ICAI has issued Exposure Draft of Ind AS compliant Schedule III to the Companies Act 2013 for Public comments.
Schedule III will be the presentation format for companies under IFRS-converged Ind ASs. Last date for comment submission is January 17, 2015. Now u can acess the ED and can submit the comment online at the following link:
http://www.icai.org/comments/asb/viewdetailcomment.html?commentdoc_id=11
| New Draft of Twelve Income Computation and Disclosure Standards (ICDS) has been Uploaded on the Finance Ministry and Income-Tax Department Website for Seeking Comments from Stakeholders and General Public by 8th February, 2015 |
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Sub- section (1) of Section 145 of the Income-tax Act, 1961 ('the Act') provides that the income chargeable under the head "Profits and gain of business or profession" or "Income from other sources" shall [subject to the provisions of sub-section (2)] be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee. Sub-section (2) of Section 145 provides that the Central Government may notify Income Computation and Disclosure Standards (ICDS) for any class of asssessees or for any class of income.
The Central Board of Direct Taxes (CBDT) had constituted a Committee comprising departmental officers and professionals in December, 2010 to inter alia suggest standards for the purposes of notification under Section 145(2) of the Act. The Committee submitted its first Interim Report in August 2011. The Committee submitted its Final Report along with the Draft of Standards in August, 2012 which was placed in public domain for comments.
On the basis of the suggestions received from the stakeholders and examination of the same by the CBDT, the draft standards submitted by the Committee have been revised.
The new draft of 12 Income Computation and Disclosure Standards(ICDS) has been uploaded on the Finance Ministry website (www.finmin.nic.in) and Income-tax Department website(www.incometaxindia.gov.in) for comments from stakeholders and general public. The comments and suggestions on the draft ICDS may be submitted by 8th February, 2015 at the email address (dirtpl3@nic.in or rkbhoot@gmail.com) or by post at the following address with "Comments on draft ICDS" written on the envelope:
*****
DSM/KA
(Release ID :114471) |
We would like to inform you that it has been decided to extend the last date for complying with the CPE hours requirement for the Calendar Year 2014 - from 31st December, 2014 to 31st March, 2015
Chairman
CPE Committee
Road Map Revised for Implementation of Indian Accounting Standards for Companies Other Than Banking Companies, Insurance Companies and NBFCs; Notification to Follow Soon
In pursuance of the Budget statement, the Ministry of Corporate Affairs, Government of India after wide consultations with various stakeholders and regulators, has drawn-up a revised Road Map for companies other than Banking Companies, Insurance Companies and Non- Banking Finance Companies (NBFC’s) for implementation of Indian Accounting Standards (Ind AS) converged with the International Financial Reporting Standards (IFRS).
The Indian Accounting Standards (Ind AS) shall be applicable to the companies as follows:
(i)On voluntary basis for financial statements for accounting periods beginning on or after April 1, 2015, with the comparatives for the periods ending 31st March, 2015 or thereafter;
(ii)On mandatory basis for the accounting periods beginning on or after April 1, 2016, with comparatives for the periods ending 31st March, 2016, or thereafter, for the companies specified below:
(a)Companies whose equity and/or debt securities are listed or are in the process of listing on any stock exchange in India or outside India and having net worth of Rs. 500 Crore or more.
(b)Companies other than those covered in (ii) (a) above, having net worth of Rs. 500 Crore or more.
(c)Holding, subsidiary, joint venture or associate companies of companies covered under (ii) (a) and (ii) (b) above.
(iii)On mandatory basis for the accounting periods beginning on or after April 1, 2017, with comparatives for the periods ending 31st March, 2017, or thereafter, for the companies specified below:
(a)Companies whose equity and/or debt securities are listed or are in the process of being listed on any stock exchange in India or outside India and having net worth of less than rupees 500 Crore.
(b)Companies other than those covered in paragraph (ii) and paragraph (iii)(a) above that is unlisted companies having net worth of rupees 250 crore or more but less than rupees 500 Crore.
(c)Holding, subsidiary, joint venture or associate companies of companies covered under paragraph (iii) (a) and (iii) (b) above.
However, Companies whose securities are listed or in the process of listing on SME exchanges shall not be required to apply Ind AS. Such companies shall continue to comply with the existing Accounting Standards unless they choose otherwise.
(iv)Once a company opts to follow the Indian Accounting Standards (Ind AS), it shall be required to follow the Ind AS for all the subsequent financial statements.
(v)Companies not covered by the above roadmap shall continue to apply existing Accounting Standards prescribed in Annexure to the Companies (Accounting Standards) Rules, 2006.
A notification on the above lines shall be issued shortly.
Many companies still grappling with new CSR rules of Companies Act
Realty major DLF, in its 2008 annual report, identified sponsoring the Indian Premier League as part of its responsibility as a corporate citizen. Now, many would believe that the new legislation under the Companies Act
, 2013, has removed many of the loose connotations associated with corporate social responsibility
(CSR), but the fact remains that companies are still grappling with the new rules that are binding from the current fiscal.
Companies with a net worth of Rs 500 crore, or a turnover of Rs 1,000 crore, or net profit of Rs 5 crore, need to spend at least 2 per cent of their average net profit for the immediately preceding three financial years on CSR
activities.
ICAI ON C&AG REPORT Attention has been drawn to certain issues raised on the certification work done by the members of the profession in the report of Comptroller and Auditor General of India (C&AG) entitled ‘Appreciation of Third Party (Chartered Accountant) Reporting in Assessment proceedings’ (Report No. 32 of 2014).
The issues raised in said report were deliberated in the recent meeting of the Council held from 23rd to 25th December, 2014. The Council was of the view that:
1. Issues raised in the report be studied for initiating a structured and meaningful dialogue with the office of C&AG.
2. Necessary steps be initiated against the erring members wherever any act of professional misconduct is observed.
3. Refer details of all such members to the Disciplinary Directorate, who are said to have done Tax Audit, under section 44AB of the Income Tax Act, 1961, more than the limit prescribed by the Institute.
4. Develop an IT based system in coordination with the authorities concerned especially to obtain the report of total numbers of Tax Audit done by each member to find out the details of the members not adhering to the Institute’s guidelines.
5. Call for such information, as required, from the members invoking authority under the relevant provisions of the Chartered Accountants Act, 1949 and Regulations/ Rules framed thereunder.
6. Keep the communication channels updated especially with the stakeholders so as to protect the interest of the profession.
7. Create a Special Cell with proper staff to deal with these matters in an urgent manner.
V. Sagar
Acting Secretary
The Institute of Chartered Accountants of India
27th December, 2014
n5-minute test is suggested to filter out risky companies:
Auditor’s Opinion: Read the Auditor’s Opinion in the 10-K to make sure that it is a “going concern” and that the financial statements “present fairly, in all material respects, … in conformity with accounting principles generally accepted…”.
Lawsuits: Read footnotes for legal proceedings that can seriously harm the company. Stay away if you don’t understand the full impact of a lawsuit.
Unusual losses: Check how often the company reported unusual losses (e.g. bad debt, inventory write-downs, severance payments to laid-off workers, etc.) in the last several years.
Earnings restatements: Almost every major financial disaster was preceded by an earnings restatement. Make sure the company has not restated in the last several years.
Intangibles assets ratio: [(Goodwill + other intangibles) / Total assets] should be < 20%. Intangibles can be impaired and quickly disappear from the balance sheet. In credit crunch times, intangibles are hard to sell. Large intangibles are also a sign of management overpaying for acquisitions.
Debt-to-equity ratio: [(Sum of all interest-bearing debt including working capital lines of credit, short-term debt, long-term debt, and capital leases) / Shareholders’ equity] should be <= 75%.
Revenue growth: Look for revenue growth of >= 30% over the last 5 years (cumulative, not annual figure). Best revenue growth comes from increase in units sold, followed by price increases.
Stock-based compensation ratio: [Stock-based compensation / accrual profits] <= 15%. This measures how much of the profit goes to employees rather than shareholders.
Short ratio: [Number of shares short / Float] <= 15%. If more than 15%, understand why and determine if that is justified.
The following procedure will be followed for appointment statutory branch auditors (SBAs) in public sector banks (PSBs):
(i) The list of eligible auditors/audit firms will be prepared by the Institute of Chartered Accountants of India (ICAI) as per the norms prescribed by RBI.( LIST prepared and ready to shoot to RBI)
(ii) The above list will be subjected to scrutiny by RBI for identifying the continuing and rested firms and excluding audit firms against whom adverse remarks/disciplinary proceedings are pending or who have been denied audit.
(iii) RBI will, thereafter, forward the final list of all eligible auditors/audit firms to PSBs for selection.
(iv) The PSBs will select the required number of branch auditors/audit firms. Banks will be required to clearly advise the audit firms selected for consideration of appointment that each audit firm can take up audit assignment (branch audit) in one PSB only. The audit firm should give their consent in writing for consideration of appointment in the bank concerned for the particular year and the subsequent continuing years.( the firms whose four year term has not completed shall be on the panel of sam bank.no fresh consent shall be require)
(v) The consent given by an audit firm will be treated as irrevocable and request, if any, from audit firms for changing the bank, after giving its consent to the bank concerned will not be entertained.( some of the banks takes consent from auditor and dont carry their names to list.auditors ignore the other bank offer being consent given .Attention is required for such exercise)
(vi) After the selection of branch auditors, PSBs will be required to recommend the names of both continuing and selected branch auditors to RBI for seeking its prior approval before their actual appointment, as per statutory requirement.
3. SBAs will have a maximum tenure of four years. The appointment of SBAs will be made on an annual basis, subject to their fulfilling the eligibility norms prescribed by RBI from time to time and also subject to their suitability.
4. The number of eligible auditors / audit firms is more than the number of branches to be audited at the following 33 centres (viz. Mumbai, Kolhapur, Pune, Solapur, Thane, Kolkata, Chennai, Coimbatore, Delhi/ New Delhi, Ajmer, Bikaner, Jaipur, Kota, Udaipur, Ahmedabad, Vadodara, Surat, Hyderabad, Chandigarh, Raipur, Faridabad, Gurgaon, Panchkula, Panipat, Sonipat, Bangalore, Ernakulam, Indore, Nagpur, Ludhiana, Jodhpur, Bhilwara, and Ghaziabad). In such centres, the auditors/ audit firms will be put to a period of compulsory rest for two years after completion of four years of continuous branch audit. In other centres, where the number of eligible auditors / audit firms is less than the number of branches to be audited, the branch auditors on completion of four years of continuous branch audit will be subjected to the policy of rotation.(as per policy the other places are out of rotation but the same is being misused)
5. While allotting branches, banks are required to select auditors/audit firms which are in close proximity to their offices/branches. Banks are also required to have a suitable mix of various categories of auditors / audit firms while selecting the branch auditors keeping in view the size of the branches to be audited.( Though banks have nothing to do with the cooling of firms other than 33 places but the same is being implemented from last four years as CAs are in surplus .Though this year PDC has prescribed a list with gap)
6. As regards statutory branch audit to be carried out by SCAs, banks will allot the top 20 branches(to be selected strictly in order of the level of outstanding advances) in such a manner as to cover a minimum of 15% of total gross advances of the bank by SCAs.
CAG pulls up chartered accountants for incorrect income tax information
Coming down heavily on chartered accountants hired by the income tax department, a CAG report on Friday said their failure to submit correct tax information resulted in levying of lower taxes by as much as Rs 2,813.11 crore in 367 cases surveyed.
"We found cases where the CAs failed to report full and correct information in 367 cases leading to short levy of taxes of Rs 2,813.11 crore and where the Assessment Officers failed to utilise the information available in 102 reports or certificates submitted to them leading to short levy of taxes of Rs 1,310.05 crore," said the report of the official auditor.
"We also found in another 616 cases where CAs committed mistakes viz in allowance of exemption or deductions, charging of tax on book profit under Section 115JB, adoption of arm's length price and reporting on cash payments exceeding Rs 20,000 per day," it said.
The performance audit covered assessments completed during the period from financial years 2010-11 to 2012-13 and up to the date of audit.
In case of major audit observations, it said assessment records of previous assessment years (AYs) were also linked wherever found necessary.
"We found that 18.87 per cent of CAs (12,435 CAs) for 2013-14 issued more tax audit reports than prescribed by ICAI. We also got cases where CAs did not mention their membership numbers," it said.
Income tax department did not refer any case for professional negligence to ICAI for taking action against erring CAs, it said.
The report also said that CAs failed to give correct information relating to allowance of depreciation in 66 cases involving short levy of tax of Rs 457.79 crore
Tax auditors did not report correct information regarding brought forward loss or depreciation resulting in irregular brought forward loss or depreciation allowance in 46 cases involving short levy of tax of Rs 557.79 crore, it said.
"We have also commented on lacunae in the existing (tax) forms which need modification in order to capture full information of the affairs of assessees so that taxes are applied correctly," it said.
The CAs are regarded as facilitators for the Income Tax Department in administering the provisions of the The Income Tax Act, 1961 correctly.
The tax audit reports (TARs) or certificates issued by them serve as a valuable reference guide to the Assessing Officers (AOs) while making assessments.
CAG Report Exposes Shocking Carelessness And Blunders By CAs
The Comproller & Auditor General of India (CAG) has issued a report No. 32 of 2014 setting out the results of the performance audit of “Appreciation of Third Party (Chartered Accountant) Certification in Assessment Proceedings of the Department of Revenue”.
The report makes for shocking reading because it exposes the utterly careless manner in which the Chartered Accountants have conducted audits and issued certificates in blatant disregard of all basic norms.
According to the CAG’s report, there has been short levy of taxes to the extent of Rs 2,813.11 crore in the 367 cases which were surveyed, as a result of wrong audit reports issued by CAs.
The report also points out that there are 616 cases where CAs have committed mistakes in allowance of exemption or deductions, charging of tax on book profit under Section 115JB, adoption of arm’s length price and reporting on cash payments exceeding Rs 20,000 per day.
The CAG report gives several illustrations of such carelessness and also provides the names and membership numbers of the CAs who have conducted the audit.
The report also laments that no action u/s 288 of the Act has been taken by the department against the erring CAs.
It may be recalled that the ITAT has recently in Vijay V Meghani vs. DCIT (ITAT Mumbai) passed severe strictures against the CA profession for alleged falling standards. The Tribunal has also advised the ICAI to take action against erring members and to tackle the issue on a war footing.
In response to the criticism advanced by the ITAT, the ICAI had issued a ste [truncated by WhatsApp]
Cabinet Clears Amendment to GST Bill: 10 Facts
The Cabinet on Wednesday cleared the Constitutional Amendment Bill on Goods and Services Tax or GST, paving the way for tabling of the new legislation in the current session of Parliament.
Here's your 10-point cheat sheet on this big story:
1) The revised Bill takes into account the deal reached between the Centre and states on contentious issues like including petroleum, alcohol and tobacco in GST. These items account for a major portion of states' tax revenues.
2) At present, petroleum products will be not be included in the GST but will remain within the central act and will be brought in at a later stage through the GST councils. Alcohol will be exempt from GST and states would have the freedom to decide their own levy. Service tax will be subsumed within GST.
3) In case of losses in the states' exchequer, the Centre will give 100 per cent compensation for the first three years, 75 per cent compensation for the fourth year and 50 per cent compensation for the fifth year.
4) The government wants to introduce the Bill in the ongoing winter session that concludes on December 23.
5) The government on Monday decided to keep petroleum out of the proposed GST in return for states agreeing to entry tax being subsumed in the new indirect tax regime proposed from April 2016.
6) The GST Bill needs to be cleared by at least half of the states, besides Parliament, before its implementation.
7) The launch of GST has been delayed by nearly seven years, as states were concerned about revenue losses on introduction of the new tax regime.
8) The GST will cut down the large number of taxes imposed by the central government and states and will lead to the creation of a unified market, which would facilitate seamless movement of goods across states and reduce the transaction cost of businesses
9) The GST Constitutional Amendment Bill, which was introduced in the Lok Sabha in 2011, has lapsed and the Modi government will be required to come up with a fresh bill.
10) If successful, economists say the implementation of GST could add 2 percentage points to GDP growth.
(With PTI inputs)
The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi, today approved the introduction of the Companies (Amendment) Bill, 2014 in Parliament to make certain amendments in the Companies Act, 2013.
The Companies Act, 2013 (Act) was notified on 29.8.2013. Out of 470 sections in the Act, 283 sections and 22 sets of Rules corresponding to such sections have so far been brought into force. In order to address some issues raised by stakeholders such as Chartered Accountants and professionals, following amendments in the Act have been proposed:
1. Omitting requirement for minimum paid up share capital, and consequential changes. (For ease of doing business)
2. Making common seal optional, and consequential changes for authorization for execution of documents. (For ease of doing business)
3. Prescribing specific punishment for deposits accepted under the new Act. This was left out in the Act inadvertently. (To remove an omission)
4. Prohibiting public inspection of Board resolutions filed in the Registry. (To meet corporate demand)
5. Including provision for writing off past losses/depreciation before declaring dividend for the year. This was missed in the Act but included in the Rules.
6. Rectifying the requirement of transferring equity shares for which unclaimed/unpaid dividend has been transferred to the IEPF even though subsequent dividend(s) has been claimed. (To meet corporate demand)
7. Enabling provisions to prescribe thresholds beyond which fraud shall be reported to the Central Government (below the threshold, it will be reported to the Audit Committee). Disclosures for the latter category also to be made in the Board’s Report. (Demand of auditors)
8. Exemption u/s 185 (Loans to Directors) provided for loans to wholly owned subsidiaries and guarantees/securities on loans taken from banks by subsidiaries. (This was provided under the Rules but being included in the Act as a matter of abundant caution).
9. Empowering Audit Committee to give omnibus approvals for related party transactions on annual basis. (Align with SEBI policy and increase ease of doing business)
10. Replacing ‘special resolution’ with ‘ordinary resolution’ for approval of related party transactions by non-related shareholders. (Meet problems faced by large stakeholders who are related parties)
11. Exempt related party transactions. holding companies and wholly owned subsidiaries from the requirement of approval of non-related shareholders. (corporate demand)
12. Bail restrictions to apply only for offence relating to fraud u/s 447. (Though earlier provision is mitigated, concession is made to Law Ministry & Winding Up cases to be heard by 2-member Bench instead of a 3-member Bench. (Removal of an inadvertent error)
14. Special Courts to try only offences carrying imprisonment of two years or more. (To let magistrate try minor violations).
http://pib.nic.in/newsite/PrintRelease.aspx?relid=112434
November 24, 2014
EXTERNAL COMMERCIAL BORROWINGS (ECB) POLICY - PARKING OF ECB PROCEEDS
A.P. (DIR Series 2014-15) Circular No. 39, DATED 21-11-2014
Attention of Authorized Dealer Category - I (AD Category- I) banks is invited to A.P. (DIR Series) Circular No. 52 dated November 23, 2011 relating to parking of proceeds of External Commercial Borrowings (ECB).
2. At present, eligible ECB borrowers are required to bring ECB proceeds, meant for Rupee expenditure in India for permitted end uses, such as, local sourcing of capital goods, on-lending to Self-Help Groups or for micro credit, payment for spectrum allocation, etc., immediately for credit to their Rupee accounts with AD Category - I banks in India.
3. With a view to providing greater flexibility to the ECB borrowers in structuring draw down of ECB proceeds and utilisation of the same for permitted end uses, it has been decided to permit AD Category -I banks to allow eligible ECB borrowers to park ECB proceeds (both under the automatic and approval routes) in term deposits with AD Category- I banks in India for a maximum period of six months pending utilisation for permitted end uses. The facility will be with the following conditions:
| i. |
| The applicable guidelines on eligible borrower, recognised lender, average maturity period, all-in-cost, permitted end uses, etc. should be complied with. |
| ii. |
| No charge in any form should be created on such term deposits i.e. to say that the term deposits should be kept unencumbered during their currency. |
| iii. |
| Such term deposits should be exclusively in the name of the borrower. |
| iv. |
| Such term deposits can be liquidated as and when required. |
4. The amended ECB policy will come into force with immediate effect and is subject to review. All other aspects of ECB policy would remain unchanged.
5. AD Category banks may bring the contents of this circular to the notice of their constituents and customers.
6. The directions contained in this circular have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.
CA institute officials under lens
Debasish Konar,Nov 22, 2014, 12.00AM IST
KOLKATA: Enforcement directorate is going to summon some senior officials of the Institute of Chartered Accountants of India (ICAI) as the institute had failed to initiate action against the chartered accountants (CAs) involved in chit fund scams. The accused CAs had vouched false audit reports.
When the SFIO (Serious Fraud Investigation Office) had been analyzing the audit reports of the Ponzi firms, the fabricated reports made by these CAs had led them nowhere.
ED, while probing the Saradha scam, found that the CAs had given false statements while making the audit reports. The agency found that a number of these CAs were directly involved in the scam. Not only the CAs involved with Saradha, but CAs involved with other chit funds were also found submitting false reports.
ED's special director Yogesh Gupta, who is himself a CA, wrote to the ethical committee of the institute complain about these unethical CAs. Some CAs had told ED that they were removed from the Ponzi firms when they refused to sign bogus audit reports.
The ethical committee was asked to initiate action against the CAs and already about 40 CAs have been identified for such unethical practices. According to ED officials, 10 of them were in gross misconduct, being part of the nexus.
An ED official said, "About 15 other CAs had been grossly negligent as they did not verify the audit reports properly and simply signed them. Another 15 CAs were found to be negligent and failed to perform their duty according to professional rules."
ICAI is yet to take action against these CAs. The institute informed ED that there was no proper process to cancel the practicing certificate.
Forwarded as received
Highlights of New Proposed Goods & Service Tax (GST)
1. The basic principal governing behind GST is to have single Taxation System for Goods and Services
across the country. Currently Indian economy has various taxes on Goods and services such as VAT,
Service Tax, Excise, Entertainment Tax, Luxury Tax Etc. now in the new Proposal of GST; we will be
having only two taxes on all goods and Services as follows:
a. State Level GST(SGST)
b. Central Level GST (CGST)
2. In case of Central GST, following Taxes will be subsumed with CGST which are at presently levied
separately on goods and services by Central government:
a. Central Excise Duty
b. Additional Excise Duty
c. The Excise Duty levied under Medicinal and toiletries preparation Act
d. Service Tax
e. Additional Custom Duty (CVD)
f. Special Additional Duty
g. Surcharge
h. Education Cess and Secondary and Higher Secondary education Cess
3. In case of State GST, following taxes will be subsumed with SGST; which are priestly levied on goods
and services by State Governments :
a. VAT/ Sales Tax
b. Entertainment Tax (unless it is levied by local bodies)
c. Luxury Tax
d. Tax on lottery
e. State Cess and Surcharge to the extend related to supply of goods and services.
4. The basic principal for subsuming of taxes in GST is provided as follows:
a. Those taxes which commences with import / manufacture /production of goods or provision
of services at one end and the consumption of goods and services o other end.
b. The taxes, levies and fees which are not related to supply of goods & services should not be
subsumed under GST.
5. Taxes on items containing alcohol and petroleum product are kept out of GST. They will continue to
be taxed as per existing practices.
6. Tax on Tobacco products will be subject to GST. But government can levy the extra Excise duty over
and above GST.
7. The Small Taxpayer: The small taxpayers whose gross annual turnover is less than 1.5 Crore are
exempted from CGST and SGST.
8. Input Tax Credit (ITC): Taxes Paid against CGST allowed as ITC against CGST. Taxes paid against SGST
allowed as ITC against SGST.
9. Cross utilization of ITC between the Central GST and State GST would not be allowed. Exception: Inter
State Supply of goods and services.
10. PAN based identification number will be allowed to each taxpayer to have integration of GST with
Direct Tax.
11. IGST Model and ITC:
a. Center would levy IGST levy ( CGST + SGST)
b. The ITC will be allowed in this transaction will be SGST, IGST, CGST as applicable.
c. Appropriate provision will be provided for consignment or Stock transfer.
12. GST Rate Structure:
a. Two Rate Structure
b. A lower rate for necessary items and goods of basic importance
c. Standard rate for goods in General
d. Special Rate
13. Exports are fully exempted with Zero rates.
Forwarded as received...
| GOVERNMENT OF INDIA CIRCULAR NO 990/14/2014-CX-8, Dated: November 19, 2014 To, Principal Chief Commissioners/Chief Commissioners of Central Excise (All) Madam/Sir, Sub: Clarification regarding availment of CENVAT credit after six months-reg. Attention is invited to the Notification of the Government of India in the Ministry of Finance, Department of Revenue No. 21/2014-CE (NT) dated 11.07.2014, vide which, inter alia, amendment was made in Rule 4(1) and 4(7) of CENVAT Credit Rules, 2004 (CCR, 2004) to prescribe that manufacturer or output service provider shall not take CENVAT credit after six months of the date of issue of any of the documents specified in sub-rule (1) of Rule 9. 2. Concerns have been expressed by trade that in view of above changes, the re-credit taken in following three situations may be hit by the time limit of six months prescribed: i. 3rd proviso to Rule 4(7) of CCR, 2004 prescribes that if the payment of value of input service and service tax payable is not made within three months of date of invoice, bill or challan, then the CENVAT Credit availed is required to be paid back by the manufacturer or service provider. Subsequently, when such payment of value of input service and service tax is made, the amount so paid back can be re-credited. ii. According to Rule 3(5B) of CCR, 2004, if the value of any input or capital goods before being put to use on which CENVAT Credit has been taken, is written off or such provisions made in Books of Account, the manufacturer or service provider is required to pay an amount equal to credit so taken. However, when the inputs or capital goods are subsequently used, the amount so paid can be re-credited in the account. iii. Rule 4(5)(a) of CCR, 2004 prescribes that in case inputs sent to job worker are not received back within 180 days, the manufacturer or service provider is required to pay an amount equal to credit taken on such inputs in the first instance. However, when the inputs are subsequently received back from job worker, the amount so paid can be re- credited in the account. 3. The matter has been examined. The purpose of the amendment made by Notification No. 21/2014-CE (NT) dated 11.07.2014 is to ensure that after the issue of a document under sub-rule (1) of Rule 9, credit is taken for the first time within six months of the issue of the document. Once this condition is met, the limitation has no further application. It is, therefore, clarified that in each of the three situations described above pertaining to Rule 4(7), Rule 3(5B) or Rule 4(5) (a) of CCR, 2004, the limitation of six months would apply when the credit is taken for the first time on an eligible document. It would not apply for taking re-credit of amount reversed, after meeting the conditions prescribed in these rules 4. Difficulties faced, if any, in implementation of this Circular may be brought to the notice of the Board. Hindi version follows. F. No. 267/72/2013-CX.8 (Pt)
Shankar Prasad Sarma OSD, CX.8 |
