IndianCAs by Ashwin Nagar

01 March 2011

Vimal Punamiya: FAVOURABLE POINTS OF BUDGET 2011 – 12 ON DIRECT TAXATION

FAVOURABLE POINTS OF BUDGET 2011 – 12 ON DIRECT TAXATION

1. The Basic Exemption Limit for Individual (Male) have been increased from Rs. 1,60,000/- to Rs. 1,80,000/-.

2. To be eligible for benefits of Senior Citizen as per Income Tax Act have been decreased from 65 years to 60 years.

3. The Basic Exemption Limit for Senior Citizen have been increased from Rs. 2,40,000/- to Rs. 2,50,000/-.

4. A new category have been introduced declaring Very Senior Citizens wherein, individual of 80 years and above will be taxed as follows:-

Upto Rs. 5,00,000 NIL

Rs. 5,00,001 to Rs. 8,00,000 20%

Rs. 8,00,001 and above 30%

5. The Surcharge in the case of Domestic Company have been decreased from 7.5% to 5% and in the case of other than Domestic Company it have been decreased from 2.5% to 2%.

6. U/S 2(15) of the Income Tax Act, which defines Charitable Purpose where the advancement of any other object of general public utility is not a charitable purpose, if the income exceeds Rs. 10,00,000/- or more in previous years have now been increased to Rs. 25,00,000/-.

7. U/S 10, the benefits of Specific Perquisites were earlier enjoyed by Chief Election Commissioner, Election Commissioner and the Judges of Supreme Court. Now the similar benefits have been extended to serving as well as retired Chairman and Members of Union Public Service Commission.

This Amendment is with retrospective effect from 01.04.2007 and will accordingly apply in relation to A.Y. 2008 – 09.

8. New clause is inserted in section 10 wherein, Income Tax is exempted to any body, authority, board, trust and commission which is set up by a Central, State and Provisional Act or constituted by Central Government or State Government for the benefit of general public and which is not engaged in any commercial activities and is notified by Central Government in this behalf.

This amendment will be applicable w.e.f. 1^st June, 2011.

9. U/S 35(2AA) of the Income Tax Act, weighted deduction / contribution made for approved, scientific research programme have been increased from 175% to 200% w.e.f 1^st April, 2012.

10. a) U/S 35AD, two new specified business have been introduced i.e.

i) developing and building a housing project under a scheme for affordable housing framed by the Central Government or a State Government, as the case may be, and notified by the Board in this behalf in accordance with the guidelines as may be prescribed; and

ii) production of fertilizer in India.

b) The date of commencement for the above two business would be 1^st April,
2011.

c) The word 'NEW' have been removed from the definition of 'specified business' in
      the case of Hotels and Hospitals u/s 35AD(8)( c) for the purpose of Section 73A
      wherein the loss of an Assessee on account of a "specified business" claiming
      deduction u/s 35AD would be allowed to be set off against the profit of another "
      specified business" under section 73, whether or not the latter is eligible for
      deduction u/s 35AD.

11. It is, therefore propose to amend section 36 so as to provide that any sum paid by the assessee as an employer by way of contribution towards a pension scheme, as referred to in section 80CCD (2) on account t of an employee to the extent it does not exceed 10 percent of the salary of the employee in the previous year, shall be allowed as deduction in computing the income under the head "Profits and Gains of business or profession".

12. Exemption u/s 80CCF i.e. Long term infrastructure bond upto Rs. 20,000/- have been extended upto A.Y. 2012 – 13.

13. The termination date for exemption u/s 80 IA (4)(iv) have been extended upto 31^st March,2012.

14. Section 139 have been amended in case of corporate assessee who undertake international transactions and file a report in form 3CEB, the due date for filing the return have been extended from 30^th September to 30^th November.

15. New section 115BBD have been introduced wherein the total income of an Indian Company includes any income by way of dividend received from Foreign Subsidiary Company then such dividend shall be taxable @ 15% + Surcharge and Education cess on the gross amount instead of 30% as earlier. No expenditure is allowed on such income.

16. U/S 139 (1) in case of a salaried tax payer who does not have any other source of Income and where the entire tax liability is discharged by the employer in the form of TDS and the complete detail of such salaried tax payer is reported by the employer in his TDS statement, then such tax payer is not required to file his return of income w.e.f. 1^st June 2011.

17. Section 254C (1) have been amended wherein, a tax payer who is the subject matter of a search would be allowed to file an application for settlement if additional income tax payable on the income disclosed in the application exceeds fifty lakhs rupees. Entities related to such a tax payer, who are also the subject matter of search, would now be allowed to file an application for settlement, if additional income tax payable in their application exceeds ten lakh rupees.

18. A new sub – section (6B) have been inserted in section 245D wherein a Settlement Commission may, at any time within a period of 6 months from the date of his order can change his order by rectifying any mistake apparent from the record only after informing and giving opportunity to be heard to the Commissioner and applicant. W.E.F. 1^st June, 2011

19. Section 282B of Income Tax Act regarding Document Identification Number have been omitted

20. The time limit have been extended from 31^st December, 2010 to 32st March, 2012 to enable Employees Provident Fund Organization (EPFO) to process the applications made by establishments seeking exemptions under section 17 of the EPF and MP Act.

UNFAVOURABLE POINTS OF BUDGET 2011 – 12 ON DIRECT TAXATION

1. There is no increment in the basic exemption limit for women.

2. In the case of developer of a SEZ and or unit located in SEZ, which were enjoying the benefits of exemption from MAT, have now been brought within the purview of MAT and therefore liable to pay tax @ 18.5% on book profit w.e.f. 1^st April, 2012.

3. Exemption benefits of Dividend Distribution Tax have been discontinued in the case of developers in SEZ for dividend distributed declared or paid after 1^st June, 2011.

4. Sec 80CCE have been amended so as to provide that the contribution made by the Central Government or any other employer to a pension scheme u/s 80CCD (2) shall be excluded from the limit of one lakh rupees provided u/s 80CCE.

5. a) U/S 92C (2), the earlier variation between actual price and arm length price does not exceed 5% then the actual price shall be treated as Arm Length Price. Now instead of variation of 5%, the allowable variation will be such percentage as notified by Central Government.

b) U/S 92CA, the power of the transfer pricing office (TPO) have been extended to determine the Arm Length price in respect of other international transaction i.e. transaction not referred by the AO, which were noticed by him subsequently in the course of proceedings before him.

c) U/S 92CA (7), the power of TPO have been extended to enable the TPO to exercise the power of Survey conferred upon an Income Tax Authority u/s 133A of the Act. W.e.f. 1^st June, 2011.

6. The rate of tax u/s 115JB (i.e. MAT) have been increased from 18% to 18.5%.

7. Just like MAT in case of Company, LLP is now liable to pay tax @ 18.5% as Alternate Minimum Tax on adjusted total income.

8. Section 115R(2)has been amended to provide that the Mutual fund is liable to pay additional income tax on such distributed income at the rate of –

a) 25 percent, if the recipient is an individual or HUF in case of distribution by a money market mutual fund or a liquid fund;

b) 30 percent, if the recipient is any other person in case of distribution by a money market mutual fund or a liquid fund;

c) 12.5%, if the recipient is an individual or HUF in case of distribution by a debt fund other than a money market mutual fund or a liquid fund; and

d) 30%, if the recipient is any other person in case of distribution by a debt fund other than a money market mutual fund or a liquid fund; w.e.f. 1^st June, 2011.

9. U/S 153 of the Income Tax Act, the time taken in obtaining the information from the tax authority in jurisdiction situated outside India under an agreement referred to in Section 90 & 90A shall be excluded from the total time limit for completion of Assessment and Re – Assessment w.e.f 1^st June, 2011.

10. Section 285 have been amended where the non-resident were not require to file the return for their liaison office, are now mandatory require for filing of annual information within 60 days from the end of F.Y. by the non – resident as regard their liaison office in India. W.e.f 1^st June, 2011.

11. Section 80 – IB (a) have been amended for deduction available for commercial production of mineral oil will not be available for block license under contract awarded after 31^st March, 2011 under the new exploration licensing policy announced by the Government of India.

12. a) Section 10 is been amended to exempt income from any infrastructure debt fund only when it is notified by the Central Government as per prescribed guidelines.

b) Section 115A has been amended to tax the gross interest income of non – resident @ 5% from such notified infrastructure debt fund.

c) New Section 194LB has been inserted to deduct tax at source @ 5% on interest income from such notified Infrastructure Debt Fund paid to the Non – Resident.

This amendment will be applicable w.e.f. 1^st June, 2011.

13. New section 92A have been inserted to deal with transactions undertaken with persons located in such country or area. The section provides as follows:-

a. An enabling power to the central government to notify any country or territory outside India, having regard to the lack of effective exchange of information by it with India as a notified jurisdictional area.

b. That if an assessee enters into an transaction, where one of the parties to the transaction is the person located in a notified jurisdictional area, then all the parties to the transaction shall be deemed to be associated enterprises and the transaction shall be deemed to be an international transactions and accordingly, transfer pricing regulation shall apply to such transactions.

c. That no deduction in respect of any payment made to any financial institute shall be allowed unless the assessee furnishes an authorization , in the prescribed form, authorizing the Board or any other Income Tax Authority acting on its behalf, to seek relevant information from the said financial institution.

d. That no deduction in respect of any expenditure or allowance (including depreciation) arising from the transaction with the person located in a notified jurisdictional area shall be allowed under any provision of the Act unless the assessee maintains such other documents and furnishes the information as may be prescribed.

e. That if any sum is received from a person located in a notified jurisdictional area, then, the onus is on the assessee to satisfactorily explain the source of such money in the hands of such person or in the hands of the beneficial owner, and in case of his failure to do so the amount shall be deemed to be the income of the assessee.

f. That any payment made to a person located in the notified jurisdictional area shall be liable to deduction of tax at a higher of the rates specified in the relevant provision of the Act or rates or Rate in force or a rate of 30 percent.

The amendment is w.e.f 01^st June, 2011.

28 February 2011

CA. V.M.V.SUBBA RAO : Highlights of Union Budget 2011-12

HIGHLIGHTS OF UNION BUDGET – 2011-12

The basic exemption limit in the case of individuals increased from Rs.1.60 lacs to Rs.1.80 lacs. However, there is no increase in basic exemption limit in the case of Resident Women who is below 60 years at any time during the previous year.

The qualifying age limit for senior citizens has been lowered from 65 years to 60 years and increased the current exemption limit under two categories

Category -1 - Age of Individual – 60 years or more but less than 80 years at any time during the previous year. The basic exemption limit is increased from Rs.2.40 lacs to Rs.2.50 lacs

Category – 2 - Age of Individual beyond 80 years or more at any time during the previous year. The basic exemption limit is Rs.5.00 lacs.

In the case of domestic companies the surcharge has been reduced from Rs.7.5% to 5%

In the companies other than domestic companies the surcharge has been reduced from 2.5% to 2%

The definition of charitable purpose u/s 2 (15) includes "the advancement of any other object of general public utility". The monetary limit in respect of such activities has been enhanced from Rs.10.00 lacs Rs.25.00 lacs.

The amount paid by an assessee as an employer by way of contribution towards pension scheme, as referred to in sec 80CCD(2) on account of an employee to the extent it doesn't exceed 10% of the salary of employee in the previous year, shall be allowed as a deduction u/s 36 in computing the income under the head profit and gains of business or profession.

The Indian company which receives foreign dividend from foreign subsidiary company such dividend is taxable at the 15% as against 30% plus applicable surcharge.

The rate of MAT is increased to 18.5% from the existing rate of 18% of such book profit.

Minimum Alternative Tax has been introduced for Limited Liability Partnership (LLP) in line with MAT on companies with effect from the Assessment Year 2012 – 2013.

The Government exempts assessees having no other income other than salary from furnishing the return of income by notification. The proposed amendment shall be effective from 1^st June, 2011.

It is proposed to omit the requirement of quoting of Documentary Identification Number in notices / order / correspondences issued by Income tax department.

The SEZ developers are required to pay dividend distribution tax on dividends declared / distributed on or after 1^st June, 2011.

The deduction u/s 80CCF to investment in notified long term infrastructure bonds extended for the A.Y. 2012-13 also.

Liaison offices of a company will be required to file Annual Information in the prescribed form with in the 60 days from the end of the financial year.

The tax holiday for power sector has been extended for further period of one year i.e. upto 31.03.2012.

SERVICE TAX

The following two new services have been proposed

Services by air conditioned restaurants having licence to serve liquor; and

short term accommodation hotels / inns / clubs / guest houses etc.

The monetary limit for adjustment of excess service tax paid is increased from Rs. 1.00 lacs to Rs.2.00 lacs.

The penalty for delayed payment of service tax u/s 76 has been reduced from 2% to 1% per month or Rs.100 per day whichever is higher.

The maximum penalty reduced to 50% of the tax.

The rate of interest is reduced by 3% for assesses with turnover of upto 60 lacs.

The maximum penalty for delay in filing of return increased from Rs.2,000 to Rs.20,000

Budget 2011: CA Anshuma Rustagi

CA Anshuma Rustagi

1. GST in 2012 - IT infrastructure to be laid down by NSDL - Pilot Project in 2011 – 13 states to adopt GST.

2. Service tax refunds for exporters to be made easier. Tax Free receipts of services by exporters to be put into place.

3. New Companies Bill to be introduced in this session of the Parliament.

4. Income Tax exemption limit increased from 1,60,000 to 1,80,000 – individual tax payers

5. Income Tax exemption limit increased from 2,40,000 to 2,50,000 – for senior citizen above 65 years of age

6. Income Tax exemption limit increased to Rs 5,00,000 – for individual tax payers above 80 years of age

7. Surcharge payable by companies reduced to 5% from 7.5%

8. MAT increased to 18.5% from 18%

9. Additional Rs. 20,000 investment in long term infrastructure bonds sop to continue

10. 15% tax on dividend recd by Indian company earned from foreign subsidiary

11. Scientific Research Expenditure – contribution to National Laboratory etc – weighted deduction increased from 175% to 200%

12. Central Excise Duty to remain at 10%

13. SEZ companies to come under MAT

14. Service Tax to remain at 10%

15. New services to be taxed

a. AC Restaurants serving liquor – with 75% abatement

b. Hospitals with more than 25 beds having AC – with 50% abatement

c. Diagnostic Test Centres – with 50% abatement

d. Government Hospitals not to be subject to service tax

e. Air Travels to be subject to service tax

f. Life insurance companies to pay service tax on investment activities

g. Legal services subject to service tax

16. Input and Input services to be defined more clearly

17. Allocation of CENVAT credit between exempt and taxable services to be rationalized

Budget 2011: Synposis by Anand Wadadekar

GENERAL:

Economy to grow at 9%, plus or minus 0.25% in 2012
Agriculture growth at 5.4%, industry at 8.1% in 2010-11
Agricultural credit limit raised to Rs 4,75,000 crore
Food inflation declined to less than half to 9.30%
Food inflation is a big concern
Economy has regained pre-crisis growth momentum
States to cut down fiscal deficit to 3% of Gross State GDP by 2014
Growth rate of services sector expected at 9.3%
Exports up 9.4% in 2010-11
FY2012 Divestment Target at Rs 40,000 crore
Removal of supply bottlenecks in food sector in focus in 2011/12
Food Security Bill to be introduced in this year
FY 2012 defence capital expenditure seen at Rs 69,199 crore
Allocation to Department of Justice increased 3 fold to Rs 3000 cr
Plan expenditure at Rs 4.14 lakh crore
To distribute 1 million Unique Identification (UID) cards per day shortly
Fiscal deficit down at 5.1% from 5.4%
Fiscal deficit seen at 4.1% in FY 13, 3.5% in FY 14
Budget estimates for 2011-12 projects Rs 9,32,440 crore - an increase of 24 per cent

FINANCE:

FIIs allowed to invest in Mutual Funds and in 5-year unlisted bonds with minimum lock in period of 3 yrs
Plan to allow FII limit in infrastructure bonds to $25billion
FII limit in corporate bonds raised to $ 40billion
Plan to introduce Companies Bill in current session

Infrastructure spending to be raised by 23%
Priority home loan limit raised to Rs 25 lakh from Rs 20 lakh
Tax-free bonds worth Rs 30,000 cr proposed to boost infrastructure
To introduce self assessment in customs to facilitate fast clearance
General Sales Tax (GST) Bill to be introduced in the current session
To introduce Public Debt Management Bill in 2012; To set up independent debt management office
To provide Rs 200 cr grant to IIT Kharagpur, Rs 20 crore to IIM Calcutta
Banks to cover 20,00 villages for opening accounts in FY12
Have set up dedicated cell on transfer pricing monitoring
To amend Indian Stamp Act shortly
Gross Tax Receipts at Rs 9.32 lakh crore, up 25%
Tax sops of Rs 20,000 on Infra Bonds extended for one year
Revenue deficit for FY11 seen at 3.4%

DIRECT TAX:

Direct tax code will be effective from April 1, 2012; DTC after getting Standing Committee Report; Direct Tax Code likely to be passed by parliament next fiscal year
No Tax Return to be filed if TDS deducted by employer
Age for being classified as Senior Citizen cut to 60 years from 65 years

Corporate Tax reduced to 5%
Minimum Alternate Tax (MAT) raised to 18.5% of book profits
Surcharge on domestic companies cut to 5% from 7.5%
Foreign unit dividend tax rate cut to 15 percent for Indian companies
Special Economic Zones to come under MAT

Personal Taxation:

Individuals:
Income up to Rs 1.80 lakh: NIL tax
Income between Rs 1.80-5 lakh: Tax at 10%
Income between 5-8 lakh: Tax at 20%
Income above Rs 8 lakh: Tax at 30%

Senior Citizen: Minimum Tax Exemption limit raised to Rs. 2,50,000 from Rs. 2,40,000
women Citizens: Remains unchanged; i.e. at Rs. 1,90,000
New category of very senior citizens introduced under which Senior Citizens above the age of 80 years to get Rs. 5,00,000 as minimum tax exemption

Rs 20,000 deduction made available for investment in Infrastructure Bonds extended for one year. This is above Rs. 1,00,000 80C exemption

INDIRECT TAX:

Service Tax rates unchanged at 10%;
Service tax to cover more areas:
Service tax net extended to include health check-ups
Domestic travel to pay Rs 50 service tax, Rs 250 on international travel
Service tax on hotel accomodation above Rs 1500 per day
Legal representation for businesses under service tax
To tax life insurance service providers

Peak excise duty unchanged at 10%; To withdraw 130 items from exemption under Central Excise; Base rate on excise duty raised to 5% from 4%
No change in peak customs duty rate i.e. customs duty remains unchanged at 10%
No change in CENVAT rates

***********************************************************
Disclaimer: This Synposis prepared by Anand Wadadekar, has been prepared with utmost care and accuracy, however errors or omissions cannot be fully ruled out and the Author is not responsible for the same. The recipient is advised to go through the original Finance Bill if required.
Source: The Economic Times, Rediff.com

26 February 2011

Indian Accounting Standards Converged with IFRS Notified

Ministry of Corporate Affairs25-February, 2011 20:15 IST

Indian Accounting Standards Converged with IFRS Notified

Reliable, consistent and uniform financial reporting is important part of good corporate governance practices worldwide in order to enhance the credibility of the businesses in the eyes of investors to take informed investment decisions. In pursuance of G-20 commitment given by India, the process of convergence of Indian Accounting Standards with IFRS has been carried out in Ministry of Corporate Affairs through wide ranging consultative exercise with all the stakeholders. Thirty five Indian Accounting Standards converged with International Financial Reporting Standards (henceforth called IND AS) are being notified by the Ministry and placed on the website. . These are: IND ASs 1, 2, 7, 8, 10, 11, 12, 16, 17, 18, 19, 20, 21, 23, 24, 27, 28, 29, 31, 32, 33, 34, 36, 37, 38, 39, 40, 101, 102, 103, 104, 105, 106, 107 and 108. The Ministry of Corporate Affairs will implement the IFRS converged Indian Accounting Standards in a phased manner after various issues including tax related issues are resolved with the concerned Departments. It would be ensured that the implementation of the converged standards in a phased manner is smooth for the stakeholders. The date of implementation of the IND AS will be notified by the Ministry at a later date.

The Press Release and IND ASs are available on the Ministry's website at www.mca.gov.in .

Ministry of Corporate Affairs, Government of India

New Delhi February 25, 2011

RCJ/VL/PT-Corporate Affairs Press Note
(Release ID :70248)

--
Best Wishes

CA. V.M.V.SUBBA RAO
Chartered Accountant
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India
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e-Mail: vmvsr@rediffmail.com
vmvsr@yahoo.co.uk
http://pdicai.org/MyPage/203038.aspx

25 February 2011

IndianCAs: Revised Schedule of Membership fee from 1-04-2011 [1 Attachment]

[Attachment(s) from Ashwin Nagar included below]

Hi Members

Find attached Revised Schedule of Membership fee from 1-04-2011.

Thanks

| Ashwin Nagar |

Success is not permanent and failure is not final

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Attachment(s) from Ashwin Nagar

1 of 1 File(s)

22068announ12483.pdf

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24 February 2011

Increase in Interest Rate on EPF

Ministry of Labour & Employment23-February, 2011 16:32 IST

Increase in Interest Rate on EPF

For the financial year 2010-2011, 9.5% rate of interest on EPF has been recommended by the Central Board of Trustees, Employees' Provident Fund [CBT(EPF)] in the 190th meeting held on 15.09.2010 based on the funds available in the interest suspense account. The Ministry of Labour & Employment has forwarded the recommendation of CBT to the Ministry of Finance (Department of Financial Services) for approval.

This information was given

22 February 2011

[2011] 9 taxmann.com 261 (Agra - ITAT)(TM) - speculative transaction

[2011] 9 taxmann.com 261 (Agra - ITAT)(TM)

Income-tax : Speculative Transactions [Section 43(5)] - Transaction of the purchase and sale of shares cannot be regarded to be speculative transaction in case same is settled through actual delivery through demat account of investor.

[2011] 9 taxmann.com 252 (Mum. - ITAT) : Bad debts

[2011] 9 taxmann.com 252 (Mum. - ITAT)

Income-tax : Section 36(1)(vii) - Bad debts - It is not requirement of law that assessee has to establish that debts which were written off as bad debts have in fact become bad

l Prior to 1-4-1989, every assessee had to establish, as a matter of fact, that the debt advanced by the assessee had, in fact, become irrecoverable, but that position got altered by deletion of the word "established", which earlier existed in section 36(1)(vii)

20 February 2011

IndianCAs: ICAI announcement on AS 30

ICAI announcement on AS 30

Application of AS 30, Financial Instruments: Recognition and Measurement, for the accounting periods ending on or before 31 st March 2011.

1 AS 30 was issued by the Institute of Chartered Accountants of India (ICAI) in 2007 but as not yet been notified by the Government under Section 211(3C) of the Companies Act, 956. As per this standard;

"Accounting Standard (AS) 30, Financial Instruments: Recognition and Measurement, issued by the Council of the Institute of Chartered Accountants of India, comes into effect in respect of accounting periods commencing on or after 1 -4-2009 and will be recommendatory in nature for an initial period of two years. This Accounting Standard will become mandatory in respect of accounting periods commencing on or after 1 -4- 2011 for all commercial, industrial and business entities except to a Small and Medium -sized Entity…."

2 AS 30 further states;

From the date this Accounting Standard becomes recommendatory in nature, the following Guidance Notes issued by the Institute of Chartered Accountants of India,stand withdrawn:

(i) Guidance Note on Guarantees & Counter Guarantees Given by the Companies.

(ii) Guidance Note on Accounting for Investments in the Financial Statements of Mutual funds.

(iii) Guidance Note on Accounting for Securitisation.

(iv) Guidance Note on Accounting for Equity Index and Equity Stock Futures and Options."

3 Subsequent to the issuance of AS 30, the world witnessed financial crisis which raised issues with regard to accounting treatment of financial in struments. Accordingly, various accounting standards setting bodies including the ICAI examined these aspects. Insofar as International Accounting Standards Board is concerned certain modifications have been made in the corresponding International Account ing Standard, viz., IAS 39, Financial Instruments: Recognition and Measurement . The International Accounting Standards Board has also issued IFRS 9, Financial Instruments, which replaces certain requirements contained in IAS 39 and it is expected that ultimately the entire IAS 39 on which AS 30 is based is not expected to be replaced before June 30, 2011 as presently committed by IASB. Accordingly, AS 30 is not expected to continue in its present form including for those entities for which converged Indi an Accounting Standards will come into force from 1st April, 2011. In this changed scenario, the Council has reconsidered the matter regarding the status of the existing AS-30 and has decided to issue the following clarification for the guidance of the Members and others concerned.

4 It is clarified that in respect of the financial statements or other financial information for the accounting periods commencing on or after 1 st April 2009 and ending on or before 31 st March 2011, the status of AS 30 would be as below:

(i) To the extent of accounting treatments covered by any of the existing notified accounting standards (for eg. AS 11, AS 13 etc,) the existing accounting standards would continue to prevail over AS 30.

(ii) In cases where a relevant regul atory authority has prescribed specific regulatory requirements (eg. Loan impairment, investment classification or accounting for securitizations by the RBI ,etc), the prescribed regulatory requirements would continue to prevail over AS 30.

(iii) The preparers of the financial statements are encouraged to follow the principles enunciated in the accounting treatments contained in AS 30 . The aforesaid is, however, subject to (i) and ( ii) above.

5. From 1st April 2011 onwards,

(i) the entities to which converged Indian accounting standards will be applied as per the roadmap issued by MCA, the Indian Accounting Standard (Ind AS) 39, Financial Instruments; Recognition and Measurement , will apply.

(ii) for entities other than those covered under paragraph 5(i) above, the status of AS 30 will continue as clarified in paragraph 4 above .

6. The abovementioned clarifications would also be relevant to the existing AS 31, Financial Instruments: Presentation and AS 32, Financial Instruments: Disclosures as well as for Ind AS 32, Financial Instruments: Presentation and Ind AS 107, Financial Instruments: Disclosures , after 1st April 2011 onwards.

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