Post on 18-Jun-2020
NEWSLETTER OF NORTHERN INDIA REGIONAL COUNCIL OF THE ICAI
VOL. XLVI, NO. 5
August, 2016
Happy Independence Day
SALUTE TO INDIA ON THIS
INDEPENDENCE DAY
From the Desk of the Chairman...
Dear Professional Colleagues,
“Success is going from failure to failure without losing
enthusiasm.”
Determination, Initiative & persistence are the
foundation of success.
Success is the sum of small efforts, repeated day in and day
out. From the core of my heart I would like to congratulate all
the newly qualified Chartered Accountants who have
recently qualified their examinations. I would like to apprise
all of you that 11.36 percent candidates passed the both
groups and if we look at the individual group wise result
14.47 percent candidates cleared group -I and 21.30
percent candidates cleared group -II Final Examinations. On
behalf of Team NIRC I welcome all the Successful candidates
to our glorious profession.
I would advise the students who have not yet qualified in the
recent examinations to work harder and harder and prepare
themselves for the next examinations. I pray to almighty for
their success too.
In order to promote, a sense of comradeship among
members and for bringing them closer to our own institute,
the ICAI organize Convocation at New Delhi & Chandigarh
(Northern Region) on 17th August, 2016 for distributing
certificates to the newly qualified Members. Members
enrolled during the period October, 2015 to March, 2016 are
supposed to participate in the Convocation for awarding the
“Certificate of Membership”. You are requested to please
EDITORIAL BOARD
Printed and Published by Shri. Ajay JainSr. Assistant Secretary, on behalf of the NorthernIndia Regional Council of The Institute of Chartered Accountants of India “ICAI Bhawan”,Indraprastha Marg, New Delhi-110 002
nircchairman@icai.org ; nirc@icai.in
Date: 10th August, 2016Place: New Delhi
CA. Deepak Garg
Chairman, NIRC of ICAI
M : 9811064105
also organized for the Students. Immediately after the
green Signal of Rajya Sabha on GST your NIRC has
organized Workshop on GST on 10th August. A series
of programme on GST will be organized for the
members in the month of August.
In the days to come your NIRC is planning to organize
number of programmes for the members which are
circulated in this news letter.All of you are requested to
please block your diaries and attend all the CPE
programmes.
A joint Regional Conference jointly with EIRC, SIRC,
WIRC and CIRC is also scheduled for 19th to 21st
August, 2016 at Goa. You are requested to register
yourself for the same and gain a maximum from
various technical sessions during the conference.
Institute of Chartered Accountant of India is also
organizing two days International Conference jnana
yajna - The quest for excellence on 22nd and 23rd
October, 2016 in Hyderabad. You are requested to
block your diary to exchange the ideas between local
and global accountancy fraternities.
On behalf of TEAM NIRC, I once agian request you to
become Member of the CABF and contribute
voluntarily for the noble and pious cause. If you have
already registered for the same, I again request you to
come forward and make more and more contribution
for this noble cause.
At last I would like to wish you all a very Happy
Independence Day, Shubh Janmashtmi and Happy
Teacher's Day. May almighty God shower His Choicest
blessings over all of us always and always.
apprise to all the members regarding this Mega
Programme who have enrolled themselves in the
above period.
A moment of pride and happiness for all the Indians is
near approaching i.e. our 70th Independence Day .
We all celebrate the Independence Day to pay tribute
and remember all the freedom fighters who had
contributed a lot and fought for the Independence of
India. My heartiest greetings to all of you! This is the
day when we all should take stock of our achievements
and failures in the past and how best we can serve the
future of our nation by performing the tasks we are
trained to conduct in a better and more efficient
manner at various levels.
With the continuous and hard efforts of our esteemed
Institute ICAI and their detailed representation to
CBDT and Hon'ble Finance Minister for deferment of
applicability of ICDS, and non-revision of tax audit
report formats, it is worthwhile to apprise to all of you
once again that Government has deferred the
applicability of ICDS by one year.
The long delayed constitution (122nd Amendment)
Bill 2014 on GST has finally got green signal of Rajya
Sabha on 3rd August, 2016. GST is the biggest
Indirect Tax Reform since Independence, is aimed at
dismantling Inter State Barriers to Trade in Goods and
Services. The proposed GST would subsume various
Central (Excise Duty, Additional Excise Duty, Service
tax, Additional Custom Duty, of Customs etc.) as well
as State level Indirect taxes (VAT / Sales Tax,
Purchase Tax, Octroi, Entry tax etc.) .
Learning is continuous Journey. In order to apprise
with the fast changing developments, Your NIRC has
organized various programmes for members and
Students during last month. Seminar on Valuation was
organized for the Members. Seminar on Tax Audit was
“Together we can, together we will”
Date: 10th August, 2016Place: New Delhi
CA. Sumit Garg
Secretary, NIRC of ICAI
M : 9560064645
From the Desk of the Secretary...From the Desk of the Secretary...From the Desk of the Secretary...
“True independence and freedom can only exist if
we do what's right without being irrational.”
Perform your duties, as action is far better than
inaction.”
Tax Audit
GST
Members Grievance Cell
Wishing all a very happy 69th Independence Day. The
freedom which we live has taken sacrifice of many of our
real heroes and on this Independence day, we all should
pay tribute to our real warriors who waved the flag of our
nation into the world and made the entire world realize
that we are independent.
Wishing all a very happy Rakhi and Krishan Janmashtmi.
Apart from our regular professional activities we should
consider our duties towards our society and human
beings. We should voluntary undertake activities like
blood donation, cleanliness, old clothes distribution, food
and accommodation facilities for the poor etc.
Tax Audit is an area of practice where maximum number of
professionals prefer to work. But as per Budget 2016,
there arises a confusion among professionals regarding
the limit of Tax Audit u/s 44AB. In this respect CBDT
clarifies the position on turnover threshold and
applicability of audit in case of presumptive taxation
regime u/s 44AD and regular tax audit u/s 44AB; Sec.
44AB mandates that every person carrying on business to
get his accounts audited if in the previous year, his
sales/turnover/ gross receipts exceed Rs. 1 crore;
However, if taxpayer opts for presumptive taxation
scheme u/s 44AD(1), audit is not required for turnover
limit upto Rs 2 crores; CBDT clarifies that the higher
turnover threshold of Rs. 2 crores for non-audit of
accounts is granted only to assessees, opting for
presumptive taxation scheme u/s 44AD.
The much awaited amendment of GST in the Taxation
reform of our country has taken place, when Rajya Sabha
approved the GST and requested Lok Sabha to made the
required amendments. The Introduction of GST will open
ample number of areas for the professionals.
Grievances are part and parcel of any system but
providing solutions is very important. We at NIRC have
been working in the direction of addressing maximum
grievance of members as well as students and try our best
efforts to resolve the problems as and when it arises.
Further you may mail us at nirc@icai.in with an assurance
to get back with proper resolution.
Students- Backbone of our Profession
NIRC future events
Concluding remark
We are regularly organizing the classes for CA Students with
a very nominal fee so that every student can afford the
same. Student's knowledge plays a greater role in effective
functioning and discharge of duties in CAs workplace so we
always organize free workshop for CA students for practical
knowledge updates and request members to encourage their
trainees to attend the same. We also have tie-up with
Vedanta Foundation who offers full scholarship /free financial
assistance to the deserving underprivileged students willing
to make a career in CA.
NIRC has conducted multiple numbers of programs for CAs in
July 2016 and also successfully organized National
Convention for CA Students as well. We are also planning to
conduct many programs in near days to come. For details
please refer “Forthcoming Programs section” in this
newsletter.
At the last but not the least, I would like to say that your
words of wisdom, suggestions are our basic essentials which
provides us the basis to act in a proactive and effective
manner, and I wish that you will always make an active
participation by sharing your views, contributing articles to
e-News, as your active participation will take all of us to new
heights. I sincerely thanks to each one of you.
Sec
reta
ryDear Professional Colleagues,
August, 2016 NIRC NEWSLETTER
undisclosed income”
The CBDT has issued a directive dated 11th July 2016 stating that the
statutory notice to be issued under section 143(2) of the Income-tax
Act has been modified. There will henceforth be three formats of the
said notice namely:
(I) Limited Scrutiny
(ii) Complete Scrutiny
(iii) Manual Scrutiny.
The CBDT has directed that all scrutiny notices shall henceforth be
issued in revised formats.
In a bid to end taxpayers' harassment, the Finance Ministry has
"modified" the Income Tax department notice issued for the tedious
scrutiny procedure by bringing in "three new formats" that will
clearly stipulate if the inqury against them is "limited, complete or
manual".
The usage of words on the new notices have also been modified with
the addition of phrases like "for your kind information", an invite to
get the inquiry done in an e-enabled and paperless fashion (in select
cities) and a "yours faithfully" sign off in the end by the concerned
Assessing Officer (AO).
For fast tracking the allotment of PAN and TAN to company
applicants, Digital Signature Certificate(DSC) based application
procedure has been introduced on the portals of PAN service
providers M/s NSDL eGov and M/s UTIITSL. Under the new process
PAN and TAN will be allotted within one day after completion of valid
on-line application.
For a greater ease of doing business in India, the Central Board of
Direct Taxes (CBDT) said it has put in place new protocols which will
ensure that corporate are allotted PAN and Tax Deduction Account
Number (TAN) within a day.
The Central Board of Direct Taxes (CBDT) has made it more difficult
for assessing officers to expand the scope of a 'limited' scrutiny to a
complete one. They will also have to substantiate any contention of
possible under-reporting of income and loss of taxes, apart from
Issue of notices under section 143(2) of Income-tax Act,
1961 in revised format.
Finance Ministry modifies IT scrutiny notices; adds words of
courtesy.
CBDT launches paperless PAN and TAN application process -
PAN, TAN for Corporates in a Day.
CBDT tightens scrutiny rules for assessing officers.
Greetings of the Day!!!
Its my pleasure to present some important updates for the month of
July 2016, which was brought into various changes and amendments
of Acts, Notifications and Circulars.
The Central Board of Direct Taxes has vide Press Release dated
6.07.2016 clarified that the Income Computation & Disclosure
Standards shall be applicable from 1.4.2016 i.e. previous year 2016-
17 (Assessment Year 2017-18).
Some of the tax payers might have filed their return of income and
obtained Tax Audit Report without incorporating the compliance with
the ICDS and related disclosures in the absence of the revised Tax
Audit Report. Considering these facts, it has been decided that the
ICDS shall be applicable from 1.4.2016 i.e. previous year 2016-17
(Assessment Year 2017-18).
Senior Indian Revenue Service (IRS) officer Rani Singh Nair took
over as the new chairperson of Central Board of Direct Taxes (CBDT),
the policy-making body of the Income Tax (I-T) department under
the Union Finance Ministry.Her predecessor Atulesh Jindal, who was
appointed CBDT chief in February this year, retired.
Nair, a 1979-batch IRS officer of the I-T cadre, worked as member
(Legislation and Computerisation) at CBDT.
Taking into consideration the practical difficulties of the stakeholders,
the Government has decided to revise the time schedule for making
p a y m e n t s u n d e r t h e S c h e m e a s u n d e r :
(i) a minimum amount of 25% of the tax, surcharge and penalty to be
paid by 30.11.2016; (ii) a further amount of 25% of the tax,
surcharge and penalty to be paid by 31.3.2017; and (iii) the balance
amount to be paid on or before 30.9.2017.
The government clarified that blackmoney declarants using the one-
time compliance window cannot pay tax and penalty from
undisclosed income to bring down their liability and such acts will not
get any immunity. The clarification in the form of frequently asked
questions (FAQs) stated that there is no intent to “modify or alter the
rate of tax, surcharge and penalty payable under the Scheme which
have been clearly specified in the Scheme itself”. It said further
“Sections 184 & 185 of the Finance Act, 2016 unambiguously provide
for payment of tax, surcharge and penalty at the rate of 45% of
Direct Tax Updates :-
ICDS notified under Section 145 (2) of the Income -tax Act,
1961 to be applicable from 01-04-2016.
Rani Singh Nair appointed CBDT chairperson.
IDS 2016 – Government Revises Time Schedule for Making
Payments under the Scheme.
IDS 2016 - Blackmoney declarants cannot pay tax from
undeclared income.
CA. Vivek Khurana
The views expressed herein are personal views of the author and do not necessarily represent the views of the NIRCs 5
Important Updates
Dear Professional Colleagues,
August, 2016 NIRC NEWSLETTER
procedure and compliance relating to excise duty of articles of
jewellery. The Sub-Committee has given its report which has been
accepted by the Government.
In a relief for listed companies, the Securities and Exchange Board of
India (Sebi) deferred the timelines for implementation of new
accounting standards.
Starting financial year 2017 companies were required to transition
from the current reporting format for financial results that is based
on Generally Accepted Accounting Principles (GAAP) to Indian
Accounting Standards Rules, 2015 or IndAS Rules. As per the Sebi
circular, banks and insurance companies will not need to comply with
the new accounting norms, and follow the prescriptions of their
respective regulators, that is the Reserve Bank of India and
Insurance Regulatory and Development Authority of India
Seeking to check black money, Lok Sabha passed a comprehensive
Benami Transactions Amendment Bill, with Finance Minister Arun
Jaitley assuring that genuine religious trusts will be kept out of the
purview of the legislation. Moving the Benami Transactions
(Prohibition) Amendment Bill 2015 for the consideration and
passage, the Minister said the legislation was predominately an anti-
black money measure and its purpose is to seize benami property
and prosecute those indulging in such activities.
A nine judge constitution bench of the Supreme Court bench will hear
from Tuesday a batch of petitions by some top corporate houses and
business associations challenging the imposition of entry tax by the
various state governments, contending that it was violative of the
freedom of trade and commerce provided under the Constitution.
The entire issue of entry tax that is under challenge through these
petitions involve financial implications of about Rs 30,000 crore - a
huge sum for the cash-strapped states like Odisha which would be
getting something like Rs 1,600 crore from the tax.
“If you always do
what you've always done,
you'll always get
what you've always gotten.”
- Anthony Robbins.
SEBI defers implementation of new accounting standards.
Lok Sabha passes comprehensive bill to check benami
transactions.
SC to examine if entry tax violates constitutional guarantee
freedom of trade.
To conclude it, I just want to share a famous quote
requiring approval of senior officers.
The guidelines issued recently by the apex direct taxes body call for
assessing officers to form a "reasonable view" that there is a
possibility of income under-assessment, said an official aware of the
move. Besides, when manually selecting cases for scrutiny in the
current financial year, the threshold for metros has been raised to Rs
25 lakh from Rs 10 lakh for instances involving additions in the earlier
year. That is, if an assessing officer finds that some income should
have been added to the declaration, the return can't be opened for
scrutiny if the incremental amount is less than Rs 25 lakh.
Government has constituted a Committee to examine the desirability
and feasibility of having a new financial year and give its
recommendations by 31st December, 2016. The Committee may,
after due examination of all relevant factors, recommend the date of
commencement of the financial year which in its view is the most
suitable for the country. The Committee may interact with experts,
institutions, Government Departments and others as deemed
necessary.
Central Board of Direct Taxes (CBDT) on Monday came out with draft
rules for determining the quantum of distributed income arising out
of buy back of shares of unlisted companies for levy of tax. The
distributed income was defined as the consideration paid by the
company on buy back of shares as reduced by the amount which was
received by the company for issue of such shares, the draft said.
Lok Sabha, unanimously passed the 122nd Constitutional
Amendment Bill as amended by the Rajya Sabha with all 443
members voting in favour.
Earlier Bill was passed by Lok Sabha on May 6, 2015 and transmitted
to Rajya Sabha for concurrence. Rajya Sabha passed the Bill with
amendments at its sitting held on the August 3, 2016 and returned it
to Lok Sabha.
The Government has set the target of 1st April next year for roll out of
the Goods and Services Tax (GST).
The Reserve Bank of India (RBI) launched a portal to curb illegal
collection of money by companies. This website will enable public to
obtain information regarding entities who accept deposits, lodge
complaints and also share information regarding illegal acceptance
of deposits. The website also incorporates regulations prescribed by
all financial regulators that one has to follow.
In this year's Budget, central excise duty of 1% without input and
capital goods tax credit or 12.5% with credit was imposed on articles
of jewellery falling under heading 7113 of the First Schedule to the
Central Excise Tariff 1985. Subsequent to that, the Government had
set up a Sub-Committee of the High Level Committee, headed by Dr.
Ashok Lahiri to interact with Trade & Industry on issues relating to
Synchronisation of financial accounting year with calendar
year.
CBDT issues draft rules for taxing buy back of unlisted shares.
Indirect Tax Updates
India's biggest tax reform measure, GST Bill passed in Rajya
Sabha & Lok Sabha..
RBI launches 'Sachet' portal to check illegal money
collection.
Simplified Central Excise norms for Jewellery Sector notified.
The views expressed herein are personal views of the author and do not necessarily represent the views of the NIRCs 6
Nominated As
Central Council Member
of ICAI
Shri. Vijay Kumar Jhalani
NIRC CONGRATULATE
August, 2016 NIRC NEWSLETTER
The views expressed herein are personal views of the author and do not necessarily represent the views of the NIRCs 7
• Date on which the goods are removed for supply to the
recipient
• Date of issuing invoice by supplier; or
• Date of receipt of payment by supplier; or
• Date on which recipient shows the receipt of the goods
in his books of account.
4 Taxable Event
The taxable event will be supply of goods or services.
Supply includes all forms of supply of goods and/or
services such as sale, transfer, barter, exchange, license,
rental, lease or disposal made or agreed to be made for a
consideration.
Deemed Supply:
• Importation of service, whether or not for a
consideration
• Permanent transfer/disposal of business assets.
• Temporary application of business assets to a private
or non-business use.
• Services put to a private use.
• Assets retained after deregistration.
5 Valuation of supply
Valuation will be same for IGST/CGST/SGST, which
aregiven below:
• Transaction Value.
• Transaction value of goods or services of like kind:
Where value of supply cannot be determined under
previous method, the value shall be determined on the
basis of transaction value of goods and/or services of like
kind and quality supplied at or about the same time to
customers.
• Computed Value Method: Where value cannot be
determined under previous method, it shall be based on
computed value which shall include cost of production,
manufacturing or processing of the goods or, the cost of
the provision of services.
1 Registration
The dealer is required to take registration under this law if
his aggregate turnover in a financial year exceeds Rs.9
lakhs. However, if the dealer is conducting business
inNorth Eastern State then,he is required to take
registration if the turnover exceeds Rs.4 lakhs.
Following categories of persons are compulsorily required
to get registered under this Act:
(i) Person making any inter-State taxable supply
(ii) Casual taxable person
(iii) Person who are required to pay tax under reverse
charge
(iv) Non-resident taxable persons
(v) Person who are required to deduct tax at source
(vi) Person who supply goods and/or services as an
agent
(vii) Input service distributor;
(viii) Persons who supply goods and/or services
through E-commerce operator
(ix) Every E- commerce operator
(x) An aggregator of services
The dealer has to take registration in the State from
where taxable goods or services are supplied. A supplier
has to obtain registration in every such Statefrom where
taxable goods or services are supplied. Also, a person
having multiple business verticals in the State may obtain
a separate registration for each business vertical.
2 GST score card
Every taxable person shall be assigned a GST compliance
rating score based on his record of compliance with the
provisions of this Act. The GST compliance rating score
shall be updated at periodic intervals and intimated to the
taxable person and also placed in the public domain.
3 Time of Supply
CGST/SGST shall be payable at the earliest of the
following dates, namely:
CA. Rajat Mohan
Highlights of Model GST LAW
August, 2016 NIRC NEWSLETTER
The views expressed herein are personal views of the author and do not necessarily represent the views of the NIRCs 8
(c) TDS Return: Every dealer who is required to
deduct tax at source shall furnish a return electronically
within 10 days after the end of month in which such
deduction is made.
(d) Return for Input Service Distributor: Every Input
Service Distributor shall file e-return for every calendar
month or part thereof, within 13 days after the end of such
month.
(e) Return for Composition Dealer: Dealers paying
tax under composition scheme shall have to furnish a
return for each quarter or part thereof, electronically
within 18 days after the end of such quarter.
(f) Annual return: Every registered taxable person
shall have to furnish an annual return for every financial
year electronically on or before the 31st day of December
following the end of such financial year in which such
supplies were made.
(g) Final return: Every registered taxable person
who applies for cancellation of registration shall have to
furnish a final return within 3 months of
The date of cancellation or
Date of cancellation order,
Whichever is later
10 Special Audit
When any officer, not below the rank of [Deputy/Assistant
Commissioner] is of the opinion that the value has not
been correctly declared or the credit availed is not within
the normal limits, he may direct such taxable person by
notice in writing to get his records including books of
account examined and audited by a chartered accountant
or a cost accountant.
11 Transitional Provisions
• Every person already registered under existing law will
be issued a certificate of registration on a provisional
basis. This certificate shall be valid for period of 6 months.
Such person will have to furnish the requisite information
within 6 months and on furnishing of such information,
final registration certificate shall be granted by the
Central/State Government.
• A registered taxable person will be entitled to utilize
CENVAT credit/Value Added Tax carried forward in a
return furnished by him in respect of the period ending
with the day immediately preceding the appointed day.
• A registered taxable person shall be entitled to
takecredit of the unavailed CENVAT credit/input tax credit
in respect of capital goods for the period ending with the
day immediately preceding the appointed day.
• Residual Method: In any other case the value shall be
determined using reasonable means consistent with the
principles and general provisions of these Rules.
6 Utilization of credit:
Note: The input tax credit on account of CGST shall not be
available for payment of SGST.
7 TDS
The Central orState Government may mandate certain
departments (via, local authority, Govt. agencies) to
deduct tax at the rate of one percent on notified goods or
services, where the total value of such supply, under a
contract, exceeds Rs 10 lakhs. Such that any refund of
more than Rs. 10 lakhs provided by the authorities will not
be liable to TDS provisions. The Deductee will be able to
claim credit of the tax deducted and reflected in the return
of the deductor in his electronic cash ledger. Which means
that this amount may be used for making any payment
towards tax, interest, penalty, fees or any other amount
payable under the Act or the rules
8 Refund
A person can claim refund of any tax interest and even
input tax credit (prescribed cases) by making an
application to the prescribed officer of IGST/CGST/SGST
before the expiry of 2 years from the relevant date as may
be prescribed. It has been provided that the limitation of
two years shall not apply where such tax or interest or the
amount has been paid under protest. No documentary
evidence is required to be furnished if the claim of refund
is below Rs. 5, 00,000.
9 Returns
Following returns are to be filed by various suppliers:
(a) First Return: Every registered taxable person
paying CGST/SGST on all intra-State supplies of goods
and/or services shall have to furnish the first return from
the date on which he became liable to registration till the
end of the month in which the registration has been
granted.
(b) Monthly Return: Every registered taxable person
shall have to e-file a monthly return for inward and
outward supplies of goods and/or services, input tax
credit availed, tax payable, tax paid and other particulars
within 20 days after the end of such month.
August, 2016 NIRC NEWSLETTER
The views expressed herein are personal views of the author and do not necessarily represent the views of the NIRCs 9
Information regarding Income under any
other head:
• Sub-Section 2B of section 192 enables the
employee to furnish particulars of income other
than "Salaries" ( not being a loss under any such
head other than the loss under the head “Income
from house property”) received by the taxpayer
for the same financial year and of any tax
deducted at source thereon. & any TDS thereon
to the employer/DDO (drawing & disbursing
officer).
• The particulars may be furnished in a simple
statement, which is properly signed and verified
by the taxpayer in the manner as prescribed
under Rule 26B(2) of the Rules and shall be
annexed to the simple statement.
• It is reiterated that the DDO can take into
account any loss only under the head “Income
from house property”. Loss under any other head
cannot be considered by the DDO for calculating
the amount of tax to be deducted.
Computation of income under the head “ Income
from house property”:
Following details generally obtained and kept by
the employer in respect of loss claimed under the
head “ Income from house property” separately
for each house property:
a) Gross annual rent/value
b) Municipal Taxes paid, if any
Double taxation by the employers on salaried
class employees for self lease payments as they
are deducting TDS under section 194I & further
u/s 192 on the income (House Property) other
than Salaries declared by the employees without
giving the credit of TDS already deducted u/s
194I.
• Employees of PSUs and others companies,
benefits go beyond salaries includes Self lease
accommodation. However, it is not clear to the
DDO of the organizations how to give the benefits
of TDS deductions u/s 194I on self lease
payments while finalizing the TDS deductions u/s
192 on salary of the Employees.
• The employers emphasis that “The tax
deducted on self lease payment will not be
adjusted against tax due on salary income &
further impressed upon to declare the full amount
of lease under I/H/P without adjusting the TDS.
• Resulting the employees are bound to declare
their self lease Income as a full under income
from House Property & taxed under salary income
without giving the benefit of TDS on self lease
bearing double taxation in the financial year.
• At this situation, option to get the TDS refund
on self lease only at the time of filing the IT return
by the employees, which generally takes time
from the end of the relevant financial year at least
4 months to get the refund as the income tax
return filing date is 31st July.
Income Tax provision
CA. Sanjay Goyal
Article on Taxation issueTDS deduction on SELF LEASE Payments to
salaried taxpayers -Practical approach.
August, 2016 NIRC NEWSLETTER
The views expressed herein are personal views of the author and do not necessarily represent the views of the NIRCs 10
Conclusion
Under reverse Calculation mechanism as the TDS on
self lease has already been deducted to Rs.31320 agst.
payable amount of tax under I/H/P is of Rs.10398, the
employees are entitled to get the benefit of extra TDS
deducted of Rs.20922/ while computing their total
income by the employer on finalization of salary &
accordingly they need to show the income/loss Rs.-
67709/-from House property after adjustment of TDS
of Rs.20922/- for considering under final computation
of salary resulting no need of refund from the I T deptt.
c) Deduction claimed for interest paid, if any
d) Other deductions claimed
e) Address of the property
f) Amount of loan, if any; and
g) Name and address of the lender (loan provider)
The case study for Avoiding Double taxation
? A company is providing self lease to their
employees & as per IT act section 194I, TDS is
being deducted @10%.
? As Sub-Section 2B of section 192 enables
employees to furnish TDS deductions on the
Income other than salary. Considering this the
employees may furnish to the employer
concerned the Income/Loss from House property
after taking the affect of TDS which has already
been deducted by the employer from self lease
income.
? In other words the employees may declare
their net income from house property after taking
the benefit of TDS which has already been
deducted from their self lease income.
Reverse Calculation for Avoiding Double taxation
First Step
Compute income under the head “Income from
house property”
August, 2016 NIRC NEWSLETTER
The views expressed herein are personal views of the author and do not necessarily represent the views of the NIRCs 11
registration Exemption: Non-resident taxable person
may be granted registration on the basis of any other
prescribed document.
• On failure to obtain registration, where a person is
liable to be registered, proper office may proceed to
register such person
• Per sub section (6) of section 19 of this Act,
Applicability: -Specialized agency of the United
Nations Organization or
-Multilateral Financial Institution or
-Organization notified under the United Nations
(Privileges andImmunities) Act,1947 or
-Embassy of foreign countries
or
-Any other person or class of persons as may be
notified
Requirement: Obtain a Unique Identity Number
• The registration or Unique identity number may be
granted or rejected
• Show cause: No rejection of application without giving
show cause notice Opportunity of being heard: No
re jec t i on o f app l i ca t i on w i thout g iv ing
reasonable opportunity of being heard
• Deemed registration in case no deficiency
communicated within period prescribed
• Grant/ rejection of registration under CGST Act/ SGST
Act shall be deemed to be grant/ rejection of
registration under SGST Act/ CGST Act.
• Exemption from registration: By notification by
Central / State Government
Special Provision (Section 19A):
• Applicability: Casual taxable person & non-resident
Introduction:
The 122nd Constitution Amendment Bill ('Bill') , A bill to
amend the constitution of India, widely known as GST Bill
that will enable the introduction of Goods and Services
Tax (GST), was passed in the Lok Sabha on 12 May 2015 &
in Rajya Sabha on 03 August 2016.
The introduction of GST would be a major step in the
reform of Indirect Taxation in India. The GST bill would be
a Value Added Tax (VAT) to be implemented in India from
April 2017. GST is proposed to be comprehensive indirect
tax levy on manufacture, sale and consumption of goods
and services.
On 14June 2016, the Ministry of Finance released Model
Goods and Service Tax “GST” Law comprising of the draft
Central / State Goods and Service Tax Act, 2016 which
consists of XXV chapters, 162 Sections, 4 Schedules &
GST Valuation (Determination of the Value of supply of
Goods and Services) Rules, 2016.
Chapter VI- REGISTRATION
Registration (Section 19):
• Applicability: Every person who is liable to be
registered under schedule III Place: Every such State
where he operates Time Limit: within 30 days when he
becomes liable to registration Exemption: Other than
Input service distributor “ISD” registered under an
earlier law
• Person with multiple business verticals in a state may
obtain separate registration for each business
verticals.
• A person may get himself voluntarily registered even if
not liable to be registered under schedule III
• Permanent Account Number “PAN” is must for grant of
CA. Vishal Agarwal
GST: Simplifying Registration Procedure
August, 2016 NIRC NEWSLETTER
The views expressed herein are personal views of the author and do not necessarily represent the views of the NIRCs 12
-If registered person contravened prescribed
provisions of act, or
-Default in furnishing of returns for three consecutive tax
periods or continuous period of six months as the case
may be, or
-Non commencement of business with in a period of six
month in case of voluntary registration
-Registration obtained by means of fraud, wilful
misstatement or suppression of facts
• Show cause: No cancellation of registration without
giving show cause notice Opportunity of being heard: No
cancellation of registration without giving reasonable
opportunity of being heard
• Tax liability: No effect on tax liabilities and other dues
for any period before / after cancellation of registration
• Cancellation of registration under CGST Act/ SGST Act
shall be deemed to be cancellation of registration under
SGST Act/ CGST Act
• Payment of taxes: by way of debit in the electronic
credit or cash ledger Amount: Equivalent to higher of
credit of input tax on input, semi finished goods, finished
goods or output tax payable Capital goods: Higher of
amount equal to ITC taken reduced by prescribed
percentage or tax on transaction value of such capital
goods Basis of calculation: Generally accepted accounting
principals
Revocation of cancellation of registration (Section
22)
• Revocation request by: Registered taxable person
Authority: Proper officer
Time Limit: within 30 days from date of service of
cancellation order
• Show cause: No rejection of application for revocation
without giving show cause notice Opportunity of being
heard: No rejection of application for revocation
without giving reasonable opportunity of being heard
• Revocation of cancellation of registration under CGST
Act/ SGST Act shall be deemed to be revocation of
cancellation of registration under SGST Act/
CGST Act
taxable person
Validity: 90days from effective date of registration
Extension: Further period of upto 90 days by proper
officer
Condition: To make an advance deposit of tax of an
amount equivalent to estimated tax liability. On
extension of registration to deposit an additional
amount of advance tax equivalent to estimated tax
liability.
Amendment of registration (Section 20):
• Inform the proper officer of any changes in the
information furnished at time of registration or
furnished subsequently
• Power of approval/ rejections of amendments in
information lies with proper officer Exempt ion: In
respect of amendment in information as m a y b e
prescribed
• Show cause: No rejection of amendments in
information without giving show c a u s e n o t i c e
Opportunity of being heard: No rejection of
amendments in information without giving reasonable
opportunity of being heard
• Rejection/ approval of amendment under CGST Act/
SGST Act shall be deemed to be rejection approval
under SGST Act/ CGST Act.
Cancellation of Registration (Section 21)
• Authority: Proper officer Cancellation request by: On
his own motion by proper officer, or Application by
registered taxable person, or Application by legal heirs
(In case of death of registered person)
Reason:-Business has been discontinued, or
-Business transferred fully, or
-Death of proprietor, or
-Amalgamated with other legal entity, or
-Demerged, or
-Otherwise disposed off, or
-Change in constitution of business, or
-No longer liable to be registered in schedule III, or
August, 2016 NIRC NEWSLETTER
The views expressed herein are personal views of the author and do not necessarily represent the views of the NIRCs 13
currency
(3) Where transactions are priced at an amount that
includes compensation for the future expected loss
of the purchasing power of the local currency. This
characteristic would be taken into account even if
the credit period is quite short.
(4) Where prices, wages, and interest rates are
closely linked to a price index
(5) Where cumulative inlation rates over a period of
three years approaches or exceeds 100%.
• CEASING TO BE HYPERINFLATIONARY
Judgment will be required in determining whether
an economy is no longer hyperinlationary. The
criteria used for this is whether the cumulative
inlation rate drops below 100% in a three-year
period. When the economy ceases to have
hyperinlation, then the entity should discontinue
preparing inancial statements in accordance with
Ind AS 29.
• FUNCTIONAL CURRENCY AND HYPERINFLATION
The functional currency should be based on the
economic circumstances relevant to the entity and
not based on choice. If the functional currency is one
of a hyperinlationary economy, the inancial
statements should be stated in terms of the
measurement unit current at the balance sheet
date.
CFS: If a parent entity operates in a hyperinlationary
economy but a subsidiary does not, then the
parent’s results should be restated for hyperinlation
but the subsidiary’s results need not be restated but
No Accounting Standard is available in case of Hyper
Inlation in I-GAAP.
• Objective of Ind AS – 29
This Standard sets out procedures for adjusting the
inancial information for the effects of hyperinlation.
Financial information reported in historical terms
would present a distorted picture of the entity’s
performance and inancial position. Ind AS-29
provides a methodology for restatement of inancial
statements using suitable price index so that the
accounts can be comparable.
DO YOU KNOW
India is not suff ering from hyper - infl ation……..!
Thanks God. In the entire world following countries
suff er from hyper - infl ation : Venezuela (situated
near North America), Iran.
IN INFLATION YOU SHOULD KNOW: TOO MUCH
MONEY CHASES TOO FEW GOODS. THE
PURCHASING POWER OF MONEY COMES DOWN.
• DEFINITION OF HYPERINFLATION
The Standard does not deine hyperinlation but sets
out the general characteristics of a hyperinlationary
economy:
These characteristics would include
(1) Where the preference is to keep wealth in
nonmonetary assets or in a stable foreign currency.
Any local currency would be immediately invested in
order to attempt to maintain its purchasing power.
(2) Where prices are quoted in a stable foreign
currency and the population regards monetary
amounts in that currency, as effectively a local
CA. Pankaj Periwal
Ind AS 29: Accounting in Case of Hyper Inflationery Conditions
August, 2016 NIRC NEWSLETTER
The views expressed herein are personal views of the author and do not necessarily represent the views of the NIRCs 14
should comply with IAS 21. Step
1: Holding Company Ind AS-29 Step
2: Apply Ind AS – 21 Step
3: Prepare CFS as per Ind AS-110
If a subsidiary is operating in a hyperinlationary economy and the parent entity is not.
Step 1: Subsidiary would use Ind AS 29.
Step 2: Apply Ind AS-21
Step 3: Prepare CFS as per Ind AS-110.
• RESTATEMENT OF FINANCIAL STATEMENTS: BALANCE SHEET MEASUREMENT PRINCIPLES FOR
RESTATEMENT
Ind AS 29 requires the restatement of inancial statements including the cash low statements and requires
the use of a general price index.
1) Monetary items: Monetary items are already stated in the measuring unit at the balance sheet dates and
are therefore not restated.
2) Nonmonetary items carried at Cost: All nonmonetary items are restated using the change in the general
price index between the date that those items were acquired and the current balance sheet date.
3) Nonmonetary items carried at Fair Value: , NMI carried at current values (e.g., net realizable value and
market value) at the balance sheet date, does not require any restatement.
4) Owners Capital: Owners capital requires restatement at current rate.
5) Retained earnings: Net Proits at monthly index rate. Others Reserves balancing igure.
The difference in the trial balance is to be considered as the balancing igure. It is to be included in the
Retained earnings.
PROBLEMS AND SOLUTIONS
Problem 1: XYZ Inc operates in a hyperinlationary economy. It is incorporated in Venezuelan. The currency
is VEF. Its balance sheet at December 31, 2016, follows:
The general price index had moved in this way:
December 31:
2012: 100 2013 : 120 2014 : 180 2015 : 300 2016 : 450
The property, plant, and equipment was purchased on December 31, 2014, and there is six months’
inventory held.
August, 2016 NIRC NEWSLETTER
The views expressed herein are personal views of the author and do not necessarily represent the views of the NIRCs 15
Required: Show the balance sheet of XYZ Inc after adjusting for hyperinlation.Solution:
XYZ Inc Balance sheet at December 31, 2016, follows: (VEF)
Notes:
1) For Plant, machine its 450 / 140 not 450 / 100 because the restatement is from date of acquisition till balance sheet date. The non -
monetary item was acquired on that date.
2) 375 in case of inventory = (450+300) / 2.
3) Share Capital requires very old base lets say 100. If additional capital is introduced then it should be restated from that date.
4) The inventory had been restated assuming that the index has increased proportionately over time. The loan is a monetary item and
therefore is not restated. If the loan had been index linked, then it would have been restated in accordance with the loan agreement. Other
monetary items are also not restated
Election to the Managing Committee of
Northern India Chartered AccountantsStudents’ Association (NICASA), Delhi - 2016-17
The Annual General Meeting (AGM) of Members of the Northern India Chartered
Accountants Students’ Association (NICASA) will be held on Saturday, the 10 th September,
2016 at 10.00 A.M. in the premises of the ICAI, ICAI Bhawan, 52-53- 54, Institutional Area,
Vishwas Nagar, Shahdara, Near Karkardooma Courts, Delhi -110 032.
Elections to the Managing Committee of the Association for the year 2016-17 would be held
from 11.00 AM to 4.00 PM on the same day. Complete details are at www.nirc-icai.org.
The views expressed herein are personal views of the author and do not necessarily represent the views of the NIRCs
ANNOUNCEMENT
August, 2016 NIRC NEWSLETTER
The views expressed herein are personal views of the author and do not necessarily represent the views of the NIRCs 16
virtue of covenant vis-à-vis availing full credit in the same F.Y., shall
be admissible as ITC in the eyes of GST subject to the fulfilment of
condition that this transferred ITC is eligible as credit both under the
earlier law as well as under GST.
D. Treatment of Duties/Taxes in respect of Stock Available
on Appointed Date
The credit of eligible 'duties and taxes' in respect of:
• Inputs held in stock,
• Inputs contained in semi-finished goods in stock or
• Inputs contained in finished goods in stock on the appointed date
Shall also beavailable to below mentioned three (3) categories of
assessee subject to the compliance of infra mentioned conditions:
a. Person who was not liable to be registered under the earlier law
but falls under the charging section of proposed GST or
b. Person who was engaged in the manufacture of exempted goods
under the earlier law but in GST, falls under the taxable supply of
goods.
c. Person who has opted for composition scheme in the earlier law
but registered as normal taxable person in the GST regime.
Now, below mentioned conditions are sine qua non for this registered
taxable person under GST to take credit, in their electronic credit
ledger, of these eligible 'duties and taxes' on inputs-goods held in
opening stock:
• Use for Taxing Supply
Such goods are used or intended to be used for making taxable
supply under GST,
• Competent ITC
Under both law i.e. in the earlier law as well as in the upcoming GST,
credit concomitant with such stock falls under the category of
competent ITC.
• Documentary Evidence of Payment
Credit would be admissible subject to the possession of requisite
invoice or other prescribed documents evidencing payment of
duty/tax under earlier law.
• Time Limitation Such invoice must be issued not earlier than one
(1) year preceding to the appointed date of GST.
• GAAP Computation of credit shall be done as per GAAP.
E. Switching from Normal Taxpayer to Composition One
If any registered taxpayer under existing statute opted for
The long journey of Good & Service Tax law which is flagged off
during the captainship of Sh. Atal Bihari Vajpayee Ji, the then prime
minister of India, in 2000 via setting up of a committee headed by
the then finance minister of West Bengal, Sh. Asim Dasgupta Ji, to
design the GST model and put in place the back-end technology and
logistics for its implementation; is now appearing to be completed
during the leadership of Sh. Narendra Modi Ji.
During the implementation phase of this new taxing statute, the
transitional period would be the most crucial time period wherein
various impugned Central Laws/State Laws shall be subsumed in a
single statute viz. GST and the books of accounts that have been
maintained rely upon the principle of 'Going Concern' would be
ushered towards the era of GST.
Extending support from the Draft Model GST Law, the various legal
provisions contained in Chapter-XXV of this draft model vis-à-vis
metamorphosis from the existing regime of various indirect taxes
towardsthe umbrella of GST has been discussed as follows:
A. GST Officers or Competent Authorities
The person already appointed, for discharging the functions
entrusted by the Central Law or State Law which are now being
subsumed in GST, shall be deemed to be the GST Officers or the
Competent Authorities under the legal provisions of
CGST/SGST/IGST Law.
B. Migration of Existing Taxpayers to GST
Prior to getting final registration under this new taxing statute, the
existing registered person under Central Law/State Law shall be
issued a provisional registration certificate for a period of six (6)
months during which various prescribed information are required to
be submitted before the GST Officers.
Post receipt of requisite information, the final registration certificate
shall be issued by Central/State Government.
Contrary to this, no final certificate of registration shall be issued, if
an application has been made by the existing taxpayer submitting
the fact of their non-taxing supply under the pool of GST ambit which
make them non-liable to take registration.
C. Treatment of balance of CENVAT Credit Availed or
Unavailed on Appointed Date
C.1. Treatment of Availed CENVAT Credit
Registered taxable person shall be eligible to take credit of the
CENVAT Credit/VAT-ITC carried forward by them in the return
furnished for the period ended with the day immediately preceding
the appointed date.
This eligibility is connected with the vital condition that such
impugned CENVAT Credit/VAT-ITC is admissible for creditboth under
provisions of the earlier law as well as eligible as ITC under the
proposed bag of GST.
C.2. Treatment of Unavailed CENVAT Credit
Unavailed CENVAT Credit/Vat-ITC on capital goods which is not
carried forward in the last return submitted in the earlier law by
CA. Harsh Garg
TRANSITIONAL PROVISIONS UNDER DRAFT MODEL GST LAW
August, 2016 NIRC NEWSLETTER
The views expressed herein are personal views of the author and do not necessarily represent the views of the NIRCs 17
to be refunded in lieu of revision of return filed for the period ended
prior to the appointed date.
Calling Recovery
If any amount becomes recoverable from the taxable person, then
the same shall be recovered as an arrear of tax under this GST Act
and the amount so recovered shall not be admissible as input tax
credit.
Calling Refund
If any amount becomes refundable to the taxable person, then the
same shall be refundable to them under the earlier law and not under
this GST Act.
J. Treatment of Long-term Construction or Work Contracts
Pursuant to contract executed before the introduction of GST regime,
the supply of goods or services on or after the appointed date of GST
shall be considered as supply made under the web of GST and
consequently, the liability to tax arises as per the legal provision of
CGST/SGST/IGST law.
K. Progressive or Periodic Supply of Goods or Services
Supply of good and/or service does not attract GST liability:
a. If consideration in lieu of such supply has been received prior to
the appointed date and
b. Duty or tax liability thereon has already been paid under earlier
law.
L. Return of Goods Sent on Approval Basis on or after
Appointed Date
Return of goods which were sent on approval basis not earlier than
six (6) months before the appointed date shall not attract tax under
GST legal provision subject to the condition that such goods are
returned within a period of six (6) months of GST applicability.
Obligation on Person Returning the Goods
Post completion of six (6) months' time period from appointed date,
return of any such goods would raise obligation on the person
returning the goods to tax such return of goods as supply provided
that supply of such goods falls under the taxing room of GST.
Obligation on Person Originally Sent Goods on Approval Basis
Person who has sent the goods on approval basis is liable to pay tax
under GST:
o If such goods are liable to tax under GST and
o Goods are not returned within a period of six (6) months from the
appointed date.
M. Deduction of Tax at Source
No deduction of tax at source under thecave of GST shall arise on
makingthe payment tothe supplier subject to the compliance of
following three (3) limbs:
a. Payment made is in pursuance of saleexecuted in the earlier law,
b. Such sale attracts tax deduction at source under the legal
provision of earlier law and
c. Event of issuance of invoice also occurs before this appointed
date.
composition scheme in GST, the amount equivalent to credit of input
tax in respect to:
• Inputs held in stock,
• Inputs contained in semi-finished goods in stock or
• Inputs contained in finished goods in stock on the appointed date
Is required to paid via debit in electronic credit ledger and post debit
of this amount, if any balance of tax still prevails then such lying
balance shall be lapsed in GST.
F. Return of Goods on or after Appointed Date
Return of goods which were originally removed/sent not earlier than
six (6) months before the appointed date shall not attract tax under
GST legal provision subject to the condition that such goods are
returned within a period of six (6) months of GST applicability.
Post completion of six (6) months' time period from appointed date,
return of any goods would raise obligation on the person returning
the goods to tax such return of goods as supply provided that supply
of such goods falls under the taxing room of GST.
G. Price Revisions on or after Appointed Date
Issuance of supplementary invoices in pursuance of price revision
shall be deemed to have been issued in respect of an outward supply
made under the net of GST subject to the compliance of below
mentioned conditions:
a. Contract for supply of goods entered prior to appointed date of
GST,
b. Price revision takes place after the implementation of GST and
c. Such supplementary invoices must be issued within a period of
thirty (30) days from such revision.
Upward Revision
Supplier of goods shall be liable to charge CGST/SGST/IGST on such
supplementary invoice raised within the stipulated time period.
Downward Revision
Supplier of goods shall be liable to reduce their CGST/SGST/IGST
liability in lieu of issuance of such supplementary invoice provided
that the receiver of such supplementary invoices has also
correspondingly reduced their input tax credit.
H. Recovery or Refund pursuant to Assessment or
Adjudication
Below mentioned is the treatment of the amount to be recovered or
to be refunded in lieu of assessment or adjudication undertaken for
any year ended prior to the appointed date.
Calling Recovery
If any amount of tax, interest, fine or penalty becomes recoverable
from the taxable person then the same shall be recovered as an
arrear of tax under this GST Act and the amount so recovered shall
not be admissible as input tax credit.
Calling Refund
If any amount of tax, interest, fine or penalty becomes refundable to
the taxable person then the same shall be refundable to them under
the earlier law and not under this GST Act.
I. Recovery or Refund pursuant to Revision of Returns
Below mentioned is the treatment of the amount to be recovered or
August, 2016 NIRC NEWSLETTER
The views expressed herein are personal views of the author and do not necessarily represent the views of the NIRCs 18
Presently, the products manufactured by the automobile sector are
separately classified in the excise tariff and are taxed at various rates
leading to interpretation and classification disputes. Further, there
are disputes over availability of CENVAT credit on input services like
group insurance, canteen services and freight paid on outward
transportation.
The Industry is plagued with inverted duty structure with differential
duty being charged on automotive components and parts falling
under Chapter 8707, 8708, 8714 and 4011 which leads to
accumulation of CENVAT credit with OEMs.
3. IMPACT OF GST
The automobile industry is sensitive to the changes in economy as
well as fiscal policy and is accepted as a measure of economic well
being of the country. The introduction of GST will have far reaching
consequences on the Industry. The general impact of GST on the
automobile industry is discussed below:
1.SINGLE GST RATE FOR MAJORITY ITEMS: Currently, products
manufactured by the automobile sector are taxed at various rates
due to interpretation and classification disputes. Introduction of GST
will end their woes of multiple rates of taxes. Based on the Report of
Revenue Neutral rate by Chief Economic Advisor, Arvind
Subramanian, it is recommended that majority of goods will be
taxed at the Standard rate which may be 18-20% . There will be very
few items which will be under exemption list. The table below
provides the comparison of current regime with GST regime;
2. BETTER PRICING AND BETTER MARGINS: The cars consists of
four categories, Small passenger cars below four meters in length
and under 1,200cc, mid-size passenger cars, between 1,200-
1,500cc, luxury cars, over 1,500cc and SUVs over 1,500cc.
1.INDUSTRY OVERVIEW
The automobile industry accounts for 22 per cent of the country's
manufacturing gross domestic product (GDP). The auto sector is one
of the biggest job creators, both directly and indirectly. India is
expected to become a major automobile manufacturing hub and the
third largest market for automobiles by 2020, according to a report
published by Deloitte.
The current production trend for automobile sector is given below
(Figures in Numbers)
2. ISSUES WITH CURRENT INDIRECT TAXATION
The automobile Industry is currently facing very heavy taxes on
account of differential duty rates given to luxury cars, small cars,
trucks and other products in the excise tariff. The overall excise duty
structure itself is complex with multiple duties such as automobile
cess, National Contingent Calamity Duty, being levied
simultaneously.
For imports, besides the basic customs duty, Additional Customs
Duty equivalent to the duty of excise (with the present complex
structure) and Special Additional Customs Duty of four percent is
levied. Various States also provide for entry tax on entry of motor
vehicles in their jurisdiction.
CA. Chitresh Gupta
GST Impact Assessment on Automotive Industry
1919
August, 2016 NIRC NEWSLETTER
20%. Through credit will be allowed on the same to the company, the
company will have to initially pay a higher rate of tax thus the
requirement of working capital will be higher and the company may
need to increase its working capital borrowings.
6. DOING AWAY WITH AREA BASED EXEMPTIONS: Generally
car manufacturers today, having very large investments, enjoy
various state incentives. The incentives are there in many
manufacturing states like Maharashtra, Gujarat, Tamil Nadu and so
on and so forth.
So, one of the facts that the car manufacturers and automobile
manufacturers have to keep in mind is that these state incentives are
based on the current value added tax (VAT) and CST that they pay. In
GST regime, CST will be phased out & VAT will be subsumed. It is
important that auto manufacturers will have to go and renegotiate
those memorandums of understanding (MoU) that they have with
the states
As per the first discussion paper, the existing schemes may continue
up to the legitimate expiry time both for Centre and States. However,
no such new exemptions will be allowed. The Centre or State may
either reimburse after collection of GST (as per the Discussion paper)
or provide an investment linked Cash subsidy (as recommended by
the Task Force Report). It will require reengineering of costing
models by the auto companies to analyze the actual impact on
pricing.
7. VALUATION OF STOCK TRANSFERS: As per Section 3 of Model
GST Law, 2016, Stock transfer is included in the definition of supply.
Hence, it will give rise to new challenges. The first and the foremost
among them is the valuation of the stock transfers in the absence of
sales value to calculate the applicable tax. As per Sec 15 of Model
GST Law, the value of a supply of goods and/or services shall be the
transaction value, that is the price actually paid or payable for the
said supply of goods and/or services where the supplier and the
recipient of the supply are not related and the price is the sole
consideration for the supply. The valuation of stock transfer has to be
done based on one of the methods as prescribed under law. This is
going to lead litigations.
8. POST SUPPLY DISCOUNTS: The Model GST Law stipulates that
post supply discounts are to be excluded from the transaction value,
provided such post supply discounts are known at or before the time
of supply of goods and are linked to the invoices for such supply.
Companies may need to analyse existing post supply
discounts/incentive schemes where the quantum of discount is not
known at the supply stage.
CONCLUSION
The Indian automotive industry which was at its nascent stage at the
beginning of the 21st century has now become an industry that
accounts for around 7% of the India's Gross Domestic Product (GDP)
and is one of the largest employers in the economy. In order to
eliminate the inherent tax inefficiencies in auto sector and to provide
a much needed impetus, there is an urgent need to implement the
GST, which would help in making India a globally competitive market
for the sector. It is also important that all the participants of
automotive industry may proactively assess the impact of GST on
their costing, procurement and supply management strategies in
order to be better equipped to embrace and capitalize this
monumental change in Indirect taxation statute as it comes.
Currently, we pay 12.5 percent excise duty on small cars, 24 percent
on mid-size cars, 27 percent on luxury cars and 30 percent on SUVs.
Then there is the NCCD of 1.1 percent, 14 percent VAT on all of the
above. If the GST bill is passed, the total tax on small cars will come
down by ten percent, the tax on mid-size cars will be lower by no less
than twenty percent whereas the luxury cars and SUVs will see a tax
reduction of approx two and five percent.
Now manufacturers like Maruti-Suzuki and Hyundai are all in favour
of the GST in its current format as it gives small car manufacturers
massive tax reductions. Even after the lowering of price and
distribution of margins at each level of the distribution process still
leaves enough margin for the car makers. This is possible as both
these car makers have most of their portfolio between the 800cc-
1500cc range. Car makers like Toyota and Honda get their sales from
larger cars which get only two percent tax reduction
3. BETTER PROCUREMENT STRATEGIES: Currently, it is tax
efficient for manufacturers to have OEMs situated in the same state
in which they have a manufacturing plant. This allows them to get
credit on the Input VAT since the above transaction is a local sale.
Since there is a seamless credit in GST with no distinction between
Inter-state or Intra-state purchase, the car manufacturers may also
chose OEM based on cost and other considerations rather than Tax
considerations.
4. CHANGE IN SUPPLY CHAIN MANAGEMENT PRACTICES: The
practice in this industry is to sell vehicles to a dealer network that
sells as well as services the vehicles. More than 80% of the sale is
generally outside the state of manufacture. The distribution of
vehicles may be either through
a)Direct sale to Dealer: At present subject to CST @2% which gets
embedded in the cost or
b)Transfer to Depots/Stock yards across country: Presently
considered as Stock transfer and CST is not levied. However, State
Vat laws provide for retention or reduction of input tax credit in the
exporting state.
In GST, both the above transactions will be considered as Supply and
full GST will be charged on the same. However, full credit will be
allowed on both the transactions.
Today the tier-1 auto component manufacturers operate through
multiple plants which are set up in the states where the automobile
manufacturer plant is located. This is specifically done with a view to
avoid the CST and availing the VAT credit. With the GST the whole
country is likely to become one market with no inter-state barriers.
This will allow the tier-1 manufacturers to consolidate their
operations in one place and enjoy economies of scale.
Goods and Services Tax will give an opportunity to both automobile
manufacturers and OEMs to improve margins. The setting up and
maintaining of the warehouse adds up to the cost to the
OEM/automobile manufacturers. Further, the cumbersome process
at every state border delays the delivery of vehicles and adds up to
the cost. GST is seen to ease out the cumbersome process and make
movement of vehicles quicker and simpler. The better the turnaround
time, the better will be the scale of margins. Logistics costs make up
to 2-3% of the sale of the vehicle. This can be reduced through better
management of supply chain.
5. INCREASE IN WORKING CAPITAL REQUIREMENT: In
automotive sector, majority of procurement and sales happen on
concessional rate of CST@ 2%. In GST, there will not be any
declaration forms thus GST will be levied on the standard rate i.e. 18-
STUDENTS ACTIVITIES
th5 June, 2016 (Sunday) 183
CPT Mock Test for CPT Students.
Venue: ICAI Bhawan, Vishwas Nagar, Delhi. th12 June, 2016
(Sunday) 240Seminar for CA Students on CARO 2016
Venue: ICAI Bhawan, Vishwas Nagar, Delhi.
th19 June, 2016 (Sunday) 270
Seminar for CA Students on WHAT AFTER CA
Venue: ICAI Bhawan, Vishwas Nagar, Delhi.
th21 June, 2016 (Tuesday) 78
A Programme on YOGA for Members & CA Students (On the occasion of 2nd International Day of Yoga)
Venue: The Institute of Engineers of (India), Near ICAI Bhawan, ITO, Delhi.
th29 June, 2016 (Wednesday) 150
Swachh Bharat Abhiyan
Venue: ICAI Bhawan I.P. Marg New Delhi.
th30 June, 2016 (Thursday) 746
Motivational Talk for GMCS Scholars
Venue: Talkatora Indoor Stadium, Talkatora Road, New Delhi.
1625CA Utsav (Cultural Evening) followed by dinner
Venue: Talkatora Indoor Stadium, Talkatora Road, New Delhi.
st1 July, 2016 (Friday) 105
Run for Society
Venue: From Yamuna Sports Complex (Gate No. 4 to ICAI Bhawan, Vishwas Nagar, Delhi.
101Flag Hoisting
Venue: ICAI Bhawan, Vishwas Nagar, Shahdara, Delhi.
125Blood Donation Camp, Health Checkup Camp, Tree Plantation, Food/Books/Clothes, distribution to
under privileged and old age home
Venue: ICAI Bhawan, Vishwas Nagar, Shahdara, Delhi.
nd2 July, 2016 (Saturday) 31
"Citizen & Member Awareness Programs on the Income Declaration Scheme, 2016”
Venue: ICAI Bhawan, Annexe Building, 7th Floor, Auditorium, I.P. Marg, New Delhi – 110 002
th8 July, 2016 (Friday) 35
Industrial VISIT for CA. Students
Venue: M/s, Northern Distributors, Sanjay Gandhi Transport Nagar, Delhi.
th14 & July,2016 (Thursday & Friday)
th151028
National Convention for CA Students
Venue: Talkatora Indoor Stadium, Talkatora Road, New Delhi.
DATE TOPIC & VENUE STUDENTS
REGIONAL COUNCIL ACTIVITIES
Date Name of Programme/Venue Chief Guest/Speakers CPE Hrs
TotalParticipants
Seminar on ValuationsVenue : India Habitat Centre, Lodhi Road, New Delhi
23rd July 2016( Saturday)
6
Guest of Honour Dr. BhaskarChatterjee, DG & CEOIndian Institute of Corporate Affairs
170
Overview & Perspective of Valuation CA. Avineesh Matta
Fair Value – Basics and Beyond CA. Rajiv Singh
Valuation under FEMA CA. Vijay Gupta
Valuation requirement under Ind AS & Common Errors in Valuation Report CA. Amit Singh
Open House: Question Answer Session CA. AseemChawla,
CA. Rajiv Singh
CA.Amit Singh
CA. Vijay gupta
Seminar on Learn, Earn & Return for CA. ProfessionalsVenue : ICAI Bhawan, Vishwas Nagar, Delhi
30th July 2016( Saturday)
3
Learn, Earn & Return - How to Build Sustainable Practice which contributes to Self, TEAM,
Clients and Society
CA. Parveen KumarCA. Ajay Sethi
61
Workshop on GSTVenue : Institution of Engineers, I P Marg, New Delhi
10th August 2016( Saturday)
3
Goods & Service Tax Act CA. Puneet Agrawal
1920
August, 2016 NIRC NEWSLETTER
th7 August2016 (Sunday)
Seminar on Tax Audit for CA Students
Venue: ICAI Bhawan, Vishwas Nagar, Shahdara, Delhi.
239
258
Forthcoming Programmes of NIRC of ICAI
Timings 23rd August 2016 (Tuesday)
Fee for Seminar Rs.300/- Pay Online at www.nircseminars.org( On the Spot Payment Rs. 400/- only through Cheque / DD)No Fee for Annual Members of NIRC ( Seminars 2016-17)Registration and Attendance at Registration Counter outside the Workshop Hall is compulsory.
Workshop on Peer Review
Date & Day 23rd August 2016 (Tuesday)
CPE HRS.3
MEMBERS
Venue ICAI Bhawan, Vishwas Nagar, Shahdara, Delhi
Timings 9.45 AM – 05.30PM
Fee for Seminar Rs.2000/- Pay Online at www.nircseminars.org(On the Spot Payment Rs.2300/- only through Cheque / DD)No Fee for Annual Members of NIRC ( Seminars 2016-17)Registration and Attendance at Registration Counter outside the Seminar Hall is compulsory on both the Days.
12 CPE hours Seminar on
Audit Planning, Audit Working Papers, Pre Audit Study,
Checklist for Audit, ROC Compliances, Audit Report &Tax Audit
Date & Day 26th & 27th August 2016 ( Friday & Saturday)
CPE HRS.12
MEMBERS
Venue NDMC Convention Centre, Opposite JantarMantar, Near Parliament Street, CP, New Delhi
Timings 11.30 AM -02.30 PM followed by Lunch
Fee for Seminar Rs.400/- No Fee for Annual Members of NIRC ( Seminars 2016-17)
Seminar on Tax Audit
J/W MayurVihar CPE Study Circle of NIRC
Date & Day 4th September 2016 (Sunday)
CPE HRS.3
MEMBERS
Venue Riverside Sports Club, MayurVihar Phase I Extension, New Delhi
Timings 9.45 AM – 05.30PM
Fee for Seminar Rs.1500/- ( On the Spot only through Cheque / DD)Rs.1400/- ( If Paid Online before 7th September 2016 at www.nircseminars.orgNo Fee for Annual Members of NIRC ( Seminars 2016-17)
Seminar on Emerging Issues of Anti Money Laundering laws and FEMA
Organized by
Committee on Economic, Commercial Laws & WTO of ICAI
Hosted by NIRC of the ICAI
Date & Day 10th September 2016 (Saturday)
CPE HRS.6
MEMBERS
Venue To be hosted on NIRC Website
Timings 05.00 PM – 08.30 PM followed by Dinner
Fee for Seminar Rs.300/- Pay Online at www.nircseminars.org( On the Spot Payment Rs. 400/- only through Cheque / DD)No Fee for Annual Members of NIRC ( Seminars 2016-17)Registration and Attendance at Registration Counter outside the Workshop Hall is compulsory.
Workshop on CARO 2016
Date & Day 20h September 2016 (Tuesday)
CPE HRS.3
MEMBERS
Venue ICAI Bhawan, Vishwas Nagar, Shahdara, Delhi
Timings 9.45 AM – 05.30PM
Fee for Seminar Rs.1500/- ( On the Spot only through Cheque / DD)Rs.1400/- ( If Paid Online before 31st August 2016 at www.nircseminars.orgNo Fee for Annual Members of NIRC ( Seminars 2016-17)
Seminar on Labour & Allied Laws
Date & Day 3rd September 2016 (Saturday)
CPE HRS.6
MEMBERS
Venue India Habitat Centre ( Jacranda hall) Lodhi Road, Delhi
Timings 5.00 PM – 9.00 PM followed by Dinner
Fee for Seminar Rs.700/- No Fee for Annual Members of NIRC ( Seminars 2016-17)
Seminar on Tax Audit
J/W Karol BaghWestened CPE Study Circle of NIRC
Date & Day 5th September 2016 (Monday)
CPE HRS.4
MEMBERS
Venue Hotel Jivitesh, Pusa Road, Near Metro pillar 87-Pusa Road, New Delhi
Timings 05.00 PM – 08.30 PM followed by Dinner
Fee for Seminar Rs.400/- Pay Online at www.nircseminars.org( On the Spot Payment Rs. 500/- only through Cheque / DD)No Fee for Annual Members of NIRC ( Seminars 2016-17)Registration and Attendance at Registration Counter outside the Workshop Hall is compulsory.
Workshop on Taxation of Non Profit / Charitable
Organizations
Date & Day 13th September2016 (Tuesday)
CPE HRS.3
MEMBERS
Venue Institution of Engineers, I P Marg, Near ICAI Bhawan, ITO, New Delhi
1921
August, 2016 NIRC NEWSLETTER
August, 2016 NIRC NEWSLETTER
1922
A View the workshop on GSTA View the workshop Real Estate
(Regulation & Development) Act 2016
A View the workshop Real Estate (Regulation & Development) Act 2016
A View the National Convention for CA Student
A View the National Convention for CA Student
A View the National Convention for CA Student A View the seminar on Valuation
1923
August, 2016 NIRC NEWSLETTER
A View the seminar on Valuation
A View the 64th annual General Meeting
A View the seminar on Learn, Earn & Return for CA professionals
A View the seminar on Tax Audit for CA Students
Total Number Of Pages : 24 (Twenty Four)
NIRC Newsletter- August, 2016
DL( )-01/1192/2015-17U(C)-257-2015-17
C
24
CPT, IPCC & Final Classes of NIRC of ICAI
Announcement For Regular Classes
Team NIRC is pleased to inform that we are organizing state of the Art, Coaching
Classes for CPT, IPCC & Final Exams.
* Focused study plan as per ICAI Exams. * Experienced and Subject Expert Faculty.* Separate class Notes for each Subject. * Suitable timings for all classes before and after the office hours.* Most comfortable environment for studies.
For more information visit us on www.nirc-icai.org.
NICASA Chairman
NIRC Newsletter- August, 2016