(Setup by an Act of Parliament) NEWSLETTER PUNE...

2015 APRIL

PUNE BRANCH OF WIRC OF ICAIPune VOL - IV - Issue No. 4 • 15/-

[ Subscriber’s copy not for sale ]

The Institute of Chartered Accountants of India(Setup by an Act of Parliament)

NEWSLETTER

2News Letter Pune Branch of WIRC of ICAI/April 2015

Negative attitude is like a punctured tyre, you cannot reach anywhere until you change it. So always think positive and be positive.

WIRC AWARD- Highly Commendable Performance 2014 to Pune Branch under Mega Branch Category being received from Hon.President,ICAI & Vice President,ICAI in presence of WIRC office bearers

CERTIFICATE OF APPRECIATION 2014 - PUNE BRANCH OF WICASA

HIGHLY COMMENDABLE PERFORMANCE 2014 - PUNE BRANCH OF WIRC

WIRC AWARD - Certificate of Appreciation 2014 to Pune Branch of WICASA under Mega Branch Category being received from Hon.President,ICAI & Vice President,ICAI in presence of WIRC office bearers


Dear members,

The spring season is spreading its cheerful & colorful greetings around us.

Also, the annual cycle of the financial year has completed one more round and we have arrived at the fresh financial year. Let me take this opportunity to wish you all a very happy, healthy, prosperous and fulfilling financial year ahead both on professional and personal level.

April is the perennial month with slogging work schedules for the CA members as well as study packed month for the CA students appearing for the examinations during the month of May. Here at Branch also all the Managing Committee members are busy in completing the routine year-end tasks and procedures well within the given deadlines by ICAI Head Office.

The programs in March-2015 providing important inputs to the students included the topics viz. “How to face CA IPCC Exam”, “How to face CA Final Exam”, “Career Opportunities after CA”, “Service Tax”, and the annual program of Gajare Memorial Motivational Speech and felicitations of the meritorious and successful students of the preceding year’s examinations.

The forthcoming important event for the students is the Extraordinary General Meeting (EGM) of Pune Branch of WICASA scheduled on 26 April, 2015. All the relevant information is available at Branch Website in Notice Board section.

For the Members, the month of March 2015 was marked with the seminars on the perennial subjects viz. “Union Budget Analysis” and “Bank Branch Audit”. The lecture meets during March covered the time specific topics like “Compliance before 31st March under Companies Act 2013 - from Auditor’s Perspective”, “Opportunities in Information Systems Audit”. With a view in keeping pace with the future of the Taxation era in our country a seminar on “Goods & Services Tax” (GST) was organized in which the Additional Commissioner, GST Cell, CBEC, New Delhi along-with other dignified and expert

speakers provided valuable details and guidance on the topic.There is another significant change luring at horizons of the Chartered Accountancy Course.In concurrence with the goal to building excellence on pillars of knowledge and competence our Institute is constantly in the process of reviewing and revising its Education and Training curriculums.

Due to the unprecedented changes induced by technology & globalization, like any other profession, the Chartered Accountancy Profession has to re-think the methods of its management and services. It’s the phase wherein we have to think globally and act locally.

On this background ICAI has set up in 2014 the “Committee for Review of Education and Training” (CRET), to formulate a new scheme of education and training for making the CA course more coherent in meeting the professional challenges with the best possible proficiency.

The Branch organized an “Outreach Meeting” at Pune in March 2015 for getting the views of various stakeholders viz. Members in Practice;Users of CA services and Members in Industry; Local Government Agencies; Persons from HR Department of Local Industry; & Academicians, Students and Parents.

I would like to conclude this communiqué with a request to all the members and students to keep visiting the Branch Website for all the details of the forthcoming programs and events.Look forward to interacting with meaningful purpose.Thank you!

PUNE BRANCH OF WIRC OF ICAIPlot No. 8, Parshwanath Nagar, Munjeri, Opp. Kale Hospital, Bibwewadi, Pune - 411037 | Tel: 020 2421 2251 / 52 | Web: www.puneicai.org | Email: [email protected]

Chairman’s Communiqué

CA. Yashwant KasarChairman Pune Branch of WIRC of ICAI

CENTRAL COUNCIL MEMBERCA. S. B. Zaware

MANAGING COMMITTEECA. Yashwant Kasar (Chairman)CA. Sachin Parkale (Vice Chairman)CA. Radhesham Agrawal (Secretary)CA. Anand Jakhotiya (Treasurer)

CA. Jagdeesh DhongdeCA. Rajeshkumar PatilCA. Ambarish VaidyaCA. Rekha Dhamankar

REGIONAL COUNCIL MEMBERSCA. Dilip ApteCA. Sarvesh JoshiCA. Satyanarayan Mundada

You have to grow from the inside out. No one can teach you, no one can make you spiritual. There is no other teacher but your own soul.


FORTHCOMING PROGRAMMES OF PUNE BRANCH OF WIRC OF ICAI

The cost of discipline is always less than the price of regret, so self-discipline is the biggest investment for success in life.

Notes :- Programme timing includes 1st half an hour Registration & Breakfast. For online registrations & detailed programme structure visit www.puneicai.org

DATE SEMINAR NAME VENUE TIME FEES

7th April,2015Lecture Meet on International Taxation: Looking beyond the obvious

ICAI Bhavan,Bibvewadi,pune-37

5.00 PM To

7.00 PMRs-100/-

10th April,2015

Lecture Meet on “Overview of Income Computation and Disclosure Standards (ICDS) under Income Tax Act,1961”


5.00 PM To

8.00 PMRs-200/-

12th April,2015Seminar for students on Amendment in Direct Tax & Project Finance


10 Am To

5 PMRs-100/-

14th April,2015Lecture meet on “Export Promotion Scheme - MEIS & SEIS under FTP 2015-20”


5.00 PM To

7.00 PMRs-100/-

17th April,2015 CPE National Live Webcast on “Companies Act 2013”


4.00 PM To

6.00 PMNA

17th & 18th April,2015

Workshop On IT SECURITY IN CA’s OFFICE ,CYBER CRIME INVESTIGATIONS & DIGITAL FORENSICS

3rd Floor, IT Center ICAI Bhavan, Bibwewadi, PUNE-

37

9:30am to

6.00pm

Rs.2400/- per Member & Rs.3370/-(Inclusive of Service Tax) For Non Members(Ltd Seats)

18th April,2015 Women CA Empowerment programme Hotel Aurora Tower, Pune

9.00 am To

5.00 pm

Fees: Rs 500/-, Discounted fees of

Rs 300/- for women members enrolled in last

3 years (enrolled after 1st January 2012)

19th April,2015 Seminar on “Agriculture Accounting ”


9.30 am to

5:30 pmRs-800/-

19th April To 17th May,2015

Advanced Excel for CA Members-2015 (Every Sunday for 5 Days)

IIFA Campus:917/15 A, Vikas A, Ganeshwadi, Behind British Library, FC Road,

Shivajinagar, Pune 411004.

9.00 am To

5.00 pmRs-3400/-

24th April to 28th April,2015

3rd International Study Tour to ‘Dubai & Abu Dhabi’ Dubai & Abu Dhabi -

Fees Rs-55000/- Member;

Rs-54000/- Spouse

26th April,2015Central and State Government Industrial Subsidies and professional opportunities for CA


9.30 am to

5:30 pmRs-600/-

8th May,2015

Nitty gritty of Private limited companies under companies Act-2013 Joint seminar by Pune branch of WIRC of ICAI & Pune Chapter of WIRC of ICSI


9.30 am To

5.30 pmRs-600/-

9th May to 7th June 2015

Certificate Course on International financial Reporting Standards (IFRS)

Will Inform Shortly - Rs-30,000/-

16th May to 21st June 2015 (12 days on Saturday & Sunday)

ISA PT batchOrbett Hotels

Deccan Gymkhana, Pune-411004.

- Rs.17500/-

22nd & 23rd May,2015

2 Days workshop on System Audit of Banks Will Inform Shortly

CPE HRS.

2 Hrs

3 Hrs

NA

2 Hrs

2 Hrs

12 Hrs

6 Hrs

6 Hrs

30 Hrs

8 hrs(CPE approval in

process)

6 Hrs

6 Hrs

60 Hrs

NA


Anger is the only evil which makes love invisible for a minute and love is the only worthy fact which is visible even after anger.

CA Pritam MahureGOLD MONETIZATION SCHEME CA. Gokul Rathi [email protected]

As you know, the Govt. initiated a scheme in 1996 for securitization of Equity Shares, Debentures, Bonds and MF Units whereby National Securities Depository was floated by the NSE. This was followed by BSE which floated CDSL. This one measure of dematerialization of shares and other securities, which were hitherto being held in physical form, revolutionized the entire stock market in the Country. As a result, not only the stock trading and investment has become easier but helped companies raise resources faster. It also helped generate huge revenues for the Govt. in the form of Securities Transactions Tax. Further, it helped generate huge Foreign Exchange Reserves as the FIIs were encouraged to invest in the Country’s Stocks.

Similarly, in a significant announcement in the Budget 2015, the Finance Minister, Mr Jaitley announced a Gold Monetization Scheme that will help investors earn interest on the gold they own. The new scheme will allow the depositors of gold to earn interest in their metal accounts, Mr Jaitley said, adding that it will also help mobilize the idle gold in the Country and put it into productive use. It is estimated that about 20,000 tons of gold, worth over Rs. 60 Lac Crores, is held in the Country. Banks and other agencies would also be able to monetize the gold deposited. Though the details of the scheme are yet to be announced, this one measure will go a long way in bringing out Gold which stashed in the households. As we know, we Indians have a penchant for amassing Gold and huge

amount of this Gold Reserve is held for ages together. ( The amount of Gold held in the Temples like Tirupati Devsthanam and the Padmanabha Temple is worth hundreds of Lacs of Crores rupees ). Once this Gold or even part of it comes out and is monetized, the money so blocked in unproductive use will come into circulation and would give tremendous push to the Economy, as has happened in case of dematerialization of Shares and Securities.The Finance Minister has announced certain measures, in his maiden full Budget, to contain circulation of black money, more particularly in Real Estate Transactions. He did not categorize the Gold Monetization Scheme under that category. However, this scheme is likely to have huge impact on circulation of black money. As we know, huge amount of black money or unaccounted money gets converted into Gold as holding huge amount of cash is otherwise not feasible and is quite risky also. Lots of such gold is likely to come out in the market once this scheme of monetization becomes successful.

The Finance Minister has also announced a Sovereign Gold Bond Scheme in the Budget to reduce India’s import of gold as well as put to work the vast amount of gold deposits held in the Country. This would be introduced as an alternative to purchasing physical gold. The bond or financial instrument will carry a fixed rate of interest and when investors sell the bond they will get the value of the gold. In such schemes, investors buying gold don’t get the metal in physical form. Instead,

COMPLIANCE CALENDAR FOR APRIL, 2015

Compiled by CA Amruta Saswadkar, Pune. [email protected]

Date Particulars

7th April, 2015 TCS payment of March, 2015 - ITNS 281

Submitting Forms 15G, 15H, 27C received in March, 2015 to IT Commissioner

10th April, 2015 Excise return for month / quarter ended March, 2015 - ER-1/2/3/6

STPI Performance report for March, 2015

15th April, 2015 STPI Performance report for the quarter ending March, 2015

PF epayment of March, 2015

21st April, 2015 ESI deposit of March, 2015

MVAT and CST return for month / quarter ended March, 2015 -Form 231-235, CST 1

MVAT and WCT TDS payment for March, 2015

25th April, 2015 Service Tax – Half yearly return ended March, 2015 – ST3

30th April, 2015 TDS payment of March, 2015 - ITNS 281

Excise annual returns FY2014-15 – ER-5/7

Profession Tax and return for March, 2015 - MTR-6, FORM IIIB


Races are not won by accelerating in top gear, but they are won by changing the gears at the right time.

Requirement of documents for EXPORTS under old & New Regime:

Export documents required from 12th March 2015

Export documents required before 12th March 2015 ( as

per World Bank’s Report)

Bill of Lading/Airway Bill Bill of Lading/Airway Bill

‘Commercial Invoice cum packing list’ or

‘Commercial invoice and packing list’

Commercial Invoice

Shipping Bill/Bill of Export

Shipping Bill/Bill of Export

Separate Packing List

Foreign Exchange Control Form (SDF)

Terminal Handling Receipt

Technical Standard Certificate

they get a paper or certificate issued by the Government certifying that they have bought a certain amount of gold.

Such Bonds offer a good alternative for investors who don’t want to buy physical gold. If one has the belief that gold prices will go up, he can just put the money in gold bonds. The beauty of this instrument is that when the price of Gold goes up, the bond price also goes up by the same amount. These gold bonds will also offer a fixed rate of interest. These bonds are designed to appeal to people buying gold for purely investment purposes, who may or may not want gold jewelry or who wish

to have gold at a future date. Once the Bond Scheme settles, there may be derivative options available for such bonds adding to their attraction.If the scheme becomes successful, it could help reduce the import of gold into the Country. India imports as much as 800-1000 tons of gold each year, draining away precious foreign exchange. It is estimated that such Gold Bond Scheme could help reduce India’s Gold Imports by as much as $10 billion (Rs. 60,000 Crores at Rs. 60 per US Dollar). While this all is happening, the days may not be very far when the Govt. brings a Scheme to monetize the properties also.

10 key facets of 122nd Constitutional Amendment Bill CA Pritam [email protected] & IMPORT – SIMPLIFIED BY GOVERNMENT CA. Swapnil Munot

[email protected]

Modi government seems to be very positive towards Business Community. In order to promote MAKE IN INDIA campaign & to adhere to the promise given by Honorable Prime Minister of India in his Japan visit held in Sep 2014 that “A red carpet, not red tape, awaits Japanese entrepreneurs coming to set up shop in India”, government has come with simplification in Import & Export documentation. BACKGROUND: As per Press Information Bureau, Government of India, “The Department of Commerce had set up an ‘Inter Ministerial Committee’ under the Chairmanship of DGFT in July 2014 to stud and recommend ways to reduce the number of mandatory documents required for export and import. The Committeheld detailed discussions with all stakeholders and the concerned Departments/Ministries/Agencies and also

visited JNPT to study the ground situation and find ways to minimize the number of documents and reduce transaction cost and time for exports and imports. The Committee submitted its “Trading Across Borders” report to Prime Minister’s Office in December 2014. Based on the recommendations of the report, (A) RBI has agreed to do away with the ‘Foreign Exchange Control Form (SDF)’ by incorporating the declaration in the ‘Shipping Bill’ (for exports) and dispensing with the ‘Foreign Exchange Control Form (Form A-1)’ (for imports). (B) Customs have also agreed to merge the ‘Commercial Invoice’ with the ‘Packing List’ and have issued a Circular No 01/15 Cus dated 12th Jan 2015, for accepting ‘Commercial Invoice cum Packing List’ that incorporates the required details of both the documents. The exporters and importers, however, have the option of filing separate ‘Commercial Invoice’ and

‘Packing List’ also, if they so desire. (C) Shipping Ministry has also agreed to do away with the requirement of ‘Terminal Handling Receipt’ and make the process online.”

NEW SIMPLIFIED EXPORT & IMPORT DOCUMENTS: As a consequence, DGFT has issued Notification No 114 (RE-2013)/2009-2014 dated 12-3-2015, and mentioned that only Three documents each would be mandatory documents for export and import which is explained in table below:


Luxury and lies have huge maintenance costs. Truth and simplicity are self-maintained without any cost. Honesty does not always pays, but dishonesty always costs. Lies have speed, but

truth has stamina.

As per World Bank, India ranks at No 126 among 189 countries in ‘Ease of doing business/Trading across Border’. The ranking methodology adopted by the World Bank for ‘Trading Across Border’ takes into account the number of mandatory documents required for export and import and the time and cost of exporting/importing a container out of/into the country. Therefore now with substantial reduction in documentation, we can expect that now India’s ranking in across border transaction will be improved in near future.This initiative would also lead to reduction in Transaction cost and time. The said changes are applicable from 12th March 2015.

Import documents required from 12th March 2015

Export documents required before 12th March 2015 ( as

per World Bank’s Report)

Bill of Lading/Airway Bill Bill of Lading/Airway Bill

‘Commercial Invoice cum packing list’ or

‘Commercial invoice and packing list’

Commercial Invoice

Bill of Entry Bill of Entry

Separate Packing List

Foreign Exchange Control Form (Form A 1)

Terminal Handling Receipt

Certified Engineer’s Report

Cargo Release Order

Product manual

Inspection report

Requirement of documents for IMPORT under old & New Regime:

10 key facets of 122nd Constitutional Amendment Bill CA Pritam [email protected] IN DEPRECIATION AS PER COMPANIES ACT, 2013 CA. Omkar Chandak

[email protected]

Depreciation= Single Shift + Extra Shift * No. of days of extra shift Depreciation Depreciation Normal working days of year

I. Introduction –• There is drastic change in compliance on the part of companies in order to implement disclosure of true and correct instead of true and fair view of financial statements.• An evolutionary change has been made in the provisions of Depreciation in Companies Act, 2013 as compared to Companies Act, 1956.• The concept of component accounting has been introduced to calculate fair value of depreciation to be charged to the statement of profit and loss each year

II. Basic Change in criteria-• The concept of Useful Life of Assets has been introduced to replace existing method of Rates of depreciation in Part C of Schedule II of Companies Act, 2013 as a base for computing depreciation.• Useful Life of Assets will be considered on the basis of Shifts.

III. Meaning of Shift & Extra Shift –• The term Shift is neither defined under Companies Act, 1956 nor under Companies Act, 2013.• Thus, it should be considered in common parlance as the period when same kind of work is carried out by group of

people.• The term extra shift should be considered as the period for which workers are employed over and above normal working hours.• Calculation of shift has to be with reference to a working day and not with reference to the entire year.• As per Companies Act, 2013, depreciation should be calculated on each asset considering the shifts for which it is actually used so as to consider its exact useful life.

IV. Extra Shift Depreciation –• The extra shift depreciation for double/ triple shift working should be calculated separately in proportion to no. of days for which asset is used for double/ triple shift as the case may be, w.r.t. normal number of working days in a year.• The extra shift depreciation so calculated has to be added to depreciation as per single shift in order to calculate total depreciation.

V. How to calculate Depreciation? (Formula) –


The ultimate measure of a man is not where he stands in moment of comfort, but where he stands at times of challenge and controversy.

VI. Component Accounting –• The Companies Act, 2013 has introduced the concept of Component accounting which was not the case of Companies Act 1956.• Each part of an asset with a significant cost shall be considered separately to calculate depreciation.• Accordingly, useful life of such a part of an asset should be determined if it is different from other part of an asset.

e.g. An Asset is purchased X Ltd. Costing Rs. 50 Lakhs comprising of engine of Rs. 44 Lakhs and other parts of Rs. 6 Lakhs. The residual value of engine and other parts is Rs. 4 Lakhs and 1 Lakhs respectively. The useful life of Asset is 20 years whereas useful life of Engine is 10 years only.

Depreciation as per Companies Act, 1956.

Depreciation as per Companies Act, 2013

• At the end of useful life of each component, it will be replaced and the replacement cost should be accordingly capitalised. Thus, it depicts the overall correct view of financial statements.

• Thus, even though overall depreciation amount that will be charged to statement of profit & loss will be same during the entire useful life of asset, the annual charge to statement of profit & loss will differ drastically.

• The component accounting results in disclosing the actual wear & tear of asset at the end of each

year and replacement cost of asset can again be capitalised in the cost of same asset.

VII. Residual Value –• The residual value of asset is normally considered as NIL if it is insignificant.

• However, if residual value is significant, it is generally estimated at the time of acquisition/installation, or subsequent revaluation of an asset.

VIII. Criteria for changes in Residual value and Useful life for certain companies under companies act, 2013 –

To sum up :

Sr. No.

ParticularsRs. (in Lakhs)

A Total Cost of Asset 50.00

B Total Residual Value of Asset 5.00

C Depreciable value of Asset (A-B) 45.00

D Useful Life of Asset 20 years

E Annual Depreciation (C/D) 2.25

Asset Component

Depreciable Amount (Rs.

In lakhs)Useful Life

Annual Depreciation (Rs. In Lakhs)

Engine 44-4=40.00 10 years 4.00

Other Parts 6-1= 5.00 20 years 0.25

Total- 4.25

Type of Company

Residual value or useful life

Whether any change

allowed

Regulated EntitiesAs notified by

regulatory authority or by central Govt.

Mandatory. Management

cannot change the basis.

Such class of companies as may be prescribed

As indicated in Part C of Schedule II

of Companies Act, 2013.

Management can consider different

basis on disclosure of justification for

the same.

For all other companies

Useful life shall not be longer and

residual value shall not be higher than that prescribed in Part C of Schedule

II of Companies Act, 2013.

Management can opt for only

shorter useful life and lower residual

value.

Depreciation as per Companies Act,

2013.

Useful Life of Asset is considered and not the rates of depreciation.

Proportionate Dep. is considered if asset

is used for double or triple shifts.

Total Depreciation of asset is the sum of depreciation of each component every year.

Correct disclosure of assets in the financial state-ments of the Company.

Useful Life and Residual value of

component is considered.


Smile increases value of face, anger spoils beauty of soul, faith is force of life, confidence is companion of success, so keep smiling.

India, is on the cusp of a massive tax reform with movement from the existing multiplicity of indirect taxes to a Dual Goods and Services Tax Regime (Dual GST Regime). With introduction of the 122nd Constitution Amendment Bill in the Parliament, there is renewed optimism that the most important piece of India’s tax reform initiative, is on course and introduction of GST from 01 April 2016 looking pre-eminent.

The much awaited GST Regime announced way back in 2006 had missed several deadlines in the past due to lack of political consensus. The groundwork on GST implementation got a fresh impetus with the new federal government taking charge in 2014. The new government laid down a strong intent statement of implementing GST in the Union Finance Budget in May 2014. The intent statement was followed up with introduction of the revised Constitutional Amendment Bill in the Parliament on 19th December 2014 post hectic parleys with the States to evolve a consensus. In the Union Budget 2015, the Union Finance Minister had underlined the importance of GST to be a game changing reform for the Indian Economy and reiterated their commitment to make it a reality from 01 April 2016. The Dual GST Model proposed to be implemented is a unique one, which increases the uncertainties around the effectiveness thereof in the long run.

One of the key factors that will be critical for success of Dual GST model will be an efficient and robust tax administration system. It is imperative to have an effective administration system not only for collection of due revenues but also to ease compliance burden; facilitate voluntary compliance; reduce corruption; strengthen the legal and regulatory frame work; broaden the tax base; ensure strict action against defaulters etc. The quality of tax admiration will be the single biggest factor contributing to broadening of the tax base, which is being looked at by the Government in the GST scenario.

Historically, the state tax administrations are familiar with taxing goods only. Taxing services is an alien world for most of the state tax officials. By its very intangible nature taxing services is far more complicated vis-à-vis goods. It has always been difficult to define the time and place where services have been rendered which are the fundamentals for taxing a service. Even the developed economies across the globe with VAT/GST Systems in place for decades, have witnessed regular changes in the mechanism for taxation of services. Services effortlessly cross borders with greater use of information technology and thus poses greater challenge to the tax officials. It is important for the tax officials to keep pace with the ever intensifying

complex service transactions.

The challenge of taxing services in the ever changing technological world is not a problem restricted to Indian sub-continent. Even the developed countries face the same challenge. The only way to tackle the same efficiently is to keep abreast with the developments across various sectors, the latest technological changes etc. through a continuous training mechanism. A cadre of carefully selected and trained officers are required to be deployed to administer the new tax regime. Undoubtedly even the trained officials will face various teething problems on introduction of GST as officials who had historically been familiar with taxation of goods would suddenly be required to struggle with complex service transactions.

The case of overlapping in taxes on intangibles including software and the everlasting debate on whether these are goods or services has been one of the largest litigative proposition in India.

The case of e-commerce sector presents one of the most recent examples of the challenges in taxation. The tax authorities at various levels seem to have failed to keep pace with the rapid developments in the e-commerce sector, the nature of business transactions and the relationship between the various stakeholders in the transactions. This lack of complete understanding has resulted into multifarious litigations and challenges for the e-commerce sector which would if not suddenly, would definitely in the long run may start impacting the sector.

The reach of a vendor in the pre e-commerce era was limited to the location of his shop or the immediate vicinity. The growth of e-commerce sector has opened vast avenues for such vendors where they can compete with multiple number of other vendors and may be supplying goods to end consumers located across India. The State Tax Administration does not, per-se, seems to be having any control mechanism to track the quantum of supplies made by such vendors. In such a scenario, the fact that in the absence of such control mechanism, quite some vendors may not be accurately reporting the whole sales revenues and may not be correctly discharging the taxes cannot be entirely ruled out.

Another challenge with regard to e-commerce transactions is on account of monitoring also. In certain States, it is a mandatory requirement to obtain an inward form from the range VAT department before buying the goods inter-state for

GOODS AND SERVICE TAX IN INDIA – A TAX REFORM OR A BUSINESS REFORM CA. Sagar Shah [email protected]


Anyone can count number of seeds in an apple. But no one can count number of apples in a seed. Future is unseen. Always hope for the best.

self-consumption and a different form in case goods are bought for further sale or to be used in business. It is difficult for an end consumer to first understand the nuances of obtaining the forms, approaching the department for getting these forms and then providing the same to e-commerce vendor for movement of the goods. An end consumer may prefer to buy the goods from a brick & mortar store rather than going through these endless challenges for some discounts. This requirement of entry forms accordingly serves as an artificial barrier for free flow of goods from one State to another.

The underlying reason for the artificial barrier seems to be emanating on account of a taxation system which is origination based rather than destination based, in respect of inter-state transactions. Goods sold through brick and mortar store fetch revenue to the state government but goods purchased through e-site doesn’t when the same are being dispatched inter-state from another State. Say, a customer situated in State A bought certain goods from e-commerce site. The warehouse is situated in State B. The goods moved from State B to State A and the dealer charged Central Sales Tax from State B on the transaction. The State A lost the revenue as it is a inter-state sale. However if the same customer would have bought the goods from brick and mortar store within the State A, the State Government would have got the tax. Now, if we compare the same transaction under the GST scenario the Government of State A will be neutral as to whether the goods are bought by an end consumer from a brick & mortar store or an e-commerce site, since the State A would ultimately get the GST revenues in both the transactions. Thus, the same transaction which is considered as a loss to a state today will change completely and will result in a revenue for the state tomorrow.

It would also be imperative to have the place of supply rules defined in a manner that it would help achieve the real intention of GST and make it simple to understand, implement

and administer.

The above factors clearly underline the requirement of a more comprehensive understanding of the various business models by the State Government Officials, requirement to ease the compliance burden, strengthening of the control mechanism etc.

Considering that the GST regime is a revolutionary tax; the ever changing technology; opening of new avenues to do business; expansion of tax base; ever diminishing difference between goods and serves and want of trained officials on the subject, are going to pose significant challenge on the administrators. The success of GST will depend upon how efficiently and effectively the various tax administrations are able to implement the new law. It is high time that government invests meaningful time and effort in training the officials to handle the new regime. It is imperative to have a robust tax administration so that the tax payers respect the rule of the law and discharge taxes fully and completely.

The tax administrators across the country need to take stock as to the current organizational capabilities, training needs at various levels, training plan for the various officers and set the same into motion at the earliest considering the proposed implementation date of 01 April 2016. The said exercise would be crucial to make sure that the tax administrations are adequately geared up for the new regime and can serve as enablers for GST to realize its full potential both for the tax coffers as well as the industry and consumers at large.

An efficacious implementation of GST and twin policy objectives of “Ease of Doing Business” and “Make in India Campaign” go hand-in-hand and success of GST would launch the economy and the twin policy objectives in an entirely different orbit.

10 key facets of 122nd Constitutional Amendment Bill CA Pritam [email protected] COMPUTATION AND DISCLOSURE STANDARDS (ICDS) CA.Prasad Zaware

[email protected]

I. Introduction –• Prior to ICDS, Income Tax Act,1961 notifies two accounting standards, i.e., one relating to disclosure of accounting policies and disclosure of prior period and extraordinary items and the other on changes in accounting policies.• During December 2010, Central Govt. constituted a committee to draft Income Computation and Disclosure Standards (ICDS).• In August 2012, committee issued draft 14 Tax Accounting

Standards for public comments and after revision Central Govt. has now notified 10 ICDS effective from 1st April,2015, i.e., for A.Y. 2016-17.

II. Applicability-• ICDS are applicable to all Assessees,i.e, corporate and non-corporate irrespective of net worth and turnover criteria.• ICDS are applicable only for computation of income under the heads “Profits and Gains from Business or Profession”


Weak people believe in revenge, strong people believe in forgiving and intelligent people believe in ignoring. Do not waste your time with explanations. People only hear what they want

to hear.

VIII Tangible Fixed Assets 10

IXEffects of changes in

foreign exchange rates11

X Government Grants 12

XI Securities 30

XII Borrowing Cost 16

XIIIProvisions, contingent

liabilities and contingent assets

29

ICDS No. NameEquivalent Accounting Standard

I. Accounting Policies 1

II. Valuation of Inventories 2

III. Construction Contract 7

IV. Revenue Recognition 9

V. Tangible Fixed Assets 10

VI.Effects of changes in

foreign exchange rates11

VII Revenue Recognition 9

and “Income from Other Sources”.• ICDS are applicable only for the normal computation of income and not for calculation of Minimum Alternate Tax(MAT).• In the case of conflict between the provisions of the Income‐tax Act, 1961 and Income Computation and Disclosure Standard, the provisions of the Act shall prevail to that extent.

III. Income Computation and Disclosure Standards (ICDS) –

V. Major changes –

a) Inventories (ICDS-II) –

• Valuation of opening stock as per clause no. 22 –

The value of inventory as on the beginning of previous year shall be

• the cost of inventory available, if any, on the day of the commencement of the business when the business has commenced during the previous year; and

• The value of the inventory as on the close of the immediately preceding previous year, in any other case.

Thus, if one enterprise has to change its opening stock just because of change in method of valuation from FIFO to Weighted Average, it cannot change because of this clause.

b) Construction Contracts (ICDS-III) –

• Revenue recognition of contracts at early stage as per clause no.20-

During the early stages of a contract, where the outcome of the contract cannot be estimated reliably contract revenue is recognised only to the extent of costs incurred. The early stage of a contract shall not extend beyond 25 % of the stage of completion.

• The threshold limit of 25% for judgment of early stage of completion which is contained in ICDS will have a greater impact on computation.

• Further, unlike AS-7, ICDS did not provide for recognition of losses immediately on expected losses on contracts. Hence, as on 31-03-2015 if entity booked expected losses on contract as per AS-7 then entire loss will be disallowed and allowed on percentage completion method basis.

c) Effects of changes in foreign exchange rates (ICDS-VI) –

• Recognition of exchange difference arising on settlement of monetary items as per clause no. 5 (i)-

Exchange Difference in respect of monetary items, exchange differences arising on the settlement thereof or on conversion thereof at last day of the previous year shall be recognized as income or as expense in that previous year.

• From the above it is clearly understood that company having balance in ‘‘Foreign Currency Monetary Item Translation Difference Account” (FCMITD) account will now required to charge to Profit & Loss for the purpose of computation of income by virtue of Transitional provision contained in ICDS.

d) Borrowing Cost (ICDS-IX) –

• The definition of borrowing cost as per ICDS does not


The true strength of a person is judged by not how well he prepares for everything to go right, but how he stands up and moves on after everything has gone wrong.

For the information of Members : Following Advertisement has been published in the Pune edition of “Times of India” Newspaper page. No. 17 and “Daily Sakal” newspaper page no.9 on Saturday, 4th April 2015.

REQUIRED LAND / PREMISES FORPUNE BRANCH OF WESTERN INDIA REGIONAL COUNCIL (WIRC) OF

THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA (ICAI)(Set up by an Act of Parliament)

Pune Branch of WESTERN INDIA REGIONAL COUNCIL (WIRC) OF THE INSTITUTE OFCHARTERED ACCOUNTANTS OF INDIA, New Delhi (ICAI) proposes to acquire freehold land or constructed premises in Municipal Corporation limits of Pune City with free,clear and marketable title, directly from the Owners / Developers / Promoters to the extent of about 3,716 sq. mtrs. (i.e. about 40,000 sq.ft.) of land or constructed premises. Land / constructed premises reserved for educational purpose will be preferred.The parties holding such freehold land/constructed premises having a free, clear and marketable title are invited to send their expression of interests in prescribed form within 21 days of publication of this invitation for offer. Prescribed form is available at : Pune Branch of WIRC of ICAI, ICAI Bhawan, Plot No. 8, Parshwanah Nagar, CTS No. 333, Survey No. 273, Bibwewadi, Pune - 411037. Phone : 020-24212251/52.Brokers please excuseChairman, Pune Branch Infrastructure Committee of ICAI.

provide for exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs.

• Entity having borrowing cost by virtue of above mentioned AS will not be entitled to claim borrowing cost under ICDS while computation of income.

V. Conclusion –

• From 1st April, 2015, entity is now under compulsion to calculate taxable income under the head “Profits and Gains from Business or Profession” and “Income from other sources” as per ICDS.

• Further, provisions of ICDS shall be considered for calculating Advance Tax for F.Y. 2015-16.

May God grant eternal peace to their noble soul!

ANNOUNCEMENT

GENERAL AMNESTY SCHEME FOR RETROSPECTIVE RESTORATION OF MEMBERSHIP (ONE TIME DISPENSATION)The names of the members whose name is removed prior to 31 st March 2014 on account of non payment of fees and not restored as on date may apply for retrospective restoration of their names under General Amnesty Scheme by filling Form 9 along with the membership fees for the year during which the name was removed and for the current year together with the fee(s) for the intervening years and the additional fee of Rs.1200/- towards restoration. To avail benefits of General Amnesty Scheme, members should submit the requisite fees and Form ‘9’ latest by 30 th April 2015. Members desirous of availing the opportunity may also apply on-line for restoration of their name by visiting www.icai.org and downloading pre-filled Form ‘9’. The link is given on home page “Know Your Institute - Restore your Membership”.


SEMINAR ON” UNION BUDGET ANALYSIS”

Inauguration

CA. Narendra Kulkarni Guest of Honor

CA. D. P. SharmaChief Guest

CA. Girish AhujaFaculty

CA. Ashok Batra Faculty

SEMINAR ON” BANK BRANCH AUDIT”

CA. Shriniwas Joshi CCM-Faculty

CA. D. G. Kurundwadkar Faculty

CA. Kiran Kunte Faculty

CA. Prashant TidkeFaculty

Inauguration

CA.KVS ShyamsunderFaculty

A good friendship does not depend on how good understanding we have, but it depends on how better we avoid misunderstanding.


There is nothing called darkness. It is just absence of light. Similarly, there is nothing called a problem. It is just absence of an idea to find an appropriate solution.

Late CA. S. B. Gajare Memorial Meritorious Students Felicitation Function

Mr.Sunil Bakshi, CA.Shirish Padey, CA.R.R.Ponkshe, Panelist-Mind Meet on Opportunities in Information Systems Audit

Committee for Review of Education and Training(CRET) - “Outreach Meeting”

CA. S.B. Zaware, CCM & CA. Hemant M. Joshi-Speaker

Webcast on Introduction to Ind AS, Roadmap and Presentation of Financial

Statements

SEMINAR ON” GOODS & SERVICE TAX”(GST)

Shri.Rajesh PandeyGuest of Honor

CA. Sagar ShahFaculty

CA. Upender GuptaFaculty

Inauguration

CS.Vinayak KhanwalkarFaculty Lecture Meet on “Compliance before 31st March under Companies

Act 2013 - from Auditor’s Perspective”

Publication Date: 10th of Every MonthPosting on 12th of Every month at Pune GPO-411001

NEWSLETTER PUNE BRANCH OF WIRC OF ICAI

RNI Reg. No.: MAHENG/2012/44928Postal Reg. No.: PCE/046/2015-2017

1) Back Page (19x15) Colour: : 13,800/-2) Inner Back Page (A4) Colour: : 13,800/-3) Full Page (A4) Colour : : 12,650/-4) Half Page: : 5,200/-5) Quarter Page: : 2,900/-Discount: *3 to 6 Insertions - 10%

*7 to 12 Insertions - 15%

ADVERTISEMENT TARIFF

FOR PUNE BRANCH NEWSLETTER WEF AUGUST 2014

Disclaimer: The ICAI and the Pune Branch of WIRC of ICAI is not in any way responsible for the result of any action taken on the basis of advertisement published in the newsletter. The members, however, may bear in mind the provision of the Code of Ethics while responding to the advertisements. The views and opinion expressed or implied in the Newsletter are those of the authors / contributors and do not necessarily reflect of Pune branch. Unsolicited matters are sent at the owner’s risk and the publisher accepts no liability for loss or damage. Material in this publication may not be reproduced, Whether in part or in whole without the consent of Pune branch. Members are requested to kindly send material of professional interest to [email protected] the same may be published in the newsletter subject availability of space and editorial editing.

Total Circulation: 6000; Total No. of pages 16 including Covers This Newsletter (Monthly) is owned by Pune Branch of WIRC of ICAI Printed & Published by CA. Yashwant kasar, Printed at Deepak Offset, Hadapsar, Pune - 411 028 & Published at ICAI Bhavan, Plot No.8, Parshwanath Nagar, Munjeri, Opp. Kale Hospital, Bibwewadi, Pune - 411 037. Editor: CA. Radhesham Agrawal

To,BOOK POST

If undelivered return to: Pune Branch of WIRC of The Institute of Chartered Accountants of IndiaPlot No.8, Parshwanath Nagar, Munjeri, Opp. Kale Hospital, Bibwewadi, Pune - 411 037. T: 24212251 / 52; Email: [email protected]

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