small taxpayer exception to both the wage limitation and the “specified service business” exclusion as both generally do not begin phasing in until owners have adjusted taxable income of more than $157,500 ($315,000 for joint filers).
Small Business Methods of Accounting. Beginning after 2018, small businesses with average gross receipts of $25 million or less will be allowed to use the cash method of accounting regardless if it is a C Corporation or a partnership with a C Corporation partner. Moreover, taxpayers that meet the $25 million gross receipts test are not required to account for inventories.
Revenue Recognition. The Conference bill generally requires accrual method taxpayers subject to the “all events test” for revenue recognition to be in conformity with its “applicable financial statements” if such are prepared by the taxpayers.
Business Interest Expense Limitations. The Conference bill limits the deduction of net interest expense for businesses with average gross receipts in excess of $25 million. The deduction is generally limited to 30 percent of adjusted taxable income (after adding back depreciation and amortization expense).
Corporate Net Operating Losses (NOL). For losses generated after 2017, the Conference Bill limits the NOL deduction to 80 percent of taxable income, disallows most carrybacks, but generally allows indefinite carryforwards.
Business Entertainment Expenses. The Conference bill generally repeals the business deduction for entertainment, amusement or recreation expenses. The 50 percent deduction for business meals is generally retained.
Domestic Production Deduction. The Conference bill repeals this popular deduction.
Affordable Care Act (ACA) or “Obamacare.” The Conference bill repeals the ACA’s individual mandate to buy health insurance by making any required payment $0 beginning in 2019.
Effective Dates. Unless noted otherwise above, the tax changes generally are effective beginning in 2018. Many of the individual provisions “sunset” after 2025 resulting in a reversion to current law unless Congress acts beforehand.

Tax schedules
schedule is a form the IRS requires you to prepare in addition to your tax return when you have certain types of income or deductions. These commonly include things like significant amounts of interest income, mortgage interest or charitable contributions. Generally, the totals you compute on these schedules are transferred to your Form 1040. When you qualify to complete a simpler tax form, such as the Form 1040EZ, then additional schedules are not required.

Schedule A

If you elect to itemize your deductions rather than claim the standard deduction, then you must prepare a Schedule A and attach it to your Form 1040. Schedule A is the tax form where you report the amount of your itemized deductions. Some of the itemized deductions listed on Schedule A include medical and dental expenses, various state taxes, mortgage interest, and charitable contributions. If your Schedule A total exceeds the standard deduction, you are typically better off itemizing your deductions.

Schedule B

Schedule B is an income schedule that requires you to separately list the sources of interest and dividend payments you receive during the year. You can use Schedule B with both Forms 1040 and 1040A. However, preparation of the schedule is only necessary when your interest or dividend income exceeds the IRS threshold for the year - $1,500 in 2017. For example, if you only earn $200 of bank interest this year, you must include this amount in your taxable income, but preparing a Schedule B is not necessary.

Schedules C and C-EZ

Schedules C and C-EZ are forms that you use to report self-employment income. Essentially, both forms separately report your business earnings and deductions to arrive at your net business profit or loss, which is then added to your other income on Form 1040. If you have a single business with simple accounting that meets IRS qualifications, you can use the shorter Schedule C-EZ, rather than Schedule C.

Schedule D

If you sell a capital asset during the year, then you must report it on a Schedule D attachment to your tax return. Capital assets transactions commonly report the gains and losses when you sell stocks, but can include any other property you sell during the year such as your home or car. The form separates the transactions into short-term and long-term transactions depending on whether you own the property for more than one year or not. Your short-term capital gains are taxed at the same rate as your other income, but your long-term gains are taxed at lower rates.

Schedule EIC

Schedule EIC is where you report your qualifications for claiming the earned income tax credit. The earned income tax credit is a refundable tax credit you can claim if you have qualifying children, and your income falls below a certain level. You can use Schedule EIC for both Forms 1040 and 1040A.

Schedule SE

If you are self-employed, you are responsible for paying Social Security tax on your earnings since an employer is not withholding it for you. You compute the amount of your self-employment tax on Schedule SE.

Standard Deduction Vs Itemised Deduction

A) It is the option of tax payer to take either of them whichever is beneficial ( assessee is called atx payer in US)

B) Standard deduction is 12k, 18k, 24k based on status.This is increased in 2018( by removing one of the other deductions called personal deduction)

C)From 2018 onwards - standard deduction is increased and scope for itemised deductions curtailed. 

The  mortgage debt interest is one of the major itemized deductions which will help the sum of itemized deductions being higher than standard deduction.

However the following changes are made in 2018 which limit the deduction for loans taken after 15th Dec 2017

Mortgage Interest Deductibility in 2018

  • Interest payments are deductible on mortgage debt of up to $750,000—formerly $1,000,000
  • Married couples filing separately can deduct interest on up to $350,000 each—formerly $500,000
  • Up to 2025, these new limits won't apply to mortgages originated before December 15, 2017
  • Deduction for other home equity debt (HELOCs and second mortgages) eliminated—formerly $100,000
In the short term, these changes only affect people who take out new purchase mortgages. Anyone who purchased a home before December 15, 2017 will be able to deduct mortgage interest payments on up to $1 million in debt, up until 2025. Even if you refinance, the old limit applies as long as the original debt was taken on before December 15, 2017. Finally, people who closed on a home purchase before January 1, 2018 can also use the old limit of $1 million—provided they purchase the residence by April 1.
Besides reducing the maximum deduction for mortgage interest, the new rules completely eliminate the deduction for interest paid on other home equity debt. Previously, taxpayers could deduct up to $100,000—$50,000 for married couples filing separately—on the interest payments for home equity loans and home equity lines of credit (HELOCs).

Role of Company Secretary

Applicability of Secretarial Standards - mandatory under section 118 of Companies A ct 2013
 Clarification on Applicability of Secretarial Standards 
Dear Professional Colleagues

The Secretarial Standards on Meetings of the Board of Directors (SS-1) and Secretarial Standards on General Meetings (SS-2) (together referred to as the Secretarial Standards), as approved by the Central Government, have been issued by the Institute of Company Secretaries of India (ICSI) under the provisions of Section 118(10) of the Companies Act, 2013 (the Act), vide ICSI Notification No. 1 (SS) of 2015 dated April 23rd, 2015 and published in the Gazette of India Extraordinary Part III - Section 4. These Secretarial Standards shall come into force w.e.f. 1st July 2015.

The Secretarial Audit Report issued pursuant to the provisions of Section 204 (1) of the Act read with Rule 9(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, shall be in Form No. MR-3 (Secretarial Audit Report) and shall inter-alia mention about the examination conducted by the Secretarial Auditor w.r.t. the compliance by a Company under the applicable clauses of the Secretarial Standards.

Considering the date of effectiveness of Secretarial Standards, the Institute clarifies the following:

1. These Secretarial Standards (SS-1 and SS-2) shall apply to Board Meetings and General Meetings, in respect of which Notices are issued on or after 1st July, 2015.

2. The Secretarial Audit Report for the Financial Year 2014-15 need not report specific non-compliances/observations/audit qualification, reservation or adverse remarks in respect of compliance with SS-1 and SS-2 as these will become effective from 01st July, 2015.

3. Further, other Secretarial Standards issued by ICSI in line with the provisions of the Companies Act, 1956 are under revision to align with the provisions of the Companies Act, 2013. Accordingly, such other Secretarial Standards are not applicable presently.

Members of the ICSI are advised to take note of the above suitably on matters pertaining to compliance of the Secretarial Standards.

Regards Sutanu Sinha Chief Executive & Officiating Secretary ,ICSI

Companies Act 2013 :Duties of Company Secretary defined, role of CS in service and practice enhanced

For the purposes of clause (c) of sub-section (1) of section 205, the duties of Company Secretary shall also include-

1) to provide to the directors of the company, collectively and individually, such guidance as they may require, with regard to their duties, responsibilities and powers;

2) to convene and attend Board, committee and general meetings, and maintain the minutes of these meetings;

3) To obtain approvals from the Board, general meetings, the Government and such other authorities as required under the provisions of the Act.

4) To represent before various regulators, Tribunal and other authorities under the Act in connection with discharge of various functions under the Act;

5) to assist the Board in the conduct of the affairs of the company;

6) to assist and advise the Board in ensuring good corporate governance and in complying with the corporate governance requirements and best practices; and

7) to discharge such other duties as may be assigned by the Board from time to time

8) Such other duties as have been prescribed under the Act and Rules.

New Companies Act 2012 has given a prominent role for company secretary in practice as well as company secretary in employment.
The functions of the company secretary shall include,—
(a) to report to the Board about compliance with the provisions of this Act, the rules made thereunder and other laws applicable to the company;
(b) to ensure that the company complies with the applicable secretarial standards;
(c) to discharge such other duties as may be prescribed.
Explanation.—For the purpose of this section, the expression "secretarial standards" means secretarial standards issued by the Institute of Company Secretaries of India constituted under section 3 of the Company Secretaries Act, 1980 and approved by the Central Government.
We find mention Company Secretaries in Practice first time after definitions in Section 7 of the Act, which deals with incorporation of companies.  Company Secretary in Practice has to compete here with other professionals. For incorporation of a company there is a requirement that a declaration is to be given by company secretary practice, which is engage in formation of the company that all the requirements of Act and rules related to registration, matter precedent and incidental thereto.
Any person making false declaration shall be liable for action under Section 447.
Section 92 of the Act contains provisions about Annual Return of the Companies. Every company shall prepare annual return containing details as mentioned in Sub – section (1) of this section.; like registered office, principle activities, shareholding pattern, members, debenture – holders, Promoters, Directors, Key Managerial persons, meetings, managerial remuneration, penalty punishment and other matters as prescribed. This Annual Return shall be signed by a director and company secretary of the company. Where there is no company secretary, it shall be signed by Company Secretary in Practice.
In case of listed companies and certain other companies determined on the basis of paid – up capital and turnover; this annual return shall be certified by company secretary. The company secretary shall certify that annual return discloses all facts correctly, adequately and in compliance with all provision of the Companies Act.
In any case, Company Secretary in Practice certify Annual Return otherwise than in conformity with requirement of the section, it shall be punishable with fine of Fifty thousand to Five Lakh rupees.
Sub – section (8) of Section 118 has an interesting reading. It say that where the minutes have been kept in accordance with sub-section (1) then, the meeting shall be deemed to have been duly called and held, and all proceedings thereat to have duly taken place, and the resolutions passed by postal ballot to have been duly passed and in particular, all appointments of directors, key managerial personnel, auditors or company secretary in practice, shall be deemed to be valid. Even though, there is no clarity, whether appointment of Company Secretary in Practice will be take place by Board of Directors or Members in General Meeting, but certainly in some meeting as per the above, by implication.
Clause (f) to Sub – section (3) of Section 134 makes it clear that report by Board of Directors shall include an explanations or comments by the Board on every qualification, reservation or adverse remark or disclaimer made by the company secretary in practice in his secretarial audit report. This clearly specifies importance of secretarial audit report in eye of legislature. Now, this is on Company Secretary Community to meet these expectations of legislature and corporate community. Hope, Secretarial Audit report by Company Secretaries will win confidence among stakeholders including investors.
Sub – section (14) of Section 143 make it clear that company secretary in practice conducting secretarial audit under section 204 shall have same power and duties as auditor of the company.
Sub – section (1) emphasis on power by saying that every auditor of a company shall have a right of access at all times to the books of account and vouchers of the company, whether kept at the registered office of the company or at any other place and shall be entitled to require from the officers of the company such information and explanation as he may consider necessary for the performance of his duties as auditor.
Sub – section (12) cast very important duty; if an auditor, Company Secretary in practice or Cost Accountant of a company, in the course of the performance of his duties has reason to believe that an offence involving fraud is being or has been committed against the company by officers or employees of the company, he shall immediately report the matter to the Central Government within such time and in such manner as may be prescribed.
This section, in fact, turns auditors into whistle – blowers, which was really a role for them intended by law – makers.
Every listed company and a company belonging to other class of companies as may be prescribed shall annex with its Board's report made a secretarial audit report, given by a company secretary in practice, in such form as may be prescribed. It shall be the duty of the company to give all assistance and facilities to the company secretary in practice, for auditing the secretarial and related records of the company. The Board of Directors, in their report shall explain in full any qualification or observation or other remarks made by the company secretary in practice in his report. If a company or any officer of the company or the company secretary in practice contravenes the provisions of this section, the company, every officer of the company or the company secretary in practice, who is in default, shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees.
Where, upon information in his possession or otherwise, the Registrar or inspector has reasonable ground to believe that the books and papers of a company, or relating to the key managerial personnel or any director or auditor or company secretary in practice are likely to be destroyed, mutilated, altered, falsified or secreted, he may, after obtaining an order from the Special Court for the seizure of such books and papers,— (a) enter, with such assistance as may be required, and search, the place or places where such books or papers are kept; and (b) seize such books and papers as he considers necessary after allowing the company to take copies of, or extracts from, such books or papers at its cost.
This is clear that Company Secretary in practice is considered an important functionary related to company and record at his possession is being considered important evidence. At this point, I request all fellow company secretaries, please maintain proper record at their offices other piecemeal record may cause problem and make them party for unwanted situations.
Certainly company secretaries have important role as consultants in merger and amalgamation but here under sub – section (7) of Section 232 provide an opportunity after order of approval for merger and amalgamation. Every company in relation to which the order is made shall, until the completion of the scheme, file a statement in such form and within such time as may be prescribed with the Registrar every year duly certified by a chartered accountant or a cost accountant or a company secretary in practice indicating whether the scheme is being complied with in accordance with the orders of the Tribunal or not. Please note that any contravention of this section attract penalty of one lakh rupees. Company secretary has to give an statement that the scheme is being complied.
Among other qualifications, practice as a company secretary for at least fifteen years or being a person of proven ability, integrity and standing having special knowledge and experience, of not less than fifteen years, in law, industrial finance, industrial management or administration, industrial reconstruction, investment, accountancy, labour matters, or such other disciplines related to management, conduct of affairs, revival, rehabilitation and winding up of companies is a qualification for appointment as technical member of the National Company Law Tribunal.
Section III of Schedule V of the Company Act deals with Remuneration payable by companies having no profit or inadequate profit without Central Government approval in certain special circumstances. Proviso to this section list some conditions to comply by the company before approving managerial remuneration in such circumstances. Two important conditions are:
(i) the auditor or Company Secretary of the company or where the company has not appointed a Secretary, a Secretary in whole-time practice, certifies that all secured creditors and term lenders have stated in writing that they have no objection for the appointment of the managerial person as well as the quantum of remuneration and such certificate is filed along with the return as prescribed under sub-section (4) of section 196
(ii) the auditor or Company Secretary or where the company has not appointed a secretary, a secretary in whole-time practice certifies that there is no default on payments to any creditors, and all dues to deposit holders are being settled on time.
Further, Part III of the Schedule V make a condition from the auditor or the Secretary of the company or where the company is not required to appointed a Secretary, a Secretary in whole-time practice that the requirement of this Schedule have been complied with and such certificate shall be incorporated in the return filed with the Registrar.
Thus, present companies Act, 2012 have many opportunities for Company Secretaries in Practice. They have to grab these opportunities and win confidence of stakeholders, legislature and corporate world. Hope, this confidence will not be broken and make this profession a just another useless employment providing opportunity at the cost of industries.
Company Secretaries has scope of practice as Company Secretaries in practice as such as well as Expert under the Act.
Sub – section (38) of Section 2 of the Act define an expert, as an engineer, a valuer, a chartered accountant, a company secretary, a cost accountant and any other person who has the power or authority to issue a certificate in pursuance of any law for the time being in force.

Certificates to be issued by practising company secretary
MGT 8 to be filed along with Annual Return

Deligence Report issued by practicing company secretary to Lenders


The Deputy General Manager,
State Bank of Hyderabad,
Dear Sir,

I have examined the registers, records, books and papers of BG Tollways Limited (the Company), having its registered office at 5th Floor, Progressive Towers, Khairatabad, Hyderabad – 500 004, as required to be maintained under the Companies Act, 1956 (the Act) and the rules made there under, the provisions of various statues, wherever applicable, the provisions contained in the Memorandum and Articles of Association of the Company as well as the provisions contained in the Listing Agreement/s, if any, entered into by the Company with the recognized stock exchange/s, as may be applicable for the half year ended on September 30, 2011. In my opinion and to the best of my information and according to the examination carried out by us and explanations furnished to me by the Company, its officers and agents, I report that in respect of the aforesaid period:

1.       The management of the Company is carried out by the Board of Directors comprising the following persons and the Board was duly constituted:

Date of Appointment/
B. Seenaiah
T. Dayakar
U. Jayakodi

During the period under review, there were no changes in the Board of Directors.

2.       The shareholding pattern of the Company as on September 30, 2011 was as under:

No. of
% of
Promoters Holding (A)
Foreign Companies’ Holding (B)
Indian Companies’ Holding (C)


During the period under review there were no changes in the shareholding pattern.

3.       The Company has not altered any of the provisions of the Memorandum and Articles of Association of the Company during the period under review.

4.       The Company has entered into transactions with business entities in which directors of the Company were interested as detailed in Annexure 1 – Related Party transactions are enclosed.

5.       The Company, during the period under review, has not advanced loans, given guarantees and provided securities to its directors and /or persons or firms or companies in which directors are interested.

6.       The Company has not made any loans and investments; or given guarantees or provided securities to other business entities.

7.       The amount borrowed by the Company from its directors, members, financial institutions, banks and others were within the borrowing limits of the Company. Such borrowings were made by the Company in compliance with applicable laws. The breakup of the Company’s domestic borrowings was as detailed in Annexure 2 - Outstanding Loans as on 30.09.2011 are enclosed.

8.       The Company has not defaulted in the repayment of public deposits, unsecured loans, debentures, facilities granted by banks, financial institutions and non – banking financial companies.

9.       The Company has during the period under review not created, modified or satisfied charges on the assets of the Company.

10.   Investments in wholly owned Subsidiaries and/or Joint Ventures abroad made by the Company are NIL.

11.   Principal value of the Forex exposure and Overseas Borrowings of the Company as on date is NIL.

12.   Company has not issued, offered and allotted any securities during the period under review.

13.   The Company has insured all its secured assets.

14.   The Company has complied with the terms and conditions, set forth by the lending bank/financial institution at the time of availing any facility and also during the currency of the facility.

15.   The Company has not declared and paid any dividends to its shareholders during the period under review.

16.   The Company has insured fully all its assets – Not Applicable

17.   The name of the Company and / or any of its Directors does not appear in the Defaulters’ List of Reserve Bank of India.

18.   The name of the Company and / or any of its Directors does not appear in the Specific Approval List of Export Credit Guarantee Corporation.

19.   The Company has paid all its statutory dues and satisfactory arrangements had been made for arrears of any such dues.

20.   The funds borrowed from banks / financial institutions have been used by the Company for the purpose for which they were borrowed.

21.   The Company has complied with the provisions stipulated in Section 372A of the Companies Act, 1956 in respect of its Inter Corporate loans and investments.

22.   It has been observed from the Reports of the Directors and the Auditors that the Company has complied with the applicable Accounting Standards issued by the Institute of Chartered Accountants in India.

23.   There is no unpaid dividend and hence credit to the Investor Education and Protection Fund does not arise.

24.   Prosecutions initiated against or show cause notices received by the Company for alleged defaults/offences under various statutory provisions and also fines and penalties imposed on the Company and/or any other action initiated against the Company and/or its directors in such cases are NIL.

25.   The Company is NOT a listed company and hence the provisions of Listing Agreement are not applicable

26.   The Company has deposited within the stipulated time both Employees’ and Employers’ contribution to Provident Fund with the prescribed authorities – Not Applicable.

Place: Hyderabad                    


The Members

I have examined the registers, records, books and papers of M/s. NEW ENERGY PRIVATE LIMITED (The company) as required to be maintained under the Companies Act, 1956, (the Act) and the rules made there under and also the provisions contained in the Memorandum and Articles of Association of the Company for the period ended on 31st March, 2014 In my opinion and to the best of my information and according to the examinations carried out by me and explanations furnished to me by the Company, its officers and agents, I certify that in respect of the aforesaid financial year:

1.           The Company has kept and maintained all registers as stated in Annexure ‘A’ to this certificate, as per the provisions and the rules made there under and all entries therein have been duly recorded.

2.             The Company has duly filed the forms and returns as stated in Annexure ‘B’ to this certificate, with the Registrar of Companies, Regional Director, Central Government, Company Law board or other authorities within the time prescribed under the Act and the rules made there under.

3.             The Company being a private limited company, has the minimum prescribed paid up capital and its maximum number of members during the said financial year was less than the Maximum Number of Members of Fifty (50) excluding its present and past employees and the company during the year under scrutiny:

ii)                 Has not invited public to subscribe for its shares or debentures and
iii)      Has not invited or accepted any deposits from persons other than its members, directors or relatives.

4.               The Board of Directors duly met Thirteen (13) times 30th June 2013, 30th July 2013, 26th August 2013, 12th September 2013, 21st September 2013, 30th September 2013, 11th October 2013, 21st October 2013, 25th November 2013, 20th December 2013, 26th December 2013, 17th January 2014 and 22nd March 2014 in respect of which meetings proper notices were given and proceedings were properly recorded and signed including the circular resolution passed in the Minutes Book maintained for the purpose.

5.                  The Company has not closed its Registrar of Members during the financial year.

6.                 The Annual General Meeting for the financial year ended on 31st March 2013 was held on 30th September 2013 after giving due notice to the members of the company and the resolutions passed there at were duly recorded in the Minutes Book maintained for the purpose.

7.      No Extra Ordinary General Meeting was held during the financial year under review.

8.              The Company being a private company, section 295 of the Act is not applicable.

9.               The Company has duly complied with the provisions of the Section 297 of the Act in respect of contracts specified in that section.

10.          The Company has made necessary entries in the register maintained under section 301 of the Act.

11.            As there were no instances falling within the purview of section 314 of the Act, the Company has not obtained any approvals from the Board of Directors, members or central Government.

12.             The company has not issued any duplicate share certificates during the financial year.

13.              The Company has:

(i)           There was no allotment/transfer/transmission of any securities during the financial year under review.

(ii)        The Company has not deposited any amount in a Separate Bank Account as no dividend was declared during the financial year.

(iii)            The Company was not required to post warrants for dividends to any member of the company as no dividend was declared during the financial year.

(iv)            The Company has not declared any dividend, issued any debentures and has not accepted deposits, the question of transfer of dividend in the unpaid dividend account, application money due for refund, matured deposits, matured debentures and the interest accrued thereon which have remained unclaimed or unpaid for a period of seven years to Investor Education and Protection Fund does not arise.

(v)        The Company has duly complied with the requirement of Section 217 of the Act.

14.     The Board of Directors of the Company is duly constituted. There was no appointment of additional directors, alternate directors and directors to fill casual vacancy during the financial year. 

15.         The Company being Private Company, the provisions of Section 269 of the Act with regard to appointment of Managing Director/Whole-time director/ Manager are not applicable.

16.            The Company has not appointed any sole selling agents during the financial year.

17.        The Company was not required to obtain any approvals of the Company Law Board, Regional Director, Registrar and / or such authorities prescribed under the various provisions of the Act during the financial year.

18.           The directors have disclosed their interest in other firms / companies to the Board of Directors pursuant to the provisions of the Act and the rules made there under.

19.          The Company has not issued any shares, debentures or any other securities during the financial year under review.

20.              The Company has not bought back any shares during the financial year.

21.              The Company has not issued any preference shares / debentures and hence the question of redemption of preference shares / debentures does not arise during the financial year under review.

22.              There were no transactions necessitating the Company to keep in abeyance the rights to dividend, rights shares and bonus shares pending registration of transfer of shares.

23.              The Company being a private Company has not invited/accepted any deposits from public within the meaning of Section 58A and the Rules framed there under except from its members, Directors or their relatives and the requisite declaration has been obtained from them.

24.              The company, being a private limited company, the borrowings made during the financial year does not attract the provisions of section 293(1) (d) of the Act. Further the complied with the provisions of Section 180 (1) (c) of Companies Act 2013.

25.              The Company being a Private Limited Company, the provisions of Section 372A of the Act is not applicable.

26.              The Company has not altered the provisions of the Memorandum with respect to situation of the Company’s registered office from one state to another during the year under scrutiny.

27.              The Company has not altered the provisions of the Memorandum with respect to the objects of the Company during the year under scrutiny.

28.              The Company has not altered the provisions of the Memorandum with respect to the name of the Company during the year under scrutiny.

29.              The Company has not altered the provisions of the Memorandum with respect to Share Capital of the Company during the year under scrutiny.

30.              The Company has not altered the provisions of Articles of Association during the year under scrutiny.

31.              There was/were no prosecution initiated against or show cause notices received by the company and no fines or penalties or any other punishment was imposed on the company during the financial year, for offences under the Act.

32.              The Company has not received any money as security from its employees during the financial year.

33.              The Company has deposited both employee’s and employer’s contribution to Provident fund with the concerned authorities in compliance with the provisions of Section 418 of the Act.

Place: Hyderabad                                                                             V. XXXXXXXXXXX
Date:                                                                                           Company Secretary in Practice

XBRL is a standardized communication language in electronic form to express, report or file a financial statements by a Companies. XBRL is only a method of presentation or reporting. It does not attempt to make any changes in the content to be reported. The idea behind XBRL is simple. Instead of treating financial information as a block of text – as in a standard internet page or a printed document – it provides an identifying label (tag) for each individual line item of data. This data then becomes computer readable.
XBRL offers major benefits at all stages of business reporting and analysis such as: cost savings, greater efficiency, improved accuracy, reliability to all those involved in supplying or using financial data.
So If you wonna measure your company’s business process and achievement effectively. Voluntarily Codify it and get measure it with your or our company’s expert team and Measure it. Always remember – IF YOU CAN’T MEASURE ; YOU CAN’T ACHIEVE AND REACH YOUR DESTINATION.
Statutory Requirement – Applicability of XBRL Filing with Registrars:
Below mentioned class of companies shall file their financial statements and other documents under section 137 of the Companies Act, 2013 with the Registrar in e-form AOC-4 XBRL:
  • All public companies listed in a stock exchange in India and their Indian subsidiaries.
  • All companies with a turnover of Rs 100 crores or more
  • All companies with a paid up capital of Rs 5 crores or more
(other than banking companies, insurance companies, power companies and NBFCs), Graphical Representation as mentioned below for better understanding.
Major Change:
In XBRL Rules 2015 first three categories of applicability of XBRL was same. However, there was one more category i.e. “all companies which were hitherto covered under the Companies (Filing of Documents and Forms in Extensible Business Reporting Language) Rules, 2011”.
Therefore a Company which was required to file financial statement in XBRL under previous rules but not falling under applicability limit as of now. Such Companies are exempted for filing of financial statement in XBRL under Amendment Rules, 2017.
Query : A Company voluntary prepared financial statement into XBRL for some financial year. Whether such Company required preparing the financial statement into XBRL in future also?
 Opinion – As Per the applicability of filing of financial statement into XBRL Rules, 2017, it is not mandatory for such companies to file financial statement into XBRL in future. It can file the normal AOC-4 form. Only Companies falling under XBRL Amendment Rules, 2017 required to file financial statement into XBRL.
List of required documents need to be process XBRL for MCA : The following components of Annual reports need to be filed in XBRL Format:
  • Balance Sheet
  • Profit and Loss Statement
  • Cash Flow Statement
  • Schedules related to Balance Sheet and Profit and Loss Statement
  • Notes to Accounts
  • Statement pursuant to Section 212 of the Companies Act, 1956 relating to subsidiaries
  • Audit and Annual Report
What if – If you fails to file the copy of the Financial Statements to ROC within prescribed time limit
: Penalty Provisions :
Company: Fine 1,000.00 for everyday till default continue but max. 10,00,000.00
Directors: Fine Min. 1 Lakhs to Max. 5 Lakhs  –  OR – Imprisonment – Max. 6 months
CFO : Same as in the case of Directors
Authorised Director : Same as in the case of Directors
How does XBRL work ?
XBRL makes the data readable, with the help of two documents:
  • Taxonomy
  • Instance Document.
Taxonomy contains description and classification of business & financial terms, while the instance document is made up of the actual facts and figures. Taxonomy and Instance document together make up the XBRL documents.
Steps involved in XBRL to file statements with MCA:

  • Mapping
  • Tagging
  • Review, verify and validate the XBRL instance document
  • Scrutiny through tool
  • Creating a XBRL docs and filling as an attachment in ROC Form.

What  is the Role of the Company Secretary in Board Meeting
The role of the company secretary is to act as the chief advisor on corporate governance to the board, so the role of the company secretary at board meetings goes well beyond administrative operations and taking the board minutes.
Duties of the Company Secretary and Preparing the Meeting
Tact and sensitivity are key to a company secretary's success in this aspect of the job. That's because it involves dealing with directors, the chair and top management – all of these must be brought together in a civil discussion so that decisions can be made.
Preparing the focus of the board meeting is a collaboration between the company secretary and the chair. While the chair will run the board meeting, the company secretary may advise the board on governance issues that derive from the meeting focus, or enter into debates with a corporate governance perspective.
It is the company secretaries duty to oversees the process of structuring board meetings, helping to determine the focus and purpose of those meetings. In this, the company secretary works closely with the chair to ensure that the most critical and timely issues are under discussion at the meeting. A board meeting has to cover a lot of ground; it would be difficult to achieve all that is necessary in an unstructured, informal chat.
Any compliance requirements that must be addressed at the time of the meeting will be added to the agenda by the company secretary, who will also include any new legal or regulatory changes of which the board should be made aware.
It then falls to the company secretary to discuss the meeting focus with all the other board members, and to take into consideration their ideas while preparing the final agenda. This document will then be shared among all the board members for any further updates or issues, as well as with the administrator, who will manage the practical details, see that the necessary equipment is made available, etc.
The company secretary should also ensure that board members have all the materials they need for preparation for this specific meeting, including, of course, board papers, but also other types of background.
Helps Manage the Board Meeting
The chair conducts the meeting, and the company secretary helps in various ways to manage it.
"As a company secretary, I represent the interests of the company, its management and its investors," as the former company secretary cited above explains. This means that the company secretary must be prepared to intervene in board discussions when some aspect of these interests seems to be neglected or ignored.
To do this requires emotional intelligence and attention to detail — a company secretary who is too intrusive or who hasn't made the necessary preparation will soon find that directors have little patience for his/her interventions.
The company secretary must see that all matters needing to be discussed are discussed, and that enough time is allowed to reach each decision with the appropriate level of concentration. The company secretary should also intervene with background points should they be ignored or neglected.
With all this, the company secretary must take notes to prepare the board meeting minutes expertly. Minutes that carefully reflect board meetings are a legal obligation. The company secretary should take care to include all relevant material, and especially all decisions, as well as a clear list of votes in each case. An electronic board portal makes taking the minutes easy and secure.

Must Finalise the Board Meeting
When the meeting is over, the company secretary should discuss with individual board members any issues that still need to be resolved, and possibly consider them for the agenda of the next meeting. If necessary or desirable, it is useful to arrange informal discussion in between board meetings so that ongoing issues can be moved forward. It may also be necessary to arrange discussions between board members and management, or board members and external advisors.
Then it will be time to write up the board minutes – it's best to do this as soon as possible after the meetings so that all the details are fresh in mind. Then the draft minutes should be shared with the chair for approval, and the chair's signature should be obtained for the approved board minutes from the previous meeting.
Often, at board meetings, there are action points decided which are the responsibility of a specific board member, a committee chair or management. The company secretary is responsible for following up on these, sending reminders when necessary and putting the outcomes up for discussion at the next meeting.
All of the company secretary's tasks can be facilitated by with Modern Governance tools included in high-quality company secretarial software: from taking the minutes to arranging meetings with board members, to storing relevant documents and data.