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NEWSLETTER OF NORTHERN INDIA REGIONAL COUNCIL OF THE ICAI

VOL. XL VI, NO. 6September, 2016

EDITORIAL BOARD

Chairman CA. Deepak Garg

Vice-Chairperson CA. Pooja Bansal (Mrs.)

Members CA. Sumit Garg

CA. Nitin Kanwar

CA. Rajender Arora

CA. Rakesh Makkar

CA. Vivek Khurana

CA. Pankaj Periwal

CA. Rajesh Kumar Agrawal

Editor CA. Deepak GargNORTHERN INDIA REGIONAL COUNCIL OF

The Institute of Chartered Accountants of India

"ICAI Bhawan", 5th Floor, Annexe Building, Indraprastha Marg, New Delhi-110002

Printed and Published by Shri. Ajay Jain Sr. Assistant Secretary, on behalf of the Northern India Regional Council of The Institute of Chartered Accountants of India "ICAI Bhawan", Indraprastha Marg, New Delhi-110 002

Phones:+ 9111-30100500

[email protected] ; [email protected]

DISCLAIMER: The NIRC is not in any way responsible for the result of any action taken on the basis of the advertisement published in the Newsletter. The Members, however, may bear in mind the provision of the Code of Ethics while responding to the advertisements.

Central Council Members-ICAl (Northern Region)

CA. Sanjay Agarwal CA. Naveen N. D. GuptaCA. Vijay Kumar Gupta CA. Sanjiv Kumar Chaudhary CA. Atul Kumar Gupta CA. Sanjay Vasudeva CA. Rajesh Sharma

981108034298106899989810050029 9810127362 9810103611 9811153837 9810277394

Regional Council Members (NIRC of ICAI)

CA. Deepak Garg CA. Pooja Bansal (Mrs.) CA. Sumit Garg CA. Nitin Kanwar CA. Rajender Arora CA. Rakesh Makkar CA. Vivek Khurana CA. Alok Jain CA. Rajinder Narang CA. Swadesh Gupta CA. Yogita Anand (Ms.) CA. Pankaj Periwal CA. Rajesh Kumar Agrawal

Chairman Vice-ChairpersonSecretaryTreasurerNICASA-Chairman NICASA-Member NICASA-Member Executive Member Executive Member Executive Member Executive Member Member Member

9811064105 9810550051 9560064645 9810387163 9891112120981110438498685207869899259011 9416045023 9312580854 9582447118 9417240316 9868156062

From the Desk of the Chairman.....

Dear Professional Colleagues,

A change always opens the way of establishment for others.

We welcome the Constitutional Amendment (GST) Bill passed by the Parliament. This is one of the biggest Tax reforms since Independence and now it will be One Nation One Tax. This will bring new opportunities for the Chartered Accountants in all field and there is provision for Audit under section 42(4) of the said Model GST Law Bill so it will provide lot of opportunities to professionals in the region.

We all the members of ICAI will be busy during this Month. In this month Tax Audit and Income tax returns of Corporate and Non Corporate assessee whose accounts are required to be audited under Income Tax Act, and other law will be filled.

Secondly The Income tax Disclosure Scheme 2016 will be closed on 30th Sept,

2016. We as a professional are aware that taxes are what we pay for civilized society and which is one of the biggest tool for the growth and progress of the country.

In order to apprise with the fast changing developments Your NIRC has organized various programs for members and Students during last month. Seminar on GST, Income Disclosure Scheme - 16 and other relevant programs were organized for the Members. Seminar on various topics were also organized for the Students.

In the days to come your NIRC is planning to organize number of programs for the members which are circulated in this newsletter. All of you are requested to please block your diaries and attend all the CPE programs.

The Institute of Chartered Accountant of India is also organizing two days International Conference Jnana Yajna – The quest for excellence on 22nd and 23rd October, 2016 in Hyderabad. You are requested to block your diary to exchange the ideas between local and global accountancy fraternities.

On behalf of TEAM NIRC, I once again request you to become Member of the CABF and contribute voluntarily for the noble and pious cause. If you have already registered for the same, I again request you to come forward and make

more and more contribution for this noble cause.

I request to all the members for their valuable suggestions, feedback and observations for the improvement of the working of NIRC. Please send your articles and experience for publishing in NIRC Newsletter.

From the core of My Heart I would like to congratulate all the students who passed the IPC (Intermediate) Examination. I would like to apprise all of you 4.78 percent candidates passed both the groups and if we look at the individual group wise result 9.18 candidates cleared group-I and 7.06 percent candidates cleared group-II Final Examinations. On behalf of Team NIRC, I would recommend more efforts and preparation with dedication.

In the last: Focus on your potential instead of your limitations.

Best Wishes,

CA. Deepak Garg

Date: 20th September, 2016 Chairman, NIRC of ICAI

Place: New Delhi M : 9811064105

September, 2016 NIRC NEWSLETTER

From the Desk of the Secretary.....

DEAR PRofEssIoNAl CollEAGuEs,

On the path of spirituality, Convinced fully that real happiness comes only through spiritual wisdom. Happiness is Life

Wish you all a very happy good day and healthy life ahead. Also wishing you and your family very happy Navratri and festive season.

As per Bhagavad Gita “No one who does good work will ever come to a bad end, either here or in the world to come”

Tax Audit

CBDT issued order for Due date of filing Income Tax return for assesses covered by Tax Audit extended to 17th October 2016 in view of IDS. Further Income Tax Clarification has been issued req. u/s 119 of the Income-tax Act, 1961 dated 9th Sept 2016. The extended ‘due date’ as per CBDT order dated 9th Sept, 2016 would also apply for the purpose of section 44AB of the Act.

Income Declaration scheme

The Income Declaration Scheme, 2016 (the Scheme) has come into effect from 1st June, 2016 and is open for declarations up to 30.09.2016. Vide Circular No.16 of 2016 dated 20.05.2016; it was clarified that a person will not be eligible to file declaration under the Scheme for the assessment year(s) in respect of which a notice under section 142(1)/143(2)/148/153A/153C has been served upon him on or before 31.05.2016. It was also clarified that where a search has been conducted under section 132 or requisition has been made under section 132A or a survey has been carried out under section 133A of the Income-tax Act, in a previous year then the person shall not be eligible under the Scheme if the time for issuance of a notice under section 143(2)/153A/153C for the relevant assessment year has not expired.

Members Grievance Cell

Grievances are part and parcel of any system but giving solutions is a very important. We at NIRC have been working in the direction of having minimum grievance of members as well as students and try our best efforts to resolve the problems as and when arise. Further you may mail us at [email protected] with an assurance to get back with proper resolution.

our future our students

We are regularly organizing the classes for CA Students with a very nominal fee so that every student can afford the same. Student’s knowledge plays a greater role in effective functioning and discharge the duties in CAs offices so we always organize free workshop for CA students for practical knowledge updates. We have also tip-up with Vedanta Foundation who offers full scholarship / free financial assistance to the deserving underprivileged students willing to make a career in CA.

NIRC future events

NIRC has conducted multiple numbers of programs for CAs in August 2016 and also successfully organized many workshops on GST and IDS which is very hot topics now a day. We are also planning to conduct many programs in near days to come.

Concluding remark

In the last of my message, I would like to say that your words of wisdom, suggestions are our basic essentials which provides us the basis to act in a proactive and effective manner, and I wish that you will always make an active participation by sharing your views, contributing articles to e-Newsletter, as your active participation will take all of us to new heights. I sincerely thanks to each one of you.

Jai Hind Jai ICAIWith Warm Regards

CA. sumit GargDate: 20th September, 2016 Secretary, NIRC of ICAI

Place: New Delhi M : 9560064645


CA. Vivek Khurana

IMPoRTANT uPDATEs

REsPECTED PRofEssIoNAl CollEAGuEs,

Greetings of the Day!!!

Its my pleasure to present some important updates for the month of August - September 2016, which was brought into various changes and amendments of Acts, Notifications and Circulars.

Direct Tax updates

Tax Audit /ITR Due date for AY 2016-17 extended to 17.10.2016.

(Government extends due date for filing of Income Tax Returns from 30th September, 2016 to 17th October, 2016. Due date for filing return & TAR for assessee whose due date for filing income tax return is 30th Sept (being Company,firms,and other required to get accounts audited under income tax act or other law and working partners of such firm) is extended to 17th October 2016)

CBDT issues clarifications on Direct Tax Dispute Resolution scheme 2016.

(Litigation is a scourge for a tax friendly regime. In order to reduce the pending litigation, the Direct Tax Dispute Resolution Scheme, 2016 (the Scheme) has come into force from June 1, 2016 and can be availed upto 31st December, 2016. The scheme is available to the cases pending with the first appellate authority [i.e. CIT(A)] as on 29th February, 2016, subject to certain conditions. It also extends to the cases pending litigation owing to retrospective amendment at different levels. Under the Scheme, if the amount of disputed tax is

■ Up to `10 lakh, complete waiver from levy of penalty and from initiation of prosecution is provided on payment of assessed tax along with the interest.

■ More than `10 lakh, the declarant is required to pay only 25% of the minimum penalty leviable along with the due tax and interest.)

Banks can accept tax dues in cash under IDs: RBI

(The Reserve bank of India (RBI) on Thursday directed banks to accept tax dues in cash under the domestic black money declaration scheme which closes on September 30. Under the Income Declaration Scheme, 2016, which came into effect on June 1, one can come clean by paying tax, penalty and cess totalling 45 per cent of the undisclosed income. It was brought to RBI’s notice by the government that “banks are hesitant” in allowing deposit of large amounts of cash by declarants under the scheme.)

Income Tax Assessing officers Asked To share Email ID, Phone Number.

(The Central Board of Direct Taxes (CBDT) has directed the income tax assessing officers (AO) to mention their email IDs and telephone numbers in all the notices issued by them to the taxpayers, after several assesses complained to it that they were unable to communicate with taxman over the internet in the absence of their contact details. The newly launched paperless system of e-assessment income tax cases, which is a “high priority” and flagship programme for the policy-making body of the tax department, does not want to leave any stone unturned in ensuring that the scheme remains a hit among taxpayers and its procedures easy to comply with.)

CBDT launches ‘e-nivaran’ facility to resolve income tax grievances.

(CBDT has launched the ambitious ‘e-nivaran’ facility for online redressal of taxpayers’ grievances related to refunds, ITRs and PAN among others as part of its initiative to reduce instances of harassment of the public when it comes to complaints related to the I-T Department. An exclusive ‘e-nivaran’ (electronic resolution) link has recently been activated on the e-filing portal of the department-- https://incometaxindiaefiling.gov.in --where taxpayers can register their complaints through their personal computer systems and receive a special PIN number on their registered mobile and email, as their unique number to keep track of the issue. )

CBDT issues closure of financial accounts of Income-tax rules.

(For providing immediate relief to the account holders and in wider public interest, it has been decided that, the financial institutions may not close the accounts by 31st August 2016 in respect of which self-certifications have not been obtained under the alternative procedure. The revised timelines for completing due diligence in respect of such accounts shall be notified in due course. In the interim, the financial institutions should continue to work on completing the required due diligence, including obtaining self-certifications.)

INDIRECT TAx uPDATEs

CBEC to be renamed as CBIT under GsT regime.(Apex indirect tax body CBEC will be renamed as the Central Board of Indirect Tax (CBIT) once the new national tax framework kicks in from April 1 next year, as per the draft dealing in GST organisational structure prepared by the Centre. Headed by a secretary-level officer, CBIT will implement the rules, including exemptions and threshold, to be set by the GST Council, which is chaired by Union Finance Minister and has state finance ministers as its members.)

5


President has signed the 122nd Constitutional Amendment Bill on GsT.(The much-awaited Goods and Services Tax now becomes a law with President Pranab Mukherjee signing the bill after 16 states ratified it. The government plans to roll out the new indirect tax regime from April 1, 2017. GST, the biggest tax reform since Independence, will create uniform market for seamless movement of goods and services with one tax rate. With the President giving his assent to the bill, the government will notify the GST Council. Union Finance Minister will head the Council, which will comprise state Finance Ministers. )

Cabinet approves process, formation and functioning of GsT council.(The Union Cabinet under the Chairmanship of Prime Minister Shri Narendra Modi has approved setting up of GST Council and setting up its Secretariat as per the following details: Creation of the GST Council as per Article 279A of the amended Constitution;Creation of the GST Council Secretariat, with its office at New Delhi;Appointment of the Secretary (Revenue) as the Ex-officio Secretary to the GST Council;Inclusion of the Chairperson, Central Board of Excise and Customs (CBEC), as a permanent invitee (non-voting) to all proceedings of the GST Council;Create one post of Additional Secretary to the GST Council in the GST Council Secretariat (at the level of Additional Secretary to the Government of India), and four posts of Commissioner in the GST Council Secretariat (at the level of Joint Secretary to the Government of India).

sEBI eases documentary requirement for transfer of securities.(Easing the process of converting physical securities into demat form, markets regulator Sebi has given more flexibility on documentary requirement for the securities held in single name without a nominee. The move is aimed at making transmission of securities more efficient and investor friendly. For securities held in single name without a nominee, an affidavit from all the legal heirs made on non-judicial stamp paper and claim of legal ownership to the securities might be sought, Sebi said in a circular.)

sEBI tightens norms for Promoters & Directors of delisting firms(In a circular, Sebi said that in case of compulsory delisting, if the company’s fair value is positive, it cannot effect transfer of equity shares via sale, pledge, or in any manner till the promoters of such a company provide an exit option to public shareholders. Additionally, the promoters’ shares will be frozen and the company will be restrained from doling out benefits to promoters through dividends, rights, bonus shares, split, and so on till the promoters provide an exit to the public shareholders, Sebi said. According to the capital market regulator, this will ensure effective enforcement of exit option to the public shareholders in case of compulsory delisting. Sebi said the promoters and whole-time directors of the compulsorily delisted company will also not be eligible to become directors of any listed company till the exit option is provided to the public shareholders.)

oThER uPDATEs

urjit Patel assumes charge as new RBI Governor.(Urjit Patel who took over as the 24th Governor of Reserve Bank will have a tough task in maintaining the legacy of his predecessor, Raghuram Rajan, and balance the need to contain inflation without hurting growth. Patel assumed charge effective September 4, 2016,

after serving as deputy governor since January 2013, RBI said in a statement . He was reappointed as deputy governor on January 11, 2016, after the completion of his first three-year term in office. Ensuring undisruptive redemption totalling USD 20-25 billion, getting used to the idea of Monetary Policy Committee and bank cleanup are the main challenges before the new Governor.)

No need to carry physical copy of Dl / RC, Install Digilocker app.(The government on Wednesday launched a new service through which a user can access their driving licence and registration certificate digitally and need not carry a physical copy all the time. This will help in integration of mobile application DigiLocker with the driving licence and vehicle registration certificate. As per a press release issued by the government: “Driving Licenses and Vehicle Registration documents can now be issued directly to the DigiLockers of individuals in digital formats.”)

sC upholds hC Rule which mandates that a lawyer outside state cannot appear in Court without a local lawyer’s appointment.(The Supreme Court in JAMSHED ANSARI VS. HIGH COURT OF JUDICATURE AT ALLAHABAD & ORS has held that right of Advocates to appear and conduct cases in the court is a matter on which the court must and does have major supervisory and controlling power and it cannot be and are not divested of control or supervision of conduct in court merely because it may involve the right of an Advocate. Dismissing an appeal against Allahabad High Court Judgment preferred by a lawyer, Jamshed Ansari, the Apex Court Bench comprising of Justices AK Sikri and N V Ramana held that Rules 3 and 3A of the Allahabad High Court Rules, 1952 and perfectly valid, legal and do not violate the right of the appellant under Article 19(1) (g) of the Constitution of India.)

Customers will have zero liability in case of online fraud - RBI.(Amid rise in cases of unauthorised electronic banking transactions, RBI proposed that customers will have no or zero liability in case of fraud being committed because of bank’s negligence or third breach. However, “where customer’s own involvement is established, customer will be liable,” said the draft circular on ‘Customer Protection - Limiting Liability of Customers in Unauthorised Electronic Banking Transactions’. In cases where customer’s own involvement is not clearly established, customer liability will be limited to a maximum of ` 5,000 if he reports within 4 to 7 working days. )

Cabinet approves grant of Permanent Residency status for foreign Investors.(The Union Cabinet has approved the scheme for grant of Permanent Residency Status (PRS) to foreign investors subject to the relevant conditions in the FDI Policy notified by the Government from time to time. The scheme is expected to encourage foreign investment in India and facilitate Make in India Programme. Under the scheme, suitable provisions will be incorporated in the Visa Manual to provide for the grant of PRS to foreign investors.)

To conclude it, I just want to share a famous quoteThe woods are lovely, dark and deep,But We have promises to keep,And miles to go before We sleep,And miles to go before We sleep.

-Robert Frost’.

6


The views expressed herein are personal views of the author and do not necessarily represent the views of the NIRCs

The Goods and Services Tax, popularly spread as The Good & Simple Tax comes as the biggest tax reform in the country after its independence and would mark its presence in the country for another 50 years to come. The professionals at large thus should gear up towards this GIANT STEP TOWARDS TRANSFORMATION; Professionals with expertise into this new law have great opportunities to mint money like anything. In order to sharpen our axe and enhance the skill set every professional need to accept and further adapt the changed scenario.

One needs to UNLEARN-the old obsolete concepts, LEARN-the new changed provisions under the GST law and RELEARN-continuously update themselves with the latest in GST Act.

I. RolE & oPPoRTuNITIEs foR PRofEssIoNAls

“PRE” GsT IMPlEMENTATIoN:

1. Impact & Restructuring Analysis: As they say that GST is not just a Tax Reform but an overall Business reform impacting each and every aspect of the Business chain and procedures, Professional thus can play a very important role in the study of the Impact of the provisions of the GST law on the various business verticals separately and advise the business restructuring of each business line like-

Ø Changed Pricing of the Product/Service

Ø Business viability

Ø Profit Margin restructuring

Ø Supply chain & distribution restructuring

Ø Point of Taxation Analysis

Ø MIS Controls - change analysis impact

Educating Entrepreneurs and Restructuring their Business System To minimize tax and smooth implementation of GST, the business would require restructuring their system and Company Secretary can provide service to proper restructuring business while keeping in mind that present system of business will not be disturbed and at the same time get maximum benefits of Tax under GST.

2. Internal Trainings: GST being a new and a major indirect tax reform after the independence of the country, a paradigm shift of various concepts like origin based tax, Manufacture ,sale,C/H/F forms,CST,VAT,Excise,Service tax are concepts which need serious unlearning in order to understand and prepare ourselves for the learning and further relearning of the new GST law.

It is thus evident that professionals have enough space to embark trainings to the business houses on this new concept of taxation and running the business.

The trainings involve Ø Staff trainings

Ø IT Trainings on use of the GSTN Network

Ø Trainings, manuals and flow charts preparation for GST Compliances.

Ø Training to identify Vendor creditability.

Ø GST Vendor Training for all major suppliers.

3. Rigorous training to professional members and students of the ICAI, ICSI and CMA on GST needs to be provided so that they act as the pioneer to the implementation of GST in the country. Professionals have scope therein to organise such knowledge sharing platforms for the professional fraternity.Members should form forums and engage into discussions and brain storming sessions of the existing provisions to come out with a clearer and better analysis of the provisions, which can be further used to educate the clienst and industry at large. As we are aware that GST is new law and it requires a lot of efforts from Members and Students for proper delivery and justification of services to clients. The rigorous and regular workshops, seminars, webinars and text updates are the demand of the hour.

4. Interpretation/Advisory/Consulting services

To interpret laws, Professionals are having special skills and competency to decode the provisions of the laws. This is a lucrative area and requires independent expert knowledge. Being a Corporate laws advisor, Company Secretaries are having an edge in this service.

5. Government Representation

For the 1st time in the history of the Indian taxonomy reform, the government appears to be more prepared and focused for the implementation of the law than the industry. With the governing body of the GST laws the GST Council given statutory meaning on 12.09.2016, the government aims to come up with the prescribed rules and the final law by the winter session of the Parliament in November 2016. Till the time that happens we professionals have a amicable scope to decode the draft law and understand the loopholes, the practical difficulties, the hardships in general and specific to a particular sector or industry. Professionals

CA. M.K [email protected]

CA. Minal [email protected]

RolE AND oPPoRTuNITIEs foR

PRofEssIoNAls uNDER GsT

7


thus further have scope in providing Assistance in drafting Representation to the Government as a feedback via trade /industry unions for industry specific GST practical impact analysis.

II. RolE & oPPoRTuNITIEs foR PRofEssIoNAls DuRING ThE TRANsITIoNAl PhAsE of GsT IMPlEMENTATIoN

6. Advisory for Pre Cautions to be taken care of during the Transition phase

The draft GST law comes with some transition provisions applicable to transactions which will be carried forward to POST GST regime as well.

Professionals have a very important role to play in terms of Advisory on the following Transitional Transactions

Ø Treatment of transfer of unutilized ITC to GST.

Ø Treatment of Sales Return.

Ø Treatment of Goods returned sent for approval before GST.

Ø Treatment of goods sent for testing, Job work.

Ø Planning wrt the refunds in the PRE GST regime

Ø Planning wrt the quantity of stock to be held just before the implementation date.

III. RolE & oPPoRTuNITIEs of PRofEssIoNAls “PosT” GsT IMPlEMENTATIoN

7. Support To Government To Implement GST

Government has to interact with stakeholders and identify the requirements and expectations of the stakeholders. In this regard, Government may face various challenges to implement GST and professionals can play an important role in drafting of Law and various Rules, Schedules, Returns etc. under GST.

While designing the website for the GST, finance professionals can support IT professionals towards requirements of law, rules etc. Major hurdle to implement GST is knowledge of the Government staff and a professional can provide a better training and technical classes to the Government staff.

8. Opportunities under the Procedural Compliances of GST

The procedural compliances would include professional services wrt:

Ø Professional Opportunities under Registration

ǃ Registrations Under the GST framework.

ǃ Separate registration is required with each state through which supply is been made and a Business establishment is operated from.

ǃ Guidance and support for Online registration on GST Network

ǃ Registration as a casual dealer, Input service distributor, composition scheme..etc

ǃ Compulsory Registration without any threshold limit

Ø Computation and payment of taxes

Ø Filing of Returns

ǃ Returns and Accounting Compliances

ǃ Under the GST draft law there are minimum of 3 monthly and one yearly return per registration which every GST registered will have to file, besides the other set of returns which may be applicable according to the specific provisions.

ǃ Day to day real time updation of date would be required for the timely filing of the returns at the online portal

ǃ During the transitional phase dual compliances of the PRE & POST GST regime may be required to maintain

ǃ Accounting treatments of the transitional entries of the exisiting tax laws to be carried forward under the new law

ǃ Accounting treatment of existing input tax Credits (ITC) and refunds to be c/f under the POST GST scenario

ǃ Professionals thus have an obvious advantage to peep into the new set of compliance procedures for their clients.

Ø Tax Advisory Services

Ø Legal Due Diligence

Ø Assessment

Ø GST Record keeping manually and online.

9. Tax planning and Internal Audit

Tax Planning requires expert knowledge of GST and good interpretation skills of professionals. Under the tax planning, the focus is to minimize the tax impact on business based on the provisions of GST Law. Some of the clients are interested to do the Internal Audit of records and compliances of GST.

10. Representation before the GST Authorities for appeals and litigations

Model GST Law allowed Professionals to appear before the GST Authorities, and can justify these services based on their performance and practical approach because of their communication skills and interpretation and good knowledge of Laws.

11. GST “Governance” and Disclosure

Like we have the concept of CORPORATE Governance and set of compliance & disclosure requirements with it to ensure the compatibility with the said Company law and SEBI rules, the same concept can be introduced under the GST Law for promising new opportunities amongst the Professionals.

To curb the challenges in the existing tax system and to curb the black money and minimize its circulation, GST Governance is required to be followed and here professionals can advise Government about the GST Governance rules that can be applicable to industries/ dealers/ traders about how to fulfil the requirements of disclosure of GST Governance to industries/dealers/traders etc.

The views expressed herein are personal views of the author and do not necessarily represent the views of the NIRCs8


12. Contracts Redrafting :

Ø With GST and the paradigm changes that it comes with, the entire indirect tax structure of the Country would change, it will thus have its own simulated impact on all the written and legally entered contracts like Vendors Contracts, Employment Contracts, Distributors & Logistics Partners Contracts, Agreement with Branches/Franchisee, Agreements with the Job workers/Work Contractors..etc

Ø The scope of professionals in terms of impact on contracts can be analysed through the answers to the following questions:

ǃ Will your contract give rise to a GST liability?

ǃ What is the GST exposure of your contract?

ǃ Does your contract relate to services performed or goods delivered before GST?

ǃ Is your contract GST efficient?

ǃ Are you liable or is the counter-party liable for the GST?

ǃ Indemnity clauses with respect to the following should be taken care of :

■ Capturing specific indemnities and obligations apropos tax compliances to ensure that there is no leakage of tax credit/benefits

■ Indemnity clauses wrt the recourse action in case of “Black Listing” under the “Compliance Rating Score” mechanism

■ Where there is a risk involved that the legal requirements for treating a transaction as a GST-free(exempt) supply may not be fulfilled, it may be soon common for suppliers to ask for a “GST Guarantee”, namely, a guarantee or standby letter of credit from a bank and on terms acceptable to the supplier to cover the potential GST liability.

The Professionals thus have an implicit scope of impact analysis and advisory in terms of redrafting and contract planning to safeguard the interest of the clients and to avoid any undue mitigation.

13. Opportunities for professionals in Information Technology Migration

The digital connect of GST is through the interface named GST Network which is the online portal expected to manage all the GST compliances and regulations.

Professionals have in their scope to assist in the following IT migration related compliances

Ø The existing SAP/ERP/MIS software’s needs to be reframed

Ø Designing of the output reports for compliances Ø Integration of the output of the internal software’s with

the GSTN Ø Control checks and ERP Implementation, Report

analysis and verification on test check and real time basis.

14. GLOBAL OPPORTUNITIES FOR PROFESSIONALS

Ø Through Communication of Benefits of GST to International Clients and Communities to attract them to Invest in India

Ø Understanding and analysing the International models of GST complaint countries

Professionals can suggest and encourage foreign nationals to invest and expand in India leading to opportunities for professionals as GST experts amongst international clients.

IV. DIRECT PRofEssIoNAl oPPoRTuNITIEs uNDER ThE DRAfT GsT lAW

15. Under Section 42: Accounts and other records:

Every registered taxable person whose turnover during a financial year exceeds the prescribed limit shall get his accounts audited by a chartered accountant or a cost accountant and shall submit to the proper officer a copy of the audited statement of accounts, the reconciliation statement under sub-section (2) of section 30 and such other documents in the form and manner as may be prescribed in this behalf.

16. Under Section 50 : Special Audit:

If at any stage of scrutiny, enquiry, investigation or any other proceedings before him, any officer not below the rank of [Deputy/Assistant Commissioner] having regard to the nature and complexity of the case and the interest of revenue, is of the opinion that the value has not been correctly declared or the credit availed is not within the normal limits, he may, with the prior approval of the [Commissioner], direct such taxable person by notice in writing to get his records including books of account examined and audited Page 70 of 190 by a chartered accountant or a cost accountant as may be nominated by the [Commissioner] in this behalf.

17. Under Section 64: Access to business premises:

Every person in charge of premises referred to in subsection (1) shall, on demand, make available to the officer authorized under sub-section (1) or the audit party deputed by the Additional/Joint Commissioner of CGST or SGST or the Comptroller and Auditor General of India or a cost accountant or chartered accountant nominated under section 50, as the case may be,-

(i) the records as prepared or maintained by the registered taxable person and declared to the CGST/SGST officer as may be prescribed;

(ii) trial balance or its equivalent; (iii) Statements of annual financial accounts, duly

audited,wherever required; (iv) cost audit report, if any, under section 148 of the

Companies Act, 2013 (18 of 2013); (v) the income-tax audit report, if any, under section 44AB of

the Income-tax Act, 1961 (43 of 1961); and (vi) any other relevant record, for the scrutiny of the officer

or audit party or the cost accountant or chartered accountant, as the case may be, within a reasonable time, not exceeding fifteen working days from the day when such demand is made, or such further period as may be allowed by the said officer or the audit party or the cost accountant or chartered accountant, as the case may be.



The views expressed herein are personal views of the author and do not necessarily represent the views of the NIRCs

Today almost all the growing companies around the corner are working or planning to work on Enterprise Resource Planning software. Working on ERP gives them an additional advantage of integrated process, better internal controls, proper recording of financial & supporting data, soft month end & year end activities and quickly preparation of Financial Statements and other MIS in real time basis. All the business processes, accounting functions, communication etc. can be integrated within the ERP which allows user to work with co-ordination using single interface.

There are several ERP packages which are available in the market for which license has to be purchased and then to be configured based on the business requirement during the ERP implementation. Some of the major players in the market are SAP, Oracle, JD Edwards, BAAN etc. and some companies use to customized their own ERP Suite considering the special nature of process and transactions. SAP being the market leader owns more than 50% of the market share and provide solutions for almost all the business needs.

Using SAP helps finance people in proper recording of their finance transactions and performing the cost controlling using SAP FICO (Finance & Controlling) module. There are various sub modules in sap covering GL (General Ledger), AP (Accounts Payable), AR (Accounts Receivable), FA (Fixed Assets), AA (Asset Accounting), BA (Bank Accounting) and Taxation. Further to tackle the budget requirements of the companies, SAP provides FM (Fund Management) module which helps business in defining the finance budget at GL Code level and even perform the availability control functionality which controls booking of expenses within the budget umbrella only.

Requirement of AS21 for consolidation in case of holding & subsidiary relationship can be met using BPC module of SAP which identifies the intercompany transactions and

perform the consolidation at the Group Level. Further BPC also provides Excel Interface and various statutory reports as well as required MIS can be built on using the sap BW database on which BPC lay down. Financial statements with notes to accounts, Cash Flow, Funds Flow, Fixed Assets Schedule etc. can be extracting with the help of BPC module. SAP provides the functionality of parallel accounting (reporting under IGAAP as well as IFRS) by creation of multiple non-leading ledger. For real accounting & postings leading ledger is used and for other set of reporting non leading ledger can be used.

SAP new upgradation to S/4 Hana Finance (Simple Finance) with Hana database comes up with drill down reporting which will help top management in easy & quick decision making for many business decisions this in parallel also helps finance team by shifting their time utilization from doing reconciliations to performing other important tasks.

ERP implementation with basics modules took around 8 to 12 months on an average for prodcutionization. Although ERP implementation is governed by the IT departments but it is majorly driven by Finance People due to better understanding of SOP and audit requirement of the companies. Once implemented, ERP is a vital tool in the hands of a CA in performing financial resource planning to Business Advisory Services. The successful implementation of the ERP is possible only if the correct solution is presented. Hence it is essential for a CA to ensure that each and every function of the business of the enterprise is taken care of, all resources are effectively used and no deviations from regulations are to be ensured.

M. No: [email protected]

CA. Rohit Chopra

sAP – NoT JusT ERP

10


The bursting of the asset bubble, combined with the meltdown of the global economy has revealed blind spots resulting from a tunnel-vision approach to governance and risk management, which threatened not just growth, but also business survival. The resulting public outcry and regulatory response has led boards of directors and chief executive officers (CEOs) to search for ways to upgrade their risk and control mechanisms and governance practices. There is a growing clamour for a mandate for internal audit to raise its game and be an enabler for raising the effectiveness of Corporate Governance.As defined by the Institute of Internal Auditors “Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes”. This clearly indicates that the role of the internal audit function must be set and looked at positively rather than negatively. That positive role must go beyond the traditional concept of controlling and safeguarding corporate assets, regulatory compliance and enforcing corporate policies. The role of internal audit is rather to focus on value creation for an organization, and on evaluating and suggesting improvements to corporate governance systems of organizations.

Transformation over the yearsInternal audit once was perceived to be a department staffed with hardliners who should be able to find faults in everything within an organization. World, as far as financial transactions and operational processes are concerned, used to be very simple then. With dramatic changes in technology everything from the process of manufacturing, processing, providing of a services to accounting for all these processes has become more complex and dynamic. As a result the scrutiny of historical data has become less relevant as far as the role of internal audit is concerned.Over the period of years the expectation of those charged with governance and senior management from the internal auditors has changed and the scope of internal audit has widened.Following concepts, linked to Internal Audit, have changed drastically:

■ Finger pointing – Internal audit is no more about finger pointing to the management in order to create a sense of existence within the organization for the internal auditors. The difference of “you and me” has reduced to the extent that internal audit is considered as a coaching rather than fault finding department.

■ Reviewing the past – The requirement of going an extra mile from preserving value to creating value has created a need for Internal Audit to go beyond just reviewing past activities. Internal Audit is no more about sitting in a room and vouching through the transactions of past periods, it is much more participative in what is going on in an organization today and what is going to happen tomorrow.

■ Compliance and control validation–Though the compliance and evaluation of controls remains one of the functions where Internal Audit has a major role. However, with the evolution of separate compliance function within organizations the role of Internal Audit has shifted from compliance and routine validation of controls to creating business value.

Corporate governance broadly refers to the mechanisms, processes and relations by which corporations are controlled and directed[.Governance structures identify the distribution of rights and responsibilities among different participants in the corporation (such as the board of directors, managers, shareholders, creditors, auditors, regulators, and other stakeholders) and includes the rules and procedures for making decisions in corporate affairs. Corporate governance includes the processes through which corporations’ objectives are set and pursued in the context of the social, regulatory and market environment. Governance mechanisms include monitoring the actions, policies and decisions of corporations and their agents.

Principles of Corporate Governance ■ Rights and equitable treatment of shareholders

Organizations should respect the rights of shareholders and help shareholders to exercise those rights. They can help shareholders exercise their rights by openly and effectively communicating information and by encouraging shareholders to participate in general meetings.


CA. Amrit Agrawal Dr. s K Gupta

RolE of INTERNAl AuDIT IN GooD CoRPoRATE GoVERNANCE


■ Interests of other stakeholders: Organizations should recognize that they have legal, contractual, social, and market driven obligations to non-shareholder stakeholders, including employees, investors, creditors, suppliers, local communities, customers, and policy makers.

■ Role and responsibilities of the board: The board needs sufficient relevant skills and understanding to review and challenge management performance. It also needs adequate size and appropriate levels of independence and commitment.

■ Integrity and ethical behavior]Integrity should be a fundamental requirement in choosing corporate officers and board members. Organizations should develop a code of conduct for their directors and executives that promotes ethical and responsible decision making.

■ Disclosure and transparency Organizations should clarify and make publicly known the roles and responsibilities of board and management to provide stakeholders with a level of accountability. They should also implement procedures to independently verify and safeguard the integrity of the company’s financial reporting. Disclosure of material matters concerning the organization should be timely and balanced to ensure that all investors have access to clear, factual information.

INTERNAl AuDIT – MEChANIsM of GoVERNANCE sYsTEMRecognizing the important role that the internal audit function plays in a corporate governance system of an organization, the Institute of Internal Auditors has issued a standard no. 2110 on ‘Governance’ which states that “An effective internal audit function provides assurance that there are appropriate corporate governance processes and internal control procedures in place. The internal audit activity should assess and make appropriate recommendations for improving the governance process in its accomplishment of the following objectives:

■ Promoting appropriate ethics and values within the organization

■ Ensuring effective organizational performance management and accountability

■ Effectively communicating risk and control information to appropriate areas of the organization

■ Effectively coordinating the activities of and communicating information among the board, external and internal auditors and management.”

Effective internal audit functions help organizations accomplish their business objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of governance, risk management and control process.

The internal auditor should, at least annually, carry out an

assessment of the overall effectiveness of the governance, risk and control frameworks of the organization, together with an analysis of themes and trends emerging from internal audit work and their impact on the organization’s risk profile. A comprehensive report is then presented to the audit committee and the board with the results and recommendations as well as the challenges that may need board interventions to handle.

Over the past 10 years, there has been a loud call for “better” governance of organizations.This call began with a focus on major public companies and has expanded to cover a broad range of organizations.

Implications of Corporate Governance on the Audit Profession:Looking back at corporate governance as a whole, i.e. the demands, pressure and tasks of the audit committee, management and the board in general, the expectations of the different stakeholders, the position of the internal auditor within the organization, etc…, an impact on the workload and the responsibilities of internal audit appears unavoidable. the audit committee relies ‘heavily’ on the internal auditor for its review of the system of internal control as prescribed by corporate governance codes and recommendations.

Performance standard 2130 deals in particular with ‘Governance’: ‘The internal audit activity should assess and make appropriate recommendations for improving the governance process in its accomplishment of the following objectives:

■ promoting appropriate ethics and values within the organization

■ ensuring effective organizational performance management and accountability

■ effectively communicating risk and control information to appropriate areas of the

■ organization effectively coordinating the activities of and communicating information among the

■ board, external and internal auditors, and management.

Corporate governance is a compilation of numerous aspects all aiming at contributing to the realization of the attributes to which corporate governance aspires. The ultimate objective being: ‘to meet the expectations of all stakeholders’. The internal auditor therefore must not only be familiar with these attributes and these aspects, but he is also expected to evaluate the system which is meant to provide reasonable assurance concerning the achievement of that objective. The internal auditor can add value by helping to provide assurance to the stakeholders (via the audit committee) that the system which looks after their expectations and interests is efficient and effective. ‘Internal audit has become a participant of corporate governance as a key pillar in assuring that the board can fulfill its task as good as possible



Aspects of Corporate Governing deserving special Attention of Internal Auditor:While traditionally the role of the internal auditor was to help the organization to maintain the system of internal control of its financial statements, a whole range of new opportunities, possibilities and responsibilities present themselves in the wake of corporate governance such as :

■ Ethical values and integrity ■ Fraud ■ Corporate Social Responsibility ■ Risk assessment and risk management ■ corporate vision and responsibilities ■ code of conduct ■ policies on performance expectations ■ compliance with stakeholders expectations ■ risk management system

The Internal Auditor’s ToolsThe Key challenge for the Internal Auditor is how to measure, evaluate and monitor corporate governance performance. The fact that corporate governance encompasses so many different kinds of aspects, both ‘hard’ and ‘soft’, indicates that perhaps some of them can be measured more easily than others. Some of the following tools may be strategically used by the Internal Auditor.

■ COSO ‘Evaluation Tool -offers no less than 14 pages of possible considerations and ‘points of focus’ on the control environment factors which are the basis for a sound corporate governance process

■ Red Flags are warning indicators which may be helpful to the internal auditor in deciding which aspects of the organization or of a process or department need closer looking at. It includes red flags on accounting, behavioral matters, infrastructure complexity, limitations of responsibilities and authorities, communications, remunerations..

■ The checklist designed by the Institute of Internal auditors UK and Ireland is called ‘Good Corporate Governance – A Checklist: which comprises a total of 47 questions with regard to the following aspects of corporate governance:

Ø statutory accountability (1 question) Ø accountabilityfor funds (3 questions) Ø communication with stakeholders (5 questions) Ø roles and responsibilities (25 questions) Ø annual reporting (3 questions) Ø internal controls ( 5 questions) Ø audit committee ( 1 question) Ø external auditors ( 1 question) Ø leadership (1 question) Ø code of conduct ( 2 questions

■ The scorecard was designed by the DVFA (Deutsche Vereinigung für Finanzanalyse und Asset Management) and is called the ‘Scorecard for German Corporate Governance’ includes the evaluation of

seven criteria:

Ø corporate governance commitment (10%) Ø shareholders and the general meeting (12%) Ø cooperation between management board and

supervisory board (15%) Ø management board (10%) Ø supervisory board (15%) Ø transparency (20%) Ø reporting and audit of the annual financial

statements (18%) ■ The ‘Global Reporting Initiative Guidelines: The

‘guidelines’ provide useful information on a number of aspects which may interest the internal auditor such as the principles themselves, the performance indicators (which could be applied as a kind of checklist), or even its overall mission and vision along with comments on corporate governance trends

The emerging opportunity and challenge for the Internal AuditorsCompanies can play 100% by the rules and still ‘fool’ their shareholders and stakeholders. Furthermore, it has become clear from the paper that corporate governance is a lot more than rules and compliance and that a lot of it has to do with ‘attitudes’ and ‘decent behavior’ for which there are few rules.

it has become obvious that corporate governance is ‘on its way’ and that the opportunities for the internal auditor to put his ‘mark’ on the process are manifoldCorporate governance is often referred to as ‘doing the right things and doing things right’That is why business nowadays depends increasingly more on ‘ethics and values’, fair play, honesty, openness etc… because businesses just can no longer afford to ‘mess things up’: one error can be fatal! Moreover, the past ‘accidents’ have resulted in a ‘there is no more room for excuses’ mood. So the internal auditor must be ‘on top’ of things, exercising his risk assessment in all its aspects and giving timely signals to the board and management in order to ‘safeguard’ the organization in every possible way.

An effective Internal Audit function plays a fundamental role in assisting the Board to discharge its governance and control responsibilities. The Board must, however, set the right ‘tone at the top’ and to ensure desired support to be extended to the internal audit at all levels within the organization.And while the internal auditor up until a short while ago just might have been somewhat reluctant to ‘rock the boat’, it must be clear that he will go down with the boat if he does not rock it in time!Hopefully this paper can contribute to this awareness and help the internal auditor in his constant search for ways to add value to his organization, for then the paper will have achieved its objective.




CA. Kanika Gupta

GsT IMPACT oN PoWER sECToR

With the objective to reduce multiplicity of indirect taxes which is currently levied on transaction in India and in order to mitigate the cascading effect, double taxation issues that are plaguing the current Indirect tax regime, India is gearing up to introduce a comprehensive Indirect tax regime under GST. All existing Indirect taxes, barring a select few, would be subsumed into the new GST. But will that objective be really achieved, is a big question, especially for the sectors which are intended to be out of GST regime like power, petroleum, alcohol for human consumption, etc.Taxes on consumption or sale of electricity have been proposed to be kept outside GST. In such case, the electricity generated by renewable sources would continue to be outside the GST regime. Electricity is held to be a ‘good’, but it is presently exempt from Excise duty and VAT. Only electricity duty is levied on its consumption by the States. Looking to the present scenario, keeping electricity out of GST Law will increase the cost of generation & distribution of electricity as credit for taxes paid on inputs which are used in these processes will not be allowed. Thus, various taxes that are levied

on procurement of goods and services (on both capital procurements as well as Operation & Maintenance charges) get embedded in the cost of the end product. Moreover, the advantage which is presently available to the Power Companies i.e. purchase of goods for the generation and distribution of electricity from other States at a concessional rate of tax (CST) of 2% shall no longer be available under GST regime. Thus, the other sectors will also be majorly impacted. Hence, if electricity is taxable under GST, full credit would be available for the taxes paid on the inputs which will significantly reduce the cost of power projects and consequently the cost of generation and distribution of electricity. Thus, the lower costs will also benefit the downstream industries. Since, electricity is kept outside the GST regime, it will have an adverse impact due to various key factors viz. (i) increase in tax costs due to removal of

exemptions (ii) tax burden due to increase in tax rates

from the current applicable tax rates (iii) increase in cost as purchase at

concessional rates against statutory forms will be done away.


BEloW Is ThE ANAlYsIs of IMAPCT uNDER GsT (i) Increase in tax costs due to removal of exemptions : The Government has always

strived to promote the renewable energy sector and accordingly, various exemptions have been provided to the sector. A few of these include:

Renewable Energy

Customs duty exemptions/ concessions on import of goods

Excise duty exemptions/ concessional rates procurement of goods to be used

in production of renewable energy

Exemption/ concessional rate under various State VAT legislations on sale of goods to be used for generation of

renewable energy

Solar Exemption from BCD on solar panels, cells and modules.

ACD and SAD provided to all items of machinery, transmission equipment, etc. used for setting up of solar power plant.

Excise duty exemption provided to all items of machinery, transmission equipment, auxiliary equipment etc. used for setting up of solar power plant

Various states charge concessional rate of VAT @ 5% on renewable energy devices and spare parts/ components and parts like Tamil Nadu, Gujarat, etc.

Certain states like Rajasthan provides exemption to solar energy equipment and plant and Machinery including parts thereof, used in generation of Electricity from Solar Energy or Wind Power

Lower rate of VAT has been provided on inputs for bio-fuel sector in few States

Wind Concessional rate of BCD of 5% and exemption from ACD and SAD provided on import of various components used by a wind power plant like wind operated power plant

Excise duty exemption provided to specified goods/ parts used for manufacture on products which may be used in a wind operated power plant

Bio Mass Concessional rate of BCD of 5% and exemption from ACD provided to all items of machinery, etc. for setting up a project for generation of power or generation of compressed bio-gas

Exemption from excise duty provided to all items of machinery, auxiliary equipment etc. for setting up a project for generation of power or generation of compressed bio-gas using non-conventional materials.

The above tax exemptions/ concessions help in reducing the procurement cost incurred for setting up/ operating a renewable energy project which are pruned under the GST regime and hence substantial increase in the cost of procurements.

(ii) Increase in tax rates

Currently, different tax rates are applicable depending on the nature of procurement. For example, generic Excise duty rate is 12.5%, Service tax is 15% and VAT is 5%-14%. All such rates could be reduced/ exempted basis the actual nature of goods and purpose.

GST aims to provide a single rate for goods and services which is expected to vary between 18-22%. An increase in tax rate from the current applicable rates would have an adverse impact on the renewable energy sector.

(iii) Removal of statutory forms

Currently, inter-State procurements are liable to concessional rate of CST @ 2% against issuance of statutory form (Form C). Hence, the tax cost on account of CST is limited to 2% in case of inter-State procurements for renewable energy projects.

GST regime, it is expected that statutory forms would be done away. Hence, concessional rate of tax would not be available. In such case, IGST @ 20% (assumed) would be applicable on inter-State procurements. This will again increase the tax costs as compared with the current regime which would directly impact the cost of renewable energy.

The views expressed herein are personal views of the author and do not necessarily represent the views of the NIRCs 15


CA Pankaj Periwal

IND As 2: INVENToRIEs


AS-2 Ind AS – 2Considers only NRV Considers Fair Value alsoDoes not consider defer payment concept. Defer payment includes an element of financing.AS – 2 does not prescribe the recognition of expense. Recognition of expense covered.AS – 2 does not allow reversal of inventory loss. But in Interim financial statements it is allowed.

Reversal of inventory loss is allowed both in annual as well as interim financial statement, (which is restricted to the original cost).

Accounting treatment of inventories not covered. Inventories used to manufacture fixed asset is capitalized. Inventories produced for sale charged to income account.

Commodity-brokers are scoped out completely. Commodity-brokers are scoped out but the valuation of inventory is discussed in terms of guidance.

AS-2 removes WIP of Service Contracts from its scope. Ind AS-2 cover WIP of Service Contracts held by them.Disclosures restricted to valuation principles only. Disclosures are enlisted in detail other than valuation :

w Amount of inventory recognized as expense during the period

Amount of any write-down of inventories recognized as an

expense in the period

w Amount of any reversal of a write-down to net realizable value

and the circumstances that led to such reversal

w Circumstances requiring a reversal of the write-down

w Carrying amount of inventories pledged as security.

some important points on Ind As-2(1) Distinguish between NRV and Fair Value

Net Realisable Value Fair ValueNRV is the estimated selling price in the ordinary course of business less estimated cost to sell the asset less estimated cost to complete the asset.

Fair Value is the price that would be received to sell an asset or even to pay a liability

NRV is after deducting expenses FV is before deducting expenses

NRV is entity specific (differs from firm to firm) FV is in general (market oriented)NRV is used by producers for valuing stock FV is used by commodity brokers / tradersNRV is defined only by AS-2 FV is comprehensively defined and explained by Ind AS-113s.

(2) Recognition of Expense ■ When inventory is sold, the carrying amount of inventory should be recognized as an expense when the related revenue

is recognized. Here the inventory cost is charged to P/L as Cost of Production but in case of India we don’t have the P/L classification as per function (also refer format of schedule III)

■ Moreover, the amount of any inventory written down to net realizable value is recognized as an expense. ■ The amount of any reversal of write-down of inventory should be credited to profit / loss account.

Illustration : Suppose Nest (I) Ltd is in snacks business (2 mins ready snacks). In the year 2015-16 say March due to public agitation the goods were abandoned from the market. Out of the inventories worth ₹ 6 crores the company has to written off 80% of stock worth ₹ 5 crores. Inventory worth ₹ 1 crore was badly damaged due to some storage problems and was destroyed.

Subsequently the restrictions were withdrawn in May 2016. Nest (I) Ltd can now write back at least 60% of the loss out of the unsold goods. Explain the impact on the P/L as per Ind AS – 2.



Solution: Year 2015-16: Inventory written off = Written off + Inventory destroyed = 1+4 = ₹ 5 crores. Year 2016-17: Inventory written back (credited to P/L) = 4 x 0.6 = ₹ 2.4 crores. (3) Something on Scope This Standard applies to all inventories other than:

Ø Work in progress under construction contracts and directly related service contracts (Ind AS 11, Construction Contracts)

Ø Financial instruments (they are MTM as per Ind AS-109) Ø Producers of Agricultural inventories / Biological assets and agricultural produce at the point of harvest (covered

under Ind AS - 41, Agriculture produce valued at Fair Value).But some guidance is provided in the following cases:

Ø Producers of agriculture and forest products, agricultural produce after harvest, and minerals and minerals products, to the extent that they are measured at net realizable value in accordance with best practices within those industries. When such inventories are measured at net realizable value, changes in that value are recognized in the pro₹it orloss in the period of change.

Ø Commodity brokers-traders who measure their inventories at fair value less cost to sell. When such inventories are measured at fair value less cost to sell, the changes in fair valueless costs to sell are recognized

as proit or loss in the period of change. In the above cases Ind AS-2 is not applicable to these industries as they don’t adopt Cost or NRV whichever is less.

Explanation with illustration

Illustration: Agricultural produce sugarcane not yet harvested valued at ₹ 6,00,000. Cost incurred ₹ 4,00,000. Here we apply Ind AS-41 because the agri produce is not yet harvested.But when the goods are harvested (plucked or detached with the plant) the sugarcane is an inventory, but not valued in accordance with Ind AS-2 i.e. cost or NRV whichever is less is not adopted. It is valued at NRV (including profits). Such practice is allowed in such industry. Similarly Commodity brokers do not follow the principle of cost or NRV whichever is less. They value inventories at fair value less cost to sell. This is because goods unsold in such industries carry high degree of certainty of being sold at Fair Value (guaranteed sale). Sometimes they have government assurance under a forward contract. In short these industries don’t apply cost or NRV whichever is less.

understand the following and improve upon the knowledge

(4) Inventories of Service Providers Service providers also keep some inventories for their services to render. For ex: A Coaching classes keep stationery.

Saloon and Spa keep consumables (lotion, cosmetics, etc). If the inventories are held for consumption then they are valued at cost. If held for sale / resale then value at NRV or Cost whichever is less.

(5) Inventory Purchased on Deferred Settlement Terms When inventories are purchased on deferred settlement terms, such arrangements in reality contain a financing

element. That portion of the price that can be attributable to extended settlement terms, the difference between the purchase price for normal credit terms and the amount paid, is recognized as interest expense over the period of the financing arrangement.

Problem : Magogama Limited purchased inventory of ` 45,00,000 on 1/4/2016. The purchase cost includes implicit finance cost. The amount will be paid at the end of 2 years. The cost of financing is 8%. Pass Journals for 2 years as per Ind AS-2.

Solution: Journal entries: (3 years) ` 45,00,000 / (1+0.08)2 1/4/2016

Purchase A/C Dr. To Trade payables A/C31/3/2016

Finance costs A/C Dr. A/C (9% x 3858025) To Trade payables A/C

38,58,025 38,58,025

3,08,642 3,08,642

31/3/2017

Finance costs A/c Dr. To Trade payables A/C

3,08,642 3,08,642

31/3/2018

Finance costs A/C Dr To Trade payables A/C

Trade payables A/C Dr To Cash

3,33,333 3,33,333

45,00,000 45,00,000


Regional CounCil aCtivities

Date Name of Programme/Venue Chief Guest/SpeakersCPE

Hrs

Total

Partic-ipants

22nd August 2016

( Monday)

Workshop on GST

Venue : Tecnia Institute of Advanced Studies, Rohini, Delhi

3 104

Goods and Service Tax CA. Atul Kumar Gupta, Central Council Member, ICAI CA Gaurav Gupta

24th August 2016

( Wednesday)

Workshop on GST

Venue : ICAI Bhawan, Vishwas Nagar, Delhi

3 121

Goods and Service Tax CA. Bimal Jain26th& 27th

August 2016Two Days Seminar on Audit and Tax Audit

Venue : NDMC Convention Centre, CP, New Delhii

12 238

Audit Planning, Audit Working Papers, Pre Audit Study, Checklist for Audit & Audit Engineering

CA. Dinesh Bahl

(Day I) Statutory Auditors Concern Areas with Respect to Compliances under Companies Act & overview of Secretarial Standards I, II

CA. Hitender Mehta

Reporting Standards SA 700, 705 & 706

Audit Evidence and Audit Materiality

CA. DeepaAgarwal

Clause by Clause Discussion on Tax Audit CA. Sanjay Agarwal

Central Council Member, ICAI(Day II) Critical Tax Issues in Tax Audit CA. ( Dr.) Rakesh Gupta

A.I.R. & FAQs on E-Filing of Tax Audit Report CA. Deepak Bholusaria

3rd September

2016 ( Saturday)

Seminar on Labour Laws

Venue : India Habitat Centre, Lodhi Road, New Delhi

6 158

Overview on Labour Laws, E.S.I and E.P.F. – Basic Compliance and Con-tract Labour Issues

Sh. Ashok Kumar Verma

Retired Regional Director -ESICIndustrial Dispute & Resolution Mechanism Gratuity, Bonus & other Perquisites

Adv. RaaviBirbal

Pension Landscape in India and National Pension System Dr. B S Bhandari

Whole Time Member

(Economics)

Pension Fund Regulatory and Development Authority

Labour Issues under Companies Act 2013 Shop and Establishment Act & Factories Act Compliance

Adv. SaurabhChadha

4th September 2016

( Sunday)

Seminar on Tax Audit

J/W Mayur Vihar CPE Study Circle of NIRC

Venue : Riverside Sports Club, Mayur Vihar, Delhi

3 117

Business Head & Related Judicial Analysis of Tax Audit with Case Studies CA. KapilGoel

5th September 2016

( Monday)

Seminar on Tax Audit

J/W Karol BaghWestened CPE Study Circle of NIRC

Venue : Hotel Jivitesh, Pusa Road, New Delhi

4 78

Business Head & Related Judicial Analysis of Tax Audit with Case Studies and E Filing of tax Audit Report

8th September 2016 ( Thurs-

day)

Seminar on GST

(Implementation, Its Impact & Preparedness)

Organized by CPE Committee of ICAI hosted by NIRC of ICAI

Venue : NDMC Convention Centre, CP, New Delhii

6 373

Chief Guest Shri Santosh Gangwar

Hon’ble Minister of State for Finance, GOI

18


Date Name of Programme/Venue Chief Guest/SpeakersCPE

Hrs

Total

Partic-ipants

Technical Session I: Introduction to The GST Model in India

■ Meaning of Goods & Services

■ Meaning & Scope of Supply

■ Point of Taxation

■ Time of Supply Rules

CA. SushilAgarwal

Chairman Technical Session

CA. Bimal Jain

Technical Session II: Input Tax Credit

■ Taking Input Tax Credit

■ Taking Input tax Credit in respect of inputs sent for job work

■ Distribution of Credit by Input Service Distributor

■ Recovery of credit Distributed in Excess

■ Transfer of Input Tax Credit

CA. H. L. Madan

Technical Session III: IGST Model for Inter State Supply

■ The Integrated Goods and Service Tax Act 2016

■ Principles of Determination of Place Supply in Inter State Supply

■ Levy and Collection of IGST

■ Place of Supply of Goods

■ Place of Supply of Services

CA. Surender Gupta

Technical Session IV: Valuation under GST

Valuation under GST and corresponding Valuation rules

CA. Virender Chauhan

Technical Session V: Levy of Tax & Exemption , Registration, Re-funds & Returns

■ Levy of tax and Exemptions

■ Refund and Returns

■ TDS Provisions

■ Registrations

■ Other GST Planning and Techniques

CA. Nagesh bajaj

Technical Session VI: Migration to GST – Are you Ready?

■ Transitional provisions under GST

■ Role of Finance Team in getting prepared for GST

■ What is going to change for you

■ Changes Required in the Entire Value chain

■ Major impact on your F&A, Legal, HR and other functions

■ Changes in the Entire Supply – Chain Management

■ Changes in IT System

■ Pricing, Costing , margins

■ Formation of Steering Committee

■ Vendor Management

CA. Prakash Sinha

12th Septem-ber 2016

( Monday)

Workshop on Taxation of NPO and FCRA

Venue : ICAI Bhawan, Vishwas Nagar, Delhi

3 64

Taxation of NPO

FCRA

CA. Akhil Jindal

CA. Lokesh Gupta

19

Regional CounCil aCtivities


20

announanCement

Date Name of Programmes Total

Participants Guest Speakers

28th August, 2016 Seminar for CA Students on GST

Venue: ICAI Bhawan, Vishwas Nagar, Delhi.

315 CA. Surbhi Singhal

CA. Surender Gupta

5th September, 2016 Seminar for CA Students on My Principal-My Teacher (on the occasion of Teachers’ Day)


110 CA. Rajesh Makkar

CA. Pankaj Meena

CA R. L. Gupta

Sh. Amit Sehgal

11th September, 2016

Delhi Level Elocution & Quiz Contests 2016


19 CA. Amit Singla, Judge

CA. Rakesh Makkar, Judge, NICASA Member

CA. Sumit Garg, Judge, Secretary, NIRC of ICAI

18th September, 2016

Half Day Seminar on Accounting Standards & Forensic Audit for CA Students

118 Sh. Satyendra Srivastava

CA. Mukund Thakur

students aCtivities

The NIRC of ICAI as launched a new portal (www.careers.nirc.org) for registration of articleship to assist CA students getting articleship.

Interested CA students are requested to go through the said portal.

Team NIRC


ICAI NEWsKIND ATTENTIoN of ThE MEMBERsPayment of Membership Fee and Certificate of Practice Fee for the year 2016-17

We take the opportunity to request you to renew your membership with the Institute by remitting the

annual membership/certificate of practice fees, which become due for payment on 1st April, 2016 and

needs to be paid on or before 30th September, 2016. Members, who have already paid advance fee for the

earlier years, may please pay the balance fee/difference of the fee payable. It may please be noted that

payment of balance fee/difference of fee is a must for renewal of membership/certificate of practice, as

the case may be.

The Applicable amount of Membership Fee/Certificate of Practice Fee is given below:

for Members below age of 60 yearsAssociate Membership Fee `800/-

Fellow Membership Fee `2200/-

Certificate of Practice Fee `2000/-

for Members age of 60 years and aboveAssociate Membership Fee `600/-

Fellow Membership Fee `1600/-

Certificate of Practice Fee `1500/-

MEMBERs ARE Also REquEsTED To PAY folloWING

Chartered Accountants Benevolent fundLife Membership `2500/-

Yearly Subscription `500/-

Voluntary Contribution A respectable amount

s. Vaidyanath Aiyar Memorial fundLife Membership `500/-

Yearly subscription `50/-

Voluntary Contribution A respectable amount

Air Mail charges for CA Journal (in case of members abroad) `2100/-

Sea Mail charges for CA Journal (in case of members abroad) `1100/-

Payment of above fee and amount can be made through Local or at par cheque/DD favouring The

Secretary, ICAI payable at the city of concerned Regional Office of ICAI, so as to reach to the office on

or before 30th September, 2016.

Member may also make payment online at http://online.icai.org/memfee.html

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announCement


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announCement-FoR memBeRs

Associate Membership:On qualifying required examinations, completion of Articled training and GMCS Courses and prescribed applicant may apply for enrollment of Membership and grant of Certificate of Practice (optional). A member who is in employment also can have COP being in part time practice but not will be entitled to make attestation, impart articled training and empanelment benefits. After enrollment as a Member he/she is allotted a unique permanent membership number which always needs to be quoted / referred in all correspondence by a member. A member after membership enrollment may join either service or start professional practice in individual name or set up sole proprietary CA Firm or may become a partner with CA Firm under the guidelines of the Institute.

Grant of fellow Membership:An Associate Member is eligible for admission as a Fellow Member if he/she satisfies the eligibility conditions laid down under Section 5(3) of the Chartered Accountants Act 1949 and Regulation 5(3) of the Chartered Accountants Regulations, 1988.

An Associate Member will be admitted as a Fellow Member if completes continuous practice within India for a period of not less than 5 years or has been an Associate Member for a continuous period of not less than 5 years and has been in government service or is ordinarily holding or has held for a continuous period of not less than 5 years any one or more posts carrying duties Relating to Accounts, Cost Accounts, Audit, Finance, Taxation, Company Law and / or Secretarial work at an educational institute approved by the Council or at a private or government, industrial, commercial or trading undertaking having a minimum paid-up capital of Rs.25 lakhs or a minimum turnover of Rs.50 lakhs or a minimum paid-up capital of Rs.10 lakhs and a minimum turnover of Rs.30 lakhs or a minimum total assets of Rs.50 lakhs.

Grant of Certificate of PracticeA member may have option to hold Certificate of Practice (COP) by making payment of due fees and filing of Form 6 with concerned Regional Office. If a member being in employment or having association or other engagement which are otherwise not permitted will be granted part time COP and such member will not be eligible for imparting articled training, attestation functions and empanelment benefits. A member running business will not be granted COP.

Issuance of script CertificateAfter enrollment of membership/grant of certificate of practice/fellow membership certificate a formal letter is issued to the member bearing its effective date. Script certificate of the newly enrolled members is granted during the convocation held twice in a year at the place of Regional Council of ICAI. However, members may obtain script certificate on priority if required so, by making separate request for the same to the concerned Regional Office of ICAI.

Verification of status of Members & firms and studentsVerification confirmation on status of memberships, particulars of CA Firms and other particulars is issued on written request of the applicant, government departments, police, and other bodies by ICAI Head Office. Confirmation related to CA Examination and related to particulars, issuance of credentials copy of duplicate CA Examination passing certificates is given on request by the Examination Department of ICAI, Noida.

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initiatives oF the Committee FoR memBeRsThe Committee has initiated various measures for the benefits of the members of ICAI through arrangements with leading service providers which the members may avail at their choice:

Arrangement for software

Ø Cloud Based SVT, TDS software & PDF Signer at Special price through KDK Software (India) Pvt Ltd. Ø Tax suite software at special price through KDK Software (India) Pvt Ltd. Ø XBRL software at special price through KDK Software (India) Pvt Ltd. Ø IT Auditor Software at Special price through KDK software Pvt. ltd. Ø Single DVD of CTR Library of Tax Cases (comprehensive coverage on Direct Taxes) at special price through Wolters Kluwer

(India) Pvt Ltd. Ø India Financial Reporting Manager (IFRM) at discounted Price through Wolters Kluwer (India) Pvt Ltd. Ø Accounting Software at Discounted Price through Busy Infotech Pvt. Ltd.

Antivirus Protection facility

Ø Quick Heal Total Security antivirus software for PC at Special price.

Ø Quick Heal Total Security software for Android enabled Mobile phones at special price.

loan scheme

Ø Professional Loan Scheme through Corporation Bank.

Ø Specialized Loan for members and Concessional Loan for lady members through Bharatiya Mahila Bank Ltd.

Ø Educational loan for students of ICAI and concessional loan for lady students through Bharatiya Mahila Bank Ltd.

Insurance scheme

Ø Personal Accident Insurance scheme through Oriental Insurance Company Limited. Ø Householder’s Insurance scheme through Oriental Insurance Company Limited. Ø Motor Vehicle Insurance at discounted premium through The New India Assurance Company Limited. Ø Health Insurance scheme with New India Assurance Co Ltd. Ø Professional Indemnity Insurance at discounted premium by New India Assurance Co. Ltd. Ø Office Protection Shield Insurance scheme at special premium by New India Assurance Co. Ltd.

initiatives oF the Committee FoR students oF iCaiThe Committee has initiated various measures in the interest of students of ICAI as wel through arrangements with leading service providers for following benefits:

Ø Educational Loan for students of ICAI and Concessional Loan to Lady Students of ICAI through Bharatiya Mahila Bank Ltd.

Ø Health Insurance scheme for students of ICAI through New India Assurance Co Ltd.

Ø Quick heal total security antivirus software for PC at Special price.

Ø Quick heal total security software for Android enabled Mobile Phones at Special price.

Knowledge sharing

Ø Declaration of Result - CCBMP - Certificate Course on Wealth Management and Financial Planning - Mumbai Batch

Ø Flexi Hours Working Portal www.seniormembers.icai.org for Senior Members of ICAI for professional opportunities.

Ø Quick Insight 2014 on professional matters and regulating provisions.

Ø Certificate Course on Wealth Management and Financial Planning.

Ø Facility for Creation of Website by CA firms through the committee exclusive website www.icai.org.in

Ø Revised Guidelines of Network of CA firms for easy adoption.

Ø Revised Minimum Recommended Scale of Fees for the Professional Assignments done by the Chartered Accountants for class ‘A’ and class ‘B’ cities.

Ø Handbook on Project Financing as an area of practice for Small and Medium Practitioners.

Ø E-newsletter ‘Practiquer’ for January, 2015 issue containing update information on committee initiative and information.

Ø Publication on “Companies Act, 2013: Perspective of Small & Medium Practitioners & CA Firms.

Ø Publication on ‘Financial Statements Presentation Under Companies Act, 2013: Practitioner’s Perspective’.

* For the details please visit Committee Website: www.icai.org.in E-mail: [email protected], Telephone: 0120-3045994


glimpses - Regional CounCil aCtivities

A View at the Workshop on GST



A View at Chess & Carrom Tournament for Member A View at Seminar on GST for CA Students

A View at two days Seminar on Audit and Tax Audit

25


glimpses - Regional CounCil aCtivities

A View at the Seminar on Labour Laws

A View at the Seminar on Tax Audit

A View at the Delhi Level Allocation and Quiz Contest, 2016 A View at the Workshop on Taxation of NPO and FCRA

A View at the Seminar on AS and Forensic Audit for CA StudentsA View at the Workshop on Taxation of NPO and FCRA

A View at the Seminar on GST (Implementation, Its Impact & Preparedness)

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Total No of Pages: 27 (Twenty Seven)

R.N.L. No. 21759/71

DL (C) - 01/1192/2015-17

U(C) - 257-2015-17

NIRC Newsletter - September 2016

Total Number Of Pages : 24 (T wenty Four)

NIRC Newsletter- August, 2016

DL( )-01/1 192/2015-17U(C)-257-2015-17

C

CPT, IPCC & Final Classes of NIRC of ICAIAnnouncement For Regular Classes

Team NIRC is pleased to inform that we are organizing state of the Art, Coaching Classes for CPT, IPCC & Final Exams.

* Focused study plan as per ICAI Exams. * Experienced and Subject Expert Faculty.* Separate class Notes for each Subject. * Suitable timings for all classes before and after the office hours.* Most comfortable environment for studies.

For more information visit us on www.nirc-icai.org.

NICASA Chairman

NIRC Newsletter- August, 2016

NIRC Newsletter - September 2016

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