the institute of chartered accountants of india...

Volume 8 | Issue 1 | August 2019 | Pages : 24 For Private circulation only

(Set up by an Act of Parliament)

The Institute of Chartered Accountants of India

English Monthly

VISHARADA

One Day Seminar on ICDS and Changes in Tax Audit Reporting

th17 August 2019

Half Day Workshop on New simplified GST Returns Formats under the GST Law

th13 August 2019

Happy

Independence Day

VIDWATH SABHAHalf Day Seminar on CA Practice Development

th15 August 2019

rd73 Independence Day Celebration

VIDWATH SABHA

Half Day Seminar on Practical Issues in Capital Gains / Loss Cases & Tips for Planning

th20 August 2019

VIDWATH SABHA

Three Day Workshop on Transfer Pricing - Case Studies & Practical Issues

th th th5 , 6 & 7 September 2019

VISHARADA

Branch of SIRC e-NewsletterBengaluru

Chairman's Communique . . .

2 August 2019

My Dear Esteemed

Members,

Wish you all,

A very happy

Independence Day !

A very happy

Nagapanchami !

A very happy

Varamahalakshmi !

It is said in that,EmÉÌlÉwÉSè

AÉlÉÇSÉrÉåuÉÉ ZÉsÉÑ CqÉÉÌlÉ pÉÔiÉÉÌlÉ eÉrÉÇiÉå !

AÉlÉÇSålÉ eÉÉiÉÉÌlÉ eÉÏuÉÎliÉ, AÉlÉÇSqÉç mÉërÉÎliÉ AÍpÉxÉÇÌuÉzÉliÉÏÌiÉ !

Every creature on this earth born happily, tries to grow and live

happily and will die happily. We Indians strongly believe that, life

is all about being happy. We should enjoy every bit of our life and

every moment of life. All our efforts every day, every minute is to

make us happy. But, many times, we do not know how to become

happy! People put a lot of efforts, take a lot of risk and do many

things, achieve a lot, yet, we see that they are not finally happy!

Then, the question is, how to be happy at all times?

As you know, happiness cannot be bought from the market.

Happiness is all about our internal attitude and mental

preparedness. Money are just incidental but, cannot give mental

relaxation and thereby happiness. Mental relaxation is easily

possible only through meeting relatives, join people and enjoy

celebrations. Therefore, we have highest number of festival

occasions. The Indian festival season begins with Varsha Ritu,

starts with Nagapanchami and continuously goes on up to

Deepavali and karthika. Therefore, next 4 months, there is one

after the other festivals. But, unfortunately, during the very same

festival season, CAs have hectic work load and full of statutory

responsibilities to discharge many things, leaving no room for

spending free time and free mind with family and friends during

the festival occasions. CA is a true karma yogi.

qÉMïüOûxrÉ xÉÑUÉ mÉÉlÉÇ, qÉkrÉå uÉ×Í¶ÉMü SÇzÉlÉqÉç!

iÉlqÉkrÉå pÉÔiÉ xÉÇcÉÉUqÉç, rÉ²É iÉ²É pÉÌuÉwrÉÌiÉ!

(A drunken monkey, hit by scorpion bite and then, followed by

electric shock, the monkey will behave erratically).

All are coming at the same time. GST Annual Returns, IT Return,

Co-operative Audit, Statutory Audit, Tax Audit and so on. Not one

or 2, so many deadlines. If not CAs, who else can handle so much !

CAs are known for their commitment and deliverables. We do

multitasking, yet deliver professional work. That is the quality of

Chartered Accountants. Challenges are part and parcel of our

profession. If it is easy, everyone on earth would come to this

profession. Since it is complex and difficult and not many can do,

there is respect, recognition, reputation and remuneration for our

profession, not only in India but also outside India. Please feel

proud that, we CAs can do !

Major programs in the month of July 2019st1. CA Day Celebration was held on 1 July 2019 and was a grand

success.

2. AGM: 57th Annual General Body Meeting was held on 5th

July 2019 in S Narayanan Auditorium, ICAI Bhavan,

Bengaluru. I thank all the Members for supporting and giving

valuable suggestions in our endeavor to improve the

functioning of the branch. th3. VICHARA GOSHTI. 26 program of Union Budget Analysis

th2019 was scheduled on 6 July 2019 in Christ University

Auditorium. We, the On behalf of Managing Committee

Members of our Branch appreciate and thank Eminent and

committed Moderators CA T V Mohandas Pai and CA S

Krishnan for their 26 years of continued efforts in this regard. I

also thank Mr. Sharad Sharma, Co-founder, iSPIRT

Foundation, Mr. Narayan Ramachandran, Chairman and Co-

founder InKlude Labs and Mr. Udaya Holla, Senior Advocate &

Advocate General, State of Karnataka for their valuable

contribution in addressing to our Members on the Union

Budget 2019.

4. CHARCHA GOSHTI. A detailed Clause by Clause Discussion th thon Union Budget 2019 over 2 days was held on 19 and 20

July 2019 in R G Royale Hotel and Convention Center. It was

full of enriching sessions handled by eminent speakers. I take

pleasure to thank CA K.S Ravi Shankar, CA S. Venkatramani

and CA V. Raghuraman on Indirect Taxes and also CA S

Ramasubramanian, CA Padamchand Khincha and CA K K

Chythanya on Direct Taxes for their valuable contribution for

making this program a grand success.

5. VIDWATH SABHA One Day Seminar on Audit & Taxation of thCharitable or Religious Trusts, NGOs, NPOs was held on 13

July 2019 and it was a grand success. I thank Dr. N Suresh, CA.

Kalyan Kumar K & CA. Pavan Jayaprakash for their valuable

and informative session.

Major Upcoming Programs: th1. SPORTS MEET: Members Sports Meet is scheduled on 11

August 2019. Request Members to participate in large

numbers for various games.

2. VISHARADA – Half Day Workshop on New Simplified GST

Returns Formats under the GST Law is being organized in S. thNarayanan Auditorium on Tuesday, 13 August 2019. I

request Members to register and get benefitted.th3. INDEPENDENCE DAY celebration is scheduled on 15

August 2019 in ICAI Bhavan. As part of it, flag hoisting, other

cultural programs and also CPE sessions are scheduled.

Request members to avail the benefit of the same.

(Contd. on Next Page)

Bengaluru Branch of SIRC of the Institute of Chartered Accountants of India

3August 2019

Online Registration open for Coaching Classeswww.bangaloreicai.org

4. VIDWATH SABHA – One Day Seminar on ICDS and

Changes in Tax Audit Reporting is being organized

in Devaraj Urs Bhawan, Millers Tank Bed Area,

Vasanthnagar on Saturday, 17th August 2019. Expert

& Eminent Speakers will be addressing on the Practical

& Legal issues in Tax Audit & ICDS.

5. VIDWATH SABHA – Half Day Seminar on Practical

Issues in Capital Gains / Loss Cases & Tips for Planning

is being organized on Tuesday, 20th August 2019 at

S. Narayanan Auditorium, ICAI Vasanthnagar Branch

Premises between 5.00 pm & 8.15 pm.

6. PRABHATH PRAVACHAN – Breakfast Meeting

on Saturday, 24th August is being organized at our

ICAI branch Premises between 8.00 am & 10.00 am

on Disclosures in Notes to Accounts & Disclosure in

Directors Reports and Secretarial compliance under

Company Secretaries Act for MSMEs.

Update on the New Initiatives of Bengaluru Branch

1. New feature in our Bengaluru ICAI Mobile:

App based Feedback feature: Now, we have enabled

our Bengaluru ICAI Mobile App with facility to give

feedback about the programs or sessions as the case

may be. It will be released soon. We request members

to download Bengaluru ICAI Mobile App and give your

honest feedback for all the sessions. Your valuable

feedback about the program and sessions will help the

Speaker and the branch to improve.

Online option to submit questions: A new feature is

being added to our website. At the time of registration

for any event, Members can ask up to 2 online questions

to the speakers on the subject. It helps the speakers to

address the frequently asked questions for the benefit

of Members at large. The feature will be released soon

and request members to use the same effectively.

The software development for giving option to

Members to submit 2 questions

We have developed our website while registering

for any programs.

2. Additional ITT lab - We had applied to HO for

additional computers to upgrade and expand the ITT

facility. The recent update from HO is that, the new

computers are expected to reach us by next few weeks.

Hope to make the new systems available to students

by the end of August 2019.

3. Career Counselling Program: New student

registration is very poor this year as compared to last

year same period. We believe that the reason is due

to delay in PU and Degree exam results in view of

general elections. However, we find that, the interest

level among students to opt for CA course looks not

impressive due to uncertainty of passing in CA and

also that, the news about few CAs being arrested is

so widely spread among the student community and

many students feel, it is a risky profession even after

passing and are going after some other course.

As informed in our earlier editions, we have taken the

task of making career counselling program in minimum

100 colleges and requested Members to volunteer and

show interest to go to the College where you have

studied and do Career Counselling Program. However,

though few Members showed interest and we have

completed Career Counselling Program in 5 Colleges

and we expect that more response from Members will

come in due course.

Friends, I wish you all the very best in discharge of your

statutory responsibility as Auditor. It is a gentle reminder

to all of us that, with the UDIN becoming mandatory and

no backdated UDIN can be generated beyond 15 days, all

the audits required to be completed on time.

Before signing off my message, I would like to solicit your

continued friendly suggestions and co-operations as always

in our efforts to serve for the cause of the profession in our

race for relevance, ready for radical change and unleashing

the potential.

Thanking you,

Yours faithfully,

Sd/-

CA Bhat Shivaram Shankar

Chairman

Chairman’s Communique . . .(Contd. from previous page)

4August

2019Visit our website: bangaloreicai.org for Online Registration

CALENDAR OF EVENTS - AUGUST & SEPTEMBER 2019

DATE AND DAY

TOPIC / SPEAKER VENUE/TIME CPE CREDIT

03.08.2019

Saturday

PRABHATH PRAVACHAN - Breakfast Meeting

Exports incentives under EXIM Policy and changes in 100% EOU PolicyCA. Dayananda .K

Delegate Fee : Members - Rs. 200/- Inclusive of GST

Branch Premises

Breakfast :

7.15 am to 8.00 am

Meeting :

8.00 am to 10.00 am

2 hrs

07.08.2019

Wednesday

Practical aspects of Insolvency Bankruptcy Code Advocate Sridhar Gomatan

Branch Premises

6.00 pm to 8.00 pm––

13.08.2019

Tuesday

VISHARADA Half Day Workshop on New simplified GST Returns Formats under the GST LawOrganized by Bengaluru Branch of SIRC of ICAI

Delegate Fee : Members - Rs. 500/- Inclusive of GST

Non Members – Rs.1,000/- Inclusive of GST

Details at Pg. No. 7

Branch Premises

5.00 pm to 8.15 pm

3 hrs

14.08.2019

Wednesday

Practical aspects of Internal Audit CA. Prashanth Vellanki

Branch Premises

6.00 pm to 8.00 pm––

15.08.2019

Thursday

73rd Independence Day Celebration Flag Hoist by the Chief Guest

CA. K.S. Madhava Murthy, Past Chairman, SIRC of ICAI

and

VIDWATH SABHA Half Day Seminar on CA Practice DevelopmentOrganized by Bengaluru Branch of SIRC of ICAI

Delegate Fee : Members Rs. 300/- (Inclusive of GST)


Branch Premises

9.00 am to 1.00 pm

Lunch :

1.00 pm onwards

3 hrs

17.08.2019

Saturday

VIDWATH SABHAOne Day Seminar on ICDS and Changes in Tax Audit ReportingOrganized by Bengaluru Branch of SIRC of ICAI

Delegate Fee : Members Rs. 1,600/- (Inclusive of GST)

Non Members : Rs. 3,000/- (Inclusive of GST)


Devaraj Urs Bhawan

Millers Tank Bed Area

Vasanthnagar

9.30 am to 6.00 pm 6 hrs

*Note: Kindly note there is no 2 Hrs. CPE on every Wednesdays Study Circle Meet.


5August 2019



DATE AND DAY


20.08.2019

Tuesday

VIDWATH SABHA

Half Day Seminar on Practical Issues in

Capital Gains / Loss Cases & Tips for Planning

Organized by Bengaluru Branch of SIRC of ICAI

Delegate Fee : Members Rs. 400/- (Inclusive of GST)

Non Members : Rs. 1,000/- (Inclusive of GST)


Branch Premises

5.00 pm to 8.15 pm

3 hrs

21.08.2019

Wednesday

GST – Questions & Answers

CA. Vinayak Hegde

Branch Premises

6.00 pm to 8.00 pm––

24.08.2019

Saturday

PRABHATH PRAVACHAN - Breakfast Meeting

Disclosures in Notes to Accounts & Disclosure in Director’s

Report and Secretarial Compliance under Company

Secretaries Act for MSMEs

CS. Sundharesan J

Delegate Fee : Rs. 200/- (Inclusive of GST)

Branch Premises

Breakfast : 7.15 am to

8.00 am

Meeting : 8.00 am to

10.00 am

2 hrs

28.08.2019

Wednesday

Taxation on Permanent Establishments – Practical Issues

CA. Arvind S

Branch Premises

6.00 pm to 8.00 pm––

04.09.2019

Wednesday

Technical Tax Aspects & Regulatory Policy Aspects for

Startups

CA. Pankil Sanghvi

Branch Premises

6.00 pm to 8.00 pm ––

05.09.2019

Thursday

06.09.2019

Friday

&

07.09.2019

Saturday

VISHARADA

Three Day Workshop on Transfer Pricing

- Case Studies & Practical Issues


Delegate Fee : Members - Rs. 3,000/- (Inclusive of GST)

Non Members : Rs.5,000/- (Inclusive of GST)


Branch Premises

10.00 am to 5.30 pm

18 hrs


6August


EDITORS :

CA. BHAT SHIVARAM SHANKAR

CA. BHOJARAJ T SHETTY

Advertisement

Tariff for the

Branch

e-Newsletter

COLOUR FULL PAGE

Outside back ` 40,000/-

Inside front ` 35,000/-

Inside back ` 30,000/-

INSIDE BLACK & WHITE

Full page ` 20,000/-

Half page ` 10,000/-

Quarter page ` 5,000/-

Advt. material should reach us before 22nd of previous month.

Disclaimer: The Bengaluru Branch of ICAI is not in anyway responsible for the result of any action taken on the basis of the articles and advertisements published in the e-Newsletter. The views and opinions expressed or implied in the Branch e-Newsletter are those of the authors/guest editors and do not necessarily reflect that of Bengaluru Branch of ICAI.


DATE AND DAY


11.09.2019

Wednesday

Practical Challenges & Difficulties – Do’s & Dont’s from

Tax Regulatory perspective

CA. Pankil Sanghvi

Branch Premises

6.00 pm to 8.00 pm ––

14.09.2019

Saturday

PRABHATH PRAVACHAN - Breakfast Meetings

1. RERA

CA. Ashok Raghavan

2. IND AS - 32

Practical Issues & Approach on IND AS - 32

CA. Anjani Khetan

Delegate Fee : Members - Rs. 200/- (Inclusive of GST) per Meeting

Branch Premises

Breakfast :

7.15 am to 8.00 am

1st Meeting :

8.00 am to 10.00 am

2nd Meeting :

10.30 am to 1.30pm

5 hrs

18.09.2019

Wednesday

SEZ & STPI as effective Business Vehicles

CA. Guruprasad. G

Branch Premises

6.00 pm to 8.00 pm––

21.09.2019

Saturday

VIDWATH SABHA

One Day Seminar on Search / Seizure & Appellant


Details will be uploaded in website

Branch Premises

9.30 am to 6.00 pm6 hrs

25.09.2019

Wednesday

Study Circle Meet Branch Premises

6.00 pm to 8.00 pm––



7August 2019


“VISHARADA” Half Day Workshop on

New simplified GST Returns Formats under the GST Law

Organised by Bengaluru Branch of SIRC of ICAI

On Tuesday, 13th August 2019

Venue: S. Narayanan Auditorium, Vasanthnagar Branch Premises

Time: 5.00 pm to 8.15 pm

Timings Topics Speakers

4.30 pm to 5.00 pm REGISTRATION

5.00 pm to 6.30 pm Framework of New simplified Return formats

under the GST law

CA. Annapurna D Kabra

6.30 pm to 6.45 pm Tea Break

6.45 pm to 8.15 pm Continued Session CA. Annapurna D Kabra

CA. Bhat Shivaram Shankar Chairman

Bengaluru Branch of SIRC of ICAI

CA. B.T. Shetty Secretary


Online Registration open

DELEGATE FEES:

FOR MEMBERS : RS.500/- INCLUSIVE OF GST

FOR NON MEMBERS : RS.1,000/- INCLUSIVE OF GST

Mode of Payment: Online / Cash / Cheque in favour of “Bangalore Branch of SIRC of ICAI”, payable at Bengaluru

For Registration, Please contact: Email : [email protected]

Ms. Geetanjali D., Tel: 080-4394 4868 Website : www.bangaloreicai.org

3 hrsCPE

8August


“VIDWATH SABHA”Half Day Seminar on

CA Practice DevelopmentOrganised by Bengaluru Branch of SIRC of ICAI

On Thursday, 15th August 2019


Time: 9.00 am to 1.00 pm


8.00 am to 9.00 am REGISTRATION & BREAKFAST

9.00 am to 10.00 am INDEPENDENCE DAY CELEBRATION Flag Hoist by the CHIEF GUEST CA. K.S. Madhava MurthyPast Chairman, SIRC of ICAI

10.00 am to 11.30 am I SESSION

How to start CA own practiceCA. Madhur Harlalka

11.30 am to 1.00 pm II SESSION

Growth strategy in CA own practice – Practical tips

CA. Madhukar N HiregangePast Central Council Member,

ICAI






DELEGATE FEES:

FOR MEMBERS : RS. 300/- INCLUSIVE OF GST




INDEPENDENCE DAY CELEBRATION AND

3 hrsCPE


9August 2019


“VIDWATH SABHA”One Day Seminar on

ICDS and Changes in Tax Audit Reporting Organised by Bengaluru Branch of SIRC of ICAI

On Saturday, 17th August 2019

Venue: Devaraj Urs Bhawan, Millers Tank Bed Area, Vasanthnagar



9.00 am – 9.30 am REGISTRATION

9.30 am – 10.00 am Inauguration by the Distinguished Personality

10.00 am – 11.30 am Issues in Tax Audit – Audit Perspective CA. K. Gururaj Acharya

11.30 am – 12.00 pm Tea Break

12.00 pm – 1.30 pm Legal Issues in Tax Audit CA. Prashanth G.S

1.30 pm – 2.30 pm LUNCH

2.30 pm – 4.00 pm Critical Issues in ICDS CA. B.P. Sachin Kumar

4.00 pm – 4.30 pm Tea Break

4.30 pm – 6.00 pm Panel Discussion – Open House CA. K. Gururaj AcharyaCA. Prashanth G.SCA. B.P. Sachin Kumar





6 hrsCPE


DELEGATE FEES:

FOR MEMBERS : RS. 1,600/- INCLUSIVE OF GST

FOR NON MEMBERS : RS. 3,000/- INCLUSIVE OF GST




10August


“VIDWATH SABHA” Half Day Seminar on

Practical Issues in Capital Gains / Loss Cases & Tips for Planning


On Tuesday, 20th August 2019

Venue: S. Narayanan Auditorium, Vasanthnagar Branch Premises Time: 5.00 pm to 8.15 pm


4.30 pm to 5.00 pm REGISTRATION

5.00 pm to 6.30 pm Capital Gains on Immovable Property CA. Krishna Upadhya S


6.45 pm to 8.15 pm Capital Gains on Financial Instruments CA. D.S. Vivek






DELEGATE FEES:

FOR MEMBERS : RS. 400/- INCLUSIVE OF GST

FOR NON MEMBERS : RS. 1,000/- INCLUSIVE OF GST

Mode of Payment: Online / Cash / Cheque in favour of

“Bangalore Branch of SIRC of ICAI”, payable at Bengaluru



3 hrsCPE

CongratulationsCA. I.S. Prasad elected as Vice President of the

Federation of Karnataka Chambers of Commerce and Industry (FKCCI)

for the year 2019-20.


11August 2019


“VISHARADA”Three Day Workshop on

Transfer Pricing - Case Studies & Practical Issues


On 5th, 6th & 7th September 2019




DAY 1: THURSDAY, 5TH SEPTEMBER 2019

9.30 am to 10.00 am REGISTRATION & NETWORKING

10:00 am to 11:30 am An Overview / Introduction of Transfer Pricing Y Background Y Sec 92 Y Sec 92A – Associated Enterprises

CA. K.K. Chythanya

11.30 am to 11.45 am Tea Break

11.45 am to 1.15 pm Overview and Controversies Y International Transaction and

Deemed International Transactions Y Specified Domestic Transactions

CA. P.V.S. S Prasad

Hyderabad

1.15 pm to 2.15 pm Lunch Break

2.15 pm to 3.45 pm Functional Assets and Risk Analysis (FAR) CA. Rishi Harlalka


4.00 pm to 5.30 pm TP Methodologies for Computing ALP Y Section 92C(1), 92C(2) read with Rules Y Overview of Methods Y Computation of ALP

CA. Narendra J Jain

DAY 2 : FRIDAY, 6TH SEPTEMBER 2019

10:00 am to 11:30 am TP Documentation and Audit Y TP Study Y 3CEB

CA. Nitish Ranjan


12August



DELEGATE FEES:

FOR MEMBERS : RS.3,000/- INCLUSIVE OF GST

FOR NON MEMBERS : RS.5,000/- INCLUSIVE OF GST

Mode of Payment: Online / Cash / Cheque in favour of

“Bangalore Branch of SIRC of ICAI”, payable at Bengaluru




DAY 2 : FRIDAY, 6TH SEPTEMBER 2019 (CONTD.)

11.45 am to 1.15 pm Economic Adjustments Mr. Bharath Lakshminarayana


2.15 pm to 3.45 pm Case study Based Y IT and ITES Y Manufacturing

CA. Ganesh Krishnamurthy


4.00 pm to 5.30 pm TP assessment and Reference to TPO Y Proceedings before DRP

– Provisions of Section 144C Y Limitation Period for TP Cases

CA. Prashanth G.S

DAY 3 : SATURDAY, 7TH SEPTEMBER 2019

10:00 am to 11:30 am TP Controversies – AMP Management Fee, Closely Linked Transactions, Royalty etc

CA. Subhobrata Sen


11.45 am to 1.15 pm Secondary Adjustment & Thin Capitalisation CA. P.V. Srinivasan


2.15 pm to 3.45 pm Other Dispute Resolution Mechanisms Y APA & MAP Y Safe Harbour Rules

CA. Adarsh Rathi


4.00 pm to 5.30 pm CBCR and Master File CA. Vaishaka Bhat






13August 2019


14August



15August 2019


ROLE OF PROFESSIONALS IN GSTR-9C

CA. Mahadev. R

The due date for filing GSTR-9 and

GSTR-9C reconciliation statement

for FY 2017-18 has been extended

till 31st August 2019. There could be

multiple reasons for such extension. It

could be technical issues associated with

uploading of forms on the portal, lack

of understanding / confusion in form

which resulted in lukewarm response in

filing annual returns and lot of requests

from industries / industrial associations

etc. The tax payers and professionals

could make optimum use of this time

to ensure that error free annual return

and reconciliation statements are filed.

There have been numerous clarifications

on these forms. Very recently, a press

release dated 3rd July 2019 has been

issued clarifying certain issues in annual

returns and reconciliation statement.

There is one clarification on role of

chartered or cost accountant in their

recommendation in form GSTR-9C.

The clarification could actually lead to

confusion among the professionals on

understanding their role in certification.

In this article, an attempt has been made

to understand the role of professionals

in certifying form GSTR-9C.

Meaning of audit as per GST law

The general meaning of audit could

be understood as verification or

examination of records or documents by

independent person. Section 2 (13) of

CGST Act 2017 defines the term ‘audit’

as examination of records, returns

and other documents maintained or

furnished by the registered person under

this Act or the rules made thereunder or

under any other law for the time being

in force to verify

i) Correctness of turnover declared,

ii) Taxes paid,

iii) Refund claimed

iv) Input tax credit availed, and

v) To assess his compliance with the

provisions of this Act or the rules

made thereunder;

It is very interesting to note that the

auditor (departmental auditor or

professional auditor) can go beyond

the records maintained under GST law

for examination of records to ensure

correctness of turnover. If one were

to observe the format of GSTR-

9C, aspects like correctness of

turnover, taxes paid, refund, ITC have

been covered for reconciliation between

the annual return and financial

statements.

Provisions relating to need of audit

In erstwhile indirect tax laws such as

service tax law, there were issues relating

to powers of the departmental officers

in carrying out audits of assessee due to

absence of specific provision in the law.

In GST law, there are specific provisions

for department to carry out audits. One

is Section 65 for audit by tax authorities

and another is special audit which

could be undertaken by professionals

when insisted by department in case of

suspicion in valuation or ITC claim by tax

payers.

Section 35(5) and 44(2) of CGST Act

2017 read with Rule 80(3) of CGST Rules

2017 provides for getting the books

of account audited from a chartered/

cost accountant along with filing of

reconciliation statement in form GSTR-

9C reconciling the supplies declared

in the annual return and such other

particulars prescribed and submission of

annual accounts.

Clarification in press release

A press release has been hosted on

the CBIC website dated 3rd July 2019

with few clarifications on GSTR-9

and GSTR-9C aspects. One of the

important clarifications issued is on role

of chartered or cost accountant in in

certifying the reconciliation statement in

para (h) which is reproduced below:

“There are apprehensions that

the chartered accountant or cost

accountant may go beyond the books

of account in their recommendations

under FORM GSTR-9C. The GST Act

is clear in this regard. With respect

to the reconciliation statement, their

role is limited to reconciling the values

declared in annual return (FORM GSTR-

9) with the audited annual accounts of

the taxpayer”.

From the date of introduction of the

form GSTR-9C which includes part B

for certification, doubts have been there

among the professionals on whether to

16August


consider GSTR-9C as audit report or only

a reconciliation statement. There is a

need and good scope for improvement

in GSTR-9C format by the government.

Role of professionals

The press release clarifies that the role of

chartered / cost accountant is limited to

reconciling the values declared in GSTR-

9 with audit annual accounts. The big

question which is arising now is, should

the role of professional be restricted to

only reconciliation of values? If yes, does

it really serve the purpose for which the

provisions of Section 35(5) could have

been introduced?

The way in which the form and the

contents are worded, interpretation

that it is pure reconciliation is possible.

Following are important pointers for

such interpretation:

a) The entire form GSTR-9C is about

reconciliation of values between

financial statement and annual

return.

b) Part V of form which provides

for auditor’s recommendation is

also worded in such a way as to

recommend additional liabilities

arising due to non-reconciliation. It

is not due to non-compliance.

c) The declaration in part B to GSTR-9C

states that “In *my/our opinion and

to the best of *my/our information

and according to examination

of books of account including

other relevant documents and

explanations given to *me/us, the

particulars given in the said Form

No.9C are true and correct subject

to the following observations/

qualifications, if any.

The emphasis again is on particulars

of GSTR-9C which are values as

per financial statement and annual

return filed by tax payer.

Section 35(5) provides for audit and

submission of annual accounts along

with GSTR-9C. An interpretation is

possible that the general audit carried

out under other acts (Companies Act

2013 or Income tax provisions etc) would

suffice including GSTR-9C submission.

There are two parts in part-B certification

to GSTR-9C as provided below:

I. Certification in cases where the

reconciliation statement (Form

GSTR-9C) is drawn up by the person

who had conducted the audit

II. Certification in cases where the

reconciliation statement (Form

GSTR-9C) is drawn up by a

person other than the person who

had conducted the audit of the

accounts

First part is applicable in case the GSTR-

9C certification is undertaken by the

person who conducted audit under

other provisions such as companies act,

income tax. It is assumed so as Section

35(5) requires audit and submission of

annual accounts. It is not clear if audit

referred in first part is audit under GST

law in accordance with Section 2(13).

Second part is applicable in case the

GSTR-9C certification is undertaken by

person other than who conducted the

audit of accounts.

Reading of Section 35(5) with Part B

certificate headings could lead to a

view that the scope of auditor auditing

the books of account under other acts

includes aspects provided in Section

2(13) such as correctness of turnover

declared, taxes paid, ITC etc. In such

cases, auditor would be undertaking

only reconciliation of values in GSTR-

9C. In case, there are different auditors

wherein second part of Part B is to

be used, view is possible that the

auditor appointed for GSTR-9C would

undertake only reconciliation of values

without audit.

However, these types of views read with

clarification in press release could dilute

audit process and may not serve the

real purpose with which government

may have introduced the concept of

audit by professional. The clarification

has created confusion among the

professionals who could have started

the audit process in diligent manner

including checking of aspects such as

correctness of turnover, ITC, refund

claim, taxes paid and other compliances.

Such clarification could force the

professionals to limit the process only

to reconciliation as there could be such

demand even from the auditees who

may not wish to get thorough audit

done including reporting of liabilities.

Such reporting could lead to notices for

demands from tax department.

Carrying out audit beyond

reconciliation

The mood of the government appears

to be bringing more transparency in

reporting of transactions to check

tax evasion. However, the recent

clarification is against this principle.

One possible intention behind such

clarification could be to provide some

relaxation to tax payers being first year

of GST implementation (does not mean

department would exclude in their

audit).

The important question to be answered

is whether the auditor is required to

audit the records as per Section 2 (13)

or not for certifying GSTR-9C. The

answer seems to be negative based

on the recent clarification. However,

professionals could opt to convince

the auditees to take the opportunity

of filing GSTR-9C to clear all genuine

liabilities. There could be issues such as


17August 2019


wrong type of taxes paid, ITC claimed

instead of deducting liabilities in case

of sales return of goods which are

revenue neutral. There could be issues

which are subject to interpretation

such as payment of interest on gross

or net liability. These issues need

not be highlighted by the auditor in

certification. The technical guide of ICAI

on GST audit could be a reference for

the CA professionals which provides for

detailed verification of transactions not

limited to reconciliation of values.

There could be genuine liabilities which

could be due to considering lower rate

of GST than actual rate applicable, ITC

claimed on restricted goods/ services

etc., which can be opted to be reported

for payment by the auditees. Auditees

also could find following advantages in

discharging such liabilities:

a) Avoid interest cost and penalty due

to allegations such as suppression

of facts, intention evasion of taxes

etc. under Section 74 of CGST /

SGST Act 2017

b) Gain confidence of the government

volunteering for tax payment

c) Investors would be happy with

compliance

d) Getting benefits from government

easier when there is a clean record

e) Customers / clients also would like

to continue to do business

In addition to this, even the auditor

could find following advantages in such

audits with proper reporting of liabilities:

a) Compliant clients would like to

continue such auditors

b) Gain confidence of government

and the general public in the CA

profession

c) Satisfaction of fulfilling the

responsibilities diligently and

contribution to nation building

d) Few others….

It is also important to consider the fact

that the professionals are also guiding

the auditees in filing their GSTR-9

annual return which is supposed to be

as per books of account and returns

filed. Genuine liabilities could have

been identified by the professionals

in such case. Instead of keeping such

points unreported, auditees should

be suggested to

discharge the

liabilities at the time

of filing annual return

so that such issues

need not be brought

to the reconciliation

statement in form

GSTR-9C.

Conclusion

It may not be

right on the part

of auditors or

the auditees to

conclude that the

role of professionals

is restricted to

reconciliation of

values. A clarification

from ICAI in

consultation with

government could be

the need of the hour.

If it is concluded that it is restricted to

reconcile the values, then the auditors

could consider to undertake complete

review of compliance to suggest

the auditees to comply in their best

interest. The observations in GSTR-9C

including part B could be restricted to

reconciliation issues. As a chartered

accountant hope that my job is not

restricted to just tallying the figures.

The views expressed are in personal

capacity of the author and it need not

be considered as the views of either

the firm associated with or that of the

institute.

18August


ACCOUNTING FOR COMPOUND FINANCIAL INSTRUMENTS UNDER IND-AS 32

CA. Anjani Khetan

Introduction

At the outset, note that a Compound Financial Instrument is defined as a non-derivative financial instrument that, from the

issuer’s perspective, contains both liability and an equity component. This means that the issuer of such an instrument

cannot simply show it (a) purely as a liability or (b) purely as equity - because this instrument contains a little bit of both. For

instance, when a debenture is convertible into equity shares, at the option of the holder, it effectively means that – at the

maturity date – such debenture can be redeemed either, (a) by paying cash or, (b) by way of exchange of the debenture for some

fixed number of equity shares of the issuer (if the holder exercises the conversion option).

Accordingly, such an optionally convertible debenture contains two elements, viz.

• a liability which is equal to the issuer’s obligation:

o to pay interest or, coupon; and

o potentially to redeem the debenture in cash at maturity (if conversion option is not exercised by the holder)

&

• equity which is equal to the holder’s right to convert the amount due on redemption for a fixed number of equity shares

(instead of, fixed amount of cash).

Accounting under Ind-AS 32:

Ind-AS 32 Financial Instruments: Presentation provides the guidance for accounting and presentation of compound financial

instruments and envisages application of what is called as “split accounting” for such compound financial instruments. Such

separation of equity and financial liability components of a compound financial instrument is consistent with the principle that

a financial instrument must be classified in accordance with its substance, rather than its legal form.

Graphically, the requirements of split accounting is shown below:


19August 2019


The steps involved in application of “split accounting” – upon initial recognition of the instrument - are as follows:

Step 1 Compute cash inflows and outflows, as per contractual terms of issue

Step 2 Discount cash inflows and cash outflows @ interest rate for similar instrument without conversion feature

Step 3 The discounted value, so arrived at in Step 2 above is equal to “Fair Value of the liability component”

Step 4 Subtract, “fair value of liability component” from “total proceeds (viz. fair value of the instrument as a whole)”….

to arrive at “Fair Value of equity component” (as a residual)

Step 5 Recognize interest obligation on the liability component by applying the Effective Interest Rate (EIR) method under

Ind-AS 109; and

Step 6 The equity component is not re-measured subsequently

To illustrate, assume that:

· CT Corp has issued 2000 convertible debentures at par, with face value being Rs. 1000 per debenture

· The debentures:

o carry an interest rate of 6% p.a. – payable in arrears; and

o has a term of 3-years

· When the debentures are issued, the prevailing market interest rate for similar debentures, without conversion options is

9% p.a.

· Each debenture is convertible, at any time up to the date of maturity, into 250 equity shares

How should CT Corp classify and account for such debentures under Ind-AS32?

In the above case, CT Corp will apply the split accounting as follows:

20August


Further, it should be noted that, in this case:

Upon initial recognition of the convertible debenture, the issuer will record the following JE:

Debit Cash 20,00,000

Credit Financial Liability 18,48,122

Credit Equity 1,51,878

The equity component of Rs.151,878 (as computed above) is not subsequently re-measured

Transaction costs, if any, for issuing the convertible debenture is allocated between (a) the debt component and (b) the

equity component, in the ratio of their relative fair values (being 18,48,122 to 1,51,878 – in this Illustration

Also, it is worth nothing that Ind-AS 32 does not deal with the accounting in the financial statements of the holder. From

the holder's perspective, a convertible debenture is a financial asset within the scope of Ind-AS 109. Ind-AS 109 prohibits

separation of embedded derivative in such cases. Rather, the holder will apply Ind-AS 109 classification requirements to the

entire convertible instrument.

ICAI – Bengaluru : Announcing 'Diploma in Information Systems Audit'

- 3rd August, 2019 - 3rd Batch of 2019

Dear Members,

This is to inform your good-self that we have started accepting registrations for the 'Diploma in Information Systems

Audit' [3rd Batch of 2019] to be held in Bengaluru from 3rd August, 2019. Kindly share this information with your peers

as well. The details are as under:-

No. of days : 10

Batch Days : Weekends only

Dates : August, 2019 : 3rd, 4th, 10th, 11th,

17th, 18th, 24th, 25th, 31st &

September, 2019 - 1st

Timings : 9:30 am to 5:30 pm

Venue : Race Course Road Premises of ICAI

Amount : Rs. 20000/-

Payment to be made online by visiting : http://pqc.icai.org/

Contact : C. R. Kulashekhar,

Section Officer (SU), Bangalore DCO,

The Institute of Chartered Accountants of India

No. 16/0, Millers Tank Bed Area, Vasanth Nagar,

Behind Bhagwan Mahaveer Jain Hospital Bengaluru – 560 052

Telephone - (080) 3056 3541


21August 2019


SEP - SEEKING FOOTFALLS OR PITFALLS!!

CA. S. Anantha Padmanabhan & CA. Vishal S. Kumar

The Honorable Prime Minister an

ardent enthusiast and the backbone

of ‘Digital India’ programme, asserted

while addressing Heads of Tech Giants at

Silicon Valley - “We must ensure that technology is accessible, affordable and adds value”.

On one end of the spectrum, the vision

of the Government is to ‘Digitalize India’

by making technology accessible, and

making it affordable with minimal costs.

On the other end, the Government is

taking steps to expand its tax base, one

of which being to target non-residents

doing business through digital means.

After introduction of Equalization Levy to

tax income from online advertisement,

the Finance Act 2018 introduced the

concept of Significant Economic Presence

[‘SEP’] to expand the scope of business

connection by bringing within its scope:

sale of goods/services or property

including provision of download of

data or software in India; or

Systematic & continuous soliciting

of business activities or engaging in

interaction with users.

The expanded scope has left a number of

unanswered questions which is likely to

add up to the litigation. Some of these

issues are discussed in this Article.

Applicability of the provisions without the “prescribed” limits: Toothless Law or Unexpected Surprises?

The provisions as it stands today are

inoperative with the Central Board of

Direct Taxes [‘CBDT’] not yet notifying the

prescribed limits.

The Memorandum to the Finance

Bill stating that the provisions would

apply from AY 2019-20, taxpayers or

those purported to be covered under

the provisions, should be prepared for

notices, in case the same is notified

within the time limit to file the tax returns

for AY 2019-20.

Once notified, will such Rules have a

prospective or retrospective effect will be

the next question, which the taxpayers

would seek clarity on.

Covering Only Digital Transactions - Surely yes, or is it?

While the emphasis in the memorandum

explaining the above provisions has been

to tax business income arising through

digital means, the requirement of “digital

mode” for sale of goods/services/property

has been given a complete miss.

The provisions as they read today would

effortlessly capture any sale of goods,

services or property made in India

through any mode merely if they cross

the prescribed limit,

Though the volume of transactions may

not be materially important, a single

transaction crossing the threshold limit

can bring a non-resident under the tax

net.

Fees for Technical Services – Redundant?

Another effect of the above provisions

is that it brings to tax sale of all services

in its gamut on crossing the notified

threshold, as long as the service is used

in India.

The concept of taxing services from

non-residents only for services which fell

within the scope of fees for technical

services [‘FTS’], stands enlarged by the

above provisions, also covering services

obtained for business carried outside

India by an Indian tax payer or for services

used to earn an income outside India. The

above exclusions under the definition of

FTS, have been given rather surprising

miss in the above provisions.

Further, with no demarcation laid out

between services that could be construed

as Fees for Technical services and other

services, litigation on characterization of

a ‘service’ – whether FTS or otherwise,

would multiply.

Furthermore, given that withholding

of taxes for services falling within fees

for technical service is at 10% whereas

services falling under the new provisions

would be subject to a withholding at the

rate of 40%, taxpayers are recommended

to have substantial documentation

to demonstrate the nature of service

received.

However, the larger question that remains

is whether FTS provisions are redundant

once the threshold is breached or would

the same still be taxed as a special income

in the hands of non-resident?

Software & Data – Neither Goods nor Services, so what is it?

Characterization of software has been

omnipresent in Indian tax litigation both

from a Direct and Indirect tax perspective.

Though, a light at the end of the tunnel was seen based on the undernoted ruling

22August


of the Apex Court1 holding that computer

software, once recorded in physical form

in a disk, tape, hard drive or any other

device, is to be construed as a sale of

‘good’, it appears that the legislature has

not yet made its mind on whether to treat

software as good or service.

Given the unclear stand of the legislature,

does this leave the taxpayers with a

leeway to still urge that ‘software’ is a

‘good’ and the acquisition of it should not

be classified as a royalty can potentially

be reignited?

Alternatively, given that the same has

been brought in the statute while laying

emphasis on ‘digital transactions’, can

one take a view that the same potentially

covers only ‘software’ downloaded

digitally (from a website or cloud) and not

from physical devices, is worth a thought!

Interacting with Users – Who tracks the count and mode of interaction?

Today businesses have been able to

reach out to consumers digitally through

various modes- mails, social media, etc.

By bringing digital interaction with users

under the tax purview, it likely to open a

Pandora’s box, not least in terms of how

will the user count be monitored, and

who will certify such numbers and also

what happens in case the user count itself

is debatable.

Moreover, it could also bring

multinationals that run websites across

the globe in the tax net in India. To

illustrate, say a business newspaper of

United Kingdom running a website, could

potentially be subject to tax in India for

the reason that users in India view the

website.

Additionally, will a non-resident be taxed

on account of having a user base in

India, irrespective of it not charging for

its services from the customers in India

1 Tata Consultancy Services v. State of Andhra Pradesh 271 ITR 401 (SC)

(like WhatsApp is a free to use service),

requires clarity.

By trying to target internet companies

based on user count, may result in certain

companies which allow users to access

content without creating an account or

which provide free to use content, out of

the tax net.

Systematic and Continuous Soliciting: Old Wine in a New Bottle?

The Apex Court 2, laid out that for a

‘business connection’ to be established,

there must exist an element of continuity

and cannot exist in a stray or one-off

transaction.

Given that the terms ‘systematic and

continuous soliciting’, have not been

defined for the purposes of the above

provisions and nor is there a scope to

determine the same under any rules, one

would have to construe that the same

would fall in line with the Apex Court’s

above ruling to not include stray or one

off transactions.

However, given that systematic and

continuous soliciting have not been made

part of the first limb of SEP a one off

transaction could get taxed.

Whether the test of ‘continuity’ would

still be a relevant factor to determine

‘business connection’ needs clarity.

Withholding of Taxes – Who tracks the limits?

The current withholding tax provisions

mandate a taxpayer to deduct tax at

notified rates on making payments to

non-residents that are taxable in India.

Now, with bringing to tax non-residents

doing business in India based on crossing

a threshold limit, taxpayers would be

burdened to deduct tax to protect itself

from the disallowance of expenditure

incurred and other liabilities under the

Act for non-deduction of tax.

2 CIT v. R D Aggarwal & C0 [1965] 56 ITR 20

Will a mere declaration from the non-

resident that it does not or is not likely to

cross the threshold limit suffice to protect

the interests of the taxpayer, will be a key

question.

In addition, payments are generally

effected through corporate credit cards

on payments to non-residents for digital

transactions, such withholding of taxes

would only add up to costs for taxpayers

who would be forced to pay by grossing

up the taxes.

Additionally, revenue authorities

would also have to put in place robust

mechanism to track the limits for non-

residents who do business with Indian

customers, as they could be missed from

the tax net if the Indian remitter does

not withhold taxes by virtue of having

transactions below the threshold limit.

Compliances: Adding injury to woes

With bringing non-resident taxpayers in

the tax net through SEP, there could also

be compliance requirements for such

non-resident entities, including

• Maintenance of books of accounts;

• Obtaining a tax audit report under

section 44AB of the Act;

• Withholding taxes on payments

linked to India sourced income;

• Computing and paying advance tax;

• Filing of return of income;

• Transfer pricing compliance,

wherever applicable.

To conclude, while the Government has

taken a step to bring economic presence

to the forefront for taxing non-resident

taxpayers, the attempt seems to create

pitfalls for both the revenue and the

taxpayers alike rather than resulting in

increasing footfall in terms of enlarging

the tax base and contribute to the revenue

mobilization for the Government.

23August 2019

57th Annual General Meeting SICASA-One Day Seminar on Latest Updates & Annual Returns-GST

CA. Venugopal Gella CA. Gella Praveen KumarCA. Madhava Yathigiri

One Day Seminar on Union Financial Budget and Audit under GST ACT at Tumkur Career Counselling

Inauguration of the programme CA. Naveen Khariwal G CA. Annapurna D Kabra

SICASA Study Circle Meetings

CA. Ramabadran CA. Shilpa Bafna CA. Prashanth K L CA. Mylar

Quiz , Elocution & Instrumental Music Contests

Career Counselling - Christ Academy Institute for Advanced Studies and Christ Academy Junior College

Industrial Visit - Goldman Sachs Services Pvt. Ltd Career Counselling - Sheshadripuram Composite College

Brindavan College

Bengaluru Branch of SIRC News Letter English Monthly Printed, Published & Edited by Editor CA. Bhat Shivaram Shankar, Chairman, on behalf of Bengaluru Branch of SIRC of ICAI., No.16/O, 'ICAI Bhawan', Millers Tank Bed Area, Vasantnagar, Bengaluru-560052, Karnataka

Tel : 080 - 3056 3500, Fax : 080 - 3056 3542, www.bangaloreicai.org e-mail : [email protected] Printed at: Jwalamukhi Mudranalaya Pvt. Ltd., 44/1, K.R. Road, Basavanagudi, Bengaluru-560 004, Ph : 080-2660 8090, e-mail : [email protected]

24 August 2019

CHARCHA GOSHTI Clause by Clause Discussion on Union Budget 2019 - INDIRECT TAXES & DIRECT TAXES

Inauguration of programme by lighting the lamp Day -1 CA. K.S. Ravi Shankar CA. Venkatramani S CA. V. Raghuraman

Inauguration of programme by lighting the lamp Day-2 CA. S. Ramasubramanian CA. H Padamchand Khincha CA. K. K. Chythanya

An Awareness Programme on Analysis of Union Budget 2019

Inauguration of programme by lighting the lamp Mr. Sharad Sharma, Co-founder,

iSPIRT Foundation

Mr. Narayan Ramachandran, Chairman & Co-founder,

InKlude Labs

Mr. Udaya Holla, Senior Advocate & Advocate General, State of Karnataka

CA. S. Krishnan, International Tax

Consultant

VIDWATH SABHA One Day Seminar on Audit & Taxation of Charitable or Religious Trusts, NGOs, NPO's

Inauguration of Seminar by lighting the lamp CA. Dr. N. Suresh CA. Kalyan Kumar K CA. Pavan Jayaprakash

Study Circle Meetings

CA. Krishna Upadhya S CA. Anjani Khetan CA. Priya Narayanan CA. Mahadev .R CA. C. R. Raghavendra

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