Cost Audit Vs TP Audit

Impact of Cost Accounting Rules on TP Compliance

Mr. Simachal Mohanty, Global Head - Direct Tax, Dr. Reddy's Laboratories Ltd

An interesting proverb says "You cannot change your luck and neighbour, but can amend your ways to meet them".

We all thought laws about Cost accounting compliance and reporting are neighbouring provisions to the direct tax laws. However, this time we need to welcome this neighbour, at or against our will, since it has already set in to the house of direct tax.

Ministry of Corporate Affairs published a notification dated 3 ^rd June 2011 , notified The Companies (Cost Audit Report) Rules 2011. All we thought that it is another piece of legislation relating to Cost Accounting, we all took a lazy view on it legitimately.  However, these rules have a lot to do with our transfer pricing law – let's analyze.

According to Sec. 209 (1)(d) of Companies Act, 1956, a company engaged in production, processing, manufacturing or mining activities must keep cost accounting records relating to utilisation of material or labor other items of costs as may be prescribed by Central Govt subject to specified criteria.

233B (1) of Companies Act, 1956 states that   cost audit and reporting shall be conducted in specified manner in order to ensure compliance of above provisions of Sec.209, Ministry of Corporate Affairs published a notification dated 3 ^rd June 2011, notified The Companies (Cost Audit Report) Rules 2011 which, inter alia, specifies the form of cost audit report and the allied rules.

Every company covered under the above category, shall keep maintain cost details, statements, schedules for each unit and each product or activity comprises in each product, duly authenticated by atleast two Directors of the company and the cost auditor.

Further, this Rule requires a cost auditor, who issues a cost audit report after 1 ^st April 2012, irrespective of the financial year of the company which it relates to, shall be in form proscribed under these rules.

The format of the cost audit report has 10 annexure, out of which one is of utmost importance both to the assessees and to the transfer pricing auditors who issues the report in form 3CEB. This annexure is referred as "RELATED PARTY TRANSACTIONS (for the company as a whole)".

Annexure contains following details which must be reported as integral part of cost accounting report issued by the cost auditor, in a horizontal manner.

RELATED PARTY TRANSACTIONS (for the company as a whole)

Sl. No

Name and address of the Related Party

Name of the Product

Nature of Transactions (Sales, Purchase etc).

Quantity

Transfer Price

Amount

Normal Price

Basis adopted to determine the Normal Price

Note :

1.      Details should be furnished for each sale/purchase separately.

2.      Details of Related Party transactions without indicating the Normal Price and the basis thereof shall be considered as incomplete information.

Compliance to the above requirement would require each of us to undertake a full fledged transfer pricing documentation in a manner it is done for Sec.92 of Income Tax Act. Interestingly, the terminologies such as "Related Party", "Transfer Price", "Normal Price" are not defined under this Rule. But practically we need to take cognizance of Chapter X of Income Tax Act dealing with the Transfer Pricing provisions.

When it is clear that the related parties will be largely construed as "associated enterprises" as per Sec.92A,

and the international transactions with such enterprises will be subject to cost audit reporting requirements, applicability of cost audit reporting requirements to specified domestic transactions including transactions with Special units (80-IA, SEZ units) and transactions with persons covered under Sec 40(A)(2)(b) need to be deliberated and examined.

Next immediate question that comes to us is when this compliance required? All we thought is that as per Income Tax provisions, transfer pricing report in form 3CEB must be issued before 30 ^th Nov, 2012 and accordingly prioritised our work schedule with other assignments.

But now we need to take immediate cognizance of the above cost audit reporting requirements since this report needs to be uploaded to Ministry of Corporate Affairs (Cost audit branch) within 180 days from the close of the company's financial year to which the report relates. So, in most of cases, this cost audit report will have to be uploaded by 30 ^th Sept 2012, which requires our immediate attention.

Data reported in Form no 3CEB and in the cost audit report need to match in all aspects with regard to transactions subject to transfer pricing regulations.

Hence we need to pre-pone finalisation 3CEB details immediately without waiting till 30 ^th Nov, since these details will be direct input for the cost audit report to be uploaded to MCA site before 30 ^th Sept 2012. 

Courtesy : taxsutra

-

Rajiv Gandhi Equity Savings Scheme

Ministry of Finance21-September, 2012 16:11 IST

Finance Minister approves the Operational Features of the Rajiv Gandhi Equity Savings Scheme (RGESS)

The Union Finance Minister Shri P. Chidambaram approved a new tax saving scheme called "Rajiv Gandhi Equity Saving Scheme"(RGESS),exclusively for the first time retail investors in Securities Market. This Scheme would give tax benefits to new investors who invest up to Rs. 50,000 and whose annual income is below Rs. 10 lakh. The Scheme not only encourages the flow of savings and improves the depth of domestic capital markets, but also aims to promote an 'equity culture' in India. This is also expected to widen the retail investor base in the Indian securities markets. Salient features of the Scheme are as under: a. Scheme is open to new retail investors, identified on the basis of their PAN numbers. This includes those who have opened the Demat Account but have not made any transaction in equity and /or in derivatives till the date of notification of this Scheme and all those account holders other than the first account holder who wish to open a fresh account. b. Those investors whose annual taxable income is ≤ Rs. 10 lakhs are eligible under the Scheme. c. The maximum Investment permissible under the Scheme is Rs. 50,000 and the investor would get a 50% deduction of the amount invested from the taxable income for that year. d. Under the Scheme, those stocks listed under the BSE 100 or CNX 100, or those of public sector undertakings which are Navratnas, Maharatnas and Miniratnas would be eligible. Follow-on Public Offers (FPOs) of the above companies would also be eligible under the Scheme. IPOs of PSUs, which are getting listed in the relevant financial year and whose annual turnover is not less than Rs. 4000 Crore for each of the immediate past three years, would also be eligible. e. In addition, considering the requests from various stakeholders, Exchange Traded Funds (ETFs) and Mutual Funds (MFs) that have RGESS eligible securities as their underlying and are listed and traded in the stock exchanges and settled through a depository mechanism have also been brought under RGESS. f. To benefit the small investors, the investments are allowed to be made in instalments in the year in which tax claims are made. g. The total lock-in period for investments under the Scheme would be three years including an initial blanket lock-in period of one year, commencing from the date of last purchase of securities under RGESS. h. After the first year, investors would be allowed to trade in the securities in furtherance of the goal of promoting an equity culture and as a provision to protect them from adverse market movements or stock specific risks as well as to give them avenues to realize profits. i. Investors would, however, be required to maintain their level of investment during these two years at the amount for which they have claimed income tax benefit or at the value of the portfolio before initiating a sale transaction, whichever is less, for at least 270 days in a year. The calculation of 270 days includes those days pursuant to the day on which the market value of the residual shares /units has automatically touched the stipulated value after the date of debit. j. The general principle under which trading is allowed is that whatever is the value of stocks / units sold by the investor from the RGESS portfolio, RGESS compliant securities of at least the same value are credited back into the account subsequently. However, the investor is allowed to take benefits of the appreciation of his RGESS portfolio, provided its value, as on the previous day of trading, remains above the investment for which they have claimed income tax benefit. k. For the purpose of valuation of shares, the closing price as on the previous day of the date of trading will be considered so that new investors are certain about their debits and credits into the account. l. In case the investor fails to meet the conditions stipulated, the tax benefit will be withdrawn. Like all financial products which have reached out substantially to the retail investors (post office savings, life insurance policies etc) through tax benefits, this tax break for direct investment in equity is expected to substantially encourage the retail participation in securities market as well as to enhance their participation in the growth of Indian industry. Entry of more retail investors are expected to further deepen the securities markets as they bring in long-term stable funds, which can counteract the volatility created by the liquidity providers of the market. The Scheme, thus, also furthers the goal of financial stability and promotes financial inclusion. Since Exchange Traded Funds and Mutual Funds have also been brought under the Scheme, the Scheme should provide encouragement and re-assurance to the first time investors. The broad provisions of the Scheme and the income tax benefits under it have already been incorporated as a new Section - 80CCG - of the Income Tax Act, 1961, as amended by the Finance Act, 2012. Department of Revenue will notify the Scheme and SEBI will issue the relevant circulars to operationalize the Scheme in the next two weeks. DSM/RS/Hb (Release ID :87893)

Note on Immunity from TDS Default

Note on  Accountant's certificate format notified to get immunity for TDS default, if due taxes paid by payee

(NOTIFICATION NO. 37/2012 [F.NO. 142/18/2012-SO(TPL)], DATED 12-09-2012)

·         Any person who fails to deduct the whole or any part of tax deducted at source on the sum paid or credited to the account of resident shall not be deemed to be an assessee in default if the following conditions are satisfied:

o   If payee has furnished his return of income under section 139

o   If Payee has taken into account such sum for computing income in such return of income

o   If Payee has paid the tax due on the income  declared by him in such return of income, and

o   the person furnishes a Certificate in Form 26 A or Form 27BA as the case may be to this effect from a practicing Chartered Accountant

·         However, the Deductor is required to pay interest u/s 201(1A) of the Income-tax Act.

·         Disqualifications of CA to certify Form 26A or Form 27BA

o   If CA is a director, partner or employee of the payee entity or its associated concerns.

o   If certificate proved incorrect or false is liable for penal action.

·         As per  Section 40(a)(ia) no disallowance if the above provisions are complied in full as per Section 201.

CA Certificate on Return of Income

NCOME-TAX (ELEVENTH AMENDMENT) RULES, 2012 - INSERTION OF RULES 31ACB, 37J, FORM NOS. 26A & 27BA

NOTIFICATION NO. 37/2012 [F.NO. 142/18/2012-SO(TPL)], DATED 12-9-2012

In exercise of the powers conferred by section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:-

1. (1) These rules may be called the Income-tax (11th Amendment) Rules, 2012.

(2) They shall come into force on the date of publication in the Official Gazette.

2. In the Income-tax Rules, 1962, (hereafter referred to as the "said rules"),-

(a)  after rule 31ACA, the following rule shall be inserted, namely:-

"Form for furnishing certificate of accountant under the first proviso to sub-section (1) of section 201

31ACB. The certificate from an accountant under first proviso to sub-section (1) of section 201 shall be furnished in Form No.26A";

(b)  after rule 37-I, the following rule shall be inserted, namely:-

"Form for furnishing certificate of accountant under first proviso to sub-section (6A) of section 206C

37J. The certificate from an accountant under first proviso to sub-section (6A) of section 206C shall be furnished in Form No. 27BA."

3. In Appendix-II to the said rules.-

(a) after Form No. 26, the following form shall be inserted, namely.—

"FORM No. 26A

[See rule 31ACB]

Form for furnishing accountant certificate under the first proviso to sub-section (1) of section 201 of the Income-tax Act, 1961

I (name) _________________________ am the person responsible for paying (within the meaning of section 204) in the case of (name of the payer) ______________________ with PAN # (PAN of the payer) __________________________________________ and TAN (TAN of the payer) ______________________ located at  (address of the payer) _______________________ ______________

I do hereby state that I, being the person responsible for paying had paid to/credited to the account of (name of the payee)  _________________ a sum of _____________________ rupees without deduction of whole or any part of the tax

A certificate from an accountant certifying that the payee has fulfilled all the conditions mentioned in the first proviso to sub-section (1) of section 201 of the Income-tax Act, 1961 is enclosed as Annex 'A' to this Form

I further state that the interest under sub-section (1A) of section 201 amounting to _______ rupees for non-deduction/short deduction of tax * has been paid by me the details of which are as under -

BSR Code/**24G Receipt Number (first seven digits of BIN)	Challan Serial Number/**DDO Serial Number (last five digits of BIN)	Date of deposit through challan/**date of transfer voucher

or

*has not yet been paid by me

Place	Signature
Date	Designation

 # In case of Government deductors "PAN NOT REQD" should be mentioned

* Delete whichever is not applicable

** For payment made without the production of challan

ANNEXURE A

Certificate of accountant under first proviso to sub-section (1) of section 201 of the Income-tax Act, 1961 for certifying the furnishing of return of income, payment of tax etc. by the payee

I/We *hereby confirm that I/we* have examined the relevant accounts, documents and records of (name and address of the payee with PAN) __________________________________________________ for the period ___________________ and hereby certify the following:

(i) ____________________  (payer) has paid to or credited following sum to the account of ________________ (payee) without deduction of whole or any part of the tax in accordance with the provisions of Chapter-XVII-B

Nature of payment	Date of payment or credit	Section under which tax was deductible	Amount paid or credited	Amount of tax deductible	Details of amount deducted, if any
					Amount deducted	Date of deduction

(ii) The payee, who is a resident, has furnished his return of income for the assessment year ______________ relevant to the payment referred to in (i) above. The details of return of income filed by the payee are as under -

Date of filing return	Mode of filing i.e.whether e-filed or paper return	Acknowledgement number of return filed	If paper return-designation and address of the Assessing Officer	Amount of total taxable income as per return filed	Tax due on the income declared in the return	Details of tax paid

(iii) The payee has taken into account the sum referred to in (i) for computing his taxable income in return of income filed by him the details of which are as under -

Receipt on which Tax has not been deducted	Head of Income under which the receipt is accounted for	Gross receipt under the head of income under which the receipt is accounted for	Amount of taxable income under the head of income under which the receipt is accounted for

(iv) It has been ensured that the information furnished is true and correct in all respects and no relevant information has been concealed or withheld

(v) Neither I, nor any of my partners, is a director, partner or an employee of the above mentioned entities or its associated concerns

I/we* fully understand that any statement made in this certificate, if proved incorrect or false, will render me/us* liable for any penal or other consequences as may be prescribed in law or is otherwise warranted

(Signature and Stamp/Seal of the Signatory)

†Accountant

Place	Name of the Signatory
Date	Full Address
	Membership No.

Notes:

 1.  *Delete whichever is not applicable

 2.  †This certificate is to be given by -

 (i)  a chartered accountant within the meaning of the Chartered Accountants Act, 1949 (38 of 1949); or

(ii)  any person, who in relation to any State, is, by virtue of the provisions in sub-section (2) of section 226 of the Companies Act, 1956 (1 of 1956), entitled to be appointed to act as an auditor of companies registered in that State "

(b) after Form No. 27B, the following form shall be inserted, namely.—

"FORM No. 27BA

[See rule 37J]

Form for furnishing accountant certificate under first proviso to sub-section (6A) of section 206C of the Income-tax Act, 1961

I. (name) ____________________ am the person responsible for collecting tax under section 206C in the case of (name of the seller/licensor/lessor) ________________________________ with PAN # (PAN of the seller/licensor/lessor) ___________________ and TAN (TAN of the seller licensor/lessor) ____________________ located at (address of the seller/licensor/lessor) _______________

I do hereby state that I, being the person responsible for collecting tax had received from debited to the account of (name of the buyer/licensee/lessee) _________________ a sum of _______________ rupees without collection of whole or any part of tax.

A certificate from accountant certifying that the buyer/licensee/lessee has fulfilled all the conditions mentioned in the first proviso to sub-section (6A) of section 206C of the Income-tax Act, 1961 is enclosed as Annex 'A' to this Form.

I, further, state that the interest under sub-section (7) of section 206C amounting to ____________ rupees for non-collection short collection of tax

* has been paid by me, the details of which are as under :-

BSR Code/**24G Receipt Number (first seven digits of BIN)	Challan Serial Number/**DDO Serial Number (last five digits of BIN)	Date of deposit through challan/* *date of transfer voucher

or

*has not yet been paid by me.

Place:	Signature:
Date:	Designation:

# In case of Government deductors, "PAN NOT REQD" should be mentioned.

*Delete whichever is not applicable.

** For payment made without the production of challan by the Government deductor.

ANNEXURE A

Certificate of accountant under first proviso to sub-section (6A) of section 206C of the Income-tax Act, 1961 for certifying the furnishing of return of income, payment of tax etc. by the buyer/licensee/lessee

I/We* hereby confirm that I/we* have examined the relevant accounts, documents and records of (name and address of the buyer/licensee/lessee with PAN) ____________________ for the period _______________ and hereby certify the following:

(i) ______________________________ (seller/licensor/lessor) has received from or debited following sum to the account of _______________________ (buyer/licensee/lessee) without collection of whole or any part of the tax in accordance with the provisions of Chapter -XVII-BB

Nature of Receipt	Date of Receipt or debit	Section under which tax was Collectible	Amount received or debited	Amount tax collectible	Details of amount collected, if any
					Amount collected	Date of collection

(ii) The buyer/licensee/lessee, has furnished his return of income for the assessment year _________________ relevant to the receipt referred to in (i) above. The details of return of income filed by the buyer/licensee/lessee are as under -

Date of filing return	Mode of filing i.e.whether e-filed or paper return	Acknowledgement number of return filed	If paper return-designation and address of the Assessing Officer	Amount of total taxable income as per return filed	Tax due on the income declared in the return	Details of tax paid

(iii) The buyer/licensee/lessee has taken into account the sum referred to in (i) for computing his taxable income in return of income filed by him, the details of which are as under:-

Payment on which Tax has not been collected	Head of Income under which the payment is accounted for	Gross payment under the head of income under which the payment is accounted for	Amount of taxable income under the head of income under which the payment is accounted for

(iv) It has been ensured that the information furnished is true and correct in all respects and no relevant information has been concealed or withheld

(v) Neither I, nor any of my partners, is a director, partner or an employee of the above mentioned entities or its associated concerns

I/we* fully understand that any statement made in this certificate, if proved incorrect or false, will render me/us* liable for any penal or other consequences as may be prescribed in law or is otherwise warranted.

(Signature and Stamp/Seal of the Signatory)

†Accountant

Place:	Name of the Signatory..............................
Date:	Full Address:............................................
	Membership No.......................................

Notes:

 1.  *Delete whichever is not applicable.

 2.  †this certificate is to be given by-

 (i)  A chartered accountant within the meaning of the Chartered Accountants Act, 1949 (38 of 1949); or

(ii)  Any person, who in relation to any State, is, by virtue of the provisions in sub-section (2) of section 226 of the Companies Act, 1956 (1 of 1956), entitled to be appointed to act as an auditor of companies registered in that State.".

-CA. V.M.V.SUBBA RAO

Cost Inflation Index for FY 2012-13 is 852

Notified Cost Inflation Index for Financial Year 2012-13 / Assessment Year 2013-14 : 852

Amendment ST Determination of Rules

SERVICE TAX (DETERMINATION OF VALUE) SECOND AMENDMENT RULES, 2012 - AMENDMENT IN RULES 2B, 3, 5 & 6; INSERTION OF RULE 2C; SUBSTITUTION OF RULE 2A AND OMISSION OF RULE 7

NOTIFICATION NO. 24/2012 - SERVICE TAX, DATED 6-6-2012

In exercise of the powers conferred by clause (aa) of sub-section (2) of section 94 of the Finance Act, 1994 (32 of 1994) and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue) number 11/2012 - Service Tax, dated the 17th March, 2012, published in the Gazette of India, Extraordinary, vide number G.S.R. 209 (E), dated the 17th March, 2012, the Central Government, hereby makes the following rules further to amend the Service Tax (Determination of Value) Rules, 2006, namely :-

1. (1) These rules may be called the Service Tax (Determination of Value) Second Amendment Rules, 2012.

(2) They shall come into force from the 1st day of July, 2012.

2. In the Service Tax (Determination of Value) Rules, 2006 (hereinafter referred to as the said rules), for rule 2A, the following rule shall be substituted, namely:-

"2A. Determination of value of service portion in the execution of a works contract.- Subject to the provisions of section 67, the value of service portion in the execution of a works contract , referred to in clause (h) of section 66E of the Act, shall be determined in the following manner, namely:-

 (i)  Value of service portion in the execution of a works contract shall be equivalent to the gross amount charged for the works contract less the value of property in goods transferred in the execution of the said works contract.

Explanation.- For the purposes of this clause,-

(a)  gross amount charged for the works contract shall not include value added tax or sales tax, as the case may be, paid or payable, if any, on transfer of property in goods involved in the execution of the said works contract;

(b)  value of works contract service shall include, -

(i)  labour charges for execution of the works;

(ii)  amount paid to a sub-contractor for labour and services;

(iii)  charges for planning, designing and architect's fees;

(iv)  charges for obtaining on hire or otherwise, machinery and tools used for the execution of the works contract;

(v)  cost of consumables such as water, electricity, fuel used in the execution of the works contract;

(vi)  cost of establishment of the contractor relatable to supply of labour and services;

(vii)  other similar expenses relatable to supply of labour and services; and

(viii)  profit earned by the service provider relatable to supply of labour and services;

(c)  Where value added tax or sales tax has been paid or payable on the actual value of property in goods transferred in the execution of the works contract, then, such value adopted for the purposes of payment of value added tax or sales tax, shall be taken as the value of property in goods transferred in the execution of the said works contract for determination of the value of service portion in the execution of works contract under this clause.

(ii)  Where the value has not been determined under clause (i), the person liable to pay tax on the service portion involved in the execution of the works contract shall determine the service tax payable in the following manner, namely:-

(A) in case of works contracts entered into for execution of original works, service tax shall be payable on forty per cent. of the total amount charged for the works contract;

(B) in case of works contract entered into for maintenance or repair or reconditioning or restoration or servicing of any goods, service tax shall be payable on seventy percent. of the total amount charged for the works contract;

(C) in case of other works contracts, not covered under sub-clauses (A) and (B), including maintenance, repair, completion and finishing services such as glazing, plastering, floor and wall tiling, installation of electrical fittings of an immovable property , service tax shall be payable on sixty per cent. of the total amount charged for the works contract;

Explanation 1.- For the purposes of this rule,-

(a)  "original works" means-

(i)  all new constructions;

(ii)  all types of additions and alterations to abandoned or damaged structures on land that are required to make them workable;

(iii)  erection, commissioning or installation of plant, machinery or equipment or structures, whether pre-fabricated or otherwise;

(b)  "total amount" means the sum total of the gross amount charged for the works contract and the fair market value of all goods and services supplied in or in relation to the execution of the works contract, whether or not supplied under the same contract or any other contract, after deducting-

(i)  the amount charged for such goods or services, if any; and

(ii)  the value added tax or sales tax, if any, levied thereon:

Provided that the fair market value of goods and services so supplied may be determined in accordance with the generally accepted accounting principles.

Explanation 2.--For the removal of doubts, it is clarified that the provider of taxable service shall not take CENVAT credit of duties or cess paid on any inputs, used in or in relation to the said works contract, under the provisions of CENVAT Credit Rules, 2004.".

3. In the said rules, in rule 2B, the words, brackets, letters and figures "referred to in sub-clause (zm) and (zzk) of clause (105) of section 65 of the Act," shall be omitted.

4. In the said rules, after rule 2B, the following rule shall be inserted, namely:-

"2C. Determination of value of service portion involved in supply of food or any other article of human consumption or any drink in a restaurant or as outdoor catering.- Subject to the provisions of section 67, the value of service portion, in an activity wherein goods being food or any other article of human consumption or any drink (whether or not intoxicating) is supplied in any manner as a part of the activity at a restaurant or as outdoor catering, shall be the specified percentage of the total amount charged for such supply, in terms of the following Table, namely:-

TABLE

	Sl. No.	Description	Percentage of the total amount
	(1)	(2)	(3)
	1.	Service portion in an activity wherein goods, being food or any other article of human consumption or any drink(whether or not intoxicating) is supplied in any manner as a part of the activity, at a restaurant	40
	2.	Service portion in outdoor catering wherein goods, being food or any other article of human consumption or any drink(whether or not intoxicating) is supplied in any manner as a part of such outdoor catering	60

Explanation 1.- For the purposes of this rule, "total amount" means the sum total of the gross amount charged and the fair market value of all goods and services supplied in or in relation to the supply of food or any other article of human consumption or any drink(whether or not intoxicating), whether or not supplied under the same contract or any other contract, after deducting-

 (i)  the amount charged for such goods or services, if any; and

(ii)  the value added tax or sales tax, if any, levied thereon:

Provided that the fair market value of goods and services so supplied may be determined in accordance with the generally accepted accounting principles.

Explanation 2.- For the removal of doubts, it is clarified that the provider of taxable service shall not take CENVAT credit of duties or cess paid on any goods classifiable under Chapters 1 to 22 of the Central Excise Tariff Act, 1985 (5 of 1986).".

5. In the said rules, in rule 3, for the words "where the consideration received is not wholly or partly consisting of money", the words "where such value is not ascertainable" shall be substituted.

6. In the said rules, in rule 5, in sub-rule(1), in the Explanation, for the words, brackets, letters and figures "services specified in sub-clause (zzzx) of clause (105) of section 65 of the Finance Act, 1994, the value of taxable service shall be the gross amount paid by the person to whom telecom service is provided by the telegraph authority", the words "the value of the telecommunication service shall be the gross amount paid by the person to whom telecommunication service is actually provided." shall be substituted.

7. In the said rules, in rule 6,-

(a)  in sub-rule (1),-

 (i)  in clause (viii), for the words "in any manner; and" the words "in any manner;" shall be substituted;

 (ii)  in clause (ix), for the words "insurance agent", the words "insurance agent; and" shall be substituted;

(iii)  after clause (ix), the following clause shall be inserted, namely:-

"(x)  the amount realised as demurrage or by any other name whatever called for the provision of a service beyond the period originally contracted or in any other manner relatable to the provision of service.";

(b)  in sub-rule (2),-

 (i)  for clause (iv), the following clause shall be substituted, namely:-

"(iv) interest on delayed payment of any consideration for the provision of services or sale of property, whether moveable or immoveable;"

(ii)  after clause (v), the following clause shall be inserted, namely:-

"(vi) accidental damages due to unforeseen actions not relatable to the provision of service; and

(vii) subsidies and grants disbursed by the Government, not directly affecting the value of service.".

8. In the said rules, rule 7 shall be omitted.