The Ministry of Corporate Affairs (MCA) had issued a notification on 24.03.2021 amending the Schedule III of the Companies Act, 2013. This notification mandated various disclosures that the companies should make in their financial statements to bring transparency in the financial statement reporting, effective from 01.04.2021.
The Union Minister of State for Corporate Affairs, Shri. Rao Inderjit Singh reiterated on Tuesday in his written reply to a question in Rajya Sabha about the companies’ new disclosures relating to the details of cryptocurrency and Corporate Social Responsibility (CSR) transactions by them during the financial year.
Details of Cryptocurrency or Virtual Currency
Where the company has invested or traded in crypto-currency or virtual currency during the financial year, the company must make the following disclosures:
- Profit or loss on transactions involving cryptocurrency or virtual currency.
- Amount of cryptocurrency or virtual currency held as of the date of reporting.
- Receipt of advances or deposits from any person for investing or trading in cryptocurrency or virtual currency.
Details of Corporate Social Responsibility
Where the company has to abide by the CSR provisions provided under Section 135 of the Companies Act, they must make the following disclosures:
- The amount that the company requires to spend during the financial year for CSR activities.
- The amount of the expenditure incurred.
- The shortfall at the end of the year.
- The total amount of the previous years’ shortfall.
- The reason for the shortfall.
- The nature of the CSR activities.
- The details of related party transactions, i.e., contributions made to a trust controlled by the company relating to CSR expenditure under the relevant accounting standard.
- When the company makes a provision relating to a liability incurred by entering into a contractual obligation, the company should show the movement in that provision during the financial year separately.
The companies must mandatorily disclose the transactions mentioned above while preparing their financial statements for FY 2021-22. They must report their dealings in cryptocurrency or virtual currency, which will help the public to know about their crypto transactions.
The company disclosure of the details of the CSR activities helps identify when the company makes any errors in their CSR activities. Reporting the previous years’ shortfall and the reason for such shortfall will ensure transparency in the company transactions.
For any clarifications/feedback on the topic, please contact the writer at mayashree.acharya@cleartax.in
I am an Advocate by profession. I interpret laws and put them in simple words. I love to explore and try new things in life.
