CA and CS HUB

Convergence to IFRS (Ind AS)– Indian banking scene

Subramanian Natarajan
1) How IFRS got its position from GAAP

Even today, when one hears people from Nilgris, Tamilnadu, India lost Re10 Crores to an unknown financial company, one’s mind goes back to 1930, when the great depression wiped out the whole capital of many investors in USA. Investors in USA craved for accounting standards and hence “Generally Accepted Accounting Principles” were developed by Certified Public Accountants, duly authorised by the government. It originated with words like financial statements, assets, liabilities, equity, revenue, expenses etc. Other countries just followed U.S.A. and thus evolved GAAP in every country. Auditors or bankers proudly accepted those financial statements, duly authorised and highly relied upon for investment, expansion or raising resources. The whole world can move capital and help the nations to raise their economies. It enabled the investors to increase their income to unknown limits.

But the unison call to make Europe as a single political entity and exploit its economic wealth by mutual investments from member countries posed new challenges. Some felt of common accounting principles exclusively for Europe and thus “International Financial Reporting Standards” with variations from GAAP were created. It believes in dealing with the current developments and providing for them. Being conservative in approach, it treats income on long period as one for each year while expects losses for future and start providing for the same from current year onwards. IFRS was introduced in 2006.

2) Why Indian accounting standards merged with IFRS

To enable India to converge with IFRS, meaning, making some adjustments in Indian Accounting Standards to suit our economy, India got Ind ( AS) which had been notified by Ministry of Corporate Affairs, Government of India vide its communication dated 18th January 2016.

Reserve Bank of India vide its communication dated June 23, 2016 advised all Banks to submit Performa Ind (AS) Financial Statements, for the half year ended September 30, 2016 latest by November 30, 2016 in new formats which were included with its communication.

The formats of Ind AS Financial statements were named as under:-

(a) Balance Sheet including Statement of Changes in Equity

(b) Profit and Loss Account

(c) Notes

RBI further advised the banks that the formats which were included with the communication of RBI were only for submission to them and not for replacing the financial statements for the financial years 2016-2017 and 2017-2018 in the current Performa. This clearly explains the fact that the common share holder will continue to get his financial statements as usual in the current formats for the said financial years. This is to enable the banks to understand the new accounting standards and get prepared for the same. Those banks which would not be in a position to both standalone and consolidated Performa Ind AS statements for the financial year ended September 30, 2016 will submit standalone statements only.

The banks were advised to disclose significant accounting policies including, inter alia, the following:

1) Financial assets and liabilities, including use of fair value option in designating financial assets or financial liabilities at Fair Value through Profit or Loss (FVTPL) upon initial recognition.

2) Impairment of financial assets with the following details:

Methodology for computation of expected credit losses (ECL)
Level of segmentation in the portfolio used
Criteria used for determination of movement from Stage 1 (12 month ECL) to Stage 2 and Stage 3 (lifetime ECL)
The method used to calculate lifetime ECL
The manner in which the forward looking information would be incorporated in the ECL estimates- the information to include discussion of judgement required and how it would be applied in determining the allowance
The treatment for non-fund based facilities
The methodology for revolving credit facilities
The impact of movement from the current approach to ECL approach
The banks were informed by RBI to finalise policy on expected credit loss provisioning, taking into account the impairment requirements under Ind AS standard No. 109. The banks were also advised to maintain flexibility while designing the systems and processes in regard to derivatives, de- recognition of financial assets and financial liabilities, employee benefits, offsetting financial instruments and income taxes. The banks would have to adopt Ind AS 101 First time Adoption of Indian Accounting Standards while changing from present Indian Accounting Standards to Ind AS standards.

But the fundamental question for an average banker is how does RBI letter affect him with his deposits, advances (fund based and non-fund based), and can anyone explain in simple terms the calculation of cost of capital for banks? Most of the books on IFRS explain in technical terms the implications of implementation of the standards and how to do it.

As a banker with vast experience in both Indian and global, I want to start from the beginning..

3) Framework for financial statements and their evolution and relevance

Terms of Framework for the preparation and presentation of Financial Statements in line with the original document produced in July 1989 by International Accounting Standards Board remain effective for Ind AS and it is a conceptual framework upon which Ind AS is based. Naturally, it defines how the financial statements are to be produced. It is not an accounting standard. The financial statements quoted above are run with the fundamental assumptions of going concern concept and accrual concept for the banks. The qualitative characteristics of financial statements are understandability, relevance, materiality, reliability and comparability. The elements of financial statements are balance sheet and statement of profit and loss.

The elements of balance sheet are assets, liabilities and equity. One is tempted to know how we understand assets or liabilities which would lead us to Ind AS . An asset is a resource, controlled by an enterprise, as a result of past events and from which future economic benefits are expected to flow to the entity. It is strange that contrary to a common man’s understanding, it is expected to help in future. Let us see how a liability is defined. It is a present obligation of the enterprise (in our case a bank) arising from past events the settlement of which is expected to result in an outflow from the enterprise of resources embodying economic benefits. It is strange it talks of today’s obligations meaning we have to pay them today out of our income.

The elements of Profit and Loss are income and expenditure.

Income represents increases in economic benefits during the accounting period in the form of inflows or enhancement of assets or decrease in liabilities that result in increase of equity, other than contributions from the equity participants.
Expense represents decreases in economic benefits during the accounting period in the form of outflows or depletion of assets or increase in liabilities that result in decrease of equity, other than distributions from the equity participants.
4) Ind AS and how RBI viewed its introduction in banks

As soon as the government committed to G 20 conference of nations Indian convergence to IFRS, RBI constituted a committee of all stake holders like banks, ICAI, and others to look into the issues that would arise while implementing the Ind AS since it is totally a new deviation from present Indian Accounting Standards and commits to a new approach. Though two committees were constituted by RBI, the second one incorporated all the recommendations of the first and we would deal with the second one only.

After holding extensive discussions with all stake holders, the group structured its recommendations into the following key areas with special emphasis on financial instruments:

Classification and measurement of financial assets
Classification and measurement of financial liabilities
Hedge accounting and derivatives
Fair value measurement
Impairment of financial assets
Presentation of financial statements and disclosure
DE recognition, consolidation, and other residuary issues
The working group also devised formats for financial statements of banks under Ind AS and application guidance thereon which were also given at the end of the report as annexure. An instrument wise valuation requirements under existing GAAP and Ind AS along with recommendations thereon were also given for guidance. The group also identified the RBI instructions that are at variance with Ind AS 109 and would need change in future.

5) Classification of financial assets

After, initial recognition, as per Ind AS, 109, financial assets may be classified a subsequently measured at (a) amortised cost, (b) fair value through profit and loss (FVTPL) or (C) fair value through other comprehensive income (FVOCI).

Ind AS 109 allows subsequent measurement at amortised cost for debt instruments only if they satisfy both business model test as well as characteristics of cash flow test.

Under business model test, the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows. Under cash flow test, the contractual terms of financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Principal is the fair value of the financial asset at initial recognition. Interest consists of consideration for the time value of money, for the risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs, as well as profit margin. Ind AS 109 explains further how to measure at FVOCI or FVTPL. To implement Ind AS in Indian banks, it may be essential to explain what type of business model and how its performance is reported to the Key Management Personnel. RBI will give detailed guidelines or allow the banks to put up an exhaustive write up to the Board with a copy to RBI as well other stake holders about implementing the new standards.

Interests in subsidiaries, associates and joint ventures would be accounted for in accordance with Ind AS 110: Consolidated Financial Statements, Ind AS 27: Separate Financial Statements, Ind AS 28: Investments in Associates and Joint Ventures. Various issues were raised by banks about classification of financial assets (debt instruments) under amortised cost or FVOCI or FVTPL. Some banks wanted to know whether the current instructions on securities classified currently as held till maturity, Available for Sale or Held for Trading would meet the requirements of Ind AS 109 instructions. It was decided by the working group that RBI instructions in 39 circulars issued earlier as well some legislative amendments for section 15 and under section 29(4) and third schedule need changes to be initiated to implement the new standards. This will be done before April 1, 2018.

6) Classification and Measurement of Financial Liabilities

Ind AS 109 requires initial measurement of financial liabilities at fair value irrespective of the category in which it will be subsequently categorised. It would also include transaction costs that are directly related to the acquisition or issue of the financial liability. Valuation technique is used wherever needed. The following clarifications related to various popular bank financial liabilities were offered in the report:

Question: Current deposits are basically maintained at zero interest and are always recognised at fair value. The question raised was whether to have fair value of the deposits using valuation technique? Similarly, banks are permitted to offer various rates of interest depending upon banks and their requirements though they do maintain a similar rate throughout the nation. Is there a need to have a valuation technique by comparing market rate?
Answer: Paragraph 47 of Ind AS 113 states that “ the fair value of a financial liability with a demand nature ( e.g., demand deposit) is not less than the amount payable on demand, discounted from the first date that the amount could be required to be paid.” As such, no change from the transaction price is visualised. As regards savings or fixed deposit rates, the banks have been forced by market players to offer the best rate they can afford or as per their requirements over a period of time. It is pertinent to observe that one foreign bank is offering Savings bank deposit interest rate as equivalent to the fixed deposit rate offered for one year by a nationalised bank. In foreign countries, it is not uncommon to sell the deposits on day to day basis and adjust by buying liabilities to make required profits.
Ind AS 109 provides for two measurement categories for financial liabilities, viz. fair value through profit and loss (FVTPL) and amortised cost. Those who are held for trading are measured through FVTPL while other liabilities are measured at amortised cost, unless fair value option is used.
7) Hedge Accounting and Derivatives

In India, various derivative instruments are permitted and regulated by various bodies like RBI, SEBI and Forward Market Commission (FMC). RBI which issues instructions on hedge and derivative accounting has based its calculations on product specific and therefore conceptually disconnected. In contrast Ind AS 109, instructs all financial derivatives to be measured at fair value irrespective of the derivative product/type. Under Ind AS 109, except for those derivatives which form part of an effective hedging relationship, gains and losses would be invariably recognised in Profit and Loss account. In view of the differing instructions issued by RBI so far, to restrict real profit or loss making by banks, Ind AS 109 categorises all derivatives like interest rate swaps, forward rate agreements, and exchange traded interest rate derivatives to be categorised under FVTPL. To meet the expectations of new standards, RBI has agreed to issue new directions to banks.

8) Fair Value Measurement

As per current RBI instructions, only investments are subjected to fair value measurement. Ind AS 113, has the objective of defining fair value, setting out a single IFRS framework for measuring fair value and specifying disclosures about fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e. an exit price at the measurement date from a prospective of a market participant who holds the asset or owes the liability). Where active markets exist for securities which are quoted in stock exchange and available for exchange, the market prices are to be used for fair value measurement. Expert bodies like FIMMDA may be requested to provide valuation based on market based /market corroborated inputs taking into Ind AS 113 into consideration to ensure uniform application among the banks. Detailed category wise investments, summarised RBI guidelines as applicable today, and Ind AS requirements as well as the recommendations of the working group have been given as annexure in the main report. It is realistic to expect further action at RBI/banks level to implement revised standard requirements.

9) Impairment of Financial Assets

Ind AS 36 defines impairment loss as the difference between carrying amount of an asset and the recoverable amount and is recognised in profit and loss account. Even after the occurrence of heavy floods which damaged a large number of houses and other properties in India, banks did not revalue the assets and make the required loss allowance. Our current procedures provide for the impairment to occur and then step in to rectify the situation. To obviate this “ too little, too late” approach, which is governed by IAS 39, a forward looking “expected credit loss” framework for recognising impairment on financial assets has been developed. RBI has given the detailed analysis which has been quoted from the RBI working group report (page 64, impairment of financial assets, para 6.1, 6.2)

“The IFRS 9 ECL requirements are applicable to all financial assets classified under amortised cost, FVOCI, lease receivables, trade receivables, commitments to lend money and financial guarantee contracts. Initially, on origination or purchase of a financial instrument, 12 month expected credit losses are recognised in profit or loss account and a loss allowance is established (stage 1). Subsequently, if the credit risk increases significantly and the resulting credit quality is not considered to be low credit risk, full time expected credit losses are recognised ( stage 2). Once the credit risk of a financial asset increases to the point that it is considered credit-impaired, interest revenue is calculated after netting the impairment allowance from the gross carrying amount (stage 3).

This contradicts the present RBI guidelines which advise the banks to make provisioning based on criteria established by the RBI, which are predominantly based on days past due concept ( 90 days norm). All the banks currently follow this practice. If this practice is replaced by ECL, the banks may have to provide more loss allowance which may affect the profit and loss account. RBI in consultation with Government of India may allow a few banks who have developed sophisticated credit modelling skills to adopt the new system.

10) Presentation of Financial Statements and Disclosures

The current financial reporting framework for banks is guided by the Banking Regulation Act, 1949 (Section 29 read with the Third Schedule) supplemented by instructions issued regularly by RBI in tune with current Accounting Standards. However, Ind AS on the basis of following standards requires different formats for financial statements:

Ind AS 1: Presentation of Financial Statements
Ind AS 32: Financial Instruments Presentation
Ind AS 107: Financial Instruments Disclosure
Ind AS 109: Financial Instruments
The working group considered various formats used by international banks incorporated in European Union (EU). After detailed discussion, RBI prescribed the following financial statements to be prepared by the banks:

Balance Sheet of ——-( name of the bank) as at March 31,—–; Statement of changes in equity of —-( name of the bank) as at March 31,—-
Profit and Loss Account of ——-( Name of the bank) as at March 31,——
Notes to Financial Statements ( 25 ) in number
The beginning of this article speaks details of new additions which would transform the reporting standards of banking most since independence. A detailed study of these returns would be undertaken in the future

Conclusion

For the first time like international banks, Indian banks would incorporate details of net gain /(loss) on fair value changes , impairment losses on financial instruments, classification of assets and liabilities under amortised cost, Fair value through comprehensive income, Fair value through profit and loss account etc. These new changes require a bank employee to update, understand and apply new standards reflecting the outstanding levels of excellence achieved by Indian Banks. Previously, we were often quoted the examples of foreign banks for raising our output and show better financial standards. Now with new financial reports based on modern expectations, Indian banks would be forced to follow international standards. Whenever India needs to raise a $1billion or more, our financial reports based on Ind AS would meet international approvals. A person from any part of the world would just look at Indian Banks’ financial statements and would show no hesitation in investing in their ventures. For the fastest growing economy like India, it brightens up its horizon.

References

RBI Working group report submitted by Sudarshan Sen, Chairperson vide letter dated September 8, 2015. Report can be viewed from rbi.org.in
Illustrated Guide to Indian Accounting Standards (Ind AS) by B.D. Chatterjeee and published by Taxmann Publications Pvt Ltd, New Delhi
Ministry of Corporate Affairs web site http://www.mca.gov.in/MinistryV2/Stand.html

4 Psychological mistakes to avoid while preparing for Income Tax!

CA Paras Mehra

Introduction

Love it or hate it but you cannot ignore it. Income tax is easy if you understood it well otherwise it is the most complex subject you will ever see. Once the great scientist Albert Einstein said: “the hardest thing in the world to understand is the income tax.”

But you have all the resources to know and learn this beautiful subject. However, from my practical experience, students are following a trend which is created by them only. This is leading to your downfall. I am not explaining to you how to clear CA exam, but how to learn something. I am talking about the conceptual understanding.

Income Tax Mistakes

So out of many in this article, I want to concentrate only on four psychological mistakes you should avoid while preparing for income tax;

1. Not reading the Section Properly: Income tax is the only subject where a single word can change the whole interpretation of the section. While you are reading the section, make sure you mark every single word correctly. Don’t just go through the section.

Let me give you a practical example: Most of us have read the section 44AD of Income-tax Act, 1961 where 8% of the total revenue is treated as your presumptive income.

I was explaining the importance of section 44AD to the group of students, and then a student asked me a question:

“Sir, thank you for your time, but I have doubt, in my mind. Suppose, my total revenue of 50 Lakh and my real earning is around 15 Lakh, but as per section 44AD, only 8% of the revenue, i.e. 8% of 50 lakh is 4,00,000 will be my deemed income. Sir, so the difference between my real and deemed income is 11 Lakh. So can an AO, in future question me on this difference and levy penalty for not disclosing right income?”

Immediately upon listening to the question, I asked him that how many times you have read the section 44AD. He said I don’t remember but many times.

Then I told him, to read the section again with me and you will get the answer. So, I opened the book and started reading the section 44AD as;

“Notwithstanding anything to the contrary contained in sections 28 to 43C, in the case of an eligible assessee engaged in an eligible business, a sum equal to eight per cent of the total turnover or gross receipts of the assessee in the previous year on account of such business or, as the case may be, a sum higher than the aforesaid sum claimed to have been earned by the eligible assessee, shall be deemed to be the profits and gains of such business chargeable to tax under the head “Profits and gains of business or profession”.

Then I put an emphasis on a line bold and underlined above. Then I told him, that even if your actual earning is more than the deeming income, but you choose to pay tax on your deemed income then it is your right which is conferred by section 44AD. Further, you are under no obligation to pay tax on your real income as to pay tax on deemed income is the benefit given by the lawmaker to the assessee.

Point to Learn

Hence, always read the section carefully. Assume yourself as a consultant and think practically about the solutions the country will seek your expertise.

2. Facts are more Important than Law: How many times it happened to you when you had a superb exam, but you scored very little marks?

No one has the answer to this question; we only assume that things are not going well for us, or it is all destiny. But I give you the answer today.

When do we decide that we had a wonderful exam? It is when we know all the answers. Right? But knowing all the answers is a different thing and writing the correct answers is a different thing.

The most important reason behind this is we don’t give much importance to the facts than law. Every time, upon reading the question, the next thing we do is to search for the answer before verifying facts of the question. This is where we have to work upon. Understand the facts first and the pursuit of the law.

Remember, “It is better to answer logically on the right facts than to write correctly on the wrong facts.”

Let us understand this with the help of an example. I reproduce here the few lines of the first question of IPCE tax exam May 2016.

Question 1 (a) Mr. Vinod Kumar, resident, aged 62 furnishes the following information about the year ended 31 March 2016.

It is true that when we read any question, we read the first line very leniently, and this is where we make a mistake. The age of the assessee in this question decides the answer to the question. If you failed to observe this point, then you’ve done it wrong.

Point to Learn

Hence, always make sure that you understand the facts right, then only apply the appropriate section to write the correct answer.

3. Exam oriented Approach: I have always been against this approach. During my student days as well, my collages used to focus on clearing the exam. But for me, CA is not just passing the CA final examination; it is about the knowledge.

Students had themselves created this approach which puts more harm to them then benefits. You must understand that there is a reason behind the CA curriculum designed by ICAI. Training is started when you clear your IPCE papers; this is because, during the practical training, you develop an analytical mind which helps you to understand the concepts more logically.

Always remember, you are living in a practical world. Always ask the question why this provision was introduced. What is the idea behind this?

Income tax is the most logical subject. Everything here is for a reason. You must ask your teachers, professionals about it and learn something out of it. If you were able to understand the importance and basic concept about taxation, then you will have a command over the subject.

“Never try to become an expert, always be a student…”

4. Not Taking training Seriously: This is a crime. If you are not serious about your practical training, then you are losing the gem of the time. As said, training not only helps you to develop an analytical mind, rather it helps you to implement what you have learned in the books. Training also builds your personality, the way of speaking, the art of argument and discussion. If you prefer your classes over the exam, then you are doing it wrong.

Income tax is a practical subject, and if you are not implementing what you are learning, then you tend to forget the sections.

The bottom line – Start your Action

Don’t just read the article and appreciate it rather learn something out of it and get into the action straight away. You all are the future of our privileged profession and hence to keep its reputation intact is your duty.

About the Author

Author is  a passionate startup advisor and a Chartered Accountant by profession and love to read, write and teach students on taxation subject.  Author can be reached at paras.mehra18gmail.com or Facebook page.

Tax department to name and shame chronic crorepati defaulters

Govt says the policy framework for putting the names of tax defaulter in public domain has been in the making and proposal is now being vetted by the CBDT

The Income Tax Department has provided a list of 67 big tax defaulters on its official web portal.

As part of its ‘naming and shaming’ policy to curb tax evasion, the Income Tax Department may soon go on to publish names of even those taxpayers who have a ‘chronic’ default of Rs.1crore and above.

Officials said the policy framework for putting the names of such entities in public domain has been in the making for quite sometime and the proposal is now being vetted by the Central Board of Direct Taxes (CBDT).

An action plan in this regard was also discussed during the tax administrators conference held here a few months ago and once the CBDT approves the policy, the names would be published in leading dailies and could possibly also be displayed on the department’s official web portal, they said.

“The subject will be discussed by the CBDT with senior I-T brass in the next few days after which a final decision will be made. The proposal is that cases of chronic default of over Rs.1 crore would also be publicly named, on the lines of a similar step taken against large tax defaulters beginning last year,” a senior official said.

The I-T department had began publishing the names of tax defaulters in leading national dailies last year and has so far named 67 such big defaulters from across the country, with their vital details like addresses, contacts, PAN card number and shareholders in case of companies, being published.

While the earlier exercise was restricted to people with huge defaults to the tune of about Rs.10-20 crore, the new measure is aimed to target the category of taxpayers which has “chronically” defaulted a tax payment of Rs.1 crore or more.

“It has been decided to ‘name and shame’ all category of taxpayers, including personal and corporate taxpayers, who have a default of Rs.1 crore and above by 31 March, which is the end of 2016-17 financial year.

“The names will be published before 31 July next year,” the CBDT had earlier said as part of a proposal in this regard. The aim of the new exercise, the official said, is to inform the public at large about such tax evaders whom the taxman has not been able to lay their hands on despite using various investigative and enforcement tools.

The I-T Department has provided a list of 67 big tax defaulters on its official web portal. Source : livemint

How You Can Pass CA, CS, CMA Exams in 1st Attempt Easily

I am here sharing some tips on How you can pass CA CPT, IPCC, Final, CS, CMA Examination easily in first attempt itself. Passing professional exams these days is becoming more harder as all the institutes have started giving lower results again. Professional Exam can be passed in the first attempt if you prepare systematically and confidently. Yes, you can crack/pass CA CPT, IPCC & Final, CS, CMA in first attempt by following our tips. All the Tips about how to pass CA, CS, CMA exams in 1st attempt are given below. These Tips to pass in first attempt will be extremely useful for CA CPT, IPCC, Final, CS Executive, CS Professional, CMA Foundation, Intermediate, Final exams.

The most important thing for every student would be: Don’t waste time. Just an example, At the time of registering in the course, you might have thought that I have one year period of time , so can study it later. Ultimately the days will go fast and faster and the exam will due. So remember: “Don’t Waste Time otherwise Time will waste you.”

Tips on How you Can Pass CA (CPT, IPCC, Final), CS,
CMA Exams in 1st Attempt Easily
Below are the 10 steps to make you prepare to crack the CA CPT, IPCC, Final & CS, CWA exams in first attempt easily.
1. Attitude The first basic factor towards Cracking CA, CS, CWA exams in first attempt is a positive attitude. Trust in your self that you can do it. Remember this golden words: “ If you think you can then you can” So generate a belief in your self that you can pass CA exam in first attempt. Yes, you can do it. So never keep fear of failure and just keep positive attitude. Remember:
“Change your attitude and you change your world”
The CA course is really challenging hence the role of positive attitude cannot be over emphasized.

2. Be confident in yourself..
Basically for passing CA course, you need not to be a super genius. Don’t feel that CA course meant for intelligent students. What is a peculiarity of this course is even super genius also fails in this course…lol. The main factor is your mind set up and outlook.
Inject some degree of cautiousness to the brain regarding the challenges of the course. The word here referred to as challenging and not tough. So, just be confident in yourself that you will pass CA exam in first attempt and yes you will.

3. Have a clear cut Goal
You must have a clear cut goal that you want to pass CA in first attempt at any cost . The words “at any cost” is very important in CA course. You will face a lot of difficulties while pursuing CA but remember you will have to cope up allthe difficulties and will have to follow the goal of cracking CA exams in first attempt.
Be cautious, set a good goal. Students normally realize this fact after
completing the first CA exam.

4. Forget that CA is tough..

Your approach toward CA is too critical to crack this course. If you feel that the CA course is tough then the course remains tough and remain difficult to clear even if your hard work and repeated attempt.

Think that the course is very challenging but nothing against you. This is the positive attitude. Tune the mind towards the challenging angle so that you can get the means to face the challenges. You may be pay more attention and care towards the studies which otherwise cannot be achieved. If you had changed your mind as suggested above, then , you won half battle.

5. Study with Planning
This is the most important step in the race of cracking CA exam in first
attempt. Most of the CA students don’t follow this most needed step. You need to plan that what you need to read and learn today in a paper sheet just before starting reading. It will not take more than 5 minutes. This will build confidence in your self that you are focused on your goal of cracking ca exam in first attempt.

Remember the golden quotation: “If you fail to plan then you plan to fail”
So make schedules to follow before reading everyday. In starting your
performance will be down but later you will be following 90- 95% schedule correctly.
You are reading the most wanted article of CAcracker.com on How you can pass CA CPT, IPCC, Final, CS, CWA Exams in first Attempt easily.

6. Prepare thoroughly..
You need to prepare thoroughly & systematically. Concept clearing is the important thing in CA to crack the exams. Prepare from ICAI study materials because it is the best material according to me. Keep reading some reference book of some good author too for more detailed knowledge. You can get an overview of the entire subject at the time of start studies. If there is senior ,what is the wrong for inquiring about the subject.

Remember: “Those who learn from own experiences are smart, genius is the one who learns from other’s experiences”

7. Revision is must..
Revision is the vital step that you must fulfill. Keep revising whatever you read in whole week in Sunday. This will lead you to crack the CA exams in first time for sure.

8. Strategies
Follow a strategy of study. Remember, you cannot study accounts independent of company law. Income-tax cannot be studied independent of accounting. Thus, these subjects are inter-related. You have to study all the subjects for the examination.

For example, In CA Final: the issue of shares by a company. Read provisions of company law from S. 55 onwards prospectus, contents, liabilities for misstatements, and so on till S.108. You would have grasped the legal requirements. Then work out problems in accounting on issue of shares at par, premium, discount, for consideration in other than cash, etc. Follow it up with
audit of issue of share capital, resolutions to be passed, documents to verify, and so on.

9. Writing
Practice writing. What you read will prove futile if you cannot reproduce it on the D-day. Do write at least 2 test papers of all the subjects before the exam. It will also boost your confident.

10. The final charge
Generally, the pressure valve is turned on only after the candidate pays the examination fees. There is a lot anxiety, nervousness, and tension. If a candidate is well prepared, last minute blues can be avoided. The candidates should learn how to tackle each subject and perform accordingly. One should know which accounts need to be opened and how to reach the goal in the shortest possible route and quickly. Saying that you should pass 36 journal entries for amalgamation, 16 entries for issue of shares, etc., is unjustified. You should learn to play according to the wicket. Source : CACRACKER

Here's how you can calculate returns on mutual fund SIP

Amendment in CYPRUS DTAA

CA Rohit Gupta

India Cyprus DTAA proposed Amendment in line with Mauritius Tax Treaty

India Cyprus Tax Treaty to be revised with Source based taxation of Capital Gains;

Retrospective removal of Cyprus from Blacklisting notification;

The Union cabinet on Wednesday approved the revised double taxation avoidance agreement (DTAA) with Cyprus which will help close gaps and enable Indian authorities to tax capital gains in the country for investments originating in the Mediterranean island nation.

The new agreement, which will replace the 1994 treaty, will enable Indian authorities to tax capital gains on investments routed through Cyprus; it will also lead to the removal of the Mediterranean island nation from an Indian government blacklist on which it was placed for not providing financial information sought by India.

The revised version will give India right to tax on capital gains arising from Indian shares, taxation of profits of permanent establishment on source basis, taxation of royalty, fees from technically services and more importantly, smooth flow of exchange of information for varied purposes.

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The move follows the recent amendment of DTAA with Mauritius. As in case of Mauritius, the treaty with Cyprus had provided for residence-based taxation of capital gains.

The proposed DTAA provides for source based taxation of capital gains on transfer of shares, instead of residence based taxation as provided in the existing DTAA.
In 2015-16, Cyprus ranked eighth in terms of foreign direct investment into India at $3.3 billion. The existing treaty provides for capital gains tax exemption and a low withholding tax rate of 10% on interest payments made to entities based in Cyprus.

At present, any payment to a Cypriot entity attracts a withholding tax of 30%. No deduction in respect of any other expenditure or allowance arising from a transaction with a person in Cyprus, or a payment made to a financial institution, is allowed unless the assessee provides the required documents.

If an assessee enters into a transaction with an entity in Cyprus, it is treated as an associate enterprise and the deal as an international transaction attracting transfer pricing regulations.

Excessive taxes paid by way of higher withholding taxes from 1 November 2013 being the date from when Cyprus was notified as a non-cooperative jurisdiction could possibly be claimed as refunds given if the withdrawal of the notification is with retrospective effect. Further, the deemed application of the transfer pricing provisions and cumbersome documentation requirements have been done away with which were required to be maintained on certain transactions with Cyprus entities vide the section 94A notification,

It needs to be seen how the Indian government will provide for refund for those transactions and also provide for revision of withholding tax returnIf the assessment of Indian entities who have transacted with Cyprus entity in past has entailed an addition in their income under transfer pricing, then how will the CBDT (Central Board of Direct Taxes) provide for revision of return/assessment order to nullify the effect of Cyprus notification retrospectively? In substance, nullifying the effect of Cyprus notification seems to be difficult

The proposed DTAA also enables source based taxation of capital gains from transfer of shares of any company the property of which consists directly or indirectly principally of immovable property situated in a contracting state.

India has been given the right to tax capital gains on investments routed through Cyprus prospectively from 1 April 2017. All existing investments, including those made up to 31 March 2017, have been sought to be grandfathered like the Mauritius Treaty,

However, Mauritius treaty additionally provides for 50% capital gains tax exemption for two years from 1 April 2017 to 31 March 2019, subject to fulfilment of limitation of benefit conditions. This appears to be absent in the revised Cyprus treaty Indian tax authorities will be able to levy capital gains tax on sale of shares by firms based in Cyprus after April 1, 2017, as there is a grand fathering provision in the agreement.

The agreement provides clarification about taxation of dividends in India that are subjected to dividend distribution tax, and clarifies that provisions on assistance in collection of taxes shall not be construed to impose any obligation that is at variance with the laws, practices or public policy of a contracting state.

A grandfathering clause provides for an old rule to apply to existing cases and a new rule to future ones.

Besides capital gains taxation of share transactions in India, the proposed treaty also permits taxation of capital gains from transfer of shares of any company that has immovable property in the country. The treaty also expands the scope of the permanent establishments to allow for source-based taxation of business income.

It also provides for a revised provision for exchange of information that would enable the use of information exchanged for other purposes, with the permission of the competent authority of the country providing the information.

the provisions in the earlier treaty for residence-based taxation were leading to distortion of financial and real investment flows by artificial diversion of various investments from their actual countries of origin, for avoiding tax. “As in the case of Mauritius, this amendment will deter such activities. Negotiations with Singapore are also under way for similar changes

India had put Cyprus on a blacklist for failing to share information on tax evasion. With the revision of the treaty, India is expected to remove Cyprus from that list, which will provide relief to investors from that country who had seen increase in compliance costs

Tax authorities now need to revise a similar treaty with Netherlands to ensure that all gaps are closed and companies pay tax at least in one jurisdiction. In the case of the Netherlands, if an asset is sold to a foreign buyer, the tax treaty allows for capital gains tax exemption.

(Author can be reached at ca.guptarohit@gmail.com / 9873832979 for any queries )

ICSI- Procedure for Marks Verification & Inspection/ Supply of Answer Books

VERIFICATION OF MARKS OF COMPANY SECRETARIES EXAMINATIONS – JUNE, 2016

In terms of Regulation 46 (2) of the Company Secretaries Regulations, 1982, as in force, a candidate can seek “Verification of Marks” in any subject(s) of CS examination within 30 days from the date of declaration of results. The interested candidates can apply for verification of marks either through on-line or off-line mode as per prescribed procedure with requisite fee @ ₹250 per subject.

To optimize the use of on-line mode of payment, candidates are advised to submit their request/s through on-line mode for quicker and hassle-free response. The on­line facility for applying for Verification of Marks will be operative from Friday, the 26th August, 2016 from 00:01 hrs and will be valid till Saturday, the 24th September, 2016 up to 24:00 hrs.

In case any candidate wishes to apply for Verification of Marks through off-line mode, he/she can download the Application Form available on the website and send the same duly filled in along with the requisite fee through Speed/Registered Post. The fee can be paid either by way of demand draft favouring “The Institute of Company Secretaries of India” payable at New Delhi; or in cash at the Regional/Chapter/Noida Office.

The last date for submitting applications for Verification of Marks either through on-line or off-line mode is 24th September, 2016.

The procedure for submitting application for Verification of Marks is hosted on the website of the Institute under ‘Students’ corner and Examination Section at the link given below:

Download procedure for submitting application for Verification of Marks

For applying Verification of Marks through on-line mode, the interested candidates can access the following link:

https://www.icsi.in/student/Login.aspx

JOINT SECRETARY (SENIOR GRADE) DIRECTORATE OF EXAMINATIONS

PROVIDING INSPECTION OR SUPPLY OF CERTIFIED COPY (IES) OF ANSWER BOOK(S) – JUNE, 2016

The Institute has been providing the facility of inspection or supply of certified copies of answer book(s) to the candidates on their request as per Guidelines, Rules and Procedures framed by the Institute in this regard.

A candidate who wishes to inspect (by visiting ICSI office at Noida) and/or obtain certified copy(ies) of his/her answer book(s) of any subject(s) of a particular examination, should apply in the prescribed form within 45 days from the date of declaration of the result, i.e., up to 10th October, 2016.

The prescribed fee for supply of certified copy (ies) of answer book(s) is Rs. 500/-per subject and Rs. 450/- per subject for providing inspection. The requisite fee is to be paid through Demand Draft drawn in favour of “The Institute of Company Secretaries of India”, payable at New Delhi.

Interested candidates can download the prescribed Application Form from the website of the Institute and send the same duly filled in along with the requite fee through Speed/Registered Post.

The “Guidelines, Rules and Procedures for Providing Inspection and/or Supply of Certified Copy (ies) of Answer Book(s) to students” are hosted on the website of the Institute under ‘Students’ corner and Examination Section at the following link:

Download Guidelines, Rules and Procedures for Providing Inspection and/or Supply of Certified Copy (ies) of Answer Book(s) to students

JOINT SECRETARY (SENIOR GRADE) DIRECTORATE OF EXAMINATIONS

Update PAN to avoid blocking of e-filing a/c by Income Tax Dept.

Dated: 27th August, 2016

This is in continuation of the earlier announcement dated 24th August 2016 (Annexed at A) on updation of PAN details to avoid blocking of e-filing account by the Income Tax Department. The issue of deactivating of the e-filing accounts of the members of the ICAI by the Income Tax Department on account of the mismatch in ‘Name’/ ‘PAN No.’ / ‘Date of Birth’ in the Income Tax records and the records available with the ICAI was taken up with the Income Tax Authorities on 26th August 2016.

Income Tax Authorities has temporarily activated the e-filing accounts which were blocked on account of the mismatch in the ‘Name’ to provide another opportunity to the members of ICAI to remove the discrepancies in the records available with the ICAI and the Income Tax Department. To remove the above said ‘Name’ discrepancy in the affected cases as informed by the Income Tax Department, an email indicating the name of the member as per ICAI records and as per the records received from the Income Tax Department has been sent to all the concerned members. The said email content is annexed at ‘B’ below for reference. The affected members can also remove this discrepancy through the following link:

http://online.icai.org/app_forms/panupdate/confirm.html

Kindly note that the members who are not yet reported under this category of ‘Name’ mismatch by the Income Tax department will not be able to access the link.

As regards the discrepancies pertaining to the mismatch in the ‘Date of Birth’ and ‘PAN Number’, concerned members are being informed through email to indicate the correct details along with supporting documents and the steps as warranted by the office will be taken. However, as of now these accounts will remain blocked.

The members who have not yet provided their PAN details for ICAI records can submit the same through the following link:

http://online.icai.org/app_forms/panupdate/index.html

Members may also file their complaint/ grievance at mss@icai.in and/or dtc@icai.in for resolving the same.

(V. Sagar)
Secretary ICAI

*************************************

Annexure A

Request to provide/update PAN details to avoid blocking of e-filing account by the Income Tax Department. – (24-08-2016)

It has been noticed that the Income Tax Department has blocked/ disabled the e-Filing account of the members whose correct PAN details are not available with the Department. Upon following with the Income Tax Department, it has been informed that the blocking and disablement of the E-filing Account of the members by them is initially temporary in nature which would be made permanent if correct PAN details are not updated/provided to Income Tax Department which are in synchronisation with the details available with the ICAI. In this regard, members had been earlier requested to submit their correct PAN details with the ICAI vide e-mails in November 2015, December 2015 and also through Announcements dated 20/11/2015, 16/12/2015 hosted at ICAI Website, wherein time limits to update/provide the PAN details were also prescribed. Further in the e-mail dated 6/5/2016 members were requested to update/ provide their PAN details latest upto 14th May 2016.

The Income Tax Department has blocked/ disabled the e-Filing account of the members whose correct PAN details are not available with the Department.

In case you are facing any problem in uploading tax audit reports due to non updation of PAN number at ICAI or due to differences in the name as per ICAI record and name given in PAN number, then please go through the link mentioned below to update your details:

http://online.icai.org/app_forms/panupdate/index.html

You may also file your complaint/ grievance at mss@icai.in and/or dtc@icai.in for resolving the same.

We would like to inform that ICAI is taking up the matter to resolve the issue with department on top priority basis and the members are requested to update/provide their PAN details by filling requisite details by clicking above link at the earliest but latest by 26.08.2016.

*************************************

Annexure B

Dear Member,

As per a communication received from the Income Tax department it is found that there is a mismatch in your name as per their e-filing portal and as per the records of ICAI. Accordingly, your account for e-filing portal may have been temporarily disabled by the Income Tax department. The discrepancy in the name is as follows:

Membership No. Name as per ICAI’s records Name as per e- filing Portal of Income Tax department.
123456 PRAKASH GUPTA P GUPTA
If you have given the data as above to the Income Tax department and intend to use the same for e-filing purposes, kindly inform us whether you would like the Institute to keep a record of your name as per Income Tax e-filing portal as an additional record in our database.

On receipt of your reply we will take up the matter appropriately with the tax authorities for updating records at their end and allow you to use their e-filing portal.

You may exercise your option using the following link :

http://online.icai.org/app_forms/panupdate/confirm.html

We look forward to your response at the earliest but within three days.

Best Wishes

CA. M Devaraja Reddy,
President,
The Institute of Chartered Accountants of India

Vignaharta! Please take away Vighna’s of MVAT Returns

CA Umesh Sharma

Arjun (Fictional character): Krishna,now the most awaited festival of Ganesha Utsav filled with fun and excitement is arriving, so all are busy in its preparations. In the same way Maharashtra Sales Tax Department has opened the gateway of the awaited filing of the VAT returns. In relation to this, all the details have been given through the notification issued on 26th August 2016. So now “Vignaharta” (Ganesha) is arriving,so will we get rid of the problems in relation to VAT?

Krishna (Fictional character):Arjuna, Sales Tax Department had introduced automation in filing of VAT Returns on 25th February 2016 and it was decided to bring it in effect from April 2016.Due to various technical issues, VAT Returns are still pending to be filled since April 2016. Now from 29th August onwards the dealer will be able to file the VAT Return. To file the Return the government has issued the respective form. The dealer can file the return by downloading the form with the version 1.0.000 and accordingly fill the purchase and the sales details. We expect that “Vignaharta”, will take away “Vighna’s” of MVAT Returns.

Vighna’s of MVAT Returns

Arjun: Krishna, What are the major aspects of this new return form?

Krishna: Arjuna, The major aspect of this new return form are as follows :

Sales Tax Department has annexed Sales and Purchase Annexure along-with the Return. In this template, every dealer is required to fill Bill wise details of Purchases and Sales for each Transaction according to the Bill number and Date. It has also been provided to mention the type of Return form e.g. Form 231, Form 232 for every transaction. Further Transaction Code for every transaction is to be mentioned e.g. purchases or sales from Registered Dealer, Non-Registered dealer, etc.
Earlier, the Dealers had to fill various forms like 231,232, etc. under VAT, CST, J1& J2 Annexures and submit them separately on the website of Department Of Sales Tax. But now all the forms are covered under one utility only.
This utility consists of purchase and sales annexures. In this we have to fill details of purchase and sales Billwise, TIN wise, Code wise and return wise and after validation the selected form will get automatically filled, which we can check later. Then we will have to manually fill some details in the return of Tax rate, Setoff retention, Payments, etc.
The responsibility of submitting correct and proper return will be solely of Dealers.
Every Dealer will have to fill the purchase and sales annexure. Only the Dealer under composition scheme will not be required to fill the sales annexure.
Many dealers don’t show transactions relating to printing and stationery, repairs, staff welfare, etc. in the return. But now it is expected that all the Dealers will show these transaction in this utility.
No negative values can be fed either in the return or in the annexure.
Some Dealer like retails traders, restaurants, medical shops, etc. does hundreds of transactions in a single day and does not know the names of the customers, then sales can be mentioned on aggregate basis.
Dealer can revise the return submitted but for that he need to revise the sales and purchase annexures.
If dealer has excess credit then he should show it in the return. If it is valid then it will be shown in the return sent by the department in the PDF format.
Arjun: Krishna, how dealer should file the return?

Krishna: Arjuna,

After entering the details in the return, if there is any tax payable then it should be paid along with the interest.
Government had extended the date to file the VAT Returns and not the payment date of the MVAT, so payment of the tax for the month or for the quarter should be paid on or before 21st of the next month or quarter.
Dealer after entering the detail in the excel utility should generate TXT file.
Dealer should login on the Sales Tax Department site and upload this TXT file.The dealer will get the acknowledgment of the same. After that dealer should download the receipt of the return filed. Then dealer will get the PDF file of the return filed.
Arjun:Krishna, from and till when dealer can file the return pending from April 2016?

Krishna:Arjuna, the duration for filing the return are monthly or quarterly according to the dealer. Government has given beginning and ending date for filing the return in the notification issued.

For Monthly Returns:

Dealer can file the return for the month of April from 29/08/2016 to 26/09/2016.
Dealer can file the return for the month of May from 06/09/2016 to 05/10/2016.
Dealer can file the return for the month of June from 12/09/2016 to 11/10/2016.
Dealer can file the return for the month of July from 16/09/2016 to 15/10/2016.
Dealer can file the return for the month of August from 20/09/2016 to 20/10/2016.
Dealer can file the return for the month of September from 26/09/2016 to 25/10/2016.
For Quarterly Returns:

The return for April-June quarter can be filed from 26/10/2016 to 30/11/2016.
The return for July-September quarter can be filed from 26/11/2016 to 31/12/2016.
Arjun:Krishna, What should dealers learn from this?

Krishna:Arjuna, dealers should understand and be updated with the new changes introduced and also should remain alert. In case the dealer does not file the return according to the duration mentioned, eventually he will have to pay the late fees. To avoid such problems the dealer while filing and submitting the return should follow the guidelines and FAQ’s displayed on the website. In case any problems or queries the dealer can contact the officer or the helpline centre. The contact details are provided in the help menu. Now the dealer has also responsibility to conduct his tax audit and file the return in the month of September. In addition to above there is also responsibility to file VAT returns through the new system. So for completing such tedious tasks pray God (Ganesha) that all work should be completed with least problems.

Guide on Auditor’s Reports under IAS for Transition Phase

Implementation Guide on Auditor’s Reports under Indian Accounting Standards for Transition Phase

During the last year, the Ministry of Corporate Affairs had issued the roadmap for the implementation of the Indian Accounting Standards (Ind AS). As per the roadmap, Ind AS are mandatory for certain classes of companies from the current financial year 2016-17 and for other classes of companies from subsequent financial years. An urgent need was felt for providing appropriate guidance to the members on the auditor’s reporting responsibilities on financial statements prepared as per Ind AS especially during the transition phase of switching over from the “Accounting Standards Framework” to the “Ind AS Framework”.

Auditing and Assurance Standards Board has brought out this “Implementation Guide on Auditor’s Reports under Indian Accounting Standards for Transition Phase” for the benefit of the members. The Implementation Guide was initially developed by an expert group constituted by the Board for this purpose and thereafter it was finalised with the contribution of the members of the Board and the Council of ICAI. The

Implementation Guide has been written    in an easy to understand language and is quite comprehensive.

The Implementation Guide addresses the various issues relating to the auditor’s reporting responsibilities on the financial statements prepared under the Indian Accounting Standards (Ind AS) framework especially during the transition phase of first time implementation of Ind AS Framework.

The complete text of the Implementation Guide has been hosted on ICAI’s website at following URL:

http://resource.cdn.icai.org/43184aasb32904.pdf

Tips to get Good marks in IPCC Advanced Accounting Paper

Compared to other subjects of CA IPCC, Advanced Accounting subject is very easy to prepare and it is also a scoring subject. So you should plan it very carefully to prepare. It should help you to increase your result.
Here I am sharing you some tips for Advanced Accounting subject of CA IPCC, so share this as much as possible for helping your friends.
Preparation tips/suggestions for Advanced Accounting are as below:

1. First of all, you should select the topics of Accounting standards which carries around 25-30 marks almost 30% of marks. You should
concentrate on the topics as follow:
AS-4
AS-5
AS-12
AS-20
AS-19
AS-26
AS-29
AS-16
AS-11 (only basics are asked)

2. Then after you should take the topics like Part of Company Accounts
which carries overall weightage of 35-40 marks. These topics are easy
compared to partnership accounts. You should concentrate on the topics as follows….
Amalgamation and Internal Reconstruction
Issue and Redemption of Debentures
Liquidation of Companies
Buy Back of Shares
ESOP’s
3. After completed these topics you should try for the next topics. But
remember, revision is the most important part of the study. So the
revision of all prepared topics are compulsory. Now it is better to
choose Accounting for B@ n k s, Insurance as these also
cover up to 15-20 marks. If you are confident of doing Partnership
Accounts, you can also go ahead with it which carries weightage of 16
marks.
4. As a final step, prepare Branch and Departmental Accounts which carries weightage of 6-8 Marks.
5. If you have the short time for preparation, then you should prepare the
topics up to Step 3 Above it is sufficient if you prepare the thoroughly.
I hope you like this article of “Preparation tips for CA IPCC Advanced Accounting Subject”. Wish you all the best for exams. Give your best in the exam. Keep trust on yourself and God. Thank You…!! Source : CA Cracker

Last minute revision topics & Important tips for (Accounts – IPCC) Group I

1. You should solve previous questions and examples of Study material of AS (10-12 Marks) from previous year papers.
2. Join up and once read out journal Entries of Internal Rebuilding. (16
Marks)
3. Then concentrate on Cash Flow Statement- (8 Marks)
4. Bonus Issue & Incomplete Record (12-16 Marks)
5. After completing the above steps, take the next step as Account current & theory chapter especially focus on Pre-packaged software topic. (4-10 marks)
6. During the examination, read the question properly in first 15 minutes
and make sure it will not waste your time otherwise you will not be able
to attempt the whole paper.
7. Start each answer from the new page and Solve all subparts of one
question at the same place.
8. Make proper formats and headings for each subpart of answer
9. Make proper working notes. It plays a vital role in step marking.
Whatever calculation you do name it as working note.
10. Don’t pay unnecessary time in solving particular question because if you waste your time in 1 question, then you will not give the proper time for others. And it will generate problems for you.
11. If you are using any formula in your solution then first write it and after that put numbers or figures in it. This will show your knowledge about formulas.

Bonus Tips:
In Accounting & Advanced Accounting paper, accounting standard s are very important which weighs around 25 to 35 marks in each subject. So, please do it properly.
For better presentation, start with journal entries problem then ledger  a/c after that final a/c problems. That’s why, because time management is very important in CA examinations.
Amalgamation and Partnership are also the most important chapters, solve atleast 1 some of all the types to get good confidence in this chapters. These can be asked for 24 to 40 marks in each accounting paper.

Hope you are satisfied with the information. If you have any query then you may ask about it. Best luck for your examinations. Keep trust in self and God. Thank You..!! Source : CA CRACKER

CA CPT, IPCC & Final Registration Validity, Revalidation Form

Brief details on validity of Registration in CA
ICAI has updated the details of CA course registration validity which is as under
[Source: ICAI ]. For detailed information check out below.

CA CPT Registration Validity

Registration is valid for 3 years from the date of registration. After expiry of the said period, revalidation form can be submitted.

CA IPCC Registration Validity
Registration is valid for 4 years from the date of registration. After expiry of the said period, revalidation form can be submitted.

CA FINAL Registration Validity
Registration is valid for 5 years from the date of registration. After expiry of the said period, revalidation form can be submitted.

Procedure for Revalidation for CPT, IPC, Final:
The request for revalidation shall be made in the below given format indicating the name of the Course (CPT/PCC/Intermediate (IPC) Course/Final), Registration Number, Date of Registration, Date of Expiry of Registration and duly signed by the registrant together with the prescribed fee, if applicable, by way of Demand
Draft in fovour of “The Secretary, The Institute of Chartered Accountants of India, payable at Mumbai/ Chennai/ Kolkata/ Kanpur/ New Delhi as the case may be and sent to the concerned Decentralized office from wherenregistration was done.

Revalidation form:
Download Revalidation form from here

And submit the Filled revalidation of registration form to the respective Regional Office near to you.

Older Notification for Revalidation of Registration:
Applicability of the Scheme:
The Revised Scheme of revalidation shall come into effect from 1st January, 2013 and shall be applicable to CPT (note 1), Intermediate (IPC) Course (note 2) and Final students (note 3).
Revalidation for CPT students:
> Initial registration for Common Proficiency Course (CPT) is valid for 3 years.
> Each Revalidation shall be valid for 3 years.
> Fee for revalidation is Rs. 300/- for each revalidation..
> Students are required to ensure that they have valid registration
before filling examination form for Common Proficiency Test (CPT).
> With a view to create awareness, it has been decided that no revalidation
fees shall be charged till 31st December, 2013. Accordingly, CPT students who
have registered on or before 31st December, 2010 are advised to apply for revalidation without paying any revalidation fee, till 31st December, 2013, so as to be eligible to appear in June, 2014 examinations onwards for 3 years from the date of revalidation.
> In case any student fails to apply for revalidation by 31st December, 2013,
he/ she then shall have to pay the prescribed revalidation fee, as stated
above, on or after 1st January, 2014 for revalidating the registration.
Revalidation for IPCC / Intermediate students:
> Initial registration for then IPCC, now Intermediate (IPC) Course is valid for 4 years.
Further, students who switched over to then IPCC, now Intermediate (IPC) Course fromerstwhile Intermediate/ Professional Education (Course-II)/ Professional Competence Course stream have valid registration period of 4 years and will be
counted from the date of switch over to then IPCC, now Intermediate (IPC) Course.
> Students, who have registered for the course on or before 31st December, 2009 and completing 4 years validity period till 31st December, 2013 are
advised to apply for revalidation before 31st December, 2013 without paying revalidation fee. In case any student fails to apply for revalidation by 31st December, 2013 he/she then shall have to pay the prescribed revalidation fee,
as stated above, on or after 1st January, 2014 for revalidating the registration.
> Each Revalidation shall be valid for 4 years.
> Fee for revalidation is Rs. 400/- for each revalidation.
> Students are required to ensure before applying for admission to
Intermediate (IPC) Examination that they have valid registration.
> Students who have registered in Intermediate/ Professional Education
(Course-II)/Professional Competence Course are required to switchover to Intermediate (IPC) Course in order to continue their studies in chartered accountancy course.
Revalidation for Final students:
> Initial registration for Final Course is valid for 5 years.
> Students, who have registered for the Final Course on or before 31st
December, 2008 (including shifted students of Final (Old) Course to Final (New) Course) are required to revalidate their Final Course registration. Such
students are advised to apply for revalidation before 31st December, 2013 without paying revalidation fee. In case any student fails to apply for revalidation by 31st December, 2013 he/ she then shall have to pay the prescribed
revalidation fee, as stated above, after 1st January, 2014 for revalidating
the registration.
> Fee for revalidation is Rs. 500/- for each revalidation.
> Each Revalidation shall be valid for 5 years.
> Students are required to ensure before applying for admission to Final
examination that they have valid registration.
Check this too: >In Verification, 21 Marks increased of a Student in CA Final
May 2013
Note 1: Those students who have registered earlier in Entrance/ Foundation/
Professional Education (Course – I) are required to register afresh in Common
Proficiency Course (CPC) to pursue their studies in CA Course. Such students’
validity of registration would be continued for three years from the date of
registration to the CPC.
Note 2: Those students who have registered earlier in Intermediate/
Professional Education (Course – II) are required to convert to
Intermediate (IPC) Course as per the announcement dated 27 th July,
2010 (link: http://220.227.161.86/19968announ290710.pdf ) and
Professional Competence Course (PCC) students are required to convert to
Intermediate (IPC) Course as per the announcement dated 7th January, 2012
(link: http://220.227.161.86/28912bos18513.pdf ).
Note 3: Those students who have registered earlier in Final (Old) Course are
automatically shifted to Final (New) course without charging any conversion fee.
Such students in order to continue their studies in CA Final Course may
approach the concerned Decentralized Officer and collect the conversion
letter (link: http://www.icai.org/new_post.html?post_id=6951&c_id=343 ).

11 steps to a secure financial future

Made money in debt funds? It’s time to book some profit

Lucrative commissions for easy work may entangle you in money laundering

Provisional Assessment U/s. 18 of Customs Act, 1962-Guidelines

F.No: 465/01/2016–Cus V
Govt. of India
Ministry of Finance
Dept. of Revenue
Central Board of Excise & Customs

Circular No. 38/2016-Customs
Dated 22nd August 2016

To,
All Principal Chief Commissioners of Customs / Customs & Central Excise
All Chief Commissioners of Customs,
All Chief Commissioners of Customs & Central Excise,
All Directorate-Generals, Chief Departmental Representative,
All Principal Commissioners of Customs,
All Principal Commissioners of Customs & Central Excise,
All Commissioners of Customs,
All Commissioners of Customs & Central & Excise

Subject:-Guidelines regarding Provisional Assessment under section 18 of the Customs Act, 1962

The Customs (Provisional Duty Assessment) Regulations 2011 issued under notification no. 81/2011 – Customs (NT) dated 25.11.2011 were reviewed in view of references from the field formations regarding guidelines on the implementation of Regulation 2(2) and Regulation 4.

2. Regulations 2(2), 3 and 4 require three elements – namely, (a) deposit of 20% of the differential duty between “provisional duty” and duty to be “finally assessed or re-assessed”; (b) execution of a bond; and (c) surety or security or both, as deemed fit,

2.1 Section 18 of the Customs Act, 1962 defines the cases where provisional assessment may be resorted, as under:

– (1) Notwithstanding anything contained in this Act but without prejudice to the provisions of section 46,-

(a) where the importer or exporter is unable to make self-assessment under sub-section (1) of section 17 and makes a request in writing to the proper officer for assessment; or

(b) where the proper officer deems it necessary to subject any imported goods or export goods to any chemical or other test; or

(c) where the importer or exporter has produced all the necessary documents and furnished full information but the proper officer deems it necessary to make further enquiry; or

(d) where necessary documents have not been produced or information has not been furnished and the proper officer deems it necessary to make further enquiry,

2.2 Further, Section 18 goes on to state how a provisional assessment is to be carried out:

“the proper officer may direct that the duty leviable on such goods be assessed provisionally if the importer or the exporter, as the case may be, furnishes such security as the proper officer deems fit for the payment of the deficiency, if any, between the duty as may be finally assessed and the duty provisionally assessed.”

2.3 Thus, the provisions of section 18 of the Customs Act, 1962, require that in cases where goods are to be provisionally assessed:

(a) the importer binds himself for the payment of deficiency, if any, between the duty as may be finally assessed and the duty provisionally assessed; and

(b) furnishes such security as the proper officer deems fit for the payment of the deficiency.

2.4 In view of the requirement that the importer binds himself to pay the deficiency, if any, between the duty as may be finally assessed and the duty provisionally assessed, it would be necessary to obtain a bond for meeting the aforesaid condition.

2.5 Insofar as the requirement of obtaining a 20% deposit of the duty provisionally assessed, the Board has decided that this condition be dispensed, particularly, as it necessitates following the procedure of refunds in cases where final assessment is in favour of the importer. Such requirements add to the transaction costs, lead to delays in clearance and detract from the ease of doing business.

2.6 It was also noted that Regulation 4 required that the importer should furnish such surety or security or both, as deemed fit, along with the Bond. In this connection, it was felt that acceptance of a surety requires making an evaluation of the underlying asset value or of the net worth of the person executing the same. This poses difficulties to the importers as well as administrative challenges to the Department in valuing sureties. Therefore, the Board has decided that the requirement of security needs to be met by either obtaining a bank guarantee or a cash deposit, as convenient to the importer, and that no sureties shall be obtained.

2.7 In view of the aforesaid, the Board has rescinded The Customs (Provisional Duty Assessment) Regulations 2011″ vide notification no. 113/2016 — Cus (NT) dated 22nd August 2016 since section 18 itself lays down the procedure to be followed in the case of provisional assessment. The only issue which is required to be addressed is regarding the amount of security since section 18 requires the same to be obtained as “deemed fit” by the proper officer, For the sake of uniformity of practice, transparency and predictability for the tax payer, the Board has decided that the following procedure and guidelines will be followed by all Customs stations while assessing goods provisionally:

2.8 Wherever, duty is to be assessed provisionally, the importer shall:

(a) for the purposes of undertaking to pay on demand the deficiency, if any, between the duty as may be finally assessed and the duty provisionally assessed, execute a bond in the prescribed form (enclosed); and

(b) furnish such security for the payment of the duty deficiency, as indicated in para 3 below.

2.9 The security to be obtained shall be in the form of a bank guarantee or a cash deposit, as convenient to the importer.

India-Mauritius Tax Treaty- Amendment in Protocol and Its Impact

CA Rahul Singhi

Recently Government of India has notified the revised tax treaty with Mauritius which was signed by both countries on 10 May 2016 under which India will impose capital gains tax on investments routed through the island nation from 1 April 2017 to curb tax evasion.

The tax treaty between India and Mauritius was signed in 1982 for the avoidance of double taxation and the prevention of fiscal evasion and for the encouragement of mutual trade and investment. The treaty provides for a capital gains tax exemption to a Mauritius resident on transfer of Indian securities. But in 1991, as India opened its doors for foreign investment, Mauritius became a favourite jurisdiction for investments in to India. This have been misused by many Indians & multinational companies to avoid paying tax. This route became tax heaven for Indians. They started routing cash through the island to avoid domestic taxes, a practice known as “round tripping”.

Thus to curb revenue loss by round tripping of funds and to fulfil promise on black money stashed abroad, Present government made efforts to renegotiate the treaty and made certain amendments in the existing protocol. The step taken by the government shows their belief in the economy and ability to attract foreign investment without tax incentives.

Amendments in Protocol

India will now have the right to tax capital gains on transfer of Indian shares acquired on or after 1 April 2017. Existing investments will be grandfathered. Further the protocol provides for a two year transition period up to 31 March 2019 during which the tax rates will be 50% of the prevailing domestic tax rates, subject to fulfillment of conditions mentioned in the LOB (Limitation of Benefits) clause.
The conditions that to be fulfilled for claiming 50% abatement are: 1) The affairs should not be arranged with the primary intention of availing the benefit provision granting reduced rate of tax. 2) The company should not be a ‘shell or Conduit company’.

The definition of PE (Permanent Establishment) has also expended with inclusion of service PE clause wherein deployment of personnel for a period of more than 90 days in any 12 months period shall constitute a PE.
A new article 12A is inserted in the protocol that provides a right to source country to tax FTS (Fees for technical services) at a rate of 10% ( on gross basis) if the beneficial owner is a resident or the other contracting state.
An exemption from tax on interest income arising in source country has been given to a bank of a resident country carrying on bona fide banking business on outstanding/existing debt claims on or before 31 March 2017. In other cases such income shall be taxable @ 7.5 %( on gross basis) in source country provided the recipient is the beneficial owner without regard to LOB.
A new obstante clause is inserted that gives a right to the source country to tax such other income not connected with PE & not dealt in any other articles. Earlier this was taxable in resident country.
The protocol amends the existing article 26 on information sharing mechanism. Now India can also insist on information in respect of persons who are not residents of Mauritius. It would be possible now to exchange information held by banks & financial institutions.
A new article 26A is introduced in the treaty that both the countries shall lend assistance to each other in collection of revenue claims/taxes.
Impact of Changes

A significant collateral damage of the protocol is its impact on the India-Singapore DTAA since the relevant provisions of capital gain tax exemption under India-Singapore tax treaty is similar with India-Mauritius tax treaty. So, the Indian government intends to renegotiate the treaty with Singapore to bring it on par.
Long term funds will not be impacted as the domestic law currently provides for 0% tax on listed shares held for more than a year.
Mauritius will continue to remain relevant for fixed income business with tax on interest being the lowest at 7.5% under the new treaty and capital gains continuing to be exempt.
Shares acquired on or before 31 March 2017 have been grandfathered which would mean a continuance of the Mauritius structures for few more years.
The government will also have to address and make appropriate changes in the General Anti Avoidance Rules (GAAR) notified in 2013. A need arises to bring clarity to GAAR rules wherein grandfathering date for investments for GAAR purpose have been extended to 1 April 2017 to eliminate unwanted confusion & interpretation by the tax authorities which is not in the spirit of what the government wanted.
Conclusion

The island nation with just 1.3 million people is the biggest single source of foreign direct investment into India. The amendment in treaty and information share mechanism puts at rest the long controversy around the Mauritius treaty. The revised treaty will result in similar tax treatment of capital gains for both domestic and overseas investors and establish a more stable and transparent taxation regime for overseas investors.

Overall this has been a great move by the government to promote a stable tax and predictable tax regime and attract FDI inflows. The measures will widen the tax base and will help in aligning the taxation to the BEPS (Base erosion & profit shifting) initiatives.

Request for suggestions for legislative changes in direct tax laws -reg.

F.No.134/56/2015-TPL
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
[TPL Division]

New Delhi, the 23rd August, 2016

To,

All Pr.CCsIT (CCA)/Pr.DsGIT

Madam/Sir,

Subject: Request for suggestions for legislative changes in direct tax laws –reg.

In the past, suggestions for legislative changes were invited from field formation during the budget exercise. In this connection I am directed to intimate you that it has been decided to create an exclusive Email Id (i.e suggestion.tpl@gov.in) for receiving suggestions thought the year for legislative changes relating to direct taxes from officers/officials of the department. The suggestions can be sent to this email ID in the following format:

Name
Designation
Contact Details:
a) Address
b) Mobile number
c) Email ID
Suggestions in Brief
Justification along with the details of
relevant Judicial rulings, if any
2. Further, it is requested that the content of this letter may be brought to the notice of all officers/officials working in your region for necessary information and necessary action.

Yours faithfully,

(Lakshmi Narayanan)

Under Secretary (TPL)