How to Revise Financial Statement under Companies Act 2013

There will be times when directors of the company will be of the opinion that financial statement or report given by the board do not reflect true and fair view of state of affairs of the company  or the report of the board do not comply with requirements laid out in Companies Act 2013

So the big question is How to Revise Financial Statement Under Companies Act 2013?

In this context we will also look at other frequently asked questions (FAQ) such as

• What is the procedure to revise financial statement
• What is the time-limit to revise financial statement
• Whether Revising Financial Statements will amount to revising Income Tax Return
• Whether Revising Financial Statements will also amount to revising VAT Return
• Whether Revising Financial Statements will also amount to revising Service Tax Return

What is the procedure to revise financial statement

Financial Statements can be voluntarily revised by the company if the directors are of the view that financial statements do not reflect true and fair view or and also do not comply with the provisions of the Companies act 2013. Below is the procedure:

• Hold the board meeting and pass the resolution for change of financial statement and appointment of authorised representative to represent the company in front of the NCLT (National Company Law Appellate Tribunal)
• File Form NCLT-1 within fourteen days of passing the resolution. The application shall, inter alia, set forth the following particulars, namely’

 (1)financial year or period to which such accounts relates

 (2)  Name and contact details of the Managing Director, Chief Financial Officer, directors, Company Secretary and officer of the company responsible for making and maintaining such books of accounts and financial statement

 (3) Where such accounts are audited, the name and contact details of the auditor or any former auditor who audited such accounts

 (4) Copy of the Board resolution passed by the Board of Directors

 (5) Grounds for seeking revision of financial statement or Board’s Report.

• The company shall at least fourteen days before the date of hearing advertise the application.
• The Tribunal shall issue notice and hear the auditor of the original financial statement, if present auditor is different and after considering the application and hearing the auditor and any other person as the Tribunal may deem fit, may pass appropriate order in the matter
• A certified copy of the order of the Tribunal shall be filed with the Registrar of Companies within thirty days of the date of receipt of the certified copy..
• On receipt of approval from Tribunal a general meeting may be called and notice of such general meeting along with reasons for change in financial statements may be published in newspaper in English and in vernacular language.
• In the general meeting, the revised financial statements, statement of directors and the statement of auditors may be put up for consideration before a decision is taken on adoption of the revised financial statements.
• On approval of the general meeting, the revised financial statements along with the statement of auditors or revised report of the Board, as the case may be, shall be filed with the Registrar of Companies within thirty days of the date of approval by the general meeting.

What is the time-limit

A  Company can revise financials for any three preceding financial years.

Whether Revising Financial Statements will also Impact Income Tax Return

Under Income Tax Act, income tax return can be revised within one year from the end of relevant assessment year or the completion of assessment whichever is earlier. Therefore, if change in financial statements amount change in tax computation, then company need to file the revised return.  For example, for financial year 2015-2016, income tax can be revised upto 31.03.2018

Whether Revising Financial Statements will also Impact VAT Return

If revising financial statements amounts to change in sales number, then accordingly VAT returns should also be revised.

Please do note VAT is a state subject, therefore time-limit to revise returns changes from state to state. In some of the states, VAT return can be revised within six months. Therefore in such scenario, if revision of financial statement is for more than one year period. Then revision of VAT return becomes difficult.

Also do note that this can also entail additional interest and penalty if there is more tax payable.

Whether Revising Financial Statements will also Impact Service Tax Return

If revising financial statements amounts to change in services number, then accordingly service tax returns should also be revised.

Time limit to revise  service tax return is three months,  Therefore in such case revising return can be little difficult.

Also do note that this can also entail additional interest and penalty if there is more tax payable.