11 August 2014

Representation made by ICAI with respect to new formats of Form No.3CA/3CB and 3CD

Representation made by ICAI with respect to new formats of Form No.3CA/3CB and 3CD. - (11-08-2014)
The new formats of tax audit reports namely Form No.3CA, 3CB and 3CD have been notified through Notification no. 33/2014 on 25/7/2014 with immediate effect. With regard to the same, certain genuine concerns were raised by the members, which, ICAI has, through a representation dated 07.08.2014, brought to the notice of the Hon’ble Finance Minister, Revenue Secretary, and Chairman CBDT for appropriate action at their end. Also, certain preliminary observations on the new forms have been shared with them.

For the reasons mentioned in detail in the representation and summarized below, ICAI has suggested:

The new formats of tax audit reports be made effective from the Assessment Year 2015-16 and not Assessment Year 2014-15. Alternatively, the due date for furnishing tax audit reports for the Assessment Year 2014-15 may be extended to 30th November, 2014

It has also been suggested that appropriate clarification be issued with regard to the position of the tax audit reports e-filed during 01.04.2014 to 24.07.2014 relating to Assessment Year 2014-15.

Reasons given in brief:

a) The Internationally accepted Standard on Auditing-700 has not been considered.
b) The audit of 50% of the taxpayers like listed companies, PSUs, Banks, Insurance Companies have already been completed and the financial statements are published. Only, the audit reports are pending for uploading in the e-filing portal.
c) The notification has been issued just two months before the last date of furnishing tax audit report and the schema for the same is not yet made available. This will cause undue hardship to both the taxpayer and the auditors.

Direct Taxes Committee, ICAI

09 August 2014

HC prohibits Non advocates from appearing before VAT Authorities

CA Sandeep Kanoi

Allahabad High Court in the case of Tax Lawyers Association Lko. Vs. State Of U.P. as a Interim Measure held that no person whosoever, may be permitted to advertise in the Newspaper or any leaflet, inviting assesses for the purpose of filing of return or arguing before the authority under the VAT Act. Any person, who is not a registered advocate, shall not be permitted to appear before the Authority under the VAT Act. Judgment is a blow for Professionals like Chartered Accountant, Company Secretaries, Cost Accountants etc. who are working in the filed of UP VAT.

Brief Details of the case is as follows :-

Petitioners are aggrieved by the provisions contained in Rule 73 read with Rule 79(2)(f) of the U.P. Value Added Tax Rules 2008 (for short VAT Rules) which permits outsiders to practice in the field of Law before the VAT Authorities under the VAT Act. Learned Senior Counsel invited our attention towards Section 33 of the Advocates Act 1961 which provides that only Advocates are entitled to practice before any Court or authority. Learned Senior Counsel further submits that impugned Rule is ultra vires to the Constitution in view of the provision contained in the Advocates Act 1961 since under the garb of the impugned Rule, outsiders have been permitted to appear before the authorities under the VAT Act to practice in the field of Law. Attention has been invited by learned Senior Counsel to certain leaflets which seem to be advertisement by certain persons who are not registered Advocates inviting assesses with regard to filing of return on payment of Rs.400/- and odd.

Submission is that under the garb of said Rule, persons who are not skilled lawyer or have no knowledge in the field of Law, are appearing before the authority under the VAT Act, are spoiling academic atmosphere of the profession.

Argument advanced by learned Senior Counsel, as well as pleadings on record, require consideration.

Accordingly, writ petition is admitted.

Learned Chief Standing Counsel has accepted notice on behalf of respondents. Let notice be issued to Advocate General of the State of U.P. and counter affidavit be filed within a period of three weeks. Rejoinder affidavit may be filed within one week thereafter. In case counter affidavit is not filed, the Court may proceed further and pass order in the matter keeping in view the arguments advanced by learned Senior Counsel.

List immediately after four weeks for peremptory hearing.

In the meantime, as an interim measure, we direct the respondents that no person whosoever, may be permitted to advertise in the Newspaper or any leaflet, inviting assesses for the purpose of filing of return or arguing before the authority under the VAT Act. Any person, who is not a registered advocate, shall not be permitted to appear before the Authority under the VAT Act.

Source – Tax Lawyers Association Lko. Throu General Secy. & Anr. Vs. State Of U.P.Thru. Prin. Secy. Tax & Registration U.P. Lko. & Ors (Allahabad High Court), MISC. BENCH No. – 7116 of 2014, Order Date :- 6.8.2014

08 August 2014

NO SERVICE TAX AUDIT BY DEPARTMENT OR CAG

In an Important judgment of the Hon’ble Delhi High Court in the case of Travelite (India) Vs. Union of India & Ors. [W.P. (C) 3774/2013, C.M. No. 7065/2013] on the Service Tax Audit issue it is held that :

Rule 5A(2) of the Service tax Rules is ultra vires the provisions of the Finance Act:

The Hon’ble Delhi High Court held that Rules only give effect to statute’s provisions and intent and cannot be used to create substantive rights, obligations or liabilities that are not within the contemplation of the statute. Further, the only audit within the Statute is as mentioned under Section 72A of the Finance Act, i.e. a Special Audit, when only certain circumstances are fulfilled. The Parliament thus had a clear intention to provide for only a special audit. Accordingly, Rule 5A(2) of the Service Tax Rules cannot provide for a general audit of the assessee and is ultra vires the rule making power conferred under Section 94(1) of the Finance Act.

Further, the Hon’ble Delhi High Court also held that the Service Tax Audit Manual is merely an instrument of instructions for the service tax authorities and do not have any statutory force. Therefore, Rule 5A(2) of the Service Tax Rules cannot be justified on the basis of the Service Tax Audit Manual.

The Instruction regarding Audit by Department is contrary to the Statue:

Further, it was held that the Instruction is also ultra vires the Finance Act since executive instructions without statutory force cannot override the law. Consequently, any notice, circular, guideline etc., contrary to statutory laws cannot be enforced since the parent statute in this regard, the Finance Act itself does not authorise a general audit of the type envisioned by the impugned Rule 5A(2) of the Service Tax Rules, and furthermore only stipulates that a Special Audit can be undertaken if the circumstances outlined in Section 72A of the Finance Act are fulfilled. The Hon’ble High Delhi Court finds that the Instruction is not only an attempt to widen the scope of the law impermissibly but also is patently contrary to the Statute. The Instruction, to the extent it provides clarifications on Rule 5A(2) of the Service Tax Rules, pertaining to Service Tax audit, is quashed.

It will also not be out of place to mention that recently, the Hon’ble Allahabad High Court in the case of ACL Education Centre Pvt. Ltd. & Ors. Vs. Union of India [2014-TIOL-120-HC-ALL-ST] has held that the Audit under service tax is to be conducted by Chartered Accountants/ Cost Accountants only and not by officers of the Department.

Further the Hon’ble Calcutta High Court in the case of SKP Securities Ltd. Vs. DD (RA-IDT) & Ors. [2013-TIOL-38-HC-KOL-ST] has held that no audit of private assessee can be undertaken by CAG.
CA. Vinay Mittal, Ghaziabad

CA Final results May 2014

Group	No. of Candidates appeared	No. of candidates passed	Pass %	Pass % in Nov 13
Both Group	42533	3100	7.29%	3.11%
Group- I	65792	8884	13.50%	5.67%
Group-II	65706	7004	10.66%	7.35%

05 August 2014

RBI Monetary Policy-2014-15

Third Bi-Monthly Monetary Policy Statement, 2014-15

By
Dr. Raghuram G Rajan, Governor

Monetary and Liquidity Measures

On the basis of an assessment of the current and evolving macroeconomic situation, it has been decided to:

keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 8.0 per cent;
keep the cash reserve ratio (CRR) of scheduled banks unchanged at 4.0 per cent of net demand and time liabilities (NDTL);
reduce the statutory liquidity ratio (SLR) of scheduled commercial banks by 50 basis points from 22.5 per cent to 22.0 per cent of their NDTL with effect from the fortnight beginning August 9, 2014; and
continue to provide liquidity under overnight repos at 0.25 per cent of bank-wise NDTL and liquidity under 7-day and 14-day term repos of up to 0.75 per cent of NDTL of the banking system.

Consequently, the reverse repo rate under the LAF will remain unchanged at 7.0 per cent, and the marginal standing facility (MSF) rate and the Bank Rate at 9.0 per cent.

CBDT Circular on SEZ

SEZ tax holiday setback continues

By Ameya Kunte

It is learnt that CBDT has recently issued a circular which is likely to have a huge negative impact on tax holiday enjoyed by SEZ units in IT sector. The circular states that transfer of people from an existing-unit to a new SEZ unit in the first year of business will not be treated as splitting up or reconstruction of an existing business, provided such transfer does not exceed 20% of total technical manpower headcount actually engaged in software development in SEZ unit. This clarification will not only affect new SEZ unit set-ups, but will also impact tax holiday claims of past years resulting into a litigation.

SEZ which are considered as growth engines of the economy have suffered tax blows in the recent past. SEZs that were promised a complete tax holiday, have been hit with Minimum Alternate Tax (MAT). Contrary to the expectations of relief from Budget 2014, the Finance Minister defended MAT on SEZ citing that "removal of MAT from SEZ developers and units had no justification vis-à-vis other sectors of economy which were liable to pay MAT". FM has also stated that MAT paid is available as credit. However, almost 20% cash outflow on MAT does have significant negative impact on SEZ project's IRR. In 2014 Budget, the Government also clarified that SEZ claiming investment-linked tax benefit (u/s Sec 35AD) will not be eligible for tax holiday u/s 10AA and vice-versa, thus further curtailing tax incentive available to SEZ.

I think Government ought to clarify policy on SEZ scheme on an overall basis & tax is an integral part of it. Else, tax set-backs will surely continue to reduce SEZ attractiveness and drive investors out of SEZ scheme.

02 August 2014

MEF Date extended

MEF Date of online filing for 2014-15 extended to 10/8/14 & for hard copy of acknowledgement upto 20/8/14

01 August 2014

No Harassment Or High-Handed Behaviour With Taxpayers: New CBDT Chief

Shri. K. V. Chowdary, the newly appointed Chairman of the CBDT, has addressed a letter dated 01.08.2014 to the income-tax department in which he has pointed out that one of the immediate challenging task is reaching the 'not so easy' target for Revenue collection without undue harassment and high handedness. He has emphasized that the department has to improve its image and become a "friendly, professional, non adversarial and competent organization focused on Revenue collection, tax payers services and ensuring strict compliance with direct tax laws".

Mr. Chowdary has emphasized that one of the issues that requires "immediate and earnest attention" is quicker and reasonable resolution of the requests/ grievances of the taxpayers, early resolution of disputes, effective assessments analyzing all the facts and avoiding high pitched assessments, promotion of compliance, sending strong message by dealing with tax evasion and tax frauds firmly effectively and quickly, widening the tax base, etc.

30 July 2014

CBDT on AIF

Income from Alternate Investment Fund to be taxed at 30%

Trustees of the fund will be taxed if investors are not named

The Finance Ministry has said that income of Alternative Investment Funds (AIF) will be taxed at the rate of 30 per cent. Such funds basically pool in money from domestic and overseas investors and invest on the basis of a pre-determined policy.

The Central Board of Direct taxes was requested to clarify whether the income of such funds would be taxable in the hands of investors (contributors to the fund) or the trustees of the fund (who will be representing investors and know as Representative Assessee).

The board said that, "In a situation where the trust deed either does not name the investors, or does not specify the beneficial interest, the entire income of the fund shall be liable to be taxed at the Maximum Marginal Rate of income tax in the hands of the trustees of such AIFs in their capacity as representative assessee."

It has also been clarified that once tax paid by the trustee, investors will not be required to pay a tax. At present, the maximum rate of income tax is 30 per cent (plus education cess at the rate of 3 per cent of tax). Experts feel that this circular gives a much needed clarity, however, there are still some areas of concern.

Ammet Patel, Tax Partner at Sudit K Parekh & Co (a leading Chartered Accountant Firm), said, "Investors will know at the time of putting the money what will be the rate of tax incidence and hence will make decision accordingly."

He said that circulars are binding on the Income Tax Department and not on the tax payers. It would have been better had the Finance Ministry clarified through amendment in Income Tax Act.

Jyoti Rai, India Head of Mauritius-based Abax Corporate Services, said that the CBDT clarification needs to be revisited, since it otherwise may have negative implication for funds industry in India.

"The industry, for long, has been relying upon the Alternative Investment Fund Ruling for determinate tax pass through status," she said.

The circular also mentioned that in cases where the beneficiaries of the fund are determined or mentioned in the trust deeds, "the tax on the whole of the income of the fund, consisting of or including profits and gains of business, would be levied on the trustees of such AIFs being representative assessee at the Maximum Marginal Rate."

The circular clarified, however, that the new norms will not operate in area falling in the jurisdiction of High Court, which has taken or takes contrary decision on the issue.

Taxing issues

· CBDT was asked to clarify on the issue

· Once trustees are taxed, investors will not be taxed

· Tax experts welcome clarification, but some concerns remain

29 July 2014

COMPARISON OF TDS AND TCS REQUIREMENTS IN OLD AND NEW FORM NO. 3CD

COMPARISON OF TDS AND TCS REQUIREMENTS
IN OLD AND NEW FORM NO. 3CD AS REQUIRED
FOR TAX AUDIT U/s 44AB OF THE INCOME TAX ACT

Now Chartered Accountants will have to verify and certify details of TDS and TCS in a very elaborative manner and will have to check TDS/TCS (returns) statements of each quarter in detail.

(1) In Old form No. 3CD:- 27(a) :- (i) complied with all TDS obligations or not as per Chapter XVII-B,
Yes/No
(ii) earlier there was no need to inform about non compliance of TCS provisions.

(1) In New Form No. 3CD:- 34(a):- Now section wise details of TDS and TCS are required to be given.

(2) In Old form No. 3CD:- Show amount of Tax deductible and not deducted at all

(2) In New Form No. 3CD:- Show Section wise Gross amount on which tax was required to be deducted or collected

(3) In Old form No. 3CD:- Give amount and details of shortfall in TDS deducted

(3) In New Form No. 3CD:- (i)Give Sectionwise gross amount on which tax was deducted or collected at lesser rate.

(ii) Give sectionwise amount of TDS and TCS deducted or collected at lesser rate.

(4) In Old form No. 3CD:- Give amount and details of TDS deducted late

(4) In New form No. 3CD:- Give amount and details of Tax deducted but not paid

(5) In New Form No. 3CD:-

(i) Give section wise total amount of payments or receipts, e.g. give gross amount of interest other than interest on securities, gross payment of freight, etc., even if liable to TDS/TCS or not Sec. 192,193, 194, 194A, 194B, 194BB, 194C, 194D, 194E, 194H, 194I, 194IA, 194J, 195, 206C(1), 206C(1C), 206C(1D). However disallowance U/s 192& 194IA will become applicable from A.Y. 2015-16.
Disallowance U/s 40(a)(ia) presently covers Sec. 193, 194A, 194H, 194I, 194J, 194C, 195(40a-i).

(ii) Give Section wise gross amount on which tax was required to be deducted or collected.

(iii) Give sectionwise gross amount on which tax was deducted or collected.

(iv) Give Sectionwise gross amount on which TDS/TCS was deducted or collected at specified rate.

(v) Give sectionwise amount of TDS and TCS at specified rate.

(6) In New Form No. 3CD:- Details of TDS statement filed:-

(i) If TDS/TCS statement filed in prescribed time then no need to give information required in 34(b).

(ii) If TDS/TCS statement not filed within prescribed time then give due date of furnishing, give date of furnishing if furnished in time.

(iii) There seems controversy in para 34(b), that, if TDS/TCS statement is not filed within prescribed time then give information Whether statement of TDS/TCS contains information about all transactions which are required to be reported. And if TDS/TCS statement filed within prescribed time then there is no need to give information that TDS/TCS statement contains all required information. If TDS statement is not filed in time then information will also have to be furnished regarding form No. 15G/15H/27C and payment to transporters, not incorporated in statement. It will be difficult for bank auditors and for voluminous payment to transporters etc.

(7) In New Form No. 3CD:- Amount of Interest payable and paid:-

34.(c) If liable to pay interest U/s 201(1A)/206C(7) on delay payment or deduction/collection of TDS/TCS give amount of such interest payable .
(ii) Also give amount of interest paid.

Complied by:-
CA RAJESH MEHTA, INDORE

Old 3CD withdrawn

Department withdraws old utility of form 3CD. Any form 3CD to be uploaded will be in new utility which will be made available.

28 July 2014

Major changes in new 3CD

1. Particulars of registration under excise, vat, iec, service tax etc to be given
2. Location(s) (address(s)) of keeping books of accounts to be given
3. Particulars of sale of Land/Building less than Stamp value to be given
4. Comparison of amount debited vis a vis amount admissible on account of various deductions to be given
5. Detailed information to be given on amount debited to P & L a/c of Capital Exp, Personal Exp. ADVERTISEMENT
6. Details on TDS deducted not deposited or not deducted u/s 40(a) Non resident
7. Name of payee whose TDS not deposited, deducted to be given u/s 40(a)(ia)
8. Amount to be profit u/s 40A(3A) to be given
9. Modavt=Cenvat
10. (28) Whether receive shares below fair value u/s 56(2)(viia)- How it is possible for CA? ???
11. Whether assessee receive security premium taxable u/s 56(2)(viib)
12. Detailed info on TDS/TCS deducted section wise to be given
13. Late filing of TDS/TCS return
14. Interest Payable u/s 201(1A) and 206C(7)
15. Audit under Service tax to be reported
16. Demand/Refund raised under any other law during the PY to be reported

Format of Tax Audit changed

Format of Tax audit report revised vide notification no 33 dated 25 07 14.

Form 3CA, 3CB & 3CD of Income Tax substitute vide Notification S.O. 1902 (E) dated 25th July, 2014

http://www.taxindiaonline.com/RC2/pdfdocs/wnew/it14not033.pdf

27 July 2014

S. 271(1)(c) penalty

CIT vs. M/s Nayan Builders and Developers (Bombay High Court)

Mere admission of Appeal by High Court sufficient to disbar s. 271(1)(c) penalty

This Appeal cannot be entertained as it does not raise any substantial question of law. The imposition of penalty was found not to be justified and the Appeal was allowed. As a proof that the penalty was debatable and arguable issue, the Tribunal referred to the order on Assessee’s Appeal in Quantum proceedings and the substantial questions of law which have been framed therein. We have also perused that order dated 27.09.2010 admitting Income Tax Appeal No.2368 of 2009. In our view, there was no case made out for imposition of penalty and the same was rightly set aside.
www.itatonline.org

http://mygov.nic.in

Ministry of Communications & Information Technology26-July, 2014 15:37 IST

MyGov: A portal for Citizen Engagement towards governance launched

The portal MyGov, a platform that serves as a medium for the people, specially the youth, to connect with the Government actively and facilitates their engagement towards nation's development was launched today. Briefing about the initiative, Shri R.S. Sharma, Secretary of the Department of Electronics and IT said that 'MyGov' empowers people to contribute towards good governance through various tasks and discussions.

MyGov presents an opportunity to the citizens to participate in multiple theme-based discussions and to share their thoughts and ideas with a wide range of people. Citizens can upload documents, case studies, pictures, videos, other work plans etc. on the platform. They can volunteer for various tasks and submit their entries. These tasks would then be reviewed by other members and experts. Once approved, these tasks can be shared by those who completed the task and by other members on MyGov. Every approved task would earn credit points for completed the task. National Informatics Centre (NIC), Department of Electronics and Information Technology would manage the poratal .

Groups and corners are an important part of MyGov. The platform has been divided into various groups namely Clean Ganga, Girl Child Education, Clean India, Skilled India, Digital India, Job Creation. Each group consists of online and on ground tasks that can be taken up the contributors. The objective of each group is to bring about a qualitative change in that sphere through people's participation.

Shri Sharma, the Secretary Electronics and IT said that the platforms launched today – "Discuss" and "Do" – will take feedback from the community and improve on a continuous basis. He said that his department has plan to have a mobile app for mygov.in, wherein while on the move, the citizens will have the flexibility to take pictures from mobile and upload on the forum, report in-context problems and issues etc. He said that this platform may even be extended to act like public audit platform for government projects. For example, citizens giving feedback on status of completed infrastructure projects, on availability of various social sector programs etc, he added. http://mygov.nic.in

****

NCJ
(Release ID :107539)

26 July 2014

McA Updates

MCA has issued two very important updates:

Amendment in the Companies (Management and Administration) Rules
Companies (Removal of Difficulties) Sixth Order, 2014

The details are given below:

Amendment in the Companies (Management and Administration) Rules

MCA vide notification dated 24th July 2014 has amended the Companies (Management and Administration) Rules 2014 through the Companies (Management and Administration) Second Amendment Rules, 2014. The necessary details of the system are given below:

In rule 9, after sub-rule (3), the following proviso shall be inserted, namely:-
"Provided that nothing contained in this rule shall apply in relation to a trust which is created, to set up a Mutual Fund or Venture Capital Fund or such other fund as may be approved by the Securities and Exchange Board of India".
Text of Rule no 9(3) is given below
"9. Declaration in respect of beneficial interest in any shares.-
(1) A person whose name is entered in the register of members of a company as the holder of shares in that company but who does not hold the beneficial interest in such shares (hereinafter referred to as ("the registered owner"), shall file with the company, a declaration to that effect in Form No.MGT.4 in duplicate, within a period of thirty days from the date on which his name is entered in the register of members of such company:
Provided that where any change occurs in the beneficial interest in such shares, the registered owner shall, within a period of thirty days from the date of such change, make a declaration of such change to the company in Form No.MGT.4 in duplicate.
(2) Every person holding and exempted from furnishing declaration or acquiring a beneficial interest in shares of a company not registered in his name (hereinafter referred to as "the beneficial owner") shall file with the company, a declaration disclosing such interest in Form No. MGT.5 in duplicate, within beneficial interest in the shares of the company:
Provided that where any change occurs in the beneficial interest in such shares, the beneficial owner shall, within a period of thirty days from the date of such change, make a declaration of such change to the company in Form No.MGT.5 in duplicate.
(3) Where any declaration under section 89 is received by the company, the company shall make a note of such declaration in the register of members and shall file, within a period of thirty days from the date of receipt of declaration by it, a return in Form No.MGT.6 with the Registrar in respect of such declaration with fee."
in rule 13,-

the words "either value or volume of the shares" shall be omitted;
the Explanation shall be omitted.
Text of Rule no 13 is given below
"13. Return of changes in shareholding position of promoters and top ten shareholders.-
Every listed company shall file with the Registrar, a return in Form No.MGT.10 along with the fee with respect to changes relating to either increase or decrease of two percent, or more in the shareholding position of promoters and top ten shareholders of the company in each case, either value or volume of the shares, within fifteen days of such change.
Explanation.- For the purpose of this sub-rule, the "change" means increase or decrease by two percent or more in the shareholding of each of the promoters and each of the top ten shareholders of the company."

In rule 23, in sub-rule (1), for the words "not less than five lakh rupees", the words "not more than five lakh rupees" shall be substituted;
Text of Rule no 23 is given below
"23. Special Notice.-
(1) A special notice required to be given to the company shall be signed, either individually or collectively by such number of members holding not less than one percent of total voting power or holding shares on which an aggregate sum of not less than five lakh rupees has been paid up on the date of the notice."
In rule 27, in sub-rule (1) and in the Explanation, for the word "shall", the word "may" shall be substituted.
Text of Rule no 27 is given below
"27. Maintenance and inspection of document in electronic form.-
(1) Every listed company or a company having not less than one thousand shareholders, debenture holders and other security holders, shall maintain its records, as required to be maintained under the Act or rules made there under, in electronic form.
Explanation.- For the purposes of this sub-rule, it is hereby clarified that in case of existing companies, data shall be converted from physical mode to electronic mode within six months from the date of notification of provisions of section 120 of the Act."
The aforesaid amendment relating to maintenance of records in electronic format comes as major relief to the corporates , who were facing various difficulties in finding solutions for converting their existing data in electronic form. Moreover there were also various confusions relating to the period for which the data needs to be converted.

Companies (Removal of Difficulties) Sixth Order, 2014

MCA has issued the 6th ROD order dated 24th July. The ROD deals with definition of the term "related party" under section 2 of the Companies Act 2013 and provides relief for the difficulty arising due to absence of the word "relative" from certain clause of the definition resulting in disharmonious interpretation. As per the ROD, in section 2 of the Companies Act, 2013, in clause (76), in sub-clause (iv), after the word "manager", the word "or his relative" shall be inserted. Relevant text of the Section 2(76) is given below: 2(76) "related party", with reference to a company, means—

a director or his relative;
a key managerial personnel or his relative;
a firm, in which a director, manager or his relative is a partner;
a private company in which a director or manager is a member or director;
a public company in which a director or manager is a director or holds along with his relatives, more than two per cent. of its paid-up share capital;
any body corporate whose Board of Directors, Managing Director, or manager is accustomed to act in accordance with the advice, directions or instructions of a director or manager;
any person on whose advice, directions or instructions a director or manager is accustomed to act:

Provided that nothing in sub-clauses (vi) and (vii) shall apply to the advice, directions or instructions given in a professional capacity;
any company which is—

a holding, subsidiary or an associate company of such company; or
a subsidiary of a holding company to which it is also a subsidiary:

such other person as may be prescribed;

25 July 2014

Changes Made in Finance (No.2) Bill,2014

Changes made by Finance (No. 2) Bill, 2014 as passed by the Lok Sabha

The list of changes made in the Finance Bill are as under:

1) Unlisted securities and units of MF transferred between 01-04-14 and 10-07-14 shall be deemed to be long-term capital assets, if held for more than 12 months.

2) Long-term Capital Gains on Units of Mutual Funds transferred between 01-04-14 and 10-07-14 shall be taxable at 10% without indexation.

3) A third proviso has been inserted in Section 92C to provide that where more than one price is determined by the most appropriate method, the arm's length price shall be computed in such manner as may be prescribed. Accordingly, the provisions of first and second proviso (arithmetic mean and tolerable range) shall not apply.

4) Taxpayers can approach Settlement Commission even for pending re-assessment cases.

5) Resident taxp
--

24 July 2014

Alert on Section 158 of Companies Act,2013

DIN to be mentioned with Director's Signature (Section 158)

Now, Director's name & DIN (Director Identification Number) has to be mentioned with their signature on all the documents to be signed in the capacity of director.

PENALTY: – Company and every officer of the company who is in default or such other person shall be punishable with fine which may extend to Rs. 10,000/- and where the contravention is continuing one, with a further fine which may extend to Rs. 1,000/- for every day after the first during which the contravention continues.

IMMEDIATE ACTIONS TO BE TAKEN:-

One should ensure that DIN is written, wherever he is signing as Director of the Company.

Generally its observed that Directors don't mention DIN even on Papers, Returns, Balance Sheet, Annual Return etc. they are filing with ROC, CLB.

EXTRACT OF SECTION 158 OF THE COMPANIES ACT, 2013

Section 158 – Obligation to indicate Director Identification Number

Every person or company, while furnishing any return, information or particulars as are required to be furnished under this Act, shall mention the Director Identification Number in such return, information or particulars in case such return, information or particulars relate to the director or contain any reference of any director.

Source: Taxguru

19 July 2014

Digital library

ICAI Launches digital library

U can download many publications FOC.

Very useful and handy.

http://icaidigitallibrary.org/index.php?option=com_booklibrary&view=all_categories&layout=categories&Itemid=697

18 July 2014

Payment Banks and Small Banks

RBI releases Draft Guidelines for Licensing of Payments Banks and Small Banks

The Reserve Bank of India released on its website today, the Draft Guidelines for "Licensing of Payments Banks" and Draft Guidelines for "Licensing of Small Banks". The Reserve Bank has sought views/comments on the draft guidelines from all interested parties and general public. Suggestions and comments on the draft guidelines may be sent by August 28, 2014 to the Chief General Manager, Reserve Bank of India, Department of Banking Operations and Development, Central Office, 13th floor, Central Office Building, Shahid Bhagat Singh Marg, Mumbai-400001 or can be emailed by clicking here.

Final guidelines will be issued and the process of inviting applications for setting up of Payments Banks and Small Banks will be initiated after receiving feedback, comments and suggestions on the draft guidelines.

Both, payments banks and small banks are "niche" or "differentiated" banks; with the common objective of furthering financial inclusion. While small banks will provide a whole suite of basic banking products, such as, deposits and supply of credit, but in a limited area of operation, payments banks will provide a limited range of products, such as, acceptance of demand deposits and remittances of funds, but will have a widespread network of access points particularly to remote areas, either through their own branch network or through Business Correspondents (BCs) or through networks provided by others. They will add value by adapting technological solutions to lower costs.

The entities eligible to set up a Payments Bank include existing non-bank Pre-paid Instrument Issuers (PPIs), Non-Banking Finance Companies (NBFCs), corporate BCs, mobile telephone companies, super-market chains, companies, real sector cooperatives, and public sector entities. The entities eligible to set up a small bank include resident individuals with ten years of experience in banking and finance, companies and societies, NBFCs, Micro Finance Institutions and Local Area Banks.

The eligible entities should be "fit and proper" in order to be eligible to promote payments banks and small banks. The Reserve Bank would assess the 'fit and proper' status of the applicants on the basis of their past record of sound credentials and integrity; financial soundness and successful track record of at least five years in running their businesses.

The minimum paid up capital requirement of both payments banks and small banks is kept at Rs. 100 crore, of which the promoters' initial minimum contribution will be at least 40 per cent, to be locked in for a period of five years. Shareholding of the promoters should be brought down to 40 per cent within three years, 30 per cent within a period of 10 years, and to 26 per cent within 12 years from the date of commencement of business of the bank.

Background

The Reserve Bank last came out with a set of guidelines for licensing of new banks in the private sector in February 2013. The process of licensing culminated with the announcement by the Reserve Bank (Press Release dated April 2, 2014) that it would grant "in-principle" approval to two applicants who would set up new banks in the private sector within a period of 18 months.

While announcing the decision to grant "in-principle" approval to the two applicants, the Reserve Bank also indicated that going forward, it intends to use the learning experience from this licensing exercise to revise the guidelines appropriately and move to grant licences more regularly. Further, the Reserve Bank would work on a policy of having various categories of "differentiated" bank licences which will allow a wider pool of entrants into banking.

Further, in the Union Budget 2014-2015 presented on July 10, 2014, the Hon'ble Finance Minister announced that:

"After making suitable changes to current framework, a structure will be put in place for continuous authorization of universal banks in the private sector in the current financial year. RBI will create a framework for licensing small banks and other differentiated banks. Differentiated banks serving niche interests, local area banks, payment banks etc. are contemplated to meet credit and remittance needs of small businesses, unorganized sector, low income households, farmers and migrant work force".

Taking into account the above, the draft guidelines on payments banks and small banks as differentiated or restricted banks have been prepared. The Reserve Bank is working on the guidelines for continuous authorisation of universal banks and will come out with these separately.

Alpana Killawala
Principal Chief General Manager

Press Release: 2014-15/121