CA and CS HUB: March 2017

ICAI added 5 new cities where CPT exam will be held in June 2017

10:10 am
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Amendment in export policy of edible oils

Government of India
Ministry of Commerce & Industry
Department of Commerce
Directorate General of Foreign Trade
Udyog Bhawan

Notification No 43/2015-20
New Delhi, Dated the 27^th March, 2017

Subject: Amendment in export policy of edible oils.

S.O.(E) In exercise of the powers conferred by Section 3 of the Foreign Trade (Development & Regulation) Act, 1992 (No.22 of 1992), as amended, read with Para 1.02 and 2.01 Df the Foreign Trade Policy (FTP), 2015-20, the Central Government hereby amends, with immediate effect, Notification No 22(RE-2013)/2009-14 dated 18.06.2013 read with Notification No 108(RE-2013)/2009-14 dated 06.02.2015 and Notification No. 17/2015-20 dated 06.08.2015 relating to 51. No. 92 of Schedule 2 of ITC(HS) Classification of Export & Import Items.

2. Export of edible oils was initially prohibited for a period of one year with effect from 17.03.2008 vide Notification No. 85 dated 17.03.2008 which was extended from time to time. Vide Notification 24(RE-2012)/2009-14 dated 19^thOctober 2012, prohibition on export of edible oil has been extended till further orders.

3. The following exemptions are permitted from the prohibition on export of ec ible oils:

(a) Castor oil

(b) Coconut oil from all EDI Ports and through all Land Custom Stations (I CS) on Indo-Nepal, Indo-Bangladesh, Indo-Bhutan and Indo-Pakistan borders.

(c) Deemed export of edible oils (as input raw material) from DTA to 100% EOUs for production of non-edible goods to be exported

(d) Edible oils from Domestic Tariff Area (DTA) to Special Economic Zones (SEZs) to be consumed by SEZ units for manufacture of processed food products, subject to applicable value addition norms

(e) Edible oils produced out of minor forest produce, ITC(HS) Code 1:;159010, 15159020, 15159030, 15159040, 15179010 and 15219020.

(f) Organic edible oils subject to export contracts being registered and certi ied as ‘Organic’ by Agricultural & Processed Food Products Export Development Authority (APEI)A).

(g) Rice Bran oil in bulk, irrespective of any pack size

(h) Groundnut oil, Sesame oil, Soyabean oil and Maize (Corn) oil in bulk, irrespective of any pack

4. Export of edible oils in branded consumer packs of upto 5 Kgs is permitted with a Minimum Export Price (MEP) of USD 900 per MT.

5. Effect of this notification:

Export of Groundnut oil, Sesame oil, Soyabean oil and Maize (Corn) oil in bulk, irrespective of any pack size, has been exempted from the prohibition on export of edible oil;

(A. K. Bhalla)

Director General of Foreign Trade

E-mail: dgft@nic.in

[Issued from F.No.01/91/180/774/AM10/Export Cell(Pt.)]

10:04 am
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CBI registers case against Syndicate Bank Managers, CA, Builder etc.

CBI

10:01 am
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Tax saving FD offers convenience, safety and a little liquidity too

Income Tax

Tax saving FD offers convenience, safety and a little liquidity too

By Preeti Motiani, ECONOMICTIMES.COM

Tax saving FD being a debt investment is safer than equity-based tax saving avenues such as ELSS schemes.

If you still haven't done any tax-saving investment and are looking for a safe and easy bet for saving tax then a tax-saving fixed deposit could be a solution.

Tax-saving FD is one of the tax saving instruments where one can invest to save tax under section 80C of the Income Tax Act. One can invest in this FD easily by visiting a bank, filling the form and giving a cheque. In fact, if you place the FD in the same bank branch on which you are drawing the cheque then the transfer of funds can happen quickly and the investment can be done within a few hours.

As the transfer of funds would be between accounts in the same bank branch, it can be done within say, 20 minutes (depending on bank staff efficiency) and you could walk out with your FD receipt within half an hour. Of course, this investment can be done online also provided you have access to net banking and are comfortable using it.

Tax saving FD being a debt investment is safer than equity-based tax saving avenues such as ELSS schemes. Returns on a tax saving FD are also guaranteed contractually by the lender (the bank or post office) and fixed for the term of the FD.

Among debt investments offering the section 80C tax benefit, this is one with the smallest lock in period of 5 years and offering a periodic interest pay out option. Five-year NSCs also offer Section 80C tax benefit but are cumulative instruments and do not offer periodic interest pay outs. Consequently, among debt investments tax saving FDs are a comparatively more liquid, safe and easy option.

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Currently, banks are offering the interest rate for the general public ranging from 6.75% to 6.90%, whereas the Post office tax saving FD is currently offering an interest rate of 7.8%.

Currently, all the post office savings schemes are offering higher interest rate than the bank FDs but they are due for review from 1.4.2017 by the government.

Here are the few points to note while making the investment in Tax- Saving FD:

1 . Only Individuals and HUFs can invest in tax saving fixed deposit(FD) scheme.
2. The FD can be placed with a minimum amount which varies from bank to bank. The maximum amount is of course Rs 1.5 lakh in a financial year which is the ceiling for tax saving investment under section 80C of the Income Tax Act.
3. These deposits have a lock-in period of 5 years. Premature withdrawals and loan against these FD's are not allowed.
4. A person can invest in these FD's through any public or private sector bank except for co-operative and rural banks.
5. Investment in Post Office Time Deposit of 5 years also qualifies for deduction under section 80 (C) of the Income Tax Act, 1961.
6. Post Office Fixed deposit can be transferred from one Post office to another.
7 . One can hold these FD's either in 'Single' or 'Joint' mode of holding. In the case the mode of holding is joint, the tax benefit is available only to the first holder.
8. The interest earned is taxable as per the investor's tax bracket and therefore, TDS is applicable. The interest on deposits is payable on either monthly/quarterly basis or can be reinvested.
9. Nomination facility is available for these FDs.
10. Most banks offer slightly higher interest rates on FDs to senior citizens (as compared to the interest rate offered on the same FD to a non-senior citizen). This interest rate differential exists for tax saving FDs also. However, the post office does not offer higher interest rates to senior citizens

Source : Economicstimes.com

9:56 am
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Commuting your pension money

Investment Tips

Commuting your pension money

The returns from your NPS or pension don’t have to go totally towards an annuity plan—which gives you a regular income after retirement. There are provisions for commuting it, to get lump sums. Here is how you do it

Deepti Bhaskaran

Pranab Jyoti Gogoi

When you invest for your retirement through products such as the National Pension System (NPS) or a pension plan offered by life insurance companies, the product construct is such that at the end of the investment period—on your retirement—you take the accumulated corpus to buy an annuity. An annuity is a pension product that pays you regular income for life.

But what if at the time of retirement you need a lump sum? The good news is that these products allow you to take a portion of the accumulated money as lump sum. In financial parlance, this is called commuting. It basically means an upfront payment of your pension money.

Let’s understand the commuting provisions in the NPS and pension policies offered by life insurance companies.

NPS

NPS is a defined contribution retirement product that needs you to stay invested till 60 years of age. It’s a market-linked product that offers four investment options: scheme G invests in government securities, scheme C in fixed-income instruments other than government securities, scheme E in equities (limited to 50% or 75% through the lifecycle fund) and scheme A in alternate investment funds (limited to 5%). Early withdrawals are discouraged and you can keep only 20% of the money and have to buy an annuity with the remaining 80%. However, partial withdrawals are allowed for certain events.

At 60 you can withdraw, or what is also called commute, up to 60% of the money (40% is tax free and 20% taxable). With the remaining 40% you need to buy an annuity. While you don’t pay any tax on the amount earmarked for buying an annuity, the annuity income (pension) that comes your way is taxable.

Pension plans

Life insurance companies offer pension plans that can broadly be divided into two categories: traditional pension plans and unit-linked pension plans (ULPP). Traditional plans don’t disclose investment portfolios or costs. They either offer a minimum guaranteed return and peg additional returns to bonuses, or offer a guaranteed benefit at the very outset. ULPPs, on the other hand, are market-linked products in which you can see the costs as well as the fund performance.

ULPPs come with a lock-in of 5 years, whereas in the case of traditional plans there are heavy surrender penalties—meant to discourage premature withdrawal. As per rules, a pension plan by a life insurance company needs to offer a non-zero positive return of premiums to the policyholder on maturity.

On maturity you can commute one-third of the accumulated amount and annuitize the rest. The lump sum in your hands is tax-free. However the annuity income is taxable. The other option is to use the money and buy a single premium pension plan again, but on maturity you will still need to annuitize the minimum amount.

Even as pension plans allow you to commute a part of your accumulated corpus to meet immediate requirements, financial planners don’t like the compulsory annuitization of pension money. This is so because, the minute you invest in these plans, you get committed to buying an annuity product several years down the line on retirement

Source livemint

3:16 am
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4 things to calculate before counting your money

Tips

4 things to calculate before counting your money

When you invest, several factors can diminish the magic of compounding, such as commissions and taxes. So, don’t jump at the first investment opportunity that offers great returns, look deeper

Are your financial goals on track? You may have a budget in place to generate the required savings and an investment plan to make the money work for you. But there are still situations that may be out of your hands to influence. However, what you can do is to make sure that you are not missing out on some of the obvious steps that can ring fence your financial plan as far as possible.

The success of your financial plan depends on how well you define your goals and how efficiently you select the investment vehicles to make your money work for you. Here are some of the factors and numbers relating to your investments, which you can ignore only at the risk of falling short of your financial goals.

Inflation

Don’t ignore the effect of inflation. It steadily eats into the value of your money and pushes up the amount of funds required to meet an expense in the future.

If inflation is assumed at 6%, then the cost of paying for your child’s education, which perhaps costs Rs4 lakh a year today, would be double that amount in 12 years.

While 6% may not seem like a large number at first, its effect compounds over the years—especially in case of long-term goals. Longer the period to the goal, greater will be its impact. If the effect of inflation is not considered while defining financial goals, then the value that is being targeted for them will be completely off the mark. The net result would be a corpus that is much lower than what you would actually need to meet the goals in the future.

Apart from looking at the general inflation rate, also consider the observed increase in cost of particular goals. For example, costs related to education and health, typically, increase at a much faster rate than those for general expenses.

Hidden costs and fees

Costs and fees eat into the returns from your investment. Don’t consider only the out-of pocket expenses that you have to pay—such as commissions and brokerages. Also consider the hidden costs that are ultimately charged to your investment.

These include expenses that are charged to the investment before its value is declared, such as fluctuating net asset values of mutual fund schemes and deductions from the gross amount invested to account for commissions.

When you evaluate investments, look beyond the return numbers. These costs can be found across products, so compare the products on these parameters too before deciding about them. If the costs are higher compared to other similar investments, then see if the higher costs are justified in any way. For example, actively managed equity funds charge a higher expense ration as compared to index funds. This is justified only if the actively managed fund consistently performs better than the index funds in rising and falling markets.

In the periods when returns are good, the higher expenses and deductions may not be seen as significant by the investor. But the same expenses levels will hurt when the returns fall or there are losses.

Consider all the costs involved in making and managing and investments, irrespective how they are charged or paid. All these affect the final corpus value that is available to you to meet the goals.

Taxes

The returns that you consider while evaluating investments are typically the pre-tax returns. A 10% return on a company fixed deposit may look good, but if you are in the 30% tax bracket, the effective return you earn would be only about 7%.

When you look at an investment through a post-tax lens, the suitability may be very different. Higher the tax bracket of the investor, greater will be the gap between the pre- and post-tax returns. From the point of view of an investor’s goals, the relevant number is the post-tax return.

It is important therefore to be aware of how the returns from various investments will be taxed. Look for ways in which you can maximize your post-tax returns.

For example, investing in debt securities through a debt mutual fund may be more tax-efficient than directly holding the bonds, where the interest income earned will be taxed according to the investor’s tax bracket.

Where the option is available, choose to draw returns as periodic dividend or interest income, or as capital gain, depending on which option gives your the best post-tax returns.

Performance

Don’t ignore the risks while evaluating an investment for its suitability for your goals. The investor must be willing to trade-off higher risk for higher returns. The impact of higher risk of volatility, default or illiquidity should be considered in light of the goal.

An investor may be willing to take on some volatility and illiquidity for a longer-term goal but not for a medium- or short-term goal.

Don’t ignore the performance of comparable investment options. Very often, the decision matrix considers the historic return performance of the investment under consideration, and maybe the risk factors. But it is important to consider how the benchmark and comparable investments performed, to determine the investment’s relative performance.

If you don’t do this, then you may be condemning your savings to working less efficiently for you. Compare apples to apples, to make sure that you have the right information. It is not enough if your investment is earning a level of return that you consider to be acceptable for your needs.

You need an investment that is consistently outperforming the benchmark and is a top-quartile performer in comparable investments, both in appreciating and declining markets.

The effects of compounding will be lower to the extent that the return numbers are lower as a result of performance, taxes and costs. Make sure you have considered all the relevant numbers to safeguard your savings and investments.

Source livemint

3:13 am
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Have You Heard? GST to apply on land lease, rent, EMIs for buying of houses under construction

GST

GST to apply on land lease, rent, EMIs for buying of houses under construction

Leasing of land, renting of buildings as well as EMIs for buying of under-construction houses will attract the Goods and Services Tax (GST)

GST, which the govt intends to roll out from 1 July 2017 will subsume central excise, service tax and state VAT among other indirect levies on manufactured goods and services.
Come 1 July and leasing of land, renting of buildings as well as equated monthly Instalments (EMIs) paid for purchase of under-construction houses will start attracting the Goods and Services Tax (GST).

Sale of land and buildings will be however out of the purview of GST, the new indirect tax regime. Such transactions will continue to attract the stamp duty, according to the legislations finance minister Arun Jaitley introduced in the Lok Sabha on Monday for approval.

Electricity has also been kept out of the GST ambit.

GST, which the government intends to roll out from 1 July 2017, will subsume central excise, service tax and state VAT among other indirect levies on manufactured goods and services.

The Central GST (CGST) bill — one of the four legislations introduced, states that any lease, tenancy, easement, licence to occupy land will be considered as supply of service.

Also, any lease or letting out of the building, including a commercial, industrial or residential complex for business or commerce, either wholly or partly, is a supply of services as per the CGST bill.

The GST bills provide that sale of land and, sale of building except the sale of under construction building will nether be treated as a supply of goods not a supply of services. Thus GST can’t be levied in those supplies.

‘Goods’ in earlier drafts of the bills were defined as every kind of movable property other than money and securities but includes actionable claim.

‘Services’ were defined as anything other than goods. It was thought that GST may be levied on supply of immovable property such as Land or building apart from levy of stamp duty. But the bills presented in Parliament have now clarified this position.

Tax experts said that currently service tax is levied on rents paid for commercial and industrial units, although it is exempt for residential units.

Deloitte Haskins Sells LLP Senior Director M S Mani said: “While service tax is applicable at present on sale of under construction apartments, it is levied on a lower value as abatement allowed. The abatement is ostensibly to take care of the value of the land involved in the construction of apartments”.

He said the GST Rules, which will come up for discussion in the Council meeting on 31 March, would help ascertain whether a lower rate of GST is proposed for such transactions or whether a similar abatement procedure would be prescribed.

“This would also be dependent on the rate fixation committee which is expected to finalise its recommendations in April,” Mani said.

Experts said service tax is currently levied on payments made for under-construction residential houses after providing abatement, which brings down the effective rate from 18% to around 6%.

“The government is trying its best to make GST litigation free. The bills very clearly specify that GST would be charged on any lease of land or letting out of the building or construction of a complex, building, civil structure or a part thereof, where whole or any part of consideration has been received before issuance of completion certificate or its first occupation,” Nangia & Co Director Rajat Mohan said.

Experts said the GST subsumes central levies like excise and service tax and local levies like VAT, entertainment tax, luxury tax. However, it does not subsume Electricity Duty.

Since the GST Constitution Amendment Act does not provide for subsuming ‘electricity duty’ under GST, it will continue to be levied by the respective state governments.

Certain states like Delhi exempt residential properties from electricity duty but levy it on commercial and industrial units

Source livemint

3:02 am
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Fear? Bitcoin use can attract anti-money laundering law: Govt The Right Way!

Black money

2:58 am
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Union Cabinet Approves 4 GST Bill

GST

Union Cabinet Approves 4 GST Bill

Esha Agrawal

The Union Cabinet has cleared four bills related to the Goods and Services Tax (GST), ahead of their introduction in Parliament, to enable roll out of the tax reform from July 1.

Approval of the bills by Parliament and a separate one by all state Assemblies will complete the legislative process for roll out of the GST, the one-nation-one-tax system that merges central taxes like excise duty and service tax and state levies like VAT.

What is GST bill?
Goods and Services Tax bill is India’s biggest reform in India’s indirect tax structure.
The purpose of the bill is to introduce one single tax on supply of goods and services, from the manufacturing stage until its delivery to the final consumer.
The final consumer of the goods and/or services will only have to bear the GST charged by the final dealer in the supply chain, and avail set-off benefits at all the previous stages.
This means interim tax stages such as excise duties and service tax and state levies like VAT will be absorbed under GST.
What were the four bills approved by the Cabinet ?
The Central Goods and Services Tax Bill 2017 (The CGST Bill),
The Integrated Goods and Services Tax Bill 2017 (The IGST Bill),
The Union Territory Goods and Services Tax Bill 2017 (The UTGST Bill) and
The Goods and Services Tax (Compensation to the States) Bill 2017 (The Compensation Bill)
GST Bill peak rate to be 40%, slabs intact for now
The GST levy may go up to 40 percent after the GST Council proposed raising the peak rate in the Bill to 20 percent, from the current 14 percent, to obviate the need for approaching Parliament for any change in rates in future.

The change in the peak rate will not alter the 4-slab rate structure of 5, 12, 18 and 28 percent agreed upon last year for the moment, In addition, a cess will be levied on demerit goods like luxury cars, aerated drinks and tobacco products.

The CGST Bill sets the tax regime for the levy of GST on intra-state supply of goods or services or both by the central government. IGST Bill deals levy of GST on inter-state supply of goods or services or both by the central government.

Similarly, the UTGST Bill provides for levy of GST on intra-UT supply of goods and services in the Union Territories without legislature. The Compensation Bill provides for compensation to the states for loss of revenue due to GST for a period of five years.

All state assemblies will have to separately approve the state GST legislation before this one-nation one-tax regime can be rolled out.

What are the benefits of GST?
The introduction of GST bill will help in simplifying administration as it removes multiple taxation systems at every stage of trade model and removes disturbances in production.
It also aims towards providing a uniform tax rate for all goods and services.
The manufacturers will be benefited by the tax regime as it will reduce the tax that levied on them.
A system of seamless tax-credits will lead to minimal cascading of taxes, thus reducing hidden costs during trade.
What are the Roadblocks for GST bill
The state GST bill has to be approved by every state government, before its introduction in Parliament for approval.
At the moment, the state GST bill has been sent to all the states by their respective state legislatures for the approval.
For any queries and comments please contact me on: eshaag6@gmail.com or 7388140275

KEEP ON SMILING!!!!!!!!

9:54 am
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10 most important income-tax changes which will apply from April 1

Budget 2017

10 most important income-tax changes which will apply from April 1

By ECONOMICTIMES.COM

With the passage of the Finance Bill on Wednesday, the Lok Sabha has completed the budgetary exercise for 2017-18. The tax proposals in the Budget 2017 have now become law. Below are 10 most important income-tax changes that will affect you next month:

1. With a decrease in tax rate from 10 per cent to 5 per cent for total income between Rs 2.5 lakh and Rs 5 lakh, there is tax saving of up to Rs 12,500 per year and Rs 14,806 (including surcharge and cess) for those with income above Rs 1 crore.

2. Tax rebate is reduced to Rs 2,500 from Rs 5,000 per year for taxpayers with income up to Rs 3.5 lakh (earlier Rs 5 lakh). Due to the combined effect of change in tax rate and rebate, an individual with taxable income of Rs 3.5 lakh will now pay tax of 2,575 instead of 5,150 earlier.

3. Surcharge at 10 per cent of tax levied on rich taxpayers, with income between Rs 50 lakh and Rs 1 crore. The rate of surcharge for the super rich, with income above Rs 1 crore, will remain 15 per cent.

4. Holding period for immovable property to be considered "long term" reduced to 2 years from 3. This will ensure immovable property held beyond 2 years is taxed at reduced rate of 20 per cent and eligible for various exemptions on reinvestment.

5. Long term capital gains tax will result in a lower payout owing to beneficial amendments. The base year for indexation of cost (adjustment of inflation) has been shifted to April 1, 2001 from April 1, 1981. This means lower profits on sale.

6. Further, tax exemption will be available on reinvestment of capital gains in notified redeemable bonds (in addition to investment in NHAI and REC bonds).

7. A simple one-page tax return form is to be introduced for individuals with taxable income up to Rs 5 lakh (excluding business income). Those filing returns for the first time in this category will generally not be subject to scrutiny.

8. Delay in filing tax return for 2017-18 will attract penalty of Rs 5,000 if filed by Dec 31, 2018 and Rs 10,000 if filed later. Such fee will be restricted to Rs 1,000 for small taxpayers with income up to Rs 5 lakh.

9. Deduction for first-time investors in listed equity shares or listed units of equity oriented fund under the Rajiv Gandhi Equity Savings Scheme is withdrawn from 2017-18. If an individual has already claimed deduction under this scheme before April 1, 2017, he/she shall be allowed to avail a deduction for the next two years.

10. Time period for revision of tax return cut to one year (from 2 years) from the end of the relevant FY or before completion of assessment, whichever is earlier

Source : economicstimes.com

12:07 am
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Looking for last-minute tax planning with Section 80C investments? Here's help

Income Tax

Looking for last-minute tax planning with Section 80C investments? Here's help

By Sunil Dhawan, ECONOMICTIMES.COM

Section 80C allows deduction from gross total income of up to Rs 1.5 lakh per annum on one or more eligible investments and specified expenses.

With less than ten days left for the financial year 2016-17 to end, the rush to save tax is nearing its natural epitome. Not so much for salaried individuals as they are expected to have done their bit by now (thanks to the regular reminders by account office), it's the non-salaried individuals who could still be scurrying around to find the right tax saver.

For anyone looking for a tax-saver at this fag end of the tax saving season, the probability of committing errors are more. The chances of locking funds in an unsuitable tax saving investment are quite high. Tax-saving investment should never be made on an ad-hoc basis or for an ill-conceived goal.

Still, if you are one of those waiting for the last-minute tax planning, here are few important things to look at.

While choosing the right tax-saver, base your decision on these five important things, among others:
* Total amount of deductions - See how much maximum you can avail
* Existing commitments - See if any fresh investment is required or not

* Types of tax-saving instrument - See what suits you
* Tenure of the investment - See if the tax saver can help you meet your goal
* Taxability of income from the investment - See the post-tax return based on your income slab

Once you have got a fix on these, equally important is to choose a tax-saving instrument which can be linked to a specific goal.

Total amount of deductions
Section 80C allows deduction from gross total income (before arriving at taxable income) of up to Rs 1.5 lakh per annum on one or more eligible investments and specified expenses. The eligible investments include life insurance, Equity Linked Savings Schemes (ELSS) mutual funds, Public Provident Fund (PPF), National Savings Certificate (NSC), etc., while expenses and outflows can include tuition fees, principal repayment of home loan, among others.

If you have exhausted your annual limit Sec 80C limit of Rs 1.5 lakh, you can also look at National Pension System (NPS) to save towards retirement and, in the process, save additional tax.

From 2015-16 onwards, an additional (additional to Section 80C) deduction of up to Rs 50,000 under Section 80CCD (1b) for investment in NPS is also possible. For someone in the highest 30 per cent income tax bracket, it's an additional annual saving of about Rs 15,000.

Further, the premium paid towards a health insurance plan for self and family members qualifies for tax benefit under Section 80D for Rs 25,000 and Rs 30,000 for those above 60. If one has a home loan, interest payments made towards its repayment can also be claimed under Section 24 of the Income Tax Act. The other deductions include donations under Section 80G, interest payments under Section 80E for education loan, etc.

Existing commitments
Before you start looking for the right tax saver, run this simple exercise to evaluate whether you actually need to make any fresh investments for this financial year (2016-17).

Non-Section 80C deductions: First, look at all non-Section 80C deductions like the interest paid on home loan, health plans, educational loan.

Section 80C outflows: Then consider Section 80C-related expenses like children's tuition fees, principal repayment on home loan, pure term life insurance plans premiums.

Existing Section 80C commitments: Consider all the existing Section 80C commitments to invest/to pay premium such as in Employees' Provident Fund (EPF) and endowment life insurance, respectively

The exercise above gives you a total of existing commitments under Section 80C, 80D and other deductions. Now, from your gross total income, reduce the amount to arrive at the taxable income.

If your net income after doing the above calculation is still above the tax exemption limit of Rs 2.5 lakh then you need to look at further tax saving. To reduce taxable income further and provided the limit of section 80C isn't yet exhausted, look for the right Section 80C investments.

Types of tax-saving instrument
Within the basket of Section 80C investments, there are two options to choose from: Investments offering "Fixed and assured returns" and those offering "market-linked returns".

The former primarily includes debt assets, including notified bank deposits with a minimum period of five years, endowment life insurance plans, PPF, NSC, Senior Citizens Savings Scheme (SCSC), etc. The returns are fixed for the entire duration and generally in line with the rates prevalent in the economy and very close to inflation figure. They suit conservative investors whose aim is to preserve capital rather than create wealth.

The 'market-linked returns' category is primarily the equity-asset class. Here, one can choose from ELSS of mutual funds and Unit-Linked Insurance Plan (ULIP), pension plans and the NPS. The returns are not assured but linked to the performance of the underlying assets such as equity or debt. They have the potential to generate higher inflation adjusted return in the long run to the extent they are based on the equity asset class.

Tenure
All the above tax-saving instruments, by nature, are medium to long term products: From a three-year lock-in that comes with ELSS to a 15-year lock-in of PPF. Some like life insurance require annual payments to be made for a longer duration.

Taxability of income
Another important factor to consider is the post-tax return of the tax-saving investment. For instance, most fixed and assured returns products such as NSC provide you with Section 80C benefits, but the returns, currently 8 per cent (five-year) annually, are taxable. This makes the effective post-tax return equal to 5.52 per cent for the highest taxpayers. Considering the annual inflation of six per cent, the real return is almost zero!

Of all the tax-saving tools, only PPF, EPF, ELSS and insurance plans enjoy the EEE status, i.e., the growth is tax-exempt during the three stages of investing, growth and withdrawal.

Making the right choice
Firstly, identify your medium and long term goals arising at different stages of your life. A market-linked equity-backed tax-saving instrument is good for long term goals as equities need time to perform. And, before considering a taxable investment, see the tax rate that applies to you and consider the post-tax return. A low post-tax return after adjusting for inflation will not help you in achieving your goals in the long run. Inflation erodes the purchasing power of money, especially over long term.

Conclusion
Tax planning should ideally begin at the start of every financial year. Remember, the risks of planning tax-saving in a hurry later are manifold. There is, for instance, a high probability of picking up an unsuitable product. Also, there isn't any one instrument that can help you save tax and at the same time also provide safe, assured and highest return. Your final choice should ideally be based on a gamut of factors rather than solely being driven by returns from the financial product.

Source: economicstimes.com

11:55 pm
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137% tax if you don't come clean on hidden cash by March 31, IT department warns evaders

Income Tax

137% tax if you don't come clean on hidden cash by March 31, IT department warns evaders

The one who does not offer his stash funds under the scheme but is caught with undisclosed income in scrutiny assessment will face 83.25% tax rate.

The Income Tax department today warned black money holders that it has "information" about their illegal deposits and they should avail the soon-to-end PMGKY window to come clean.

In advertisements issued in leading national dailies, the department said that the "countdown" in this regard has begun and stash holders should declare their black money "or regret later".

The window under the Pradhan Mantri Garib Kalyan Yojna (PMGKY) closes on March 31. The advertisement said that the "Income Tax department has information about your deposits."

The department also said that total "confidentiality is ensured" to those who declare their black assets and funds under this scheme.

It had recently also cautioned stash holders to avail the scheme or face stringent action under Benami laws, adding that the defaulters' names will also be shared with the central probe agencies like theEnforcement Directorate and the CBI.

The tax and penalty against those who hide their black money and fail to avail the PMGKY could go as high as 137 per cent of the cash deposits made, a senior officer had said, adding the department will not shy away from slapping the newly enacted Benami Transactions Act against defaulters.

The official explained that a person or entity that opts for PMGKY will have to pay 49.9 per cent tax on the income, whereas a person who does not opt for the scheme but offers his black income in his Income Tax Returns will face a tax and penalty rate of 77.25 per cent.

The one who does not offer his stash funds under the scheme but is caught with undisclosed income in scrutiny assessment will face 83.25 per cent tax rate.

For those who do not declare their stash under the PMGKY and are raided will face 107.25 per cent tax and penalty if the undisclosed income is surrendered during the action.

Those who do not surrender such hidden income even during searches will stand to face the highest level of penalty and tax at 137.25 per cent.

The Benami Act invites rigorous imprisonment of up to seven years and the violators also stand to be charged under the I-T Act, besides being liable to pay fine up to 25 per cent of fair market value of benami property and other penalties.

The Centre had come out with the PMGKY scheme after its decision to demonetise high value currency notes of Rs 500 and Rs 1,000 last year.

A quarter of the total sum will also have to be parked in a non--interest bearing deposit for four years under the said scheme.

The scheme had commenced on December 17 last.

Source: economicstimes.com

11:49 pm
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EPFO to discuss making EPF optional for apparel workers

Provident Fund

EPFO to discuss making EPF optional for apparel workers

Trade unions are against the move saying this would encourage such an exemption for other sectors as well in future and might defeat the purpose of retirement savings

PTI

EPFO considers amending the EPF & MP Act for making provident fund contributions optional for employees in apparel and made-ups sector. Photo: Bloomberg

New Delhi: Retirement fund body Employees’ Provident Fund Organisation (EPFO) will consider a proposal to amend the Employees’ Provident Fund and Miscellaneous Provisions Act (EPF & MP Act) for making provident fund contributions optional for employees in apparel and made-ups sector at the trustees’ meet on next Thursday.

However, the trade unions are against this move saying this would encourage such an exemption for other sectors as well in future and might defeat the purpose of retirement savings. “The proposal to amend the Act for implementing the Cabinet decision of making EPF contributions optional for employees earning less than Rs15,000 per month is listed on the agenda of EPFO’s trustees meet scheduled on 30 March, 2017,” a source said.

Earlier last year in June, the Centre has brought a package for the textile and apparel sector which was later extended to made-ups also in December 2016. Among other sops in the package, it was announced that EPF shall be made optional for employees earning less than Rs15,000 per month in these segments.

However it was a Cabinet decision but it could not be implemented without amending the EPF & MP Act 1952, the source said. In the present legal framework, the employees as well as employers contribute 12% each towards mandatory contributions towards social security scheme—EPF, EPS and EDLI—run by EPFO.

Once approved by the CBT, the proposal would have to go through the floor test in both the Houses of Parliament. Commenting on the proposal, All India Trade Union Congress Secretary D. L. Sachdev said,

“All central trade unions will oppose this proposal because it would start a new practice of making EPF contributions optional for a set of categories of employees. This will set a wrong precedent.” Besides, the EPFO’s apex decision making body, the Central Board of Trustees (CBT), headed by the labour minister would also take up a proposal of providing health cover to its around 50 lakh pensioners.

Earlier, back of the envelope calculations done by ESI had estimated Rs200 monthly premium per person for providing health cover under its scheme to the EPFO pensioners. The proposal is aimed at providing health cover to EPFO pensioner, who get very little amount as pension and hence healthcare is out of their reach. Besides, the CBT will also discuss the proposal to cover scheme workers like Anganwadi and mid-day meal, under the social security schemes run by the EPFO

Source livemint

11:41 pm
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Section 66A of IT Act, 2000: What has changed two years on?

Income Tax

Section 66A of IT Act, 2000: What has changed two years on?

The manner in which courts have handled issues of free speech and access to information, in accordance to Section 66A of IT Act, 2000, does not augur well

Shreeja Sen

A file photo of the Supreme Court Photo: Mint

Two years ago, on 24 March 2015, online speech or communication got a boost as the Supreme Court declared a draconian provision—Section 66A of the Information Technology Act, 2000—unconstitutional.

It was group of petitions, but the first was filed by then law student Shreya Singhal, granddaughter of late judge Sunanda Bhandare, in light of the arrest of Shaheen Dhada and Rinu Srinivasan. They were arrested under Section 66A for criticizing the shut down of Mumbai after the death of Shiv Sena leader Bal Thackeray on social networking website Facebook.

The case came to be known as Shreya Singhal versus Union of India, now in the annals of history as a landmark decision in the free speech regime.

The court struck down Section 66A of the IT Act for being “open ended, undefined, and vague” and the words used in the text of the provision being “nebulous in meaning”.

The provision was titled “punishment for sending offensive messages through communication service” and included information shared via a “computer resource or a communication device” known to be “false, but for the purpose of causing annoyance, inconvenience, danger, obstruction, insult, injury, criminal intimidation, enmity, hatred or ill will”.

The wide net cast by the section did not go unnoticed by the apex court which said, “Section 66A is cast so widely that virtually any opinion on any subject would be covered by it, as any serious opinion dissenting with the mores of the day would be caught within its net.”

The ruling also read down the ambit of intermediary liability while constitutional validity of Section 69A (power of Central government to block information through any computer resource for public access) and Section 79 (intermediary liability) of the IT Act and the rules made under it.

Two years have passed since the Shreya Singhal decision. The Supreme Court’s history with civil rights (like free speech) was called “chequered and inconsistent” by lawyer Gautam Bhatia, who writes on these issues, in a recent Mint column.

Last year also saw the court upholding the sections from the Indian Penal Code which punish defamation with up to two years imprisonment.

“In Section 66A, there was immediate relief to a lot of people because it was struck down. Also the ruling with respect to intermediary rules has been immensely beneficial for free speech. However, there are points of concern given that the Supreme Court itself is applying the ruling inconsistently and not expanding or following the course set by it,” said lawyer Apar Gupta, who also represented the non-profit People’s Union for Civil Liberties, a petitioner in the batch of cases with the Shreya Singhal case.

As an example, Gupta referred to a recent interim order by the apex court directing intermediaries to have an in-house mechanism for screening of search results. “It seems to conflict with the Shreya Singhal case,” he said.

The manner in which courts have handled issues of free speech and access to information does not augur well. Gupta said, “At the very least it shows inconsistency by the court and otherwise it shows that Shreya Singhal may be a case in isolation. It undermines the significance of the case.”

Source livemint

11:39 pm
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No woman director at 65 PSUs, govt asks RoC to act against companies

Government of India

11:36 pm
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No plans to introduce Rs 5,000, Rs 10,000 notes: Govt

Government of India

11:28 pm
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Aadhaar now a must for mobile phone connections

Others

Aadhaar now a must for mobile phone connections

DoT has directed all telecom firms to reverify existing mobile phone connections, prepaid and postpaid, using Aadhaar number and biometric details

Komal GuptaSuranjana Roy

Aadhaar-based e-KYC would also be mandatory for customers procuring new SIM cards for prepaid and postpaid mobile phone connections. Photo: Mint

After making Aadhaar mandatory for filing income tax returns and applying for a permanent account number (PAN), the government has moved to make Aadhaar-based e-KYC (know your customer) mandatory for mobile phone connections.

In a notification late Thursday, the department of telecommunications (DoT) directed all mobile phone service providers to reverify existing customers, prepaid and postpaid, using their unique Aadhaar identity number and biometric details. They were told to complete the exercise by early next year.

Aadhaar-based e-KYC would also be mandatory for customers procuring new SIM cards.

It is another step towards making the use of Aadhaar all-pervasive in a country where it is already being used to better target beneficiaries of some government subsidies and welfare programmes.

On Tuesday, the government said Aadhaar would be mandatory for filing income tax returns as well as for obtaining and retaining the permanent account number (PAN) that taxpayers need to quote in their returns. From 1 July, every taxpayer will have to quote Aadhaar while applying for a PAN and when filing tax returns. Existing PAN holders will have to disclose their Aadhaar numbers to the government by a date that will be specified later. In case they fail to intimate their Aadhaar number, taxpayers will have the PAN allotted to them deemed invalid.

The move to link mobile phone connections to Aadhaar, administered by the Unique Identification Authority of India (UIDAI), comes after the Supreme Court said in February that all phone numbers in India should have verified users. The court said this during a hearing on a case brought by Lokniti Foundation, a non-profit organization.

Although the Supreme Court stopped short of saying that Aadhaar has to be used to verify users, the government seems to have decided that linking the unique identity number to mobile connections will be the best way to go about this.

“A meeting was held on 13.02.2017 in the department with the telecom industry wherein UIDAI, Trai and PMO representatives also participated to discuss the way forward to implement the directions of Hon’ble Supreme Court,” said the notification issued by DoT.

Trai is short for the Telecom Regulatory Authority of India and PMO for the Prime Minister’s Office.

Any unverified mobile phone number, or any number that is not linked to Aadhaar, will be illegal after 6 February 2018.

The government has directed telecom companies to intimate their existing subscribers about the re-verification process through all means possible, including through advertisements in newspapers and text messages.

The licensees have also been directed to send a “verification code” to the mobile numbers of subscribers to ensure that SIM cards are physically available with the subscribers before initiating the e-KYC process.

“I am unclear about the benefit that will arise out of the exercise where we will have to re-evaluate all the subscribers,” said Arpita Pal Agarwal, partner and leader—telecom industry practice—at consultancy PricewaterhouseCoopers India Pvt. Ltd. “It will add additional costs to the (telecom) sector, which it at the moment cannot afford.”

The Supreme Court previously said in an interim ruling that the use of Aadhaar should not be mandatory in delivering government benefits. Hearings in the case and a final ruling are still pending. The legislation that conferred statutory status on the Aadhaar project too said its use wouldn’t be mandatory.

“The government can decide with the legislature on making Aadhaar compulsory for the various schemes or activities. However, I don’t understand why are they making it compulsory for some schemes on their own when a decision is still pending before the Supreme Court. They can be easily challenged,” said Rahul Matthan, partner at law firm Trilegal and a Mint columnist.

According to former rural development secretary N.C. Saxena, the delivery of benefits offered by government schemes should be linked to Aadhaar.

“Aadhaar should become compulsory as it will help government check corruption. I don’t know why people are against it. We can start making Aadhaar compulsory one scheme at a time, see its impact and then extend it to other schemes,” he said.

Source livemint

11:26 pm
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Sebi bans Reliance Industries from equity derivatives market for one year

SEBI

Sebi bans Reliance Industries from equity derivatives market for one year

Sebi has also asked Reliance Industries (RIL) to disgorge Rs447 crore plus interest in a 10-year-old case involving erstwhile listed arm Reliance Petroleum

Jayshree P. Upadhyay

A file photo of the Sebi headquarters in Mumbai.

The Securities and Exchange Board of India (Sebi) on Friday banned Reliance Industries Ltd (RIL) from accessing the equity derivatives market for a year, and directed the company to disgorge the profits made by violating the rules on unfair trade practices when it sold a stake in its erstwhile unit Reliance Petroleum Ltd (RPL).

RIL will appeal and challenge the order in the Securities Appellate Tribunal (SAT), a company spokesperson said.

RIL has been asked to pay Rs447.27 crore along with an annual interest of 12% dating back to 29 November 2007, which translates into a penalty of around Rs1,300 crore. The order, passed by Sebi’s whole-time member G. Mahalingam, said that RIL had made “unlawful gains” of Rs513 crore, “which could not have been made but for the fraudulent and manipulative strategy/pattern adopted by them”.

Sebi arrived at the unlawful gain of Rs513 crore by considering the net short position that RIL and 12 other entities maintained while trading in the RPL stock in November 2007, ahead of a planned amalgamation of the firm with RIL. In 2007, RIL sold a 4.1% stake in RPL, but to prevent a slump in the RPL stock, the shares were sold first in the futures market and later in the spot market, covering the share sales in the futures market.

RIL and the other entities were allegedly involved in the short sale of RPL shares ahead of the amalgamation. A short sale involves selling borrowed shares with plans to buy them back later at a lower price.

“The trades in RPL shares which were examined by Sebi were genuine and bona fide transactions. These were carried out keeping the best interests of the company and its shareholders in view. Sebi appears to have misconstrued the true nature of the transaction and imposed unjustifiable sanctions,” the RIL spokesperson said in an email.

The regulator had, in 2008, launched investigations into the matter and initiated quasi-judicial proceedings in 2010. That year, RIL had applied to settle the case through the consent mechanism. Sebi rejected the consent application in 2012. RIL then filed an appeal before SAT challenging the Sebi order. SAT presiding officer J.P. Devadhar on 30 June 2014 said the dispute was rejected as it was not “consentable and maintainable”.

Sebi completed investigation in the matter in 2015 and subsequently issued a showcause notice to RIL.

The other 12 entities named in the order have also been barred from trading in the futures & options segment for one year. RIL has been asked to pay up within 45 days of the order.

Anirudh Laskar and Kalpana Pathak contributed to this story.

Source livemint

11:20 pm
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Download CA IPCC Audit Capsule by JKSC for May 17 Exam

CA IPCC

12:31 pm
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Non Resident can enter foreign exchange derivative contract

Notification

Non Resident can enter foreign exchange derivative contract

RESERVE BANK OF INDIA
(Financial Markets Regulatory Department)
(CENTRAL OFFICE)
NOTIFICATION
Mumbai, the 17th March, 2017
No. FEMA. 384/RB-2017

Foreign Exchange Management (Foreign Exchange Derivative Contracts) (Amendment) Regulations, 2017

G.S.R. 260(E).—In exercise of the powers conferred by clause (h) of sub-section (2) of section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999), the Reserve Bank hereby makes the following amendments in the Foreign Exchange Management (Foreign Exchange Derivative Contracts) Regulations, 2000 (Notification No. FEMA 25/RB-2000 dated May 3, 2000), namely:—

1. Short Title and Commencement

(i) These regulations may be called the Foreign Exchange Management (Foreign Exchange Derivative Contracts) (Amendment) Regulations, 2017.

(ii) They shall be come into force from the date of their publication in the Official Gazette.

2. Amendment under Schedule II: In the Foreign Exchange Management (Foreign Exchange Derivative Contracts) Regulations, 2000 (Notification No. FEMA 25/RB-2000 dated May 3, 2000), in Schedule II, after the existing para 6, the following shall be added, namely:

A non-resident may enter into a foreign exchange derivative contract with an Authorised Dealer bank in India to hedge an exposure to exchange risk of and on behalf of its Indian subsidiary in respect of the said subsidiary’s transactions subject to such terms and conditions as may be stipulated by the Reserve Bank from time to time.

[F. No. 1/15/EM/2015] T. RABI SANKAR, Chief General Manager

Footnote : The principal regulations were published in the Official Gazette vide G.S.R. No. 411(E) dated May 8, 2000 in Part II, Section 3, sub-section (i) and subsequently amended vide‑

G.S.R. No. 756(E) dt. 28.09.2000,

G.S.R. No. 264(E) dt. 09.04.2002,

G.S.R. No. 579(E) dt. 19.08.2002,

G.S.R. No. 222(E) dt. 18.03.2003,

G.S.R. No. 532(E) dt. 09.07.2003, 3

G.S.R. No. 880(E) dt. 11.11.2003,

G.S.R. No. 881(E) dt. 11.11.2003,

G.S.R. No. 750(E) dt. 28.12.2005,

G.S.R. No. 222(E) dt. 19.04.2006,

G.S.R. No. 223(E) dt. 19.04.2006,

G.S.R. No. 760(E) dt. 07.12.2007,

G.S.R. No. 577(E) dt. 05.08.2008,

G.S.R. No. 440(E) dt. 23.06.2009,

G.S.R. No. 895(E) dt. 14.12.2009,

G.S.R. No. 635(E) dt. 27.07.2010,

G.S.R. No. 608(E) dt. 03.08.2012,

G.S.R. No. 799(E) dt. 30.10.2012,

G.S.R. No. 330(E) dated 23.05.2013,

G.S.R. No. 374(E) dated 02.06.2014,

G.S.R. No. 365(E) dated 01.06.2016 and

G.S.R. No. 378(E) dated 25.10.2016.

8:51 am
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Companies (Indian Accounting Standards) (Amendment) Rules, 2017

Circulars

Companies (Indian Accounting Standards) (Amendment) Rules, 2017

MINISTRY OF CORPORATE AFFAIRS

NOTIFICATION

New Delhi, the 17th March, 2017

G.S.R. 258(E).—In exercise of the powers conferred by section 133 read with section 469 of the Companies Act, 2013 (18 of 2013) and sub-section (1) of section 210A of the Companies Act, 1956 (1 of 1956), the Central Government, in consultation with the National Advisory Committee on Accounting Standards, hereby makes the following rules further to amend the Companies (Indian Accounting Standards) Rules, 2015, namely:—

1. Short title and commencement.-(1) These rules may be called the Companies (Indian Accounting Standards) (Amendment) Rules, 2017.

(2) They shall come into force on the 1st day of April, 2017.

In the principal rules, in the “Annexure”, under the heading “B. Indian Accounting Standards (Ind AS)” in “Indian Accounting Standard (Ind AS) 102, Share-based Payment”, –

(i) for paragraph 19, the following paragraph shall be substituted, namely:-

“19 A grant of equity instruments might be conditional upon satisfying specified vesting conditions. For example, a grant of shares or share options to an employee is typically conditional on the employee remaining in the entity’s employment for a specified period of time. There might be performance conditions that must be satisfied, such as the entity achieving a specified growth in profit or a specified increase in the entity’s share price. Vesting conditions, other than market conditions, shall not be taken into account when estimating the fair value of the shares or share options at the measurement date, Instead, vesting conditions, other than market conditions, shall be taken into account by adjusting the number of equity instruments included in the measurement of the transaction amount so that, ultimately, the amount recognised for goods or services received as consideration for the equity instruments granted shall be based on the number of equity instruments that eventually vest. Hence, on a cumulative basis, no amount is recognised for goods or services received if the equity instruments granted do not vest because of failure to satisfy a vesting condition, other than a market condition, for example, the counterparty fails to complete a specified service period, or a performance condition is not satisfied, subject to the requirements of paragraph 21. ”

(ii) for paragraph 30, the following paragraph shall be substituted, namely:-

“30 For cash-settled share-based payment transactions, the entity shall measure the goods or services acquired and the liability incurred at the fair value of the liability, subject to the requirements of paragraphs 31–33D. Until the liability is settled, the entity shall remeasure the fair value of the liability at the end of each reporting period and at the date of settlement, with any changes in fair value recognised in profit or loss for the period. ”

(iii) for paragraph 31, the following paragraph shall be substituted, namely:-

“31 For example, an entity might grant share appreciation rights to employees as part of their remuneration package, whereby the employees will become entitled to a future cash payment (rather than an equity instrument), based on the increase in the entity’s share price from a specified level over a specified period of time. Alternatively, an entity might grant to its employees a right to receive a future cash payment by granting to them a right to shares (including shares to be issued upon the exercise of share options) that are redeemable, either mandatorily (for example, upon cessation of employment) or at the employee’s option. These arrangements are examples of cash-settled share-based payment transactions. Share appreciation rights are used to illustrate some of the requirements in paragraphs 32–33D; however, the requirements in those paragraphs apply to all cash-settled share-based payment transactions.”

(iv) for paragraph 33, the following paragraph shall be substituted, namely:-

“33 The liability shall be measured, initially and at the end of each reporting period until settled, at the fair value of the share appreciation rights, by applying an option pricing model, taking into account the terms and conditions on which the share appreciation rights were granted, and the extent to which the employees have rendered service to date subject to the requirements of paragraphs 33A–33D. An entity might modify the terms and conditions on which a cash-settled share-based payment is granted. Guidance for a modification of a share-based payment transaction that changes its classification from cash-settled to equity-settled is given in paragraphs B44A–B44C in Appendix B.”

(v) after paragraph 33, the following paragraphs and headings shall be inserted, namely:-

“Treatment of vesting and non-vesting conditions

33A A cash-settled share-based payment transaction might be conditional upon satisfying specified vesting conditions. There might be performance conditions that must be satisfied, such as the entity achieving a specified growth in profit or a specified increase in the entity’s share price. Vesting conditions, other than market conditions, shall not be taken into account when estimating the fair value of the cash-settled sharebased payment at the measurement date. Instead, vesting conditions, other than market conditions, shall be taken into account by adjusting the number of awards included in the measurement of the liability arising from the transaction.

33B To apply the requirements in paragraph 33A, the entity shall recognise an amount for the goods or services received during the vesting period. That amount shall be based on the best available estimate of the number of awards that are expected to vest. The entity shall revise that estimate, if necessary, if subsequent information indicates that the number of awards that are expected to vest differs from previous estimates. On the vesting date, the entity shall revise the estimate to equal the number of awards that ultimately vested.

33C Market conditions, such as a target share price upon which vesting (or exercisability) is conditioned, as well as non-vesting conditions, shall be taken into account when estimating the fair value of the cashsettled share-based payment granted and when remeasuring the fair value at the end of each reporting period and at the date of settlement.

33D As a result of applying paragraphs 30–33C, the cumulative amount ultimately recognised for goods or services received as consideration for the cash-settled share-based payment is equal to the cash that is paid.

Share-based payment transactions with a net settlement feature for withholding tax obligations

33E Tax laws or regulations may oblige an entity to withhold an amount for an employee’s tax obligation associated with a share-based payment and transfer that amount, normally in cash, to the tax authority on the employee’s behalf. To fulfil this obligation, the terms of the share-based payment arrangement may permit or require the entity to withhold the number of equity instruments equal to the monetary value of the employee’s tax obligation from the total number of equity instruments that otherwise would have been issued to the employee upon exercise (or vesting) of the share-based payment (i.e. the share-based payment arrangement has a ‘net settlement feature’).

33F As an exception to the requirements in paragraph 34, the transaction described in paragraph 33E shall be classified in its entirety as an equity-settled share-based payment transaction if it would have been so classified in the absence of the net settlement feature.

33G The entity applies paragraph 29 of this Standard to account for the withholding of shares to fund the payment to the tax authority in respect of the employee’s tax obligation associated with the share-based payment. Therefore, the payment made shall be accounted for as a deduction from equity for the shares withheld, except to the extent that the payment exceeds the fair value at the net settlement date of the equity instruments withheld.

33H The exception in paragraph 33F does not apply to:

(a) a share-based payment arrangement with a net settlement feature for which there is no obligation on the entity under tax laws or regulations to withhold an amount for an employee’s tax obligation associated with that share-based payment; or

(b) any equity instruments that the entity withholds in excess of the employee’s tax obligation associated with the share-based payment (i.e. the entity withheld an amount of shares that exceeds the monetary value of the employee’s tax obligation). Such excess shares withheld shall be accounted for as a cashsettled share-based payment when this amount is paid in cash (or other assets) to the employee.”

(vi) for paragraph 52, the following paragraph shall be substituted, namely:

“52 If the information required to be disclosed by this Standard does not satisfy the principles in paragraphs 44, 46 and 50, the entity shall disclose such additional information as is necessary to satisfy them. For example, if an entity has classified any share-based payment transactions as equity-settled in accordance with paragraph 33F, the entity shall disclose an estimate of the amount that it expects to transfer to the tax authority to settle the employee’s tax obligation when it is necessary to inform users about the future cash flow effects associated with the share-based payment arrangement.”

(vii) after paragraph 52, the following paragraphs and headings shall be inserted, namely:-

“Transitional provisions

53-59 [Refer Appendix 1]

59A An entity shall apply the amendments in paragraphs 30–31, 33–33H and B44A–B44C as set out below. Prior periods shall not be restated.

(a) The amendments in paragraphs B44A–B44C apply only to modifications that occur on or after the date that an entity first applies the amendments.

(b) The amendments in paragraphs 30–31 and 33–33D apply to share-based payment transactions that are unvested at the date that an entity first applies the amendments and to share-based payment transactions with a grant date on or after the date that an entity first applies the amendments. For unvested share-based payment transactions granted prior to the date that an entity first applies the amendments, an entity shall remeasure the liability at that date and recognise the effect of the remeasurement in opening retained earnings (or other component of equity, as appropriate) of the reporting period in which the amendments are first applied.

(c) The amendments in paragraphs 33E–33H and the amendment to paragraph 52 apply to share-based payment transactions that are unvested (or vested but unexercised), at the date that an entity first applies the amendments and to share-based payment transactions with a grant date on or after the date that an entity first applies the amendments. For unvested (or vested but unexercised) sharebased payment transactions (or components thereof) that were previously classified as cash-settled share-based payments but now are classified as equity-settled in accordance with the amendments, an entity shall reclassify the carrying value of the share-based payment liability to equity at the date that it first applies the amendments.

59B Notwithstanding the requirements in paragraph 59A, an entity may apply the amendments in paragraph 63D retrospectively, in accordance with Ind AS 8, Accounting Policies, Changes in Accounting Estimates and Errors, if and only if it is possible without hindsight. If an entity elects retrospective application, it must do so for all of the amendments made by Amendments to Classification and Measurement of Share-based Payment Transactions under Ind AS 102.

Effective date

60-63C [Refer Appendix 1]

63D Amendments to Classification and Measurement of Share-based Payment Transactions under Ind AS 102 amended paragraphs 19, 30–31, 33 and 52 and added paragraphs 33A–33H, 59A–59B, 63D and B44A–B44C and their related headings. An entity shall apply those amendments for annual periods beginning on or after 1 April, 2017.”

(viii) In Appendix B, after paragraph B44, the following paragraphs and heading shall be inserted, namely:-

“Accounting for a modification of a share-based payment transaction that changes its classification from cash-settled to equity-settled”

B. 44A If the terms and conditions of a cash-settled share-based payment transaction are modified with the result that it becomes an equity-settled share-based payment transaction, the transaction is accounted for as such from the date of the modification. Specifically:

(a) The equity-settled share-based payment transaction is measured by reference to the fair value of the equity instruments granted at the modification date. The equity-settled share-based payment transaction is recognised in equity on the modification date to the extent to which goods or services have been received.

(b) The liability for the cash-settled share-based payment transaction as at the modification date is derecognised on that date.

(c) Any difference between the carrying amount of the liability derecognised and the amount of equity recognised on the modification date is recognised immediately in profit or loss.

B44B If, as a result of the modification, the vesting period is extended or shortened, the application of the requirements in paragraph B44A reflect the modified vesting period. The requirements in paragraph B44A apply even if the modification occurs after the vesting period.

B44C A cash-settled share-based payment transaction may be cancelled or settled (other than a transaction cancelled by forfeiture when the vesting conditions are not satisfied). If equity instruments are granted and, on that grant date, the entity identifies them as a replacement for the cancelled cash-settled sharebased payment, the entity shall apply paragraphs B44A and B44B. ”

(ix) In Appendix 1, after paragraph 4, the following paragraph shall be inserted, namely:-

“5. Paragraphs 53-59 and 60-63C in IFRS 2 have not been included in Ind AS 102 as these paragraphs relate to Transitional Provisions and Effective date, respectively. However, in order to maintain consistency with paragraph numbers of IFRS 2, the paragraph numbers are retained in Ind AS 102. ”

3. In the principal rules, in the “Annexure”, under the heading “B. Indian Accounting Standards (Ind AS)” in “Indian Accounting Standard (Ind AS) 7, Statement of Cash Flows”, –

(i) after paragraph 44, the following paragraphs and heading shall be inserted, namely:-

“Changes in liabilities arising from financing activities

44A An entity shall provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes.

44B To the extent necessary to satisfy the requirement in paragraph 44A, an entity shall disclose the following changes in liabilities arising from financing activities:

(a) changes from financing cash flows;

(b) changes arising from obtaining or losing control of subsidiaries or other businesses;

(d) changes in fair values; and

(e) other changes.

44C Liabilities arising from financing activities are liabilities for which cash flows were, or future cash flows will be, classified in the statement of cash flows as cash flows from financing activities. In addition, the disclosure requirement in paragraph 44A also applies to changes in financial assets (for example, assets that hedge liabilities arising from financing activities) if cash flows from those financial assets were, or future cash flows will be, included in cash flows from financing activities.

44D One way to fulfil the disclosure requirement in paragraph 44A is by providing a reconciliation between the opening and closing balances in the balance sheet for liabilities arising from financing activities, including the changes identified in paragraph 44B. Where an entity discloses such a reconciliation, it shall provide sufficient information to enable users of the financial statements to link items included in the reconciliation to the balance sheet and the statement of cash flows.

44E If an entity provides the disclosure required by paragraph 44A in combination with disclosures of changes in other assets and liabilities, it shall disclose the changes in liabilities arising from financing activities separately from changes in those other assets and liabilities. ”

(ii) after paragraph 52, the following paragraphs and heading shall be inserted, namely:-

“Effective date

53-59 [Refer Appendix 1]

60 Paragraphs 44A–44E have been added. When the entity first applies these amendments, it is not required to provide comparative information for preceding periods. An entity shall apply those amendments for annual periods beginning on or after 1 April, 2017.”

(iii) In Appendix 1, after paragraph 5, the following paragraph shall be inserted, namely:-

“6. Paragraphs 53-59 in IAS 7 have not been included in Ind AS 7 as these paragraphs relate to Effective date. However, in order to maintain consistency with paragraph numbers of IAS 7, the paragraph numbers are retained in Ind AS 7.”

[F. No. 01/01/2009-CL-V(Part VI)]

AMARDEEP SINGH BHATIA, Jt. Secy.

Note : The principal notification was published in the Gazette of India, Extra-ordinary, part II, Section 3, Sub-section (i), vide number G.S.R. 111(E), dated the 16th February, 2015, subsequently amended vide G.S.R. 365(E), dated the 30th March, 2016.

8:49 am
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All about Loan under Nidhi Company in India – Practical Aspect

Companies Act 2013

All about Loan under Nidhi Company in India – Practical Aspect

CA Paras Mehra
1.0 Introduction

In this article, we shall discuss the practical aspects about the lending power under the Nidhi Company. Nidhi Companies are one of the special types of companies in India which had a power to accept deposit and lend money. However, for some people it is still a mystery on how loan is given and against which security the same is to be initiated.

Let us proceed on to understand the laws for loan under Nidhi Company.

2.0 Loan limit

As per the law, a Nidhi company can advance loan upto Rs.2 lakh if the amount of deposits is less than two crore rupees. Further details are as follows:

Loan Limit Deposit Amount
Two Lakh Rupees Deposit is less than two crore rupees
Seven lakh fifty thousand rupees Deposits are more than two crore but less than twenty crore rupees.
Twelve lakh rupees Deposits are more than twenty crore but less than fifty crore rupees.
Fifteen Lakh rupees Total amount of deposits is more than fifty crore rupees.
Apart from the loan limits, there are restriction on loan to be disbursed against which security. Let us proceed on to discuss that part.

3.0 Loan against securities

Before moving forward, the golden rule for loans is that a Nidhi Company cannot lend any unsecured loan. Further, it can only give loan against the securities mentioned in the law.

A Nidhi Company can advance loan against the following securities:

#Security No.1 – Gold, Silver and Jewellery: This type of loan is very popular among the community and is popularly known as gold loan. The repayment period of such loan shall not exceed one year. The total value of loan should not exceed the 80% of the total value of gold or silver.

#Security No.2 – Immovable property: This type of loan is known as loan against immovable property. The repayment of this type of loan shall not exceed 50% of the overall loan and repayment period shall not exceed seven years.

#Security No.3 – FD Receipts, National Saving Certificates, Government securities and insurance Policies: The loan against these securities are not very common. Further, in the case of loan against fixed deposits, the period of loan shall not exceed the unexpired period of the fixed deposits.

4.0 Loan which a Nidhi Company is not allowed

Here is the list of loans which a Nidhi Company is not allowed:

Personal Loan: A Nidhi Company is not allowed to lend money as personal loan on the basis of credibility or Income Tax return. The loan has to be against any security.
Micro Finance – Small Credit: Micro finance business is very famous especially in rural and semi urban areas. However, no company is allowed to do the business of micro finance, other than the registered NBFC.
Vehicle Finance: The business of vehicle finance is also not allowed. The business of vehicle finance is also allowed only to a registered NBFC. These are all special categories and need a net worth of atleast Rs.2 crores.
Hire Purchase: The business of hire purchase has also been restricted to Nidhi companies.
5.0 Conclusion

The finance business is India is highly regulated and complex. We have put on a small light on the complex subject matters. However, you can only solve the mystery once you put yourself on.

About the Author

Author is CA Paras Mehra who is professionally associated with Hubco.in, a brand to register and manage Nidhi Companies in India. You can reach him on paras@hubco.in or agam@hubco.in.

8:46 am
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Section 80D: Deduction for premium paid for medical insurance secrets revealed

Income Tax

CA Abhianchal Dua
Deduction is available up to Rs. 25,000 to a tax payer of premium paid for Medical insurance of self, spouse and dependent children. If individual or spouse is 60 years old or more the deduction available is Rs 30,000. An additional deduction for insurance of parents (father or mother or both, whether dependent or not) is available to the extent of Rs. 25,000 if less than 60 years old and Rs 30,000 if parents are 60 years old or more.

For uninsured super senior citizens (80 years old or more) medical expenditure incurred up to Rs 30,000 shall be allowed as a deduction under section 80D. However, this deduction shall only be allowed if no payment has been made to keep in force the health insurance of such super senior citizen. The aggregate of health insurance premium and medical expenditure incurred in respect of such parents would be limited to Rs. 30,000.

For example, If an individual has paid medical insurance premium of his father (aged 82 years) of Rs. 18000 and also incurred medical expenditure of Rs. 17000. Also he incurred medical expenditure for his mother (aged 81 years) for Rs. 10000. Now, total deduction allowed will be Rs. 18000+10000 i.e. Rs.28000. This is because for father, medical insurance has also been taken so no deduction for medical expenditure of Rs.17000 will be allowed. But for mother, deduction of medical expenditure of Rs.10000 is allowed. Remember, if medical expenditure of mother is Rs.20000, then only Rs.12000 would have been allowed for deduction (18000+12000=30000*) *Maximum limit is Rs.30000.

For claiming deduction, it is mandatory that the above payments should be made by any mode other than cash (e.g. cheque, credit card, debit card, etc.)

Section 80D: Deduction for Preventive Health Check-Up

A deduction of Rs. 5000 will be allowed under this section for payment of preventive health check-up of either the individual himself or his family members which includes spouse, parents and dependent children.

This deduction is NOT in addition to the deduction of Rs.25000/30000 stated above, but is included in the above deduction.

It is important to note that Rs.5000 is the maximum total deduction allowed. This deduction is not per person but in total. So if a person pays an amount for preventive health check up of himself + spouse + dependent children + parents, the gross total deduction allowed would be Rs. 5000.

For preventive health check-up payment can be made by any mode (including cash) for claiming deduction.

Therefore, the maximum deduction available under this entire Section 80D is to the extent of Rs. 60,000.

8:43 am
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The ultimate guide to understand – Financial Asset and Financial Liability

Accounting Standards

The ultimate guide to understand – Financial Asset and Financial Liability

CA Deepak Rathore
As we know, Companies are required to comply with IND As Provisions and make the opening Ind-AS balance sheet on the date of transition. This is the starting point for adoption of Ind-AS. For this purpose, an entity should, in its opening Ind-AS Balance Sheet:

(a) recognise all assets and liabilities whose recognition is required by Ind-AS;

(b) not recognise items as assets or liabilities if Ind-AS do not permit such recognition;

(c) reclassify items that it recognised in accordance with previous GAAP as one type of asset, liability or component of equity, but are a different type of asset, liability or component of equity in accordance with Ind-AS; and

(d) apply Ind-AS in measuring all recognised assets and liabilities.

Opening balance sheet is to be prepared on the date of transition, i.e., the beginning of the earliest comparative period presented, e.g., if an entity adopts Ind-AS from 2016-17, its date of transition will be April 1, 2015 and, thus, it will be required to prepare its opening Ind-AS balance sheet on April 1, 2015.

One the Major challenge is to identify their Financial Asset and Financial liability. This new term with context to Indian economy therefore a detail study is required to understand it. Firstly let us have the understanding what the standard is saying about the Financial Asset and Financial Asset

As per Para 11 of Indian Accounting Standard (Ind AS) 32-Financial Instruments: Presentation

A financial asset is any asset that is:

(a) cash;

(b) an equity instrument of another entity;

(i) to receive cash or another financial asset from another entity; or

(ii) to exchange financial assets or financial liabilities with another entity under conditions that are potentially favourable to the entity; or

(d) a contract that will or may be settled in the entity’s own equity instruments and is:

(i) a non-derivative for which the entity is or may be obliged to receive a variable number of the entity’s own equity instruments;

(ii) a derivative that will or may be settled other than by the exchange of a fixed amount of cash or another financial asset for a fixed number of the entity’s own equity instruments. For this purpose the entity’s own equity instruments do not include puttable financial instruments classified as equity instruments in accordance with paragraphs 16A and 16B, instruments that impose on the entity an obligation to deliver to another party a pro rata share of the net assets of the entity only on liquidation and are classified as equity instruments in accordance with paragraphs 16C and 16D, or instruments that are contracts for the future receipt or delivery of the entity’s own equity instruments.

A financial liability is any liability that is:

(a) a contractual obligation :

(i) to deliver cash or another financial asset to another entity; or

(ii) to exchange financial assets or financial liabilities with another entity under conditions that are potentially unfavourable to the entity; or

(b) a contract that will or may be settled in the entity’s own equity instruments and is:

(i) a non-derivative for which the entity is or may be obliged to deliver a variable number of the entity’s own equity instruments;

(ii) a derivative that will or may be settled other than by the exchange of a fixed amount of cash or another financial asset for a fixed number of the entity’s own equity instruments. For this purpose, rights, options or warrants to acquire a fixed number of the entity’s own equity instruments for a fixed amount of any currency are equity instruments if the entity offers the rights, options or warrants pro rata to all of its existing owners of the same class of its own non-derivative equity instruments. Apart from the aforesaid, the equity conversion option embedded in aconvertible bond denominated in foreign currency to acquire a fixed number of the entity’s own equity instruments is an equity instrument if the exercise price is fixed in any currency. Also, for these purposes the entity’s own equity instruments do not include puttable financial instruments that are classified as equity instruments in accordance with paragraphs 16A and 16B, instruments that impose on the entity an obligation to deliver to another party a pro rata share of the net assets of the entity only on liquidation and are classified as equity instruments in accordance with paragraphs 16C and 16D, or instruments that are contracts for the future receipt or delivery of the entity’s own equity instruments.

Particular Whether it is Financial Instrument? Classification Reason
Loans/Advances- Bank or Inter corporate
√
Financial Liability Financial liability as contractual obligation of the entity to pay cash to bank.(Para-11(a)
Cash √ Financial Asset A financial asset is any asset that is:
(a) cash;
(AG-3)
Share of Subsidiary Companies
√
Financial Asset a contractual right to receive cash by way of dividend or at the time sale of the investment
Capital Advances/Mobilization Advances
X
N.A Since the advance will adjust against future supply of asset which is not cash neither a Financial instrument.
Prepaid Expenses
X
N.A There is no contractual obligation to receive the cash/ financial Asset. future economic benefit of the same is the receipt of goods and services(AG 11)
TDS Receivable/Payable
X
N.A Not arising out of any contractual arrangement (AG 12)
Financial Guarantee Given
√
Financial Liability Contractual liability arise at the time of default of original borrower
Provision for Expenses X N.A Not arising out of any contractual arrangement
Trade Receivable √ Financial Asset Trade Receivable are financial assets as they create a contractual right to receive cash for the entity.(AG-4)
Vendors √ Financial Liability Contractual obligation on the company to pay cash or financial asset.
Perpetual debt instruments √ Financial Asset Contractual right to receive cash(Interest) at the stated rate for the entity AG-6
Warranty Obligation X NA There is no contractual obligation to pay the cash/Financial but the obligation is for providing services only.
Advance Income Received X NA There is no contractual obligation to pay the cash/Financial but the obligation is for providing services only.
Inventory X NA Assets creates an opportunity to generate
an inflow of cash or another financial asset, but it does not give rise to a present
right to receive cash or another financial asset (AG 10)
Property, plant and equipment X NA
Leased Assets/Intangible Assets X NA
Equity Share capital/Reserves
√
Equity An equity instrument is any contract that evidences a residual interest in the
assets of an entity after deducting all of its liabilities.
Financial Asset /Financial Liability Financial Asset - Financial LiablityApplication Guidance

AG4 Common examples of financial assets representing a contractual right to receive cash in the future and corresponding financial liabilities representing a contractual obligation to deliver cash in the future are:

(a) trade accounts receivable and payable;

(b) notes receivable and payable;

(d) bonds receivable and payable.

In each case, one party’s contractual right to receive (or obligation to pay) cash is matched by the other party’s corresponding obligation to pay (or right to receive).

AG6 ‘Perpetual’ debt instruments (such as ‘perpetual’ bonds, debentures and capital notes) normally provide the holder with the contractual right to receive payments on account of interest at fixed dates extending into the indefinite future, either with no right to receive a return of principal or a right to a return of principal under terms that make it very unlikely or very far in the future. For example, an entity may issue a financial instrument requiring it to make annual payments in perpetuity equal to a stated interest rate of 8 per cent applied to a stated par or principal amount of Rs. 1,000. Assuming 8 per cent to be the market rate of interest for the instrument when issued, the issuer assumes a contractual obligation to make a stream of future interest payments having a fair value (present value) of Rs. 1,000 on initial recognition. The holder and issuer of the Instrument have a financial asset and a financial liability, respectively.

AG11– Assets (such as prepaid expenses) for which the future economic benefit is the Receipt of goods or services, rather than the right to receive cash or another Financial asset, are not financial assets. Similarly, items such as deferred revenue and most warranty obligations are not financial liabilities because the outflow of economic benefits associated with them is the delivery of goods and services rather than a contractual obligation to pay cash or another financial asset.

AG-12 – Liabilities or assets that are not contractual (such as income taxes that are created as a result of statutory requirements imposed by governments) are not financial liabilities or financial assets. Accounting for income taxes is dealt with in Ind AS

12. Similarly, constructive obligations, as defined in Ind AS 37, Provisions, Contingent Liabilities and Contingent Assets, do not arise from contracts and are not financial liabilities.

Queries and suggestion are always welcome @ Deepakrathore.8888@gmail.com

8:31 am
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