E-NEWS LETER · for their large participation and also congratulate to all the winners in such...

Edition: 3rd May 2020

E-NEWS LETER

Published by CICASA Jodhpur


Important Announcement

Youtube Channel “CICASA Jodhpur” for CA students.

We received good response, in the month of April-20, we received 5 videos from students on a

different - different topics.

1. Pushp Kumar Sahu (Equalisation levy)

2. Naresh Choudhary (Relief under GST Act and Other Indirect Tax Law Looking to Covid 19)

3. Antima Gaur(Accounting Standard - 2)

4. Antima Gaur (Profit Prior to Incoporation)

5. Pushp Kumar Sahu (Section 94B of Income Tax Act)

Invitation for Contribution of Article‟s/ quiz for Newsletter JODHPUR Branch of CICASA

appreciate all the Student authors who contributed their articles for the newsletter. We

request all the students to further contribute their articles for the newsletter and a quiz (10

questions), which are of Academic/Practical interest and will be useful for the students from

exam point of view as well. The article should not be copied from elsewhere and it should be

original work of the author.

Please send your Articles at:

[email protected]

If anyone interested in making videos with us for You Tube Channel please contact us on

[email protected] or call on 9828597133

YouTube Channel Link


Message from Chairman (Jodhpur Branch of CIRC of ICAI)

Dear Students,

Warm Greetings!

At the outset I pray to almighty for the safety and health of yourself and family members in these unprecedented

times of COVID-19 outbreak. I feel privileged to interact with all of you through this news letter “SAMBHAV”.

As we all are aware the whole world has been adversely effected by pandemic COVID-19 and getting into serious

life threatening challenge. Indian Government under the guidance of our Honorable Prime Minister Mr. Narendra

Modi has imposed lockdown and further extended within interest of nation and our lives. I urge my students to

follow the instructions laid by government and soliciting all to download Aarogya Setu (Mobile App) to break the

spread of the disease. Therefore these challenges may confine our movement but cannot confine our zeal for

knowledge and endeavor to continue the spirit of learning.

Many new initiatives such as webinars, capsule courses, brainstorming competition and fun activities for

continuous growth and excellence in academic and social advancements are conducted. I appreciate the students

for their large participation and also congratulate to all the winners in such competitions. My special thanks to

those student for their generous contribution in ICAI COVID-19 Relief Fund under these special circumstances in

the interest of mankind.

Also want to highlight about extension of the examination May’20 from 19th

June to 29th

July’20 so I sincerely

request you all to utilize this extended period and prepare yourself for examination and my best wishes to all in

getting success.

If any student facing any hardship during this period I would like to extend my full support and will ensure our best

efforts for any possible need and assistance.

I would like to conclude by mentioning special thanks to CICASA Chairman, CA. Dhaval Kothari and also on behalf

of entire managing committee for his best efforts towards student activities and commencing successful

publication of “SAMBHAV” for first time in history of Jodhpur branch.

“STAY HOME STAY SAFE”

“Strength and growth come only through continuous effort and struggle.”

CA. Surendra Lunawat

Chairman – Jodhpur Branch (2020-21)


My Dear Readers and Students,

Very Warm Wishes!

In the month of April we all were facing lockdown due to COVID-19 pandemic. I hope, you and

your family members are safe, enjoying the best heath.

Keeping in view the COVID-19 situation and lockdown, Jodhpur Branch of CICASA of ICAI came

in the month of April with Quarantine Talent Search program (Drawing, Essay writing, Selfie,

Slogan Writing and environmentalist). We received huge participation from students.

Jodhpur Branch of CICASA of ICAI became co-host with WICASA of ICAI for organizing of online

crash course for CA Final (old and new), CA Intermediate/IPCC, and CA Foundation. More than

500 students registered from Jodhpur Branch.

Last month, we organized First Webinar of Jodhpur Branch for students jointly with Lucknow

Branch. It was 2 day program on GST Annual Return and GST Audit. We received tremendous

response from students and more than 300 students registered from Jodhpur Branch.

I would like to take this opportunity to fully express of my heartfelt thanks to Judges of

Quarantine Talent Search Program CA. Amit Ji Jain, CA. Ritesh Ji Bhootra and CA. Pooja Ji Rathi

and speaker of Webinar CA. Arpit Ji Haldia and CA. Shashank Ji Mittal and special thanks to

Chairman Lucknow Branch CA. Rahul Ji Verma and Secretary CA. Raveesh Ji Choudhary.

The “Sambhav” is our little effort to share some knowledge content with you through articles

written by students on various topics; to inform you about the past events and upcoming

events. Also, it gives space to the budding writers, who wish to express themselves through

their write ups. !

"It’s Going To Be Hard, But Hard Does Not Mean Impossible.

Before I Conclude I would request all our students to participate actively in all the programs organized

by CICASA Jodhpur.

Hope you enjoying reading.

CA. Dhaval Kothari

Chairman- Jodhpur Branch of CICASA

[email protected]


In – News


NPA: A HOLE IN THE HEART OF INDIAN ECONOMY

Banks are the engines of a country which keeps the wheels of the country moving. Banks fail

and economy of country collapse. The biggest ever challenge that Indian banking industry is

currently facing is the management of Non Performing Assets (NPA's) which is not only

affecting the banks but the whole economy. In fact level of NPA's in Indian banking sector is

nothing but a reflection of state of health of industry and trade.

Let’s go on main content now.

What are Non performing Assets (NPA's) ?

• An NPA is a loan or advance for which the principle or interest payment remained overdue for

a period of 90 days.


Banks are further required to classify NPA into:

The current scenario:

• Indian banks' gross non-performing assets (NPAs) stood at Rs 9.4 lakh crore as on March

31,2019. This is a HUGE amount.

• The gross NPA ratio of banks stood at 9.3 percent in March 2019, this means that about 10%

of loans are never paid back, resulting in substantial loss of money to the banks.

• The gross percentage of non-performing assets in Indian public sector banks accounts for 80

to 85% of the total NPA, while private sector banks accounts for the remaining.

• Also, the NPA problem in India is worst when comparing with other emerging economies of

the world.

However a ray of hope came when Gross NPA ratio improved to 9.1% as of Sept 2019 end but

banking sector is by no means out of the woods.

“The failure of a loan usually represents miscalculations on both sides of the transaction or

distortions in the lending process itself.”

This quote captures one of the fundamental reasons for India’s non-performing assets (NPA)

problem as more debts provided by the banks, particularly by the state-owned public sector

banks (PSBs), turn into risky category credits. The accumulation of bad loans happened over an

extended period of time, and today it threatens to hamper the revival of economic growth by

choking the credit supply channel of the economy.

The origin of Crisis !

The answer lies partly in the credit boom of the years 2004-05 to 2008-09.

In that period, commercial credit (or what is called ‘non-food credit’) doubled. It was a period in

which the world economy as well as the Indian economy were booming. Indian firms borrowed

furiously in order to avail of the growth opportunities they saw coming.


▪ Most of the investment went into infrastructure and related areas — telecom, power, roads,

aviation, steel.

▪ Businessmen were overcome with exuberance and they believed, as many others did, that

India had entered an era of 9% growth.

But soon after, as the Economic Survey of 2016-17 notes, many things began to go wrong.

▪ There were problems in acquiring land and getting environmental clearances and several

projects got stalled. Project costs soared.

▪ At the same time, with the onset of the global financial crisis in 2007-08 and the slowdown in

growth after 2011-12, revenues fell well short of forecasts.

▪ As a result, financing costs rose as policy rates were tightened in India in response to the

crisis.

▪ Further, the depreciation of the rupee meant higher outflows for companies that had

borrowed in foreign currency.

This combination of adverse factors made it difficult for companies to service (i.e maintain and

repay) their loans to Indian banks.(Reference taken from-The Hindu)

And thus, This has lead to Twin Balance sheet problem in India!

Twin Balance Sheet Problem- Twin Balance Sheet problem is the stress on Balance Sheets of

both; the Lenders (Banks) and the Borrowers (Corporates). Banks suffer the sting of stressed

assets which have very less probability of full revival and Corporates have loan and interest

obligations which are beyond their current financial standings.

Yes Bank and PNB Bank Crisis!

You all have heard of Yes bank and PNB bank crisis, right?

One problem was common in both the banks, not just the presence of HUGE amount of

Nonperforming assets but also under-reporting them.

Perpetrated by Nirav Modi, the PNB scam was one of the biggest banking fraud in India’s

history. Nirav Modi had allegedly acquired fraudulent Letters of Undertaking from one of PNB’s

Mumbai branches to secure overseas credit from other Indian lenders, which ultimately proved

to be A BIG NPA!

Also, Yes Bank’s financial crisis has largely been attributed to growing NPAs and poor

management. As per YES Bank’s financial results, YES Bank’s gross NPAs have pole-vaulted to

18.87 per cent – the highest in the private banking space. Further, A major crisis may be

brewing for Indian banks in near future!


ALERT of a bad loan surge after lockdown is over!

Indian banks sitting on cluster of NPA cluster bombs:

• The lockdown has disrupted businesses and hit sales, incomes and revenues, increasing cash

flow pressure.

• To provide relief and stave off bankruptcies, RBI has announced measures for increased flow

of credit via banks to companies and allowed banks and non-bank financial institutions to grant

borrowers a three-month moratorium on loan repayments and reclassification of stressed loans

as NPAs.

• The relief given by RBI can offset liquidity constraints to an extent in the interim, but revenue-

related challenges will continue due to the massive unprecedented shock to the economy.

• The moratorium and forbearance in terms of classification of stressed loans will prevent a

spike in NPA levels at banks and non-banks for the next couple of months. But a few months

after the moratorium is over, bad loans may rise sharply.

• With the lockdown in place, growth forecasts have been revised downwards to 0% for FY20

by Moody’s. As a result the NPA ratio could go way over 12% by next March.

What should be the Way Ahead?

The need of the hour to tackle NPAs is some urgent remedial measures. This should include:

• Mechanism to identify the hidden NPAs.

• In case of willful defaulters, legal action should be taken without any delay.

• Improving credit risk management- This includes credit appraisal, credit monitoring.

Authored By:

Yash Nandwani

(WRO0635223)


What is Indian Govt And RBI doing to fight with this Pandemic COVID19 ??

Let me first give You little bit of background . There is a good sequencing of attacking the

Corona virus Problem by the govt.First there is dress rehearsal of lock down in form of “Janta

Curfew” on Sunday then after that govt came with compulsory locked down for 21 days & then

on Wednesday a lot of Tax payments regulatory fillings were pushed back by three months and

then in Thursday the informal sector got hurt by the locked down given a life line .Some

humanitous measures were announced (500Rs for all woman Jandhan Holders, Three cylinders

free for next 3 months, the amount of grains to get in PDS are going to be doubled & many

more). Now comes the announcement for formal sector, this is the ones who borrows from

Banks so this is announced in such way in which one set of steps putting of lot of money in

hands of banks and in another sets of steps borrower have been given more time to repay loans

Broadly these two steps are announced.

Now Being more involved with formal, The following are the Announcements as per my

understanding :

1. RBI reduced repo rate by the 75 basis point to 4.4% (lowest in 11 years) to rescue slow

moving economy, with effect of this the EMIs for the month of March and onwards will

be reduced by significant amount. Industries like Hotel, Tourism , Real estates &

Individuals with homes loans will get major benefits of this. It will encourage banks to

infuse money into productive sectors. The reverse repo rate reduced by 90 basis points

to encourage refinancing.

2. The moratorium period of three months has allowed by RBI. This will directly affect the

liquidity of the banks. So as to face the liquidity issues RBI has reduced CRR

requirements significantly by 100 basis points. (First time in 7 years). Reduction in CRR

will help banks to reduce their lending rated and aid monetary transmission. MSF rate

also increased to 3% based on SLR. It will also infuse greater amount of liquidity in

economy.

3. The NPA classification would be major point with respect to RBI norms. The relaxation

or guidelines are expected from RBI to consider or ignore moratorium period of 3 month

while determining NPA classification.


4. Effect to the ratios:

GNPA & NNPA - For banks it won't be major challenge for closing March 2020 books as

they are following 90 days approach as per RBI norms. Where as for NBFCs considering

application of IndAS, For ECL provision considering next 12 months approach, their

GNPA and NNPA would be affected.

NIM (Net interest Margin)- As the cost of funds would be continued on deposits and

other instruments, but their interest income would be significantly affected due to

pandemic. So NIM would be mismatched with their past trends.

Hope this pandemic won't lead to crisis like sub prime or big bang where the securities prices

kept on reducing and banks left with zero liquidity to repay deposits.The measures taken by RBI

and govt is appreciable,They are doing it differently, hope our Economy and life get back to

normal soon and, We all win against this Pandemic COVID19.

.

Authored By:

Mahim vyas

(CRO0611937)


Notified Jurisdictional Area Section 94A

In this article, we will understand why section 94A was introduced and what was the need of

invoking such provisions under the Income Tax Act,1961.

Section 94A was introduced by Finance Act, 2011 by the Central Government in order to notify

certain jurisdictions from which India has no such agreements or arrangements of Sharing/

Exchanging Tax information of the assessee. Central Government has been trying since long to

bring back the Black money deposited by Indians in Foreign Bank Accounts. The main reason

behind introducing this section is to Curb the circulation of unaccounted money and various

international transactions which takes place between Tax Havens and other tax oriented

countries. And where Tax information exchange system does not exist.

This section Empowers the Central Government to Blacklist the countries where such effective

agreement of sharing tax information does not exist.

This provision acts as counter measure to discourage the transactions between India and

Notified Jurisdicted Areas. Till date only Cyprus has been notifed as NJA by Central

Government which was rescinded in the year 2016 Vide Notification No. 114 dated

14/12/2016 and Notification No. 119 dated 16/12/2016. Therefore in the current regime

there is no such NJA exists.

Let us better under this provision in the form of example

There were two brothers named Pushp Kumar Sahu resident of India and another one is Uday

Kumar Sahu who is a resident of Country X which is notified by Indian Government as Notified

Jurisdicted Area, Mr. Uday and Mr. Pushp has been entered into a transaction in the nature of

lending or borrowing of money , then after entering into such transaction both the parties will

be deemed to be an “Associated Enterprises”( within the meaning of section 92A) by virtue of

section 94A(2).

There would be a liability in the hands of Mr. Pushp kumar sahu in respect of any sum received

or credited from Mr. Uday in any previous year, then Mr. Pushp has to offer the explanation

about source of the said sum, if he fails to explain the same, then such sum credited in his

account would be deemed to be his income and accordingly tax will charged on such income.


Under the same situation Mr. Pushp has also made payment to Mr. Uday ( Resident of NJA)

then there is a liability of Mr. Pushp to deduct tax on such sum credited to the account of Mr.

Uday at the highest of the following rates, namely;

1). At the rate or rates in force;

2). At the rate specified in the relevant provisions of this act;

3). At the rate of 30%.

Authored By:

Pushp Kumar Sahu

(CRO0553317)


Interview of All India Rank (16th) CA. Ritika Mehta by Kratika Moondra

Exam preparation starts from planning the last six months of the

preparation time. That's the most crucial part. I ensured that all

my coaching classes are scheduled such that 6-4 months are

reserved for revision. Also, minimum 6 hours sleep is must. I

always sticked to the same study material which I used from

beginning and the institute's material. – CA. Ritika Mehta (AIR

16 – CA Final, May 19)

How did you prepare for your Exam? – Kratika

Moondra

Did you expect that you will be in

All India Rank? – Kratika Moondra

No, I had never thought about results but always focused on giving

my best. – CA. Ritika Mehta (AIR 16 – CA Final, May 19)

What was your first reaction after knowing that

you became CA with AIR? – Kratika Moondra

I came to know about AIR after 1 hour of result declaration and I was

speechless. – CA. Ritika Mehta (AIR 16 – CA Final, May 19)

How did you prepare for your Exam? – Kratika

Moondra

Exam preparation starts from planning the last six months of the

preparation time. That's the most crucial part. I ensured that all

my coaching classes are scheduled such that 6-4 months are

reserved for revision. Also, minimum 6 hours sleep is must. I

always sticked to the same study material which I used from

beginning and the institute's material. – CA. Ritika Mehta (AIR

16 – CA Final, May 19)


What was the role of Mock Test organized by

ICAI in your success? – Kratika Moondra

Mock test is the best tool to assess your speed and confidence. I

took the mock test to know whether I can complete the paper with

appropriate presentation in the given time. Mock tests also boosts

your confidence as we get to know the points of improvement. –

CA. Ritika Mehta (AIR 16 – CA Final, May 19)

To whom you give credit for this achievement

of yours? – Kratika Moondra

To my grandparents, parents, friends and every person I met during

the entire journey of CA as I've learnt a lot over this journey. – CA.

Ritika Mehta (AIR 16 – CA Final, May 19)

At last what are your study mantras which you want

to share with other students ? – Kratika Moondra

Dedication and continuous written practice is must. There is no

alternative to hardwork. Hardwork with smart ways can help you

achieve the milestone.– CA. Ritika Mehta (AIR 16 – CA Final,

May 19)

How did you manage Study with articleship? –

Kratika Moondra

Time management is the most important to manage study along

with articleship. Even articleship experience helps you to

understand the concepts in an effective way. – CA. Ritika Mehta

(AIR 16 – CA Final, May 19)


Hi Friends, I Kratika Moondra got chance to have few words with CA. Ritika Mehta (AIR 16

in CA Final, May 2019 Exam). I am thankful to her for sharing her success story and also

thankful to CA. Dhaval Kothari sir for giving me this opportunity to have a word with AIR16 it

will also inspire me and other students to work for AIR.

CA. Ritika Mehta

Kratika Moondra

CRO0574008


WINNERS LIST OF QUARANTINE TALENT SEARCH WINNERS LIST OF QUARANTINE TALENT SEARCH WINNERS LIST OF QUARANTINE TALENT SEARCH WINNERS LIST OF QUARANTINE TALENT SEARCH

DRAWING / PAINTING:-

1. Nausheen Ali

2. Nishi Gupta

3. Anita Parakh

ESSAY WRITING

1. Mayank Kayal

2. Ajay Rawat

3. Sourav Jangid

SELFIE COMPETITION

1. Megha Parakh

2. Hardik Prajapat

3. Muskan Jain

SLOGAN WRITING

1. Nishi Gupta

2. Karina Jeswani

3. Payal Rathi

ENVIRONMENTALIST

1. Mahim Vyas

2. Naresh Choudhary

Jodhpur Branch of CICASA of CIRC of ICAI

congratulates to All Winners.


SLOGAN

"Prevention & Sanitation is a way, to keep all viruses away,

Be with family and enjoy home stay, corona is atrocious, will soon fade away."

(Nishi Gupta)

“Against Corona, We have seen the Country strive,

So let’s help the nation revive.” Stay Home, Stay Lives (Karina Jeswani)

आशा क� एक लो लगाओ, हताशा को दरू भगाओ,

महामार� क� इस नकारा�मकता म�, सकारा�मकता क� �करण �दखाओ,

मन म� उपजे इस डर को, आज एक नई �ह#मत से $मलाओ,

आओ $मलकर द�प जलाओ। (Payal Rathi)


FINITE DESPAIR INFINITE HOPE

Our little contribution will result country back in motion.

INDAI ….in the whole world,

Is what the heaven called.

The country which has given thousands a living,

Is now fighting for its own surviving.

Today busy roads went all empty,

Just because of COVID-19 ND order by Majesty.

Never thought in an imagination

India will be silent,

From Temples to Railway stations.

Yes, current view looks like a Paradise,

But…such silence brings tears in eyes.

Somewhere we all are enjoying this quarantine

But there is some starving and are not fine.

Thanks to those clad in green and white

Who are still in laboratory, Radhika Pungalia

To cure the injury to our country. (CRO0610299)

Great salute to doctors, Police and warriors in pain ,

For keeping the country priority without any complain.

There is something in its utter stillness

That makes country,

The artifice of its own happiness.

Hope the country will be busy soon

And everything will be normal too..!


Drawing:

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2


Disclaimer: - Readers attention is specifically invited to the fact that the views stated are

those of the respective author only and not of the Jodhpur Branch of CICASA of CIRC of ICAI.

Neither the author nor the Jodhpur Branch of CICASA of CIRC of ICAI bears any responsibility of

any sort of whatsoever in case of any action taken by the reader. The articles are prepared

from general information and compilation of the statues, circulars and Notification as

understood by the Authors and should not be constructed as legal advice on any particular

matter.

3

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