NEW REQUIREMENTS INCLUDING IN CARO 2020 REPORTING

NEW ADDITIONAL REQUIREMENTS INCLUDING IN THE CARO 2020 REPORTING AFTER ON CONSULTING ON WITH THE NFRA

www.carajput.com; CARO2020

www.carajput.com; CARO2020

Statutory Auditor’s Report (CARO 2020) shall include a statement a New Reporting Requirements

The existing COVID-19 pandemic affects not only public health but also the financial system as a whole. Public safety measures in place, although necessary are a huge hit to the economy’s liquidity flow leading to serious problems such as unemployment, a failure of the supply chain, a sudden drop in demand, unavailable inventories, etc.

The Government provides various relief and relaxation measures to boost businesses and the economy. In the same sense, the MCA has postponed from FY 2019-20 to FY 2020-21 the applicability of the Companies (Auditor’s Report) Order, 2020 [CARO 2020].

The Statutory auditor’s report (CARO 2020) shall include the following statement on the below matters, which are mention below:

www.carajput.com;CARO2020 Disclouser

www.carajput.com; CARO2020 Disclouser

  • Registration U/s 45-IA of RBI Act
  • Total Cash losses information
  • Information about the tangible and intangible assets
  • Cost records Maintenance
  • Total of statutory liabilities Deposit
  • Completed unrecorded income which is required to be disclosed,
  • Information of Default in repayment of borrowings
  • Details of Compliance in respect of deposits accepted
  • Details of transfer to fund specified under Sch- VII of Co. Act
  • Qualifications or adverse auditor remarks in other group companies
  • information of resignation of statutory auditors during the year
  • any material uncertainty on meeting liabilities of the company.
  • information of inventory and working capital
  • complete details of investments, any guarantee or security or advances or loans given
  • Compliance in respect of a loan to directors
  • Funds raised and utilization
  • Any Fraud & whistle-blower complaints
  • Any pending Compliance by a Nidhi Company.
  • Complete details Compliance on transactions with related parties
  • Implementation about Internal audit system
  • Non-cash dealings with company directors

In cases where the answer given by the Statutory auditor to any of the above requirements is unfavorable or negative, The auditor’s report shall then also set out the basis for such unfavorable or qualified response. In addition, in cases at which the auditor is unable to give an opinion on any defined issue, the report shall state such fact together with the purposes why the auditor can not give an opinion on the same.

CARO 2020 Applicability on which of the Companies.

To improve the scope of the audit, the CARO 2020 was published by the MCA in consultation with the NFRA. It contains a list of topics that the relevant companies are obliged to report on.

CARO 2020 applies to all  St. Audits beginning on or after 1 April 2020 which relates to the financial year 2019-20. The order applies to all companies covered under CARO 2016. Accordingly, the order requires all companies except the following companies which have been expressly prohibited from their jurisdiction:

  • Companies registered for charitable purposes
  • Small companies (Companies with paid-up capital less than/equal to Rs 50 lakh and with a last reported turnover which is less than/equal to Rs 2 Cr)
  • Insurance companies
  • One person company
  • Banking companies
The Below Private Limited Companies are also exempt from CARO’s, 2020 requirements:
  • Whose gross receipts or revenue (including revenue from discontinuing operations) is less than or equal to Rs 10 Cr in the financial year
  • Whose paid-up share capital plus reserves is less than or equal to Rs 1 CR as on the Balance sheet date (i.e. usually at the end of the financial year )
  • Not a holding or subsidiary of a Public company
  • Whose borrowings is less than or equal to Rs 1 Cr at any time during the financial year

CARO, 2020 (Applicable from FY 2019-20)-Changes made

www.carajput.com; CARO2020

www.carajput.com; CARO2020

  • Fixed Assets/ Property, Plant, and Equipment

# Reporting over maintenance of records of Intangible assets have been specifically added.

# Leased Immovable property is specifically excluded from the reporting over the holding of title deeds in the Company’s name. If owned Immovable property is not held in the Company’s name, Dispute status and details of the registered owner need to be reported.

# In the case of EPP revaluation, the auditor must determine that the same has been achieved on the basis of the Reported Interest survey. Changes ought to be recorded if 10% or more of the adjustments are made in the WDV.

  • Inventory

# Inconsistencies recognized by management with an effect of 10% or more of the inventory value need to be reported.

# In the case that the Corporation has a working capital limit of more than INR 5 Crores depending on the security of the current assets (e.g. Stock, Debtors), the auditor must report that the regular filings (e.g. Financial Accounts, Debtors Listing) made with the lender are in compliance with the books.

  • Undisclosed Income:

# The auditor must disclose whether or not any income has been returned under the Income Tax Act, 1961 and the same has been duly accounted for in the books of accounts.

  • Default in repayment of loans

# The auditor must determine that the company is considered to be a “Willful defaulter.”

# Information on the removal of term loans from allowable use needs to be published.

# Data has been given on how short-term loans have been used for long-term purposes.

# The auditor must comment on all money taken to meet the commitments of the community business.

# Reporting on loans received by the Firm was made on the basis of the commitment of shares issued by the Firm to shareholders, Joint ventures and associates.

  • Fraud reporting

# Fraud reporting has been extended to fraud against the Company by any person rather than by officers or employees in the past.

# The fraud report issued by the auditors in the form ADT-4 to CG should be reported.

# The auditor has to record his evaluation of “Whistle Blower” allegations.

# The auditor must report whether the internal audit system exists within the company and whether or not the internal audit reports have been considered.

# The particulars of the proceedings (pending/initiated) under the Benami Law need to be published.

  • Consolidated Financial Statements

# Details of consolidated companies with qualifications or adverse reactions in the CARO report must be reported along with Paragraph Number of the auditor with audit report on Consolidated Financial Activities.

  • Non-Banking Financial Activities

# The auditor must report on the conduct of financial activities of an NBFC nature by the company without valid Certificates and reporting.

  • Cash Losses

# The auditor will document whether the Company has suffered CASH LOSS during the current AND preceding financial year and the volume of such cash loss.

# The resignation of the statutory auditor and the causes, problems with him duly considered by the incoming auditor or not; must be published.

  • Financial Ratios

# The goals of the Organization to meet its Existing Obligations on the basis of percentages, maturity and plans for execution must be stated.

  • Corporate Social Responsibility:

# The Auditor will disclose that the unexpended amount has been allocated to the designated fund within 6 months of the end of the fiscal year and whether or not the pending project balance has been moved to a special account. (Amendment itself under the Corporations Act, not yet told in 2013).

APPLICABILITY OF ANNEXES TO THE AUDITOR’S REPORT:

  1. Annexure of the CARO Report is not needed in the case of Small Business, Banking Firm, Insurance Company, Section 8 Company, One Person Company, and any private company having paid-up capital and free assets to INR 1 crores as at the balance sheet date and borrowing up to INR 1 crores at any time during the year and revenue up to INR 10 crores as per the financial reporting of the year mentioned.
  2. Annexure of the Internal Financial Control Report is not required in the case of Small Company, One Person Company, AND any Private Company with Turnover up to INR 50 Crores as per the financial statements of the year concerned and borrowing up to INR 25 Crores at any time during the year.

CONCLUSION:

According to CARO 2020, disclosure is required as to whether any qualifications or adverse remarks have been made by the respective auditors in the CARO reports of the companies included in the consolidated financial statements, if yes, the company details and the CARO report sentence numbers usually contain the qualifications or adverse remarks should be noted. The CARO 2020 is supposed to substantially increase the overall standard of the audit reports on the company’s financial statements and thereby contribute to greater accountability and confidence in the company’s financial affairs. It is inevitably expected to increase the inflow of investment by and in Indian companies.

In summary, we would like to say that the auditor’s reporting expectations are expanding substantially. Hoping this would lead to more public accountability between the company and its shareholders and hence the auditor needs to make sure he’s more perspective and especially while performing his duties.

Click here to access the overview of the MCA Order on CARO, 2020 dated 25.02.2020.

Post by Rajput Jain & Associates

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

Important Updates on the reduction compliance obligation under Atmanirbhar Scheme:

Important Relevant updates on the reduction of compliance obligation under the Atmanirbhar Scheme:

www.carajput.com; Sitharaman

www.carajput.com; Sitharaman

TODAY ‘S FIFTH AND LAST TRANCH OF ANNOUNCEMENTS FOCUS ON 8 SECTORS:

1. MGNREGA Scheme 

Total budget was Rs 61,000 crores

• The extra Rs 40,000 crores allotted

2. HEALTH’s

• Setting up the public system

• Block all districts to avoid infectious diseases

• Public health laboratories to be set up at block level in all districts;

3. EDUCATION-driven technology

• PM e-Vidya multi-mode control system

• One-nation interactive school under DIKSHA for school education

• One-year Television channel for each class;

• Extensive use of radios

• Special e-content for children of Divyang

 Top 100 universities must ultimately be allowed to start online courses by 30 May 2020.

 4.  Significant support to distressed firms: Fresh IBC has been suspended for one year. As per the declaration of FM.

A.    IBC related – debts related to COVID 19 are out of IBC default

B.    No further insolvency lawsuits can be launched for up to a year. i.e No fresh insolvency case will be initiated for up to a year

C.   Minimum limit of IBC would be Rs. 1 Cr. i.e Total insolvency requirement lifted from Rs 1 lakh to Rs 1 crore

D.   Decriminalised all the sections. Few Non Compoundable offenses would become compoundable offenses.

E.    Compounding by ROC

F.    Direct listing in foreign destinations

G.   NCD listing would not be treated as listed companies for the purpose of Companiesct

H.   Covid-related loans should be exempt from default under IBC

I.      For MSMEs, a special insolvency framework will be notified

Fresh IBC proceedings suspended for a year; debts related to Covid ...

 5. State seeks to decriminalize losses under the Companies Act

• Bulk of compound crimes parts to be transferred to the Internal Adjudication System (IAM) and improved RD forces for compounding.

• 7 compounding crimes dropped entirely and 5 to be dealt with in an alternate system.

 6. Simplify of doing business for companies

• Clear listing of shares by Indian listed corporations within international jurisdiction. Pvt firms that issue non-convertible bonds (NCDs) on stock exchanges not to be considered as public entities.

All industries are now open to private parties

7. Fresh Public Sector Business Strategy

• The Pvt sector will be able to invest in all markets, while public sector companies will continue to play a significant role.

• a new policy that will categorize strategic sectors and others.

• The list of strategic sectors requiring the presence of PSEs in the public interest shall be notified.

A list of strategic sectors needing the participation of PSEs in the public interest will be identified.

• There will be at least one PSE in these strategic sectors, but the pvt sector will also be authorized.

• The PSEs should be privatized in other industries.

• To reduce unnecessary operating expenses, the number of firms in key markets will usually be just three or four, while others will be privatized / mixed / brought under holding companies.

 8. Policy management and services

• The Center has agreed to raise the State Borowing Limit from 3% to 5% for FY21. This will provide extra Rs 4.28 lakh crore capital to states.

A.   Part of the loan would be related to specific reforms. The relation between the reforms will be in four areas:

1. One Nation One Ration Card,

2. Ease of Doing Business,

3. Power distribution,

4. Urban local body revenues.

 B.   The Department of Spending should be told of a particular scheme

• Unconditional 0.50 percent rise

• 1% in 4 tranches of 0.25% for each tranche linked to specifically specified, tangible and feasible policy actions;

• 0.5 per cent of targets was reached in at least three of the four improvement regions.

Post by Rajput Jain & Associates

 

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

How will Tax Structure Look Like After Implementation of Goods and Services Tax?

How will Tax Structure Look Like After Implementation of Goods and Services Tax?

www.carajput.com; GST Vs. Sales Tax

www.carajput.com; GST Vs. Sales Tax

GST Council approves four tier GST rates @ 5% (Food Items), 12% & 18% (Standard) & 28% (Aerated drinks, Pan Masala, Tobacco & Luxury Items). GST rate for Gold to be decided later.

The Goods and services tax is a new regime in the indirect taxation in India. This was basically introduced mainly with the intention of removing the cascading effect that is the effect of paying taxes on taxes in India. The prevailing indirect taxes which are VAT, CST, service tax, central excise will all vanish once the GST comes into force. It is proposed that GST would come into force from 1st of April,2017.

This new GST would open the doors of theIndian market to many foreign investors who are willing to trade in India. Thus the trade barriers which are prevailing now due to the complications of Indian indirect taxation regime will be removed by GST. On the darker side, GST would also bring up some challenges to Indian businesses as there would be an ease of entry into Indian market thus increasing competition. But however, the business persons in India are still happy with GST because they no longer have to face the complications which prevail right now. Especially for service-oriented industries, it is no less than a boon.

In order to appreciate the provisions of GST, we need to have an overlook over the present tax structure. By doing so, we can have a comparative view. That would be more convincing. Here we go!

Present tax structure

Presently both state and the central governments are involved in imposing and collecting of taxes under various entries of the constitution. A detailed analysis is given below:

  • Service tax

Service tax is collected by the union government for the taxable services which are provided in the taxable territory ( thewhole of India except Jammu and Kashmir). The rates are differential based on the service provided.

  • Central Sales Tax ( CST)

It is collected by the state where the sale has been made. Only interstate sales come under CST. Local sales are left under State VAT.

The sales or purchases which are affected within the state are subject to state VAT. They are collected by respective state governments.

  • Central excise

This is collected by the union government. It is collected by the manufacturers producing goods and is collected when the manufactured goods are removed from the premises.

  • State excise

This is collected by the state government on the alcoholic production.

Now, that was an overview of the present tax structure. Let us now zoom into the proposed GST structure. Read on!

The proposed GST structure

There would be 3 types of Tax in the proposed GST regime:

  • Central Goods and Services Tax( CGST)

The sale of goods and services between 2 different states come under this. It is levied and collected by the central government.

  • State Goods and Services Tax ( SGST)

The local sales happening in the state are covered here. It is imposed and collected by the state government.

  • Integrated Goods and Services Tax ( IGST)

Other residual sales are covered under this head. This is again collected by the central government.

The list of central taxes which are going to be subsumed in GST is given below for better insight:

  • Additional excise duty
  • Service tax
  • Central excise
  • Excise duty which is presently levied under Medicinal and toiletries preparation act
  • Central Sales tax
  • Cesses

Similarly, the state taxes or levies which are going to be subsumed in GST are:

  • Luxury tax
  • State VAT
  • Entry tax
  • Entertainment tax
  • State cessesand surcharges
  • Taxes on betting, gambling and lotteries

GST in relation to certain specific products

Though GST is supposed to be the unanimous tax which promises uniformity in taxes, the GST treats certain products differentially. These products have a separate provision in the GST regime. Highlights of these provisions are summarized below:

  • The manufacturing of alcoholic beverages is outside the ambit of GST. Thus alcoholic beverages will have no ruling sections and would continue to be levied by the state excise act and collected by the respective state government.
  • Also, the tobacco and tobacco related products also are not covered under GST. They would continue to be charged by the central excise by the central government.
  • Imposing GST on the petroleum products is kept at a halt as of now. It would be included on a later date when the GST council deems it necessary. Till then, the central government would continue to collect taxes on petroleum products. The petroleum products are inclusive of the following:
  • Petrol
  • Diesel
  • Natural gas
  • Aviation turbine fuel

The set-off and adjustment credit

As it is already mentioned, the main intention of GST is to remove the cascading effect of taxes. The double taxation will thus be removed by GST. Therefore, it is crucial that some set-off and adjustment credits need to be given when thetax is paid on both services and goods which are received to be set off against the liability which is to be paid when the goods are sold.

The 3 types of GST will have set off provisions like:

  • SGST can be set off against any surplus arising from IGST.
  • CGST can be set off against SGST and surplus from IGST.
  • IGST can be set off against SGST and CGST in the same sequence.

Exemption limits and the GST rate

The exemption limits and the GST rates are yet to be finalized by the GST council. However, it is estimated that the exemption limit would be INR 10 lacs. In layman terms, businesses which do not cross the turnover of 10 lacs are given exemptions under GST.

The rate of GST will have apositive impact on themajority of products like electronic goods and consumer goods and a negative impact on a few. The rate is estimated to be fixed between 18% and 20%. The concessional rate would be around 12% and the rate fir precious metals would be 2% to 6%.

GST registration

All the businesses indulged in thesale of goods and services are required to get themselves registered under GST. The registration has to be obtained based on states and not India as a whole. As the E- filing is in practice now obtaining GST registration is mandatory. The GST council has announced that the registration process is kept very simple and there is ease of operation.

Bottom line of GST

Thus as a whole, we can come to a conclusion that GST is going to reduce the price of many products and services. Moreover, due to ease of entry and ease of operations, the Indian market will be exposed to the international market. This can also pave way for investors to invest in India globally. The complications that prevailed in the indirect tax regime are removed by GST. Especially the service tax which is considered very complicated and confusing for many persons, GST is a boon. Besides the consumers too can benefit from theintroduction of GST as the frauds and errors are bound to decrease. There is no scope for escapism too to the dealers. Thus, bills will all be made white and no scope for theblack money. Everything would be billed and with a uniform tax rate. Thanks to the GST council and GST proposing committee!

We look forward for your valuable comments. www.carajput.com

FOR FURTHER QUERIES CONTACT US: W: www.carajput.com  E: info@carajput.com T: 011-233-4-3333, 9-555-555-460

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

CORPORATE AND PROFESSIONAL UPDATE OCT 5, 2016

Professional Update For the Day:

1

Direct Tax:-

CBDT notifies ICDS to be applicable w.e.f. AY 2017-18 for all assesses other than individual & HUF (who are not under audit u/s 44AB) following mercantile system of accounting for the purposes of computation of income chargeable to income-tax under the head “Profits and gains of business or profession” or “Income from other sources”vide Notification No. 87/2016 dated 29/09/2016.(Click here to view)

CBDT has issued Income tax (23rd Amendments) Rules, 2016 vide Notification No. 88/2016 dated 29/09/2016.These Rules shall come in to force with effect from 1st April, 2017.(Click here to view)

CBEC has issued revised guidelines for arrest in relation to Service Tax offences punishable under the Finance Act, 1994 and Central Excise Act, 1944, Circular No. 201/11/2016-Service Tax dated. 30.09.2016.

Assessee could not get the accounts audited within the time limit prescribed u/s 44AB and if there is no mala fide reason for not obtaining the accounts audited in time than penalty u/s 271B should not be imposed – Gemorium Vs ITO W-5(1), Jaipur (ITAT Jaipur).

Indirect Tax:-

CBEC has issued guidelines for arrest in relation to offenses punishable under the Finance Act, 1994 and Central Excise Act, 1944 vide Circular No. 201/11/2016 dated 30/09/2016.(Click here to view)

CBEC has exempted the service tax on transportation to educational institutions vide Notification No. 45/2016 dated 30/09/2016.(Click here to view)

Judgment of Delhi high court quashing Rule 5A(2) of service tax rules, 1994 and holding service tax audits as invalid, has been stayed by the supreme court; hence, for time being, service tax audits may continue.[SC of India vs. Mega Cabs (p.) Ltd].

 MCA UPDATE:

MCA has introduced SPICE (simplified proforma for incorporating Company electronically) w.e.f. 02.10.2016 in e-form INC-32.

Form INC-32, INC-33, INC-34 under simplified Performa for Incorporating Companies electronically are available as notified by Comp. (Fourth) Amendment Rules, 2014.

RBI UPDATE:

RBI has cuts the Repo rate by 25 bps now The *new Repo rate is 6.25%.* This will make the loan rate cheaper.

RBI issued a circular regarding Investment by foreign portfolio Investors (FPI) in government securities vide Circular No. 4/2016 dated 30/09/2016.

GST UPDATE:

Under GST Composition Scheme is not applicable if assessee makes Inter- state supplies or pays tax on Reverse Charge basis.

Under GST no need to file GST RFD-01 for refund of balance in electronic cash ledger. Same can be claimed through return forms GSTR-3, 4 & 7.

FAQ on GST issued by CBEC

Q 1. What is the taxable event under GST?

Ans. The taxable event under GST shall be the supply of goods and / or services made for consideration in the course or furtherance of business. The taxable events under the existing indirect tax laws such as manufacture, sale, or provision of services shall stand subsumed in the taxable event known as ‘supply’.

Q 2. What is the meaning of ‘Supply’?

Ans. The term ‘supply’ is wide in its import and 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 by a person in the course or furtherance of business. It also includes import of service. The model GST law also provides for including certain transactions made without consideration within the scope of supply.

Q 3. What is a taxable supply?

Ans. A ‘taxable supply’ means a supply of goods and / or services which is chargeable to good and services tax under the GST Act.

Q 4. What are the necessary elements that constitute supply under MGL?

Ans. In order to constitute a ‘supply’, the following elements are required to be satisfied, i.e.-

(i)  supply of goods and / or services;

(ii)  supply is for a consideration;

(iii)  supply is made in the course or furtherance of business;

(iv)  supply is made in the taxable territory;

(v)  supply is a taxable supply; and

(vi)  Supply is made by a taxable person.

Q 5. Can a transaction in which any one or more of the above criteria is not fulfilled, be still considered as supply under GST?

Ans. Yes. Under certain circumstances such as importation of service (Section 3(1) (b)) or supplies made without consideration, specified under Schedule-I of MGL, where one or more ingredients specified in answer to question no. 4 are not satisfied, it shall still be treated as supply under GST Law

Q 6. Importation of Goods is conspicuous by its absence in Section 3. Why?

Ans. Importation of goods is dealt separately under the Customs Act, 1962, wherein IGST shall be levied as additional duty of customs in addition to basic customs duty.

Q 7. Are self-supplies taxable under GST?

Ans.Inter-state self-supplies such as stock transfers will be taxable as a taxable person has to take state wise registration in terms of Schedule 1(5). Such transactions have been made taxable even if there is no consideration. However, intra-state self-supplies are not taxable.

Q 8. Whether transfer of title and/or possession is necessary for a transaction to constitute supply of goods?

Ans. Title as well as possession both have to be transferred for a transaction to be considered as a supply of goods. In case title is not transferred, the transaction would be treated as supply of service in terms of Schedule II (1). In some cases, possession may be transferred immediately but titled may be transferred at a future date like in case of sale on approval basis or hire purchase arrangement. Such transactions will also be termed as supply of goods.

Q 9. What do you mean by “supply made in the course or furtherance of business”?

Ans. No definition or test as to whether the activity is in the course or furtherance of business has been specified under the MGL. However, the following business test is normally applied to arrive at a conclusion whether a supply has been made in the course or furtherance of business:

Is the activity, a serious undertaking earnestly pursued?

Is the activity is pursued with reasonable or recognisable continuity?

Is the activity conducted in a regular manner based on sound and recognised business principles?

Is the activity predominantly concerned with the making of taxable supply for consideration/ profit motive?

The test may ensure that occasional supplies, even if made for consideration, will not be subjected to GST.

Q 10. An individual buys a car for personal use and after a year sells it to a car dealer. Will the transaction be a supply in terms of MGL? Give reasons for the answer.

Ans. No, because supply is not made by the individual in the course or furtherance of business. Further, no input tax credit was admissible on such car at the time of its acquisition as it was meant for non-business use.

Q 11. A dealer of air-conditioners transfers an air conditioner from his stock in trade, for personal use at his residence. Will the transaction constitute a supply?

Ans Yes. As per Schedule-I (1) business assets put to a private or non-business use without consideration will be treated as supply.

Q 12. Whether provision of service or goods by a club or association or society to its members will be treated as supply or not?

Ans. Yes. Provision of facilities by a club, association, society or any such body to its members shall be treated as supply. This is included in the definition of ‘business’ in section 2(17) of MGL.

Key Dates:

Excise payment for Non SSI for the month of September by G.A.R.- 7 challan-06/10/2016

Service tax payment for the company for the month of September by G.A.R.- 7 challan-06/10/2016

Service tax payment for Individuals/Proprietory/ Partnership Firms for the quarter ended by G.A.R.- 7 challan-06/10/2016

Submission of TCS forms (27C) received in sep to IT Commissioner- 07/10/2016

Payment of TDS/TCS challan No. 281-07/10/2016

The biggest enemy of success is fear of failure. So when fear knocks at your door send courage to open the door and Success will wait for you.

“Change will not come if we wait for some other person or some other time. We are the ones we’ve been waiting for. We are the change that we seek.

We look forward for your valuable comments. www.carajput.com

FOR FURTHER QUERIES CONTACT US:

W: www.carajput.com    E: info@carajput.com             T: 011-233-4-3333, 9-555-555-460

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Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

HIGHLIGHTS RESULTS OF THE GST COUNCIL MEETING HELD :

HIGHLIGHTS RESULTS OF THE GST COUNCIL MEETING HELD :

www.carajput.com; GST Council Meeting

www.carajput.com; GST Council Meeting

  1. The threshold Annual Exemption Limit fixed at ₹ 20 Lac.
  2. The threshold limit for the north-eastern and hill states paged at ₹ 10 Lac.
  3. GST rates and tax slabs would be decided at three-day’s meeting during 17-19 Oct, 2016.
  4. GST rollout slated for 1st April, 2017.
  5. All cesses will be subsumed in the GST
  6. GST Council’s next meeting on 30th Sep, 2016 to finalise draft GST law / rules.
  7. The state authorities will have jurisdiction over assessees with annual turnover of less than ₹ 1.5 crore.
  8. Those with turnover of over Rs 1.5 Crores would be cross examination either by officers from the Centre or state to avoid dual control.
  9. The existing 11 Lac service tax assessees would continued to be assessed by the Centre.
  10. New assessees which would be added to the list would be divided between the Centre and the States.
  11. Council is working on a compensation law and draft compensation formula.
  12. The base year for calculating compensation would be 2015-16 and the formula for payment of compensation would be deliberated b/w the state and Central authorities.
  13. All decisions today by the GST Council were taken on the basis of consensus.

We look forward for your valuable comments. www.carajput.com

FOR FURTHER QUERIES CONTACT US:

W: www.carajput.com E: info@carajput.com T: 011-233-4-3333, 9-555-555-460

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

Income Declaration Scheme’2016

Income Declaration Scheme’2016 – Latest Developments

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(a)       Instruction No. 9 of 2016 (IDS) dated 27-09-2016

(Non –indexation of assets sold prior to 01-06-2016)

CBDT issues yet another clarification on the Income Declaration Scheme (‘IDS’), clears air on making declaration with respect to sale made prior to June 1, 2016 of capital asset acquired out of undisclosed income and sale proceeds held in cash.

Instances have been brought to the notice of the Board that some taxpayers are of the view that if a capital asset acquired out of undisclosed income is sold before 01.06.2016 and the sale proceeds so received are held in cash, then the amount of undisclosed income required to be declared under the Scheme shall be the amount of undisclosed income invested in acquisition of such capital asset as increased by the capital gain arising on sale of such asset determined in accordance with the provisions of the Income-tax Act, 1961 (i.e.sale consideration less indexed cost of acquisition).

Clarifying the position, the Board has clarified that as per the provisions contained in section 183(2) of the Scheme that where the income chargeable to tax is represented in the form of investment in any asset, the fair market value of such asset as on 01.06.2016 shall be deemed to be the undisclosed income for the purposes of the Scheme. In this context, it may be noted that cash in hand is an asset for the purposes of the Scheme.

(b)       Instruction No. 10 of 2016 (IDS) dated 28-09-2016

(Filing declarations in non pan cases)

In cases where the declarant is not having a PAN or PAN is pending allotment and the assessee is not likely to get PAN by the date of closure of the Scheme i.e. 30.09.2016, the CBDT has clarified that in such cases a declaration under the Scheme can be filed manually before the jurisdictional Pr.Commissioner/Commissioner by quoting the date and acknowledgment number of PAN application form.

However, the jurisdictional Pr.Commissioner/ Commissioner shall issue Form-2 only after the allotment of PAN to the declarant. The time limit provided for issuance of Form-2 under sub-rule (3) of rule 4 of the Income Declaration Scheme Rules, 2016 in such cases shall apply from the date on which PAN has been allotted to the declarant. In case, PAN allotment could not be made due to non­compliance/non-furnishing of documents by the declarant, the declaration shall be treated as invalid.

We look forward for your valuable comments. www.carajput.com

FOR FURTHER QUERIES CONTACT US:

W: www.carajput.com         E: info@carajput.com       T: 011-233-4-3333, 9-555-555-460

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

NEW UPDATE ON LEGALITY OF REOPENING OF ASSESSMENT U/S 147/263 BASED ON AUDIT OBJECTIONS

NEW UPDATE ON LEGALITY OF REOPENING OF ASSESSMENT U/S 147/263 BASED ON AUDIT OBJECTIONS

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www.carajput.com; Company Registration

One of the key sources of dispute is the existing arrangement for follow up on audit objections by Internal Audit Party and the Revenue Audit Party. In terms of the existing arrangement, the AO is required to take corrective steps following audit objections. The corrective measures take the form of rectification or reassessment (by reopening the case under section 147 or revision by the Principal Commissioner or Commissioner under section 263). In the case of rectification, these are general in the nature of correction for arithmetical errors and other mistakes which are apparent from the record. The problem arises when the AO seeks to take corrective measures by invoking the provisions of section 147 or 263 of the Income tax Act. Since the audit objections are based on material on record and there is no occasion for new material to be brought on record in the course of audit, any reopening of assessment or review by the Principal Commissioner constitutes “change of opinion” in the eyes of the law. This being so, the corrective measure under section 147 or section 263 of the Income tax Act is held to be invalid by Courts.

In spite of several court judgments to this effect, the CBDT had issued a circular to the effect that in all cases of audit objections, the AO should initiate corrective steps irrespective of whether the objection is valid or not in the eye of law. Consequently, steps are initiated by the AO to reopen the completed assessment or by the Principal Commissioner for revision of assessment orders. These steps give rise to several rounds of litigation; first the assessee challenges the very act of reopening or revision, as the case may be, and upon losing, the Department files appeal before the higher Courts thereby clogging the judicial system. While this process is on, the AO proceeds to complete the assessment on merit leading to another round of litigation. In large number of cases, the assessments on merit are completed even though the Department is in disagreement with the audit objection. The very issue has also been considered by the Income-Tax Simplification Committee constituted by the Govt. of India against such mechanical reopening .

In a recent judgment in case of Sunil Gavaskar vs. ITO, the Hon’ble bench of ITAT Mumbai considered the legality of such reassessments based on audit objections. Primarily reopening merely on the basis of audit objections and in absence of any new material indicating escapement of income, amounts to change of opinion and creates uncertainties for taxpayers.

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

HIGHLIGHTS OF RAILWAY BUDGET 2016-17

Highlights of Railway Budget for 2016-17.

www.carajput.com; Highlight of Railway Budget

www.carajput.com; Highlight of Railway Budget

Following are highlights of the Railway Budget for 2016-17

(Apr-Mar), presented by Railway Minister Suresh Prabhu in Parliament today:

GENERAL

* Budget reflects aspirations of the entire railway family

* Rail Budget reflects aspiration of all

* Core objective is to improve individual experience

* Rail Budget is the vision of PM Modi

* Making all efforts to turn PM’s vision into reality

* Railways facing headwinds on tepid economic growth

* Railways have stood the test of time

* Need to overhaul Railways’ work culture

* Need to bring in new approach

* Will lay out three pillars of strategy

* Looking at new areas for generating revenues

* Need to reorganise, rejuvenate, restructure railways

* Railways facing headwinds from 7th pay panel burden

* Will engage with global agencies for funds

* Absolute deductions planned in expenses such as diesel

* Have significantly reduced cost of power procurement

* Will revisit all rules, structures to overhaul railways

* To improve procurement practises at par with international norms

* New revenues through changes in freight policies

* Punctuality has gone up to almost 95%

* To include implementation reports in Budget

* Carry 23 mln passengers every day

* Special teams to screen railway operations

* To introduce 33% quota for women passengers

FY17 ESTIMATES

* FY17 investment seen at 1.21 trln rupees

* Investment rate of capex has increased substantially

* FY17 capital expenditure seen 1.2 trln rupees

* FY17 revenue seen 1.84 trln rupees

* Capex to grow exponentially

* Ramped up capex in FY17

* FY17 operating ratio seen 92%

* Increasing rigour on cost optimisation in FY17

* Freight’s contribution to earnings seen 67%

* FY17 gross budgetary support seen 400 bln rupees

* 44 new projects planned FY17 worth 927 bln rupees

FY16 REVISED

* 87.2 bln rupees saved from last year budget estimate

* FY16 operating ratio seen 90%

* FY16 loss from subsidising passenger fares seen 300 bln rupee

* Saving from previous Budget estimates 787 bln rupees

INFRASTRUCTURE, MODERNISATION

* To be at forefront of infrastructure growth

* Railways will be at forefront of infra growth

* To generate employment for 90 mln man days by FY18

* To commission broad gauge lines at 7 km/day FY17

* FY17 track commissioning aim 2,800 km

* Aim to have zero direct discharge of human waste by 2020

* Reserved accommodation to be available on demand by 2020

* Aim 80 km/hour avg speed of express train by 2020

* Freight speed seen at 50 km/hr by 2020

* To eliminate all unmanned level crossings by 2020

* Taken action on 139 Budget announcements made last yr

* To run semi high-speed trains on Golden Quadrilateral by 2020

* Action initiated on 139 FY16 Rail Budget announcements

* To meet reservation on demand by 2020

* Will take a zero-based budgeting approach

* To take zero-base budgetary approach for freight

* To conduct recruitment online

* To set up Margao, Hazira ports FY17 via PPP

* To spend 8.5 trln rupees over 5 yrs to modernise rail infra

* To hasten electrification of railways working with Power Min

* To build more dedicated freight corridors

* To up FY17 allocation for electrification by 50%

* To generate employment of 140 mln man-days in 2018-19

* 65,000 additional berths generated in FY16

* Taken steps to significantly improve svcs for rail passengers

* Dedicated IVRS system receiving over mln feedback calls daily

* Set up mechanism to get direct feedback from customers

* Responsiveness to customer needs touched new heights this yr

* Initiated IT-based internal audit

* Signed MoUs with some zonal railways

* To move to contract award system online in FY17

* Social media being used as a tool to bring transparency

* Mission to ensure transparent bidding process

* To set up 2 loco units with 480 bln rupee invest

* To set up new loco units with order book of 400 bln rupees

* Aim to have 100 WiFi-enabled stations this yr, 400 in next 3

* To redevelop stations by different models

* Finalised 2 locomotive factories bids under ‘Make In India’

* E-ticket capacity 7,000 tickets/minute now vs 2,000 earlier

* Introduced 1,780 automatic ticket vending machines

* Initiated capacity augmentation on some busy routes

* Developed application to maintain centralised land data

* To open cashless ticketing facilities for foreigners in 3 mos

* To introduce tickets with bar codes

* To introduce bar-coded tickets

* To start track management system under Digital India

* To introduce bar-coding of tickets at major stations

* To allow cancellation of tickets via call on 139

NEW TRAINS, LINES

* Plan to electrify 2,000 km track in FY17

* Track laying to be at 13km/day in FY18, 19km/day in FY19

* North-South dedicated freight corridors in Delhi-Chennai

* Plan Kharagpur-Vijaywada freight corridor

* Plan Mumbai-Kharagpur freight corridor

* Decongestion on Jalandhar-Jammu line going on

* To put 3 freight corridor projects on high priority

* Mizoram, Manipur to come under broad gauge network soon

* To launch long distance fully unreserved Antyodaya trains

* To have more unreserved passenger coaches

* Proposed dedicated freight corridor for east-west, east coast

* Proposed dedicated freight corridors for north-south

* Overnight double-decker trains named ‘Uday trains’

* Overnight double-decker trains for better access on busy line

BORROWING

* Will scout overseas for rupee bonds

* To scout international markets for rupee bonds

INVESTMENT PUSH

* Secured funding from LIC at favourable terms

* Bankable projects assured of funding now

* LIC to invest 1.5 trln rupees over 5 years

* 1 rupee invest in rail can impact econ output by factor of 5

* In partnership with SAIL, NTPC, coal ministry on funding

* Signed MoUs with 6 states for JVs

* Got expressions from 17 states to form JVs

* MoUs with zonal railways for quantifying performance

* Forming JV with states for local rail projects

* Availing multilateral financing for station development

* Cabinet approved redevelopment of 400 stations via PPP model

* Bidding process in advanced stage to redevelop 4 stations

* To undertake bidding to redevelop some big stations next yr

* Bankable railway projects to be completed in 3-4 years

MISCELLANEOUS

* To raise quota of lower berth for women, senior citizens

* To build additional toilets in 475 stations before FY16 end

* Aim 17,000 bio-toilets before FY16 end

* Initiated audit for punctuality of passenger trains

* Disposable bed rolls at all stations for all classes

* 311 railway stations currently under CCTV surveillance

* All stations to have CCTV surveillance in phased manner

* Anti-falling measures in suburban coaches

* To eliminate accidents by adopting latest technology

* Entered into R&D pacts with Korea, Japan to improve ops

* All railway stations to be under CCTV surveillance in phases

* Supporting 120,000 concurrent users now vs 40,000 earlier

* Installed CCTV cameras at 311 stations

* To introduce ‘Deen Dayalu’ coaches

* Every customer a brand ambassador for railways

* To upgrade Baroda rail institute to full fledged university

* Working on implementing Kakodkar panel report on safety

* To have Hamsafar, Tejas, Uday coaches for reserved passengers

* Tajas speed to be 130 km/hour

* Deen Dayalu coaches for unreserved passengers for long travel

* To add 2 or 4 more unreserved coaches in long distance trains

* New catering policy for multipurpose stalls at stations

* To extend e-catering services to all 408 A1, A2 stations

* IRCTC to introduce local cuisines available on demand

* To make local cuisine available on demand on trains

* IRCTC to unbundle catering services

* Set up Swachh Rail waste aggregation and recycling centre

* To install 30,000 bio-toilets at stations

* To start Clean-My-Coach service on pan-India basis

* To introduce CCTV coverage at all Tatkal counters‎

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 011-233 433 33

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

CORPORATE AND PROFESSIONAL UPDATE FEBRUARY 23, 2016

CORPORATE AND PROFESSIONAL UPDATE FEBRUARY 23, 2016

6

  • Supply Of Goods to Indian Navy not must to claim excise exemption.
  • Manufacture of rosin and turpentine without aid of power , seeking retrospective exemption is not a constitutional right – HC. [Mangalam Organics Limited vs Union of India – 2016 (2) TMI 529 – Delhi High Court].
  • Brokerage paid to the third party has nothing to do with the rental income paid by the tenant brokerage not deductible in computing income from house property
  • Cenvat of Goods/ Service used in construction of rented property allowed. [Nirlon Ltd. vs. Commissioner of Central Excise,Mumbai].
  • Proceedings under rule declared unconstitutional by HC in invalid. [Vipul-S Plasticrafts P. Ltd. vs. Commissioner of Central Excise].
  • The petitioner is admittedly not a foreign company : Since the petitioner is not an eligible assessee in terms of section 144C(15)(b), no draft order can be passed in the case of the petitioner u/s 144C(1) – HC. [Honda Cars India Limited (Formerly – M/s. Honda Siel Cars India Limited vs Deputy Commissioner of Income Tax & Another – 2016 (2) TMI 527 – Delhi High Court].
  • Kindly attend the Annual Award Function of NIRC of ICAI  on February 20th at 3 PM in NDMC Convention Centre, Connaught Place, New Delhi.

Direct Tax:

  • Bogus purchases – CIT(A) was fully justified in deleting the addition made by the AO on account of alleged bogus purchases particularly when the GP rate declared by the assessee was progressive and was accepted by the AO. – ITO, Ward 2 (2) , Ghaziabad Versus Ray Steels – 2016 (2) TMI 498 – ITAT DELHI
  • Disallowance of short term capital loss on sale of shares – sale of share was effected between two group companies having the same directors about the shares of the group company during the lock-in period – it is case of sham transaction – loss booked not allowed –  AAA Portfolios Pvt. Ltd. Versus DCIT, Circle-1 (1) , New Delhi – 2016 (2) TMI 499 – ITAT DELHI

Indirect Tax:

  • Claim of refund of service tax paid by them during the period from April 2011 to March 2012 on services of constructions of college building – Ld. Commissioner (Appeals) by proper application of mind set aside rejection of refund claim and allowed appeal of the respondent. – Refund cannot be denied – Commissioner of Service Tax-VII Versus M/s SM Sai Construction – 2016 (2) TMI 486 – CESTAT MUMBAI

Updates:

  • IRDAI has issued Clarification on IRDAI (Registration of corporate Agents) Regulations, 2015 Vide Ref: IRDA/CAGTS/CIR/LCE/029/ 02/2016 dated 16.02.2016.
  • RBI has recently issued Notification on the Implementation of Section 51-A of Unlawful Activities Prevention Act (UAPA), 1967 – Updates to ISIL (Da’esh) & Al-Qaida Sanctions List Vide Notification No.  DBR.AML.No.10293/14.06.001/ 2015-16 dated 16.02.2016

Company Law:

Query:  Does income tax representation services can be rendered by an auditor under section 144? Are they covered in management services?

Answer:  No, they are not considered as management services. So, an auditor can render tax representation services provided it shall be approved by the Board or Audit committee of the company, as the case may be, in pursuant to Section 144 of the Act.

Key Dates:

  • New appeal filing monetary limit shall  apply to pending appeals also.[ITO vs. Smt. Sudha Brijratan Damani (ITAT Mumbai), I.T.A. No. 6952/Mum/2013].
  • CBEC makes it mandatory for RBI and Electricity Board to file Annual Information Return. Notification no. 04/2016 dated 15.02.2016.
  • Interest from surplus fund is taxable as income from other sources. [M/s Himlayan Expressway Limited vs. ITO (ITAT Chandigarh), ITA No. 690/ Chd /2014, AY 2009-2010].
  • 172 : No TDS on payment to Non–Resident shipping companies. [CIT vs. V.S. Dempo & Co. Pvt. Ltd. (Bombay High Court), Income Tax Appeal Nos. 989, 991, 948, 957,978 of 2015].
  • WIP Valuation on receipt basis is forbidden in Mercantile Accounting. [The ACIT vs. M/s. Ambarwadikar & Co., Engineers & Contractors (ITAT Pune), ITA Nos.169 to 171/PN/2006 & C.O.No.27/PN/2010].
  • MCA invites comments on The Draft Companies (Accounting Standards) & (Indian Accounting Standards) Amendment Rules 2016 to be submitted latest by03.2016.
  • Last date for submission of online application form for emplacement with O/o C&AG for the year 2016-2017 for audit of PSUs is extended to 2.2016.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 011-233 433 33

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

THE AUDIT WORK AND CERTIFICATION WOULD NOT COME WITHIN THE REALM OF FTS.

THE AUDIT WORK AND CERTIFICATION WOULD NOT COME WITHIN THE REALM OF FTS

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www.carajput.com; Audit Work

In a recent ruling, ISO Certification fee paid by Indian company to Non-Resident can’t be treated as FTS as the audit work and certification would not come within the realm of FTS. Hence, not taxable in India in the absence of PE of NR in India.

TUV Bayren (India) Ltd. V. DIT[2015] (Bombay HC)

Facts

Assessee was a certification agency which was issuing ISO certificate to its clients. The nature of work is that the assessee is approached by certain parties for issuance of this standard certificate. The process of evaluation in the form of audit of activities undertaken by the clients is carried out through the audit parties of the assessee. Based on the report of such audit party, a certificate to individual clients/applicants are issued. This is after reviewing the report and several stages of audit work which has been carried out. The certificates are issued for specific and certain period.

AO submits that the services provided are clearly technical or of consultancy in nature. It is not a simple certification agency as is projected by the assessee. It has specified clients and handles these clients cases. To enable them to obtain certification so that the products of such clients are certified to meet with the International Quality standards and hence these are covered under FTS.

Ruling

It was held that the present case is completely covered by the judgment of the same Court in the case of DIT(IT) v. NGC Network Asia LLC [2009] 313 ITR 187 (Bom.). As a result of the above discussion, none of the questions are substantial questions of law. The appeal fails and is dismissed. These are neither technical nor managerial nor consultancy services. There is no advice given but insofar as this activity is concerned, the record indicates that the audit work and certification would not come within the realm of fees for technical services. In the circumstances, there is nothing in the activities which could enable the revenue to bring them within the purview of section 9 (1)(vii) and Article 12(4) of Indo-German Double Taxation Avoidance Agreement.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 9555555480

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)