Companies Fresh Start Scheme, 2020

Companies Fresh Start Scheme, 2020
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Companies Fresh Start Scheme, 2020

The government has issued a General Circular No. 12/2020 dated 30th March 2020 in order to revive the non-compliant companies. As per part of the government initiative of ‘Ease of Doing Business’ and helping the revival of non – compliant companies to make compliances easier and at a low cost, the Finance Ministry has come up to give a one time opportunity to the non- compliant companies to file all the belated fillings on MCA 21 without paying any additional fees and granting of immunity from any penalty and prosecution on account of delay in certain filings.

 

Let’s understand in detail about the CFSS, 2020
Ques 1. Period for which the scheme is applicable?

Ans. The scheme shall come to force on 1st April 2020 and will be valid up to 30th September 2020.

Ques 2. To whom this scheme shall be applicable?

Ans. This scheme shall be applicable to all the companies which have defaulted in filing any documents, annual returns, or any other statement on the MCA 21 portal except for specific exclusions as mentioned in Ques 4.

Ques 3. What are the benefits of this scheme – CFSS, 2020?

Ans. This scheme shall have the following benefits: –

  1. The additional fees required to be paid at the time of filing of belated filings shall be waived.
  2. Immunity shall be granted from the launch of prosecution.
  3. Immunity shall be granted against proceedings for imposing of penalty.
Ques 4. What are the areas where the scheme is not applicable?

Ans. The following items are not covered under the scheme: –

  1. No immunity shall be granted against any consequential proceedings arising from the filing of the belated document.
    • For example – As per proviso to Section 42(4), the utilization of money raised through private placement shall be made only after filing of return of allotment u/s 42(8). Here, if the return of allotment is not filed then it can be filed without payment of additional fees but proceedings for utilization of money shall not be covered by this scheme.
  2. No immunity from any proceedings involving the interest of any shareholder/ director/ KMPs.
  3. No immunity where the court has ordered conviction in any matter.
  4. No immunity shall be granted where order imposing penalty has been made, and no appeal has been filed against such order before 1st April 2020.
  5. The scheme is not applicable to a dormant company or where the application has been made for obtaining dormant status.
  6. The scheme is not applicable to companies against which action for striking off name has been initiated or where the application for striking off name has been filed by the company.
  7. The scheme is not applicable to amalgamated companies.
  8. The scheme is not applicable to form for any increase in authorized capital and charge related documents.
Ques 5. What will happen in the case, where an appeal has been filed against prosecution or penalty proceedings for which the company wants to avail this scheme?

Ans. The company shall at first withdraw the appeal filed against the notice. Thereafter, the company shall file the application under this scheme along with the proof of withdrawal of the appeal.

Ques 6. What will happen in the case, where the penalty proceedings have been initiated but an appeal could not be filed?

Ans. If the last date of filing appeal falls between 1st March 2020 to 31st May 2020, then an additional 120 days shall be given from the last date of the appeal to file the appeal. Also, prosecution for the additional period allowed shall not be initiated.

Ques 7. What is the procedure of availing the scheme?

Ans. For availing the benefit of the scheme the following steps shall be followed: –

  1.  File the belated returns/ documents after paying the normal fees before 30th September 2020.
  2. File Form CFSS-2020 within 6 months from the closure of the scheme.
  3. Based on Form CFSS-2020, the designated authority shall issue an immunity certificate.
Ques 8. Whether the scheme is applicable to Inactive Companies?

Ans. The inactive companies while filing of belated documents can apply for dormant status or striking off the name of the company.



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About CA Mehul Gupta 30 Articles
Chartered Accountant in practice, Certified GST Practitioner & Commerce Graduate. He is mainly engaged in the practice of Direct taxes, GST, International taxation, & assurance services. A visiting faculty in the Faridabad Branch of ICAI.

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