ICAI has issued today Guidance note on Accounting for Derivatives.
This Guidance Note is an interim measure to provide recommendatory guidance on accounting for derivative contracts and hedging activities considering the lack of mandatory guidance in this regard with a view to bring about uniformity of practice in accounting for derivative contracts by various entities.
Please refer link to view / Download GN on Accounting for Derivatives http://220.227.161.86/37597research27174.pdf
Forwarding as received from Chintan Patel..
Proposed amendment :
IMPORTANT effective from 1st JUNE, 2015;
TDS provision u/s 194C applicable on payments to transporters vide Finance Bill, 2015
CURRENT SCENARIO:
Under the existing provisions of sub section (6) of section 194C of the Income Tax Act, 1961, there is no deduction of tax from payments made to the contractor during the course of plying, hiring and leasing goods carriage if the contractor furnishes his Permanent Account Number (PAN) to the payer.
REASON FOR THE AMENDMENT:
This exemption (as mentioned above) applies to all the transporters irrespective of their size, which defeat the real intention of bringing this amendment vide Finance Bill, 2009.
The memorandum explaining the provisions of Finance (No.2) Bill, 2009 indicates that the intention was to exempt only small transport operators (as defined in section 44AE of the Act) from the purview of TDS on furnishing of Permanent Account Number (PAN). Thus, the intention was to reduce the compliance burden on the small transporters. However, the current language of sub-section (6) of section 194C of the Act does not convey the desired intention and as a result all transporters, irrespective of their size, are claiming exemption from TDS under the existing provisions of sub-section (6) of section 194C of the Act on furnishing of PAN.
PROPOSED AMENDMENT:
Now to bring the more rationale, it is proposed to amend the provisions of section 194C of the Act to expressly provide that the relaxation under sub-section (6 ) of section 194C of the Act from non-deduction of tax shall only be applicable to the payment in the nature of transport charges (whether paid by a person engaged in the business of transport or otherwise) made to an contractor who is engaged in the business of transport i.e. plying, hiring or leasing goods carriage and who is eligible to compute income as per the provisions of section 44AE of the Act (i.e. a person who is not owning more than 10 goods carriage at any time during the previous year) and who has also furnished a declaration to this effect along with his PAN.
We can depict the changes made by Finance Bill, 2015 in Section 194C(6) as follows:-
Existing Section 194C(6)
Sec 194C(6) After proposed amendment
No deduction shall be made from any sum credited or paid or likely to be credited or paid during the previous year to the account of a contractor during the course of business of plying, hiring or leasing goods carriages, on furnishing of his Permanent Account Number, to the person paying or crediting such sum.
No deduction shall be made from any sum credited or paid or likely to be credited or paid during the previous year to the account of a contractor during the course of business of plying, hiring or leasing goods carriages, on furnishing ofwhere such contractor owns ten or less goods carriages at any time during the previous year and furnishes a declaration to that effect along with his Permanent Account Number, to the person paying or crediting such sum.
Emphasis supplied
This amendment will take effect from 1st June, 2015.
Points to note:-
1. As per Explanation (ii) of Section 194C the ‘Goods carriages” shall have the meaning assigned to it in the Explanation to subsection (7) of Section 44AE.
2. In continuation of Note 1, “Goods Carriage” means any motor vehicle constructed or adapted for use solely for the carriage of goods, or any motor vehicle not so constructed or adapted when used for the carriage. [Explanation (a) to subsection (7) of Section 44AE read with Section 2 of the Motor Vehicles Act, 1988.]
3. A person, who is in possession of goods carriage, whether taken on hire purchase or on instalments and for which the whole or part of the payment is still due, shall be deemed to be the owner of such goods carriages. [Explanation (b) to subsection (7) of Section 44AE.]
IMPACT AREA:
This proposed amendment will have impact on both the parties i.e. payer and payee. As far as payees are concerned, the inflow of cash will be lower now as there going to be a deduction of 1% / 2% from the revenues. Further, it may also bring the larger amount of revenue under the tax umbrella as the deduction of tax will imply to declare that income to the income tax department curbing the unfair practices. Those entities which are not profitable and making losses, this deduction of Tax may block the money for a very long time until they get it back via income tax refund after processing of the income tax return. To cater this problem, one may obtain the certificate u/s 197 of Income Tax Act, 1961 for deduction of tax at lower/nil rate.
Taking the look at the impacts on other side i.e. on payers the major work stands to identify all such cases where no TDS was made and now it is required to deduct the TDS, if declaration is not available. It is advisable on the part of the payer to communicate (if possible) to all the payees and ask for the declaration well in advance so that any lack of communication regarding these provisions can be avoided.. This process will also require the changes in the accounting software/ERP/SAP of the payee so that there will be the deduction of tax. Further, the proper record and documentation of declarations and PAN, should be maintained to substantiate the cases where deduction of tax is not to be made. A sample declaration is enclosed as Annexure –A of the article.
Annexure – A
Sample Declaration u/s 194C(6) for non-deduction of tax at source.
To,
__________ (name of the Payer)
__________ (Address of the Payer)
Declaration
I, ________, Proprietor / Partner / Director of M/s _________________ (name and address of Payee) [hereinafter “the contractor”] do hereby makes the following declaration as required by sub section (6) of Section 194C of the Income Tax Act, 1961 for receiving payments from the payer without deduction of tax at source:-
1. That I/We am/are authorized to make this declaration in the capacity as proprietor/partner/director.
2. That the contractor is engaged by the payer for plying, hiring or leasing of goods carriage* for its business.
3. That the contractor does not own more than 10 goods carriage* as on date.
4. That if the number of goods carriages* owned by the contractor exceeds ten at any time during the previous year 2015-16 (i.e. 01.04.2015 to 31.03.2016) or after furnishing this declaration, the contractor shall forthwith, in writing intimate the payer of this fact.
5. That the Income Tax Permanent Account Number (PAN) of the contractor is ____________ . A self-attested photocopy of the PAN is furnished to the payer along with this declaration.
Place : ______
Date : _______ (Name of Declarant)
Verification
I, the above named declarant do hereby verify that the contents of the above paragraphs one to five are true to the best of my knowledge and belief, and no part of it is false and nothing material has been concealed in it.
Place :
Date:
(name of Declarant)
* Goods Carriage” means any motor vehicle constructed or adapted for use solely for the carriage of goods, or any motor vehicle not so constructed or adapted when used for the carriage. [Explanation (a) to subsection (7) of Section 44AE read with Explanation (ii) of Section 194C and Section 2 of the Motor Vehicles Act, 1988.]
Rajjya Sabha passed Finance Bill 2015. Now only ascent from President required for enactment of Budget.
Amendment to The CENVAT Credit Rules,2004 (CCR,2004)
Rule 3(7)(b) of the CCR,2004 has been amended so as to allow utilization of credit of Education Cess and Secondary Education Cess for payment of basic excise duty in the following situations:
1. Education Cess and Secondary & Higher Education Cess on inputs or capital goods received in the factory of manufacture of final product on or after the 1st day of March,2015;
2. Balance 50% Education Cess and Secondary and Higher Education Cess on Capital Goods received in the factory of manufacture of final product in the financial year 2014-15; and
3. Education Cess and Secondary & Higher Education Cess on input services received by the manufacture of final product on or after 1st day of March,2015;
(Notification No.12/2015-Central Excise (N.T.) dated 30-04-2015 refers)
ICAI has today issued illustrative formats of an auditors’ report on CFS, covering some of the clauses of section 143(3) of the Companies Act, 2013 (and where the auditor does not have the responsibility for reporting on internal financial controls over financial reporting under section 143(3)(i) of the Companies Act, 2013).
These formats may be applied for the FY 2014-15 and until further announcement.
Format of Auditor's Report
(a) Unmodified opinion on the consolidated financial statements : 220.227.161.86/37520aasb27034-cfs-co.pdf
(b) Modified opinion on the consolidated financial statements: 220.227.161.86/37521aasb27034-cfs-qo.pdf
Snippets of changes made in Finance Bill, 2015 as passed by the Lok Sabha
The Hon'ble Finance Minister had presented the Finance Bill, 2015 in lok Sabha on February 28, 2015. Now the Lok Sabha passed the Finance Bill, 2015 with certain changes. Originally the Finance Bill, 2015 proposed to provide relief from MAT only to FIIs without extending such relief to foreign companies. Now exemption from MAT has been proposed to be provided to foreign companies as well. Key changes as made to the Finance Bill, 2015 are given hereunder:
1) MAT exemption to foreign coImpanies : The Finance Bill, 2015 proposed to provide relief from MAT only to FIIs without extending such relief to foreign companies. Thus, the foreign company would be liable to pay MAT on capital gains arising from transfer of securities and income arising from royalty, interest or FTS even if such income would not be chargeable to tax or taxable at lower rate in India by virtue of applicable double taxation avoidance agreements ('DTAA') or any provision of the Income-Tax Act.
Therefore, the Finance Bill, 2015 as passed by Lok Sabha proposes to provide relief from MAT to foreign companies as well. Capital gains from transfer of securities, interest, royalty and FTS accruing or arising to foreign company has been proposed to be excluded from chargeability of MAT if tax payable on such income is less than 18.5%.
2) Increase in limit of Section 80D deduction to Individuals : The Finance Bill, 2015 had increased the limit of deduction under Section 80D to Rs 25,000 for any member of HUF. It omitted to increase such limit for individuals. Accordingly, necessary changes have been proposed to rectify such omission.
3) Subsidies included in definition of income : Any subsidy which is not reduced from the actual cost of the asset in view of provisions of Explanation 10 to Section 43(1) has been proposed to be included in the definition of income.
4) Interest on loan taken to acquire an asset : Interest on borrowings used for acquisition of asset has been proposed to be disallowed as revenue expenditure till the date on which asset is put to use.
Goods cleared from DTA to SEZ treated as Exports
CBEC vide Circular No. 1001/8/2015-CX, Dated: April 28, 2015 has clarified that Benefit of rebate of duty under Rule 18 of Central Excise Rules, 2002 and Refund of accumulated CENVAT credit under Rule 5 of CENVAT Credit Rules, 2004 will continue to be available on goods cleared from Domestic Tariff Area (DTA) to Special Economic Zone (SEZ).
As per the provisions of SEZ Act, supply of goods from DTA to the SEZ is treated as export; as a SEZ is treated as a territory outside the customs territory of India. The DTA supplier supplying goods to the SEZ shall clear the goods either under bond or as duty paid goods under claim of rebate on the cover of ARE-1. Thus, any licit clearances of goods to an SEZ from the DTA will continue to be treated as export only.
[Circular No. 1001/8/2015-CX, Dated: April 28, 2015]
Considering difficulties expressed by cross section of tax payers,decision ws tkn to review ITR forms: Revenue Secy Shaktikanta Das to ANI
Changed in Notified ITR-1, ITR-2 & itr-4s for A. Y. 2015-16
CBDT has vide Notification No. 41/2015 Dated 15.04.2015 notified Form ITR-1, ITR-2 and ITR-4S for Assessment Year 2015-16 i.e Financial Year 2014-15. The Notification also made Several Change in Rule 12 of Income Tax Rules, 1962 which is related to Condition of Filing of Income Tax Return. A brief summary of Changes is as follows :-
General
1) ITR-1 (SAHAJ) & ITR-4S (Sugam) cannot be filed by individual who has earned any income from source outside India.
2) Introduction of EVC for verification of return of income filed as an option to send ITR-V to CPC, Bangalore.
3) Super Senior citizen are now allowed to file ROI in paper form even though their income exceed Rs 5 lakhs subject to other conditions.
ITR-1
1) Introduction of furnishing Aadhar Card Number in ROI. Which will be used for EVC system introduced as mentioned above.
2) Details of all bank accounts with Bank name, IFSC Code, Name of Joint Holder, if any, Account number, Account balance as on 31.03.2015 mandatorily to be provided. Even those accounts which are closed during the year.
ITR-2
1) Introduction of furnishing Aadhar Card Number in ROI. Which will be used for EVC system introduced as mentioned above.
2) Details of Foreign Travel made if any (For resident and nonresident both) includes, Passport No, Issued at, name of country, number of times travelled and expenditure
3) Details of utilization of amount deposited in capital gain account scheme for years preceding to last two assessment years. Particulars asked include year of utilization, amount utilized, amount unutilized lying idle in capital gain account scheme till the date of filing of return of income.
4) In case of LTCG & STCG not chargeable to tax to Non-resident on account of DTAA benefit, It is required to furnish Country name, Article of DTAA, TRC obtained or not?,
5) For Non-resident, Income from other sources, If any income chargeable to tax at special rate provided in DTAA, It is now required to provide details of Name of Country, Relevant article of DTAA, Rate of Tax, Whether TRC obtained or not?, Corresponding rate of tax under income tax act.
6) Details of all bank accounts with Bank name, IFSC Code, Name of Joint Holder, if any, Account number, Account balance as on 31.03.2015 mandatorily to be provided. Even those accounts which are closed during the year.
7) In schedule FA- Foreign assets disclosure, Following details added.
a) Foreign Bank accounts details: It is now further require to furnish Account number, account opening date, Interest/income accrued from such account, If any along with details of head of income and schedule under which such income is shown, if offered to tax in India.
b) In similar manner, details of income from Financial interest in any entity outside India along with details of income offered to tax in ITR-2 from such income.
c) Similar disclosure requirement is also required for Immovable property outside India, capital asset held outside India, trust held outside India
ITR-4S
1) Introduction of furnishing Aadhar Card Number in ROI. Which will be used for EVC system introduced as mentioned above.
2) Details of all bank accounts with Bank name, IFSC Code, Name of Joint Holder, if any, Account number, Account balance as on 31.03.2015 mandatorily to be provided. Even those accounts which are closed during the year.
☝
vide [Notification No. 39/2015/F. No.142/02/2015-TPL] Dt.13/04/2015,New Delhi
CBDT notifies amendment to Rule 2BB specifying transport allowance exemption u/s 10(14) w.e.f. April 1; Increases transport allowance exemption from Rs 800 to Rs 1600 per month; Also, doubles the exemption limit for 'blind or orthopaedically handicapped employees' from Rs 1,600 per month to Rs 3,200 per month
ICAI issues Guidance for application of Schedule II of Companies Act 2013.
It includes guidance on component accounting, continuous process plant, Double/Triple Shift working,
etc.
Link... http://220.227.161.86/37329clcgc27675.pdf
ANNOUNCEMENT ON CARO, 2003 AND ADDITIONAL REPORTING UNDER THE COMPANIES ACT, 2013
We are receiving queries from the members regarding applicability of CARO, 2003 along with Auditors’ Report on financial statements of companies for the financial year 2014-15. The Ministry of Corporate Affairs (MCA) is working on it and has constituted a Committee for this purpose to analyse the contents of the Order to be made under section 143(11) of the Companies Act, 2013 for the Financial Year 2014-15. ICAI is also a member of the said committee. We are given to understand by MCA that an Order being a smaller version of CARO 2003, applicable for the financial year 2014-15, may be notified soon under section 143(11) of the Companies Act, 2013. However, at this juncture, to bring more clarity, this Announcement is released in consultation with the Ministry.
The Companies Act, 1956 has ceased to have effect from 01st April, 2014. As a corollary, the Companies (Auditor’s Report) Order, 2003 issued under section 227(4A) of the said Act also ceases to have effect from the said date.
Section 143(11) of the Companies Act, 2013 which came into force from 01st April, 2014 provides that “the Central Government may, in consultation with the National Financial Reporting Authority, by general or special order, direct, in respect of such class or description of companies, as may be specified in the order, that the auditor’s report shall also include a statement on such matters as may be specified therein.”
Accordingly, it may be noted that as when an Order is notified by the Central Government under section 143(11) of the Companies Act, 2013, the members would be required to report thereon as a part of their statutory audit reports.
Until the aforesaid Order is issued, no additional reporting under section 143(11) of the Companies Act, 2013 is required by the Auditors for the financial year 2014-15.
Members are advised to keep a watch on the MCA site(www.mca.gov.in) as well as the ICAI site (www.icai.org)for further announcements in this regard.
~Chairman, Auditing & Assurance Standards Board
LIST OF YEAR END STATUTORY OBLIGATIONS
~ by Rajesh
LAST DATE - 31-3-2015 (Tuesday)
INCOME TAX
1.Pay remaining Advance Tax for AY 2015-16.
2.File Income Tax Return for AY 2014-15 without penalty of Rs. 5,000/-.
3.File Income Tax Return for AY 2013-14 with penalty of Rs. 5,000/-.
4.File Wealth Tax Return of for AY 2013-14 & 2014-15.
5.Make investments in PPF, LIC etc (Sec 80C), pay Mediclaim Premium (80D) etc.
6.Banks to file Return of Interest upto Rs.10,000 without TDS for Mar 2015 quarter in Form No. 26QAA.
SERVICE TAX/ EXCISE
7.Pay Service Tax/Excise Duty for Month/Qtr Mar 2015.
COMPANIES ACT, 2013
8.Company to repay Deposits from Members & Relatives of Directors etc. taken before 1-4-14. Fine of 1-10 cr for Co & 25 lac - 2 cr for Officers in Default &/ jail upto 7 years
9.Company to reduce number of Directors to 15. Beyond 15 Directors, Special Resolution is required. Sec (149(1)).
10.Directors to reduce Number of Directorships to 10 in Public Cos & 20 in all cos u/s 165. Minimum Fine 5,000. Maximum Fine 25,000 per day from 2nd day of default.
11.Listed Cos & other Public Cos with Paid up Share capital of 100cr or more or Turnover of 300cr or more to have at least 1 Woman Director.
12.Audit Committee of a company existing before 1-4-2014 to be reconstituted by having minimum 3 directors, with independent directors forming a majority. Sec 177(3).
13.Listed Public Company to have at least one-third of the total number of directors as Independent Directors.
14.Auditor NOT to provide prescribed Non audit services like internal audit, accounting & book keeping etc. beyond 31st March, 2015. (Sec 144). Fine of 25000 to 5 lac on Auditor besides on Co & Officers in Default.
15.Large companies (Net worth of 500 cr or more or Turnover of 1000 cr or more or Net Profit of 500 cr or more during any financial year) to spend at least 2% of Average Net Profits during 3 immediately preceding financial years in CSR activities
16.File e-form CRA-2 (Notice of Appointment of Cost Auditor) without Penalty/Late Fee. MCA Circular 2/2015 of 11-2-15.
CAs
17.CAs comply with CPE hours requirement for Calendar Year 2014.
GHMC
18.Pay Property Tax for 2014-15.
Note : Above list has been compiled merely to assist you in meeting your year end statutory responsibilities. Please check for any extensions, exclusions etc. While we have taken utmost care and caution in compiling it, you are requested to check the correctness etc of the same from independent sources. The sender, updation team and no other person can be held responsible for any inadvertent errors, mistakes or omissions, if any.
MCA has issued notifications dated 19th March 2015 and amended 3 rules:
1. Companies (Meeting of Board & its Powers) Amendment Rules, 2015 : Chapter 12 :
Removed requirement of discussion of following items only by way of Resolution at the Board Meeting :
1. to take note of appointment(s) or removal(s) of one level below the Key Management Personnel,
2. to take note of the disclosure of director’s interest and shareholding,
3. to buy, sell investments held by the company (other than trade investments), constituting five percent or more of the paid up share capital and free reserves of the investee company,
4. to invite or accept or renew public deposits and related matters ,
5. to review or change the terms and conditions of public deposit,
6. to approve quarterly, half yearly and annual financial statements or financial results as the case may be.
View Notification at http://www.mca.gov.in/Ministry/pdf/Chapter12_Rules_19032015.pdf
2. Companies (Management and Administration Rules) Amendment Rules, 2015 : Chapter 7:
'Voting through electronic means'- substituted Rule 20 by defining few terms like cut off date, electronic voting system, agency etc. and provided clarity on evoting at General meeting venue etc.
View Notification at
http://www.mca.gov.in/Ministry/pdf/Chapter7_Rules_19032015.pdf
3. Companies (Share Capital and Debentures) Amendment Rules, 2015: Chapter 4 :
It permits 45 days to listed companies to issue duplicate share certificates, authorisation to any other person for signing share certificate even if the Company has company secretary, changes in certain time periods, etc.
View Notification at
http://www.mca.gov.in/Ministry/pdf/Chapter4_Rules_19032015.pdf
