Baroda Branch of Western India Regional Council of The ... · The Institute of Chartered...

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

Volume - III April 2012l

Baroda Branch of Western India Regional Council ofThe Institute of Chartered Accountants of India

T-E-A-M-W-O-R-KIn union there is a strength

NewsLetter` 20/- Copy

THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIAICAI Bhawan, Post Box No. 7100, Indraprastha Marg, New Delhi - 110002. Tel. : +91 (11) 39893989 E-mail : [email protected] Web : www.icai.org

WESTERN INDIA REGIONAL COUNCILICAI Bhawan, 27, Cuffe Parade, Post Box No. 6081, Colaba, Mumbai - 400 005. Tel. : +91 (22) 39893989 Email : [email protected] Web : www.wirc-icai.org

BARODA BRANCH OF WIRC OF ICAI “ICAI Bhawan”, Kalali-Tandalja Road, Atladra, Vadodara - 390 012. Telefax : +91 (265) 2681115 / 2680593 E-mail: [email protected] Web : www.baroda-icai.org

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Dear Esteemed Members,

Each new financial year marks the new vistas of opportunities and I hope FY 2012-13 is loaded with abundant opportunities for all in their desired spheres.

The beginning of financial year 2012-13 was preceded by a fortnight of discussions, debates and decodification of Union

Budget 2012. We had live screening at ICAI Bhawan on Budget day. In the following days, a program on Analysis of Budget by our own past chairman CA Anirudh sonpal alongwith Advocate Saurabh Soparkar, Live Webcast of WIRC program on budget by CA Bansi Mehta, Past President ICAI and a clause by clause analysis by CA Girish Ahuja, further demystified the budget.

A public program on Union Budget 2012 was organized jointly with Central Gujarat Chamber of Tax Consultants where 300+ participants had the privilege of listening to Advocate Mukesh Patel, leading public speaker on budget, for the first time on Baroda branch platform.

Amongst other programs in the month of March, program on Direct Taxes was well attended with the award winning faculty CA Kapil Goel. Bank branch audit seminar had all the much sought after speakers like CA Amarjit Chopra past president of ICAI, CA Rahul Joglekar, Mumbai, CA Ramesh Kedia Ahemdabad and by our regional council member CA Mangesh Kinare.

CA Families maintain the spirit of friendship amongst CA fraternity and the festival of holi was celebrated with family members of CAs at the ICAI Bhawan. In the month of March, the charitable trust clinic opened its doors, where 6 NGOs benefitted with the advice from eminent experts. The said clinic was inaugurated in July 2011 by the then Vice-President and our current Hon’ble President CA Jaydeep Narendra Shah as an effort to augment the ICAI’s social responsibility index.

In the coming months, branch is gearing up for Mega program. To enjoy the knowledge feast, I request the members to save their dates for 2 days for ICAI All Region Conference jointly organized by WIRC, EIRC, NIRC and jointly hosted by Baroda & Nagpur Branches at Baroda on 8th and 9th of June.

Benjamin Franklin once said, “An investment in knowledge pays the best interest.” Keeping this in mind the branch has organized many interesting programs in April and I hope to see you all there.

With warm regards.

CA. Pradeep Agrawal

SIRC, CIRC &

MANAGING COMMITTEE

CA. Rajesh Shah Ex-officio 98250 41142

CA. Yash Bhatt 99243 88339Treasurer

CA. Pradeep Agrawal

Chairman 93272 4347998985 60967

CA. Ashish Parikh 98252 31545Vice Chairman

CA. Nayan Kothari Secretary 98244 33445

CA. M J Parsiya 98251 10620

Past Chairman

Immediate

CA. Viral Shah 98243 62211Member

CA. Arpan Dodia 98983 83530Member

CA. Hitesh Shah Member 99247 94693

CA. Pradeep Agrawal CA. Hitesh Shah

CA. Vishal Doshi CA. Ashok Thakkar

CA. Abhishek Nagori CA. Narendra Hindocha

CA. Bimal Bhatt CA. Neena Patel

CA. Nidhi Bhatt CA. Rachana Parikh

EDITORIAL TEAM

Index

I pledge myself to dedicate for all that is good and noble in the profession.

Stupendous task lies ahead of us. I am, however, confident that with the valuable goodwill, co-operation and contribution of the members of the Institute we will be able to achieve for the profession its rightful place in the economic life of the country.

In all humility I call upon every member of the Institute to strive for harmony and integrity in all spheres of our activities.

Shri S. VAISH, rd3 President of ICAI, NEW DELHI, 16th September, 1953.

2nd Regional Conference ........................... 02

Forthcoming Events ................................... 03

Income Tax Updates ................................... 04

Service Tax Updates ................................... 06

ICAI Updates .............................................. 09

Banking Update .......................................... 09

Charitable Clinic ........................................... 10

Photo Flash ................................................. 11

Lets Connect with ICAI ............................... 08

Announcements ......................................... 09

NewsLetter

02

BARODA BRANCH OF WIRC OF THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA

APR. 2012VOLUME - III

` 3200

Members Non-Members` 2400 up to 21.05.2012 ` 2800 thereafter

FEES per person(Non-Residential)

For Registration & further details, contact :

ICAI Bhawan, Kalali- Tandalja Road, Tandalja, Baroda, Ph.: 0265-2681115, 2680593, 094260 75397

E-mail : [email protected] or [email protected]

Baroda Branch of WIRC of ICAI

DAY 1 : FRIDAY, JUNE 8, 2012Registration & Breakfast : 8.00 am to 8.45 am

Chief Guest: Shri Narendra Modi (*)Hon’ble Chief Minister of Gujarat State

Guest of Honors : CA. Jaydeep Narendra Shah Hon’ble President, ICAI &

CA. Subodh Kumar Agrawal Hon’ble Vice-President, ICAI

Chairman of Session CA. M. M. Chitale, Past President, ICAI, & Chairman, NACAS

• IFRS vis-a-vis Indian CA. Jamil Khatri, BengaluruAccounting Standards (Ind AS)

• Practical Approach to CA. K. L. Jhanwar, JaipurCompliance of Auditing Standards

LUNCH BREAK

Chairman of Session CA. R. Bupathy, Past President, ICAI.

• General Anti- CA Padamchand Kincha,Avoidance Rules (GAAR) Bangaluru

• Controversial Issues in CA. Yogesh Thar, Mumbai.Taxation

Panel Moderator CA. Kamlesh Vikamsey, Past President, ICAI

Panellists : • Impediments to creation CA Harish Motiwala, Past CCM, ICAI

of Indian Big Firms

• Impact of Small Cap CA Manish Baxi, BarodaInternational Joint Ventures of Clients on CA Office

INAUGURAL SESSION 9.00 am to 10.30 am

Technical Session - I Accounts & Audit

Technical Session - II Direct Taxes

Panel Discussion : CA Profession – an Introspection

Mega Cultural Evening 7.00 pm to 09.00 pm

Technical Session - III Indirect Taxes

Technical Session - IV Future Professional Opportunities

Valedictory Session

Cultural Evening followed by a grand dinner

DAY 2 : SATURDAY, JUNE 9, 2012Breakfast: 8.00 am to 8.45 am

Chairman of Session CA. Ashok Chandak, Past President, ICAI

• Impact of Structural CA. Ashok Batra, New DelhiChanges in Service Tax

• Cenvat Credit - Issues & CA. Vipin Jain, MumbaiControversies For Service Providers

LUNCH BREAK

Chairman of Session CA. G. Ramaswamy, Past President, ICAI

• Green Audit CA. Suresh Prabhu Former Union Minister

• Forensic Investigation CA. Chetan Dalal, Mumbaiusing Information Technology

Chief Guest CA.(Adv) Anil Dave, (*)Hon'ble Supreme Court Judge

Vote of Thanks 5.30 pm to 6.00 pm

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03



ForthcomingEvents

2nd ISA Meet at Baroda

Day & Date : Friday, 20.04.2012Time : 05:30 pm to 09:00 pmVenue : Auditorium, ICAI Bhawan, Baroda

Topics Faculties

Keynote Address CA Atul Bheda, Chairman,Committee on Information Technology

Practical Aspects of IS Audit Eminent SpeakerOpportunity for CAs for IS Audit Eminent Speaker

CPEHRS.3

MY CHEF @ HOME-Program for Members, Spouse & Family

Day & Date : Saturday, 21.04.2012Time : 03.30 p.m. to 05.30 p.m.Topics : Recipes, Party menus etc.Faculty : Chef from Hotel Surya Palace Fees : ` 100/-per person (followed by Hi-Tea)Venue : Hotel Surya Palace, Sayajigunj, Baroda

In an era of increasing usage of ‘plastic

money’ & Inernet - with an objective of better

services to members & students, Baroda

Branch is having facilities of Registrations for

seminar & conference by paying through

credit/debit card at ICAI Bhawan or visit

www.baroda-icai.org for online payment.

PAYMENT OPTIONS FOR PROGRAM REGISTRATION

e-paymentD r o p B o x a t 2 - B , Ramkrishna Chambers, BPC Road, Baroda. Kindly mention your name, membership number and program for which registration is sought, on back side of the Cheque

Join us on group Facebook Baroda Branch of WIRC of ICAIExchange views and news. Be updated about forthcoming events of Baroda Branch

STUDY CIRCLE EVENTS

BRANCH EVENTSCPE Teleconferencing

Day & Date : Wednesday, 11.04.2012Time : 11:00 am to 01:00 pmTopic : Revised Schedule - VIFaculty : CA Ganesh BalkrishnanFees : `. 100/- per person Venue : ICAI Bhawan, Baroda

CPEHRS.2

CPE Teleconferencing

Day & Date : Wednesday, 25.04.2012Time : 11:00 am to 01:00 pmTopic : Auditing StandardsFaculty : CA P R Ramesh, HyderabadFees : `. 100/- per personVenue : ICAI Bhawan, Baroda

CPEHRS.2

2nd Charitable Clinic

Day & Date : Friday, 27.04.2012Time : 03:00 pm to 05:00 pmFees : NilVenue : United Way of Baroda, 9th Floor, Sidcup Tower,

Race Course Baroda

Felicitation of Hon'ble President & Vice PresidentHon'ble

Day & Date : Thursday, 17.05.2012Time : Will be announced laterVenue : ICAI Bhawan, Baroda

Day & Date : Wednesday, 18.04.2012

Time : 5.00 pm to 8.00 pmTopic : Legal, Taxation & Accounting aspects in Real

Estate Industry. Faculty : CA. Tarun Ghia, MumbaiFees : `. 200/- (Non Members)Venue : ICAI Bhawan, Baroda

Day & Date : Wednesday, 25.04.2012

Time : 6.00 pm to 8.00 pmTopic : Recent Amendments under Service Tax LawFaculty : Adv. R. R. MirchandaniFees : `. 200/- (Non Members)Venue : ICAI Bhawan, Baroda

CPEHRS.3

CPEHRS.2

Workshop

Day & Date : Saturday, 19.05.2012Time : 03:30 pm to 06:30 pmTopic : Practical Workshop on Revised Schedule - VIFees : `. 300/- per person upto 16.05.2012,

thereafter `. 400/- per personVenue : ICAI Bhawan, Baroda

CPEHRS.3

CPEHRS.3Peer Reviewers Training

Day & Date : Tuesday, 19.06.2012Time : 09:00 am to 05:00 pmFees : `. 1000/- per personVenue : ICAI Bhawan

Topic Faculty

Keynote Address CA Pankaj Jain, Chairman,Peer Review Board

Members are requested to register themselves in advance by

using above options and avoid spot registration to help us to

serve you better.

Baroda Branch is planning to organise Family RRC in the first

week of August, 2012. (Details will be announced shortly).

Members are requested to take note of the same while planning

their vacation & interested members are requested to get their

names registered at Branch.

Family RRC Announcement

WICASA Event

STUDY CIRCLE

Day & Date : Wednesday, 25.05.2012Time : 6.00 pm to 9.00 pmVenue : ICAI Bhawan, Baroda

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04



Brief note on amendments relating to Income-tax proposed by Finance Bill 2012

If you are asked `How is the budget’ and you do not want to admit that you have not read it, your best bet is to respond `Sweet and sour’.

I) General

No changes in Surcharge (5% for d o m e s t i c a n d 2 % fo r o t h e r companies) and Cess (3%). No changes in basic rates also except in case of individuals. Basic exemption raised to Rs.200000/- for both men and women. Highest slab of 30% to a p p l y fo r i n co m e exc e e d i n g Rs.1000000/- in all cases including senior citizens.

ii) Corporates:

Effective rates including surcharge and cess, continue to be same as under:

Income Others exceeding (%)1 crore( %)

Domestic companies 32.445 30.900

Other companies 42.024 41.200

Tax under section 115JB:

Domestic company 20.008 19.055

Other company 19.436 19.055

Dividend Distribution Tax 16.223 16.223

iii) Special Rates

a) Section 115BBE: Income under sections 68 to 69D-Cash credits etc. to be taxed at 30%(plus surcharge/cess) from A.Y.2013-14. May result in loss of benefit of setoff of current and earlier years’ losses and depreciation as also loss of initial threshold upto which tax is not payable.

b) 115BBD: Beneficial rate of 15% on dividend income from specified foreign company extended by 1 year to A.Y. 13-14.

c) 115A: Concessional tax rate of 5% for

1. Tax rates

Interest paid to nonresidents by companies engaged in specified businesses

d) 115BBA: From A.Y.2013-14, tax rate applicable to nonresident and non-citizen sports persons / sports institutions relating to activities in India increased from 10% to 20% and such rate also applicable to such foreign entertainers.

I would give a zero rating to the Finance Bill solely on account of retrospective amendments. Brief examples of amendments:

i) Amendment to correct drafting errors: Section 111A to rectify rate on short term capital gains from shares, when other income below threshold, from 10% to 15%. Also in case of conversion of proprietary / partnership business to corporate form, now provision, for computing gain on later, to take cost of predecessor.

ii) Debatable matters: Section 9: To consider payment for licensing of software, use of online databases as also transmissions by satellite, cable etc., as royalty. Read with amendment i n s e c t i o n 1 9 5 ( e x t e n d e d t o nonresidents) requires assessees to do impossible task of deducting tax at source retrospectively.

iii) Amounts otherwise considered non-taxable even by Supreme Court: To tax transfer of shares in foreign companies if they derive value substantially from assets in India as also transfer of rights of management etc even if flowing from the transfer of such shares.

Even when the logic supports the amendment, I believe that the Government should be graceful, not highhanded and should make provisions prospectively. Govern-ment’s tendency to make such amendments necessitate change in approach to tax planning and management.

We have legal luminaries to whom

2. Retrospective amendments

3. Drafting of law

developed countries outsource legal services. In spite of that drafting of law shows lack of basic skills and care. Examples:

i) Taxability of transfer of shares in foreign company depends on whether the shares derive value substantially from assets in India. The term `substantially’ is incapable of comprehension as it could range from 10% to 90% in different context.

ii) Under General Anti Avoidance Rules, tax benefit may be refused in respect of an arrangement aimed only at obtaining tax benefit. Literally read, it may hit exemptions and deductions specifically provided by law like deductions under sections 80C, 80IA, 80C, 10AA,gains on conversion to LLP, mergers and demergers etc. May also hit transactions of sale of assets to book loss, gifts to children, etc. I believe proper draft would provide that it will not hit a transaction unless it goes contrary to the objectives of the provisions of law.

i) Effective from A.Y.2013-14

ii) To codify the doctrine of substance over form

iii) May override tax treaties.

iv) Transaction/agreement/arrangement may be declared impermissible if its purpose is to obtain a tax benefit and la c ks co m m erc ia l s u bsta n c e . Considered Lacking commercial substance if substance is different from form or involves round trip financing or offsetting elements or includes an accommodating party or disguises the value, location, source, ownership or control of fund; or location of asset / transaction / residence is determined for tax benefits.

v) Consequences: Denial of tax benefit (reduction/deferment of tax or increase in loss) by disregarding or recharacterising any party or the t r a n s a c t i o n / a g r e e m e n t o r arrangement or part thereof, disregarding corporate structure, r e a l l o c a t i n g a m o u n t o f

4. General Anti-Avoidance Rule (GAAR)

Income Tax Updates

Compiled by CA. Narendra Hindocha, Baroda

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income/expenses/deduction etc to different parties, holding location of an asset, transaction or party to be different from one shown, treating equity as debt or capital as revenue or vice versa.

vi) Guidelines to be prescribed. Onus on the taxpayer. Final decision by Panel of 3 members. Aggrieved taxpayer to file appeal before the Tribunal.

According to unsubstantiated reports, there is enough money belonging to Indians in tax havens, to make every Indian a happy soul. To capture this wealth, amendments proposed to require filing of returns by residents having assets/interest in entities abroad or signing power for accounts abroad. Also mere fact of having asset abroad would make you liable to face reopening of assessments for 16 years. In case of agent of nonresident, notice can be issued for 6 years.

i) We have transfer pricing regulations to safeguard against valuations of transactions with Nonresidents done so that higher income arises outside India.

ii) Pricing of domestic associates can be used to evade tax by transferring income to a loss making concern or to a concern eligible for deductions / exemptions. However, presently there is limited safeguard against such practices in the form of Section 40(A) applicable only to expenditure.

iii) From A.Y. 2013-14, it is proposed to apply all the transfer pricing regulations to domestic transactions also (including interunit transactions when deductions under section 80IA etc are c la imed) i f amounts aggregates to over Rs.5/- crores. This will require detailed calculations, documentation and audit reports for all transactions including transactions in intangibles like brand, goodwill, knowledge.

iv) This amendment may be considered

5. Unaccounted money in tax havens

6. Transfer pricing regulations and their application also to domestic transactions

unnecessary and burdensome as regards transactions between two assessees who pay tax at same rate.

v) Allowable variation from Arm’s Length Price to be limited to 3%

vi) Dispute Resolution Panel (DRP)-Now even Assessing Officer can appeal. A lso DRP is retrospect ively empowered to order enhancement.

vii) Transfer Pricing Officer retrospe-ctively empowered to determine Arm’s Length Price of any intern-ational transaction even if not referred to him.

viii) Provisions made for Advance Pricing Agreements.

MAT for companies survives although considered irrational. Later, we got similar AMT applicable to LLP. Now minimum alternate tax is proposed for all non-corporates also who claim certa in deduct ions. Changes, effectiveA.Y.2013-14:

i) Due to drafting error, MAT failed to apply in some cases of Banking / Insurance / Electricity companies on the ground that they are not required to prepare accounts as per Schedule VI. This is now rectified.

ii) In case of sale of revalued asset, even realized profit may not go to profit and loss account as it may be transferred from revaluation to general reserve. Such profit to be added to book profit under section 115JB.

iii) Regarding non-corporates, the provisions to apply to persons claiming deduction in respect of certain income under Chapter VIA(80IA etc. but not 80P or section 10AA(SEZ). Tax at 18.5 to be applied to adjusted income(income plus aforesaid deductions) if exceeding 20 lakhs. Credit for such tax in prescribed manner allowed for up to 10 years

I) Prescribed for transfer of certain immovable properties (other than agricultural land) @ 1% if the

7. Minimum Alternate Tax

8. Deduction/collection of tax at source(TDS/TCS)

consideration exceeds Rs.50/20 lacs depending on location(For Vadodara, it is Rs.20/- lacs. No need to obtain TAN or file quarterly returns-credit to payee on the basis of challan bearing PAN.

ii) Section 194J (Rate 10%)to apply to Sitting fees/remuneration to Directors from 1-7-12 if not taxable under the Head ̀ Salaries’

iii) Seller of bullion or jewellery to collect 1% of sale consideration in cash exceeding Rs. 2 lacs

iv) You are not considered to be in default for omission to deduct and pay TDS if deductee gives certificate that he has furnished his return, shown relative income therein, and paid tax due on such income. Date of filing return is considered day of payment.

v) Best part of the Finance Bill, in my opinion, is that in aforesaid situation, disallowance under section 40(a)(ia) will not apply. The provision is prospective but judicial decisions may support a stand that they are retrospective.

vi) Delay in filing quarterly statements to attract fee of Rs.200/- per day. Error to attract penalty from Rs.10000/- to Rs.100000/-

vii) There was no remedy for wrong demand in intimation under section 200A. This is now provided by making such intimation liable to rectification and appeal.

viii) Time limit for demand for non-deduction now extended from 4 to 6 years.

ix) Higher threshold for TDS from compensation for compulsory acquisition/interest on debentures.

x) There was no liability to advance-tax in certain cases to the extent tax was deductible at source, even if no tax was actually deducted. Now liability of pay advance-tax will reduce only to the extent of is actually deducted

I) In case of professionals, as also cases of agency or commission business, presumptive taxation not applicable

9. Others

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retrospectively. In other cases, Exemption from tax audit and presumptive taxation applicable upto Rs.1/- crore from A.Y. 2013-14. In case of professionals, tax audit to apply for receipts exceeding Rs.25/- lacs.

ii) Weighted deduction at 150% of capital expenditure for businesses of co ld cha in , warehous ing for agricultural produce, hospital with 100 beds, notified affordable housing scheme and production of fertilizers if business is commenced after 1-4-12.

iii) Closely held companies to prove genuineness of source of investments by shareholders from A.Y.2013-14.

iv) Power plants get additional depre-ciation and one more year to start generation to avail 80IA.

v) Residency Certificate mandatory for claiming benefit under the tax treaty.

vi) Exemption/deduction in respect of life insurance policy only if premium does not exceed 10% of the sum assured, as against 20% presently.

vii) Deduction under Section 80D extended to cost of preventive health checkup.

viii) Deduction of Rs. 10,000 for interest on savings accounts.

ix) Extended Time limit for assessments in many cases.

x) Rates of penalty in search cases to be 10/20/30% depending on stage at which income disclosed.

xi) Deductions for donations under sections 80G/80GGA not to be allowed if donation exceeding Rs.10000/- is made in cash.

Other changes relate to Dividend distribution tax, TDS on interest on debentures, TCS on minerals, charitable trusts, Venture capital funds/companies and investors there in , sh ipp ing companies, 35AD deduction for inland container depot, container freight station, beekeeping, and warehousing for sugar, research, merger / demerger in cases of i nte rco m p a ny h o l d i n g s , s a l e o f agricultural land, capital gains where consideration not determinable, gain on

sale of house invested in small/ medium enterprise, Agricultural extension projects,150% deduction on expenses on notified Skill development projects, persons aged 60 years to be considered senior citizens for sections 80D, 80DDB, share premium exceeding market value , advance-tax for senior citizens not engaged in business, Due date for audit and return in Transfer Pricing cases, Reference to valuer, search cases, wealth-tax, etc.

Compiled by Indirect Taxes Working Group

Highlights of Changes in through Service Tax

Union Budget 2012

Rate changes :(with effect from 01.04.2012)

a. The rate of service tax is being restored to the statutory rate of 12% - Notification No. 8/2009-ST dated February 24, 2009 reducing the rate to 10% has been rescinded effective from April 1, 2012.

b. Changes have also been made in composit ion rates: for works contracts from 4% to 4.80%.

c. The rate for Cenvat reversal for exempt services has been revised likewise from 5% to 6%.

Negative List:

Valuation Rules:

There is paradigm shift in the way services are proposed to be taxed in future. Taxation will be based on what is popularly known as “Negative List of Services”. It means that if an activity meets the characteristics of a “service” it is taxable unless specified in the Negative list, comprising 17 heads listed in proposed new section 66D, or otherwise exempted by a notification issued under section 93 of the Act. Most of the 88 exemptions at present will be either rescinded, being no more needed, or modified in some manner, or merged in a mega notification, leaving the final tally of exemptions to just 10.

A. The value of the Works Contract is proposed to be redefined, as follows:

i As at present, first determination will be the value of service being the total amount charged for the contract reduced by the value of property transferred in goods for State VAT purpose;

ii If value of goods is not intimated to State VAT, the assessees can still calculate the actual value of goods and the same will be relevant to deduce the value of the service involved in the works contract;

iii If the value is not so deduced, and not merely as an option, the value shall be specified percentage of the total value as follows:

a. for original works: 40% of the total amount;

b. other contracts: 60% of the total amount;

c. for contracts involving construction of complex or building for sale where any part of the consideration is received before the completion of the building: 25% of the total amount

B. For determination of value of taxable service involved in supply of food and drinks in a restaurant or as outdoor catering the revised taxable portion shall be as follows:

First Auditor General of India

Shri V. Narhari Rao“Accounting is becoming more and more intricate with the advance of modern technique in industry. After all, accounts follow facts… an accountant must have a very good inkling- a very comprehensive idea of what he is looking into….the role of an accountant in modern India, which is fast industrializing, is very great indeed…. He has to know a great deal in each sphere of activity. He has to be jack of all trades. He has got to know something of everthing.”

First Comptroller and Auditor General Of India, on Role of an Accountant and Auditor in National Economy[April,5 1954, at ICAI Headquarters]

Shri V. Narhari Rao,

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Sr. Description of service Existingtaxable taxable portion portion

1. Service portion in the supply of food or any other article of human consumption or drink at a restaurant

2. S. No.1 provided from a premises elsewhere 50% 60%(outdoor catering)

Abatements:

Certain changes are proposed to be introduced in the abatements along with negative list. The existing and new abatements shall be as follows:

Sr. Service Existing Proposed Cenvat creditstaxable taxable portion portion

1. Convention center or mandap 60% 70% All credits, except with catering on inputs, of

Chapter 1 to 22 will2 Pandal or Shamiana with catering. 70% 70% now be available.

3 Coastal shipping 75% 50% No credits as at present.

4 Accommodation in hotel etc. 50% 60% Credits on input services allowed.

5 Railways: goods 30% 30% All credits will be allowed.

6 Railways: passengers New levy 30 -do-

General Changes

a. Special audit provisions, available at present by way of section 14AA of the Central Excise Act and made applicable to Service Tax by way of section 83, are being replaced by a new section: 72A, giving comprehensive powers for such audit relevant for service tax purposes.

b. The period for issue of demands in normal situations is being raised from 12 months to 18 months.

c. Clause (a) of section 89 relating to prosecution for non-issue of invoice is being replaced with the words “knowingly evades payment of service tax”.

Reverse charge provisions:

To give effect to new reverse charge mechanism, some changes are being proposed: firstly, a proviso is being added to sub-section (2) of section 68 and both the service provider and service receiver will be considered as persons liable to pay the tax on notified taxable services and to the extent specified against each one of them. The scheme is being introduced for three services where the service provider is either an individual or a firm or LLP and the recipient is a body corporate. The three services and the portion of tax payable are as follows:

Sr. Description of service Service Servicerecipient provider

1. Hiring of a motor vehicle designed to carry passengers:

(a) with abatement 100% Nil

(b) without abatement 40% 60%

2. Supply of manpower for any purpose 75% 25%

3. Works contract service 50% 50%

Proposed

30% 40%

It is clarified that the liability of the two persons is for respective amounts and is not influenced by compliance or the lack of it by the other side. Service provider is allowed Cenvat credit of tax paid by him on inputs and input services.

Penalty waiver for renting of immovable property service:

It is proposed that penalty may be waived for those taxpayers who pay the service tax due on the renting of immovable property service (as on the sixth day of March, 2012), in full along with interest within six months.

Point of Taxation Rules, 2011(with effect from 01.04.2012)

a. The new rules will replace the existing Export of Services Rules, 2005 and the Taxation of Services (Provided from Outside India and Received in India) Rules, 2006. Rule 5 of the export rules will be incorporated in Service Tax Rules.

b. The time period for issuance of invoice is being increased to 30 days ordinarily and 45 days for banks and financial institutions.

c. The benefit available to individuals and firms to determine POT on the basis of date of payment for eight specified services is being extended to all services in a slightly modified form. The facility will be now available to individuals and partnership firms (including limited liability partnership) up to a turnover of Rs 50 lakh in a financial year provided the taxable turnover did not exceed this limit in the previous financial year. For computing the above limits, the turnover of the whole entity is required to be summed up and not any single registration.

d. In case of a new levy, no tax is chargeable on services where payment has been received and invoice issued within a period of 14 days.

e. The small scale exemption has also been amended recognizing that the first clearances up to Rs 10 lakhs will be in terms of invoices and not mere payments received.

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Service Tax Rules, 1994:

a. A common simplified registration format for Central Excise and Service Tax is being placed for public comments, together with further l i b e ra l i za t i o n i n re g i s t ra t i o n requirements, particularly centralized registrations.

b. Likewise a new simplified one page common return with Central Excise: to be called Excise & Service Tax Return (EST for short) is being introduced.

c. It is also being proposed that the cycles for the payment service tax and filing of return should coincide. To this end the tax payment requirement is proposed to be revised as follows:

1. Assessees who paid tax of Rs 25 lakh or more in previous year and new assessees other than individuals and firms: Monthly

2. Others: Quarterly

d. The restrictions in Rule 6(4B) are being omitted allowing unlimited amount of permissible adjustments.

Simplified scheme for refunds:

A simplified scheme for refunds is being introduced by substituting the entire Rule 5 of CCR, 2004. The new scheme does not require the kind of correlation that is needed at present between exports and input services used in such exports. Duties or taxes paid on any goods or services that qualify as inputs or input services will be entitled to be refunded in the ratio of the export turnover to total turnover.

Compiled by CA. Abhishek Nagori & CA. Neena Patel

A professional body thrives on the cumulative strength of the professionals that it boasts of and we take pride in considering ourselves ICAI’s precious reserves of knowledge, experience and ability. Simultaneously, ICAI is also a reservoir of opportunities with gains. To garner the flow from the same, Let’s connect with ICAI brings you two more avenues this month.

Let’s Connect With ICAI

should cover all the sub chapters or aspects of the syllabus and be free from any ambiguity, doubt etc. The question should convey the same meaning which you intend to convey. It is also essential that proper care is taken in framing the questions and the options (answers) are provided below the questions. The solution (correct answer) to each option (answer) shall be given as per the above format.

The copyrights of the questions as well as the answers so submitted shall vest with the Council of the Institute. The contributor of the questions shall ensure that the questions so submitted to the Institute are not parted with by him/her to any Body/Person and shall be meant only for the exclusive use by the Council of the Institute. It should be ensured that the questions are original and framed with the meticulous care.

For each question framed and forwarded and accepted by the council of the Institute for developing a Question Bank of ISA-AT, Rs. 500/- per question selected/accepted will be paid as honorarium. In addition to honorarium payable towards questions selected, Rs. 100/- (fixed) will be paid for other services also. The questions may be sent in a sealed envelope super scribed “Question Bank ISA-AT” to Shri G. Somasekhar, Additional Secretary (Exams), The Institute of Chartered Accountants of India, “ICAI Bhawan”, Indraprastha Marg, New Delhi-110002 by name or by e-mail to [email protected].

While sending the questions by post/mail, please mention your name and complete postal address alongwith contact details i n c l u d i n g m o b i l e n u m b e r. A l l correspondence on the subject should be treated as secret. Interested persons may kindly contribute to the Question Bank of ISA-AT.

The Government of India has, in exercise of the powers conferred by Sec. 28A of the Chartered Accountants Act, 1949, constituted a Quality Review Board to perform the following functions:-

(a) to make recommendations to the

Empanel as a Technical Reviewer with the Quality Review Board

Invitation for Contribution of Questions for ISA-AT Question Bank

Mod Module ule No. Title

T h e I n fo r m at i o n Syste m s A u d i t Assessment Test (ISA-AT) is an objective type test having multiple choices and contains 200 questions carrying 200 marks. The time allowed for answering 200 questions is four hours. The aforesaid Test is meant for the members of the Institute to enable them to develop understanding in the field of Information System Audit.

With a view to develop the Question Bank for the various Modules spread over the Syllabus of the ISA-AT, it has been decided to invite questions from Chartered Accountants/experts working in various organisations/institutions. The titles of these Modules prescribed in the Syllabus are given hereunder:

1 I n f o r m a t i o n Te c h n o l o g y Infrastructure & Communication/ Networking Technology

2 Protecting Information Assets

3 Systems Development, Life Cycle & Application Details

4 Business Continuity Planning

5 I n f o r m a t i o n S y s t e m s Organisation And Management

6 Information System Control & Audit Process

The Contributor can contribute as many questions as he/she can, but in a lot of minimum 50 questions on the aforesaid modules in the following manner:

Q. Questions and AnswerNo. answer options (for Example)

01 Question description

A) Option AB) Option B CC) Option CD) Option D

02to50

While framing the questions, the contributors have to prepare the questions for individual modules in separate files/documents. The questions

NewsLetter

09



ICAIUpdatesCompiled by CA. Ashok Thakkar

Re g u l at i o n o f Fo re i g n C h a r te re d Accountant Firms

The Minister of State in the Ministry of Corporate Affairs Shri R.P.N. Singh on 26th March 2012 informed the Rajya Sabha that the Indian Chartered Accountant (CA) firms are regulated by the Institute of Chartered Accountants of India (ICAI) in terms of provisions of the Chartered Accountants Act, 1949 and the Rules and Regulations framed thereunder. Further, no CA firms, whether Indian or foreign, can operate in the area of audit/ assurance services in India without being registered with the ICAI. It is, h o w e v e r, p o s s i b l e t h a t s e v e r a l “Multinational Accounting Firms” may be operating in the country in the fields of audit/ assurance services through Indian Audit Firms/ Members who are registered with ICAI

The Minister was replying to a written question whether it is a fact that Indian Chartered Accountant (CA) firms are being regulated by the Institute of Chartered Accountants of India but the foreign CA firms practising in India are not regulated by any regulatory body.

AnnouncementsBaroda Branch of WIRC of ICAI is planning to organize below Certificate Courses / Post Qualification Courses during the year 2012 provided we get minimum participants. So desired members are requested to register their names with Baroda Branch on 0265-2681115 / 2680593

E-mail: [email protected]

For more details on course content, please visit

http://www.icai.org/new_post.html?post_id=3581&c_id=81

oCertificate Course on Indirect Taxes

oCertificate Course on Enterprise Risk Management

oCertificate Course on Internal Audit

oCertificate Course on Master in Business Finance

oCertificate Course on Forensic Accounting & Fraud Detection using IT & CAATs

oCertificate Course on International Financial Reporting Standards

oCertificate Course on Forex and Treasury Management

oCertificate Course on Derivatives

oCertificate Course on Valuation

oCertificate Course on Arbitration

oCPE Course on Computer Accounting and Auditing Techniques (CAAT)

oDiploma in Insurance and Risk Management (DIRM)

oManagement Accountancy Course (MAC)/ Corporate Management Course (CMC)/ Tax Management Course (TMC)

oInternational Trade Laws & World Trade Organisation (ITL & WTO)

CERTIFICATE COURSES FOR MEMBERS :

POST QUALIFICATION COURSES :

Council with regard to the quality of services provided by the members of Institute;

(b) to review the quality of services provided by the members of the Institute including audit services; and

© to guide the members of the Institute to improve the quality of services and adherence to the various statutory and other regulatory requirements.

Now, with a view to initiating the work of review of quality of audit services of auditors/audit firms in India, the Quality Review Board has decided to seek the services of members of the Institute, meeting the criteria laid down by the Board in this regard, to function as Technical Reviewers for the Board in terms of the “Procedure for Quality Review of Audit Services of Audit Firms” issued by it. A suitable amount ranging up-to Rs. 1 lac, as may be fixed by the Quality Review Board depending upon the volume of work involved, may also be paid as honorarium. The Technical Reviewer :

a) is a member of the ICAI

b) possess at-least 15 years’ post qualification exp.

c) is currently active in the practice of accounting and auditing

d) has handled at least 10 statutory audit assignments as a signing partner / proprietor of entities having annual turnover of rupees fifty crores and above during last five financial years ending 31.3.2011

Members fulfilling the criteria mentioned above may kindly apply in the prescribed ‘Application Form for Empanelment as a Technical Reviewer’. For any further details, visit website http://www.qrbca.in or download application form from the link:http://www.qrbca.in/announcement-for-empanelment-as-a-technical-reviewer-with-the-quality-review-board/. The empanelment is done in December every year.(Source: www.icai.org; The Chartered Accountant- ICAI Journal)

Eligibility

How to apply

BankingUpdatesCompiled by CA Vihang Bakshi

Banks should cut transaction charge on debit cards: RBI

The Reserve Bank of India (RBI) on Monday said it is not logical for banks to charge similar interchange fee on debit cards as levied on credit cards. An interchange fee is the amount per transaction that is shared among various stakeholders, such as issuer bank, acquirer bank and the payment gateway. Presently, the charge is 1.1-1.2 per cent for both debit and credit cards. Lower fee on debit cards will help in larger acceptance of electronic payments by merchants across the country.

NBFCs see red on loan norms

The restrictions imposed on gold loan operations of non-banking finance companies (NBFC) have raised the hackles of these firms as they feel the lack of uniformity in guidelines will help banks gain market share. NBFCs are set to approach the

Reserve Bank of India (RBI) to request the regulator to extend the new guidelines to banks as well. Last week, RBI released a new set of norms that restrict NBFCs from offering more than 60 per cent of the value of gold as loan. This cap on the loan-to-value (LTV) ratio is not applicable to banks.

NewsLetter

10



oMicrosoft Dynamics NAV

The ICAI proud ly acknowledges professional achievements of its members in Entrepreneurship and Public Service. ICAI has a special committee, the “ C o m m i t t e e f o r M e m b e r s i n Entrepreneurship & Public Services” to recognize their contribution to the economy as a whole and factor in their vision and perspectives in the work program of ICAI.

ICAI looks forward to interacting with these persons of eminence from time to time at various platforms and would also like to work with them and provide any support that they may wish to have from ICAI membership at large.

The Committee is compiling a database of ICAI Members who have established themselves as successful Entrepreneurs or are engaged in Public Services such as Public Servants i.e. MP/MLA, those

ERP Courses on SAP FA & MA Module,

Request to share contact details of ICAI Members in Entrepreneurship & Public Services - (19-03-2012)

associated with Constitutional Authority i.e. Judiciary/Appellate Tribunal, working with Regulatory bodies i.e. SEBI, RBI, IRDA etc, are Civil Servants/serving Central or State Government, Members of Local Bodies, etc.

Do send in the details of any such member known to you giving name, current designation and contact details to Mr Mudit Vashishtha, Secretary to the Committee at e-mail: [email protected].

http://www.icai.org/new_post.html?post_id=8251&c_id=219

1st Clinic organized on 23.3.2012, was very well appreciated and representatives from 6 different NGO's and queries had been resolved satisfactorily. Chartered Accountants and Trustees interested in having their queries solved are requested to registered themselves latest by 25.04.2012 at United Way of Baroda O f f i c e - 2 3 5 8 0 9 1 o r [email protected]. Querists are required to send queries in advance with facts & also to bring along with them

Charitable Clinic

relevant papers like trust deeds, last 2 years audited accounts etc. 2nd Charitable Clinic will be held on 27.04.2012, Friday, 3.00 to 5.00 p.m at United Way of Baroda -9th Floor Sidcup Towe rs , R a c e C o u rs e , B a ro d a -390007.Queries will be resolved by CA. Bipin C Shah, CA. M V Shah & CA. A R Mannan.

Obituary

CA. Harshvadan V. Parikh CA. Vishnu A. Mahajan

CA Harshvadan Parikh left for heavenly

abode on 17.02.2012 & CA Vishnu A.

Mahajan, Past Chairman, Baroda

Branch of WIRC of ICAI passed away on

16.03.2012.

May the departed soul rest on peace.

NewsLetter

11



Holi Milan on 08.03.12CA Atur Mehta, Baroda CA Tejas Shah, Baroda

Workshop for Accountants 01.03.2012

Members participated in Holi Milan

Revised Schedule-VI on 10.03.2012

CA Dhinal Shah CCM, ICAI - Speaker and audience on Revised Sch.-VI

Live Screening of Budget 2012

Live screening of Budget Audience on 16.03.2012

Controversial Issues in Direct Taxes

Adv Kapil Goel, New Delhi on 03.03.2012

Statutory Bank Branch Audit on 17.03.2012

CA Amarjit Chopra, Past President of ICAI CA Mangesh Kinare, RCM, MumbaiCA Rahul Joglekar, Mumbai CA Ramesh Kedia, Ahmedabad

Congratulations

Congratulations to CA. Arun Kumar

Gupta, CFO of Bombardier Transporter

India Ltd. on being a part of Roll Of

Honour, 2012 under category

of Corporate Governance / Financial

Control - Revenues above Rs 1000 cr,

conducted by CFO Institute.

CFO100 -

Orientation Meeting at WIRC, Mumbai

Committee Members of Baroda Branch on 03.03.2012

Sr. Names Amt. `

1 CA. Abhishek Nagori 10,000

2 CA. Ashok Thakkar 10,000

3 CA. Darshan Bhutwala 10,000

4 CA. Jay Chhaira 50,000

5 CA. Manish Baxi 20,000

6 CA. Mayur Swadia 10,000

7 CA. Neena Patel 52,000

8 CA. Rahul Parikh 10,000

9 CA. S.R Parikh 20,000

10 CA. Vinod Kansara 9,000

Worthy

Contributors - 2012 Appeal for the

Scheme for CA Students

Financial Assistance

Dear Members,

The Baroda Branch of WIRC of ICAI has a strong tradition of providing CA Students of Baroda, the best tools and support in achieving their goal of becoming Chartered Accountants. With the active help of its Members, the Baroda Branch of WIRC of ICAI has been since past few years providing needy CA Students with financial assistance so as to enable them to meet a part of their estimated education costs.

NewsLetter

12



If undelivered, please return to :

Baroda Branch of WIRC of The Institute of Chartered Accountants of India

www.baroda-icai.org WIRC : www.wirc-icai.org ICAI: www.icai.orgl l

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

Back Cover (4 color) 10,000 Inside Front/ Cover (4 color)Back 7,500 Full Page (1 Color) 5,000 Half Page (1 Color) 3,000

ADVERTISEMENT TARIFF : * Discount - 3 to 6 issue of 10%, 7 to 12 issue 15% * Circulated to more than 1500 Chartered Accountants

ADVERTISEMENTS : The tariff for advertising given below are duly approved by the Managing Committee of the Baroda Branch. Advertisements are received directly by the Branch and no advertising agency has been appointed for this purpose.

SUBSCRIPTION RATES : This Newsletter is circulated without any charges to its members and other important categories of recipients as per ICAI Advisory on Newsletters. Subscription rate is Rs. 20/- per issue for others.

PRINTED AND PUBLISHED BY : CA. Pradeep Agrawal on behalf of Baroda Branch of WIRC of ICAI. Published at “ICAI Bhawan”, Kalali-Tandalja Road, Atladra, Vadodara - 390 012

Printed at Multiprints, 30/B, Gandhi Oil Mill Compound, Near BIDC, Gorwa, Vadodara - 390016. Ph.: 0265-2285592

“ICAI Bhawan”, Kalali-Tandalja Road, Atladra, Vadodara - 390 012.

Telefax : +91 265 2681115 / 2680593 E-mail: [email protected]

Study Circle Meeting

CA. Narendra Hindocha on 21.03.2012

CTC - Orientation of Faculties on 17.03.2012

Educational Tour at Income Tax, Baroda on 20.03.2012

Analysis of Union Budget held on 18.03.2012

Adv. Saurabh Soparkar, Ahmedabad CA Anirudh Sonpal, Baroda

Public Awareness Programme on 19.03.2012

Mukesh Patel speaking on Union Budget Mukesh Patel speaking on Union Budget

Charitable Clinic

1st Charitable Clinic held on 23.03.2012

CTC Faculties Orientation by CA. Chandrakant Ruparaliya, Mumbai Interaction with CA. Girish Ahuja, New Delhi on 11.03.2012

CA. Kishor Chauhan, Rajkot on 24.03.2012

CA. Jay Chhaira, Vice Chairman, WIRC on 13.03.2012

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