In a bid to use the technology to improve supervision and compliance, the Ministry of Corporate Affairs MCA is set to launch random electronic scrutiny of corporate filings in the later part of the year.
Talking about the development, MCA secretary Rajesh Verma said, “There will be stratified random sampling of the returns. We are deciding the percentage of returns that will be taken up for the scrutiny.”
The scrutiny driven by the computer will be akin to the one undertaken by income tax authorities that take up some returns. The work on the same will begin earlier, while the version 3 of MCA-21 will have a system of red flags that will include frequent resignation by auditors or directors, companies with low paid up capital but high turnover or high level of related-party transactions.
The MCA field officers, comprising of regional directors and registrars of companies open the books during an investigation or a compliant with the database moving to an electronic platform. However, the authorities are aiming to improve the oversight and compliance.
The new electronic module will send out an alert if the companies fail to file returns on the due time. On the other hand, non-filers will be tracked and prodded to file, using electronic means. MCA will be moving to a pre-field and auto filing regime for returns, helping the companies comply easily.
In order to replace the current system, a web-based form is being implemented as a part of the exercise. The focus is primarily on the improvement of compliance, while undertaking a series of steps to make life easier for businesses, said Verma.
A few years back, only 50 per cent of the companies filed their returns by the prescribed deadline, but the level had gone up to 75 per cent for the financial year 2018-19.
