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Jaipur Chartered Accountants'For in House Circulation only No. 1 (2016-2017) March - April 2016

Newsletter

The Institute of Chartered Accountants of India JAIPUR (CIRC)

Respected Professional Colleague,

It is a matter of proud and honour for me to have been elected as the Chairman of Largest Branch of CIRC of ICAI. I am grateful to the Almighty God for giving me the opportunity to serve the Jaipur Branch and I would also like to express my sincere thanks and gratitude to all the members and specially my colleagues in the management committee for showing their confidence in me for elevating as a Chairman in the first term of the new management committee.

On a personal note, I am not somebody who had any legacy before starting the accountancy profession. But with rigorous training, right guidance provided by my Guru Shri R.S. Mangal Ji, My Parents, other seniors and support of my fellow members, I have risen to this position coming from a small town Newai which has its own share of struggles. Today I feel proud, privileged & obliged with folded hands to address you as Chairman of the eminent Jaipur Branch of CIRC of Institute of Chartered Accountants of India.

Fresh air, New Vision, full of Enthusiasm, yes the new team is fully devoted to work hand to hand to serve the members of Jaipur Branch and profession. In view of dynamic business environment, it's imperative that we constantly upgrade our self to excel in the profession. The branch is committed to hold both structured & unstructured learning programmes for its members. I shall be candid in saying that in last few years our members specially young members are facing various complexities because of changing needs of the industry. I assure that this year & years to come Jaipur branch shall be committed to bridge the gap between industry & our members.

Also not forgetting the established professionals, we shall be also holding various large scales conferences on our core subjects, getting best of the speakers & experts, every time we hold an event. It shall be the objective of entire managing committee. BOS is constantly making an effort to impart high quality education & trainings for our beloved students. Jaipur branch is always committed to its students & be rest assured, I won't let you down on this front also. We shall be committed to impart high quality coaching by conducting classes at branch only.

I also congratulate all newly elected office bearers and my fellow colleagues in the management committee and assure to the members of Jaipur Branch that we as a TEAM ICAI JAIPUR will not leave any stone unturned for the profession and are fully dedicated to discharge this big responsibility in efficient manner.

My special thanks to all Central Council members & Regional Council members for making a joint effort to take the branch to new heights.

Although the newsletter format is limited in the amount of in-depth information it can provide, we will make every effort to describe, if only briefly, our latest achievements & activities. Any criticism, opinions, and encouragement from the members will be highly appreciated by the editors of the Newsletter and Management Committee.

From The desk of Chairman...

With Warm Regards,

Mobile: 9414073452E mail: [email protected]

CA. Dinesh Kumar Jain“All the Power is within you; You can do anything and everything.

Believe in that ; Don't believe that you are weak,Standup and express the divinity within you.”

- Swami Vivekananda

OFFICE BEARERS 2016-17

A-19, II Floor, Golimar Garden,

Sahakar Marg, Jaipur - 302001

Phone: 0141 - 2743549

Mobile: 9414073452, 9351326690

E-mail: [email protected]

CA. Dinesh Kumar Jain

Chairman269, Padmavati Colony Ist, Kings Road,

Nirman Nagar, Jaipur - 302019

Phone: 0141- 3317552

Mobile: 9828049550, 9314749550


CA. Ankit Jain

Treasurer & YMEC Chairman188-A, Barkat Nagar, Tonk Phatak

Jaipur - 302015

Phone: 0141 - 2594450

Mobile: 9414234860


CA. Sanjay Kumar Maheshwari

Secretary & CICASA ChairmanD-173, Jagraj Marg, Bapu Nagar

Jaipur - 302015

Phone: 0141 - 4024260

Mobile: 9829399453


CA. Abhishek Sharma

Vice Chairman

B-73, Rajendra Marg,

Bapu Nagar, Jaipur - 302015

Phone: 0141 - 2364513

Mobile: 9414070306


CA. Sushil Kumar Jalan

Member624, 6th Floor, Jaipur Electronic Market,

Gopalpura Byepass, Jaipur - 302018

Phone: 0141 - 5103459

Mobile: 9887539278


CA. Shishir Agrawal

Member 507, IV Floor, Shalimar Complex,

Church Road, Jaipur - 302001

Phone: 0141 - 2371354

Mobile: 9414389398


CA. Shiv Shanker Gupta

Member710, Paris Point, Collectorate Circle,

Bani Park, Jaipur - 302016

Phone: 0141 - 2207082

Mobile: 9828037060


CA. Nikhilesh Kataria

Member

323,Ganpati Plaza, M I Road,

Jaipur - 302001

Phone: 0141-2361889

Mobile: 99290-97300


CA. Prakash Sharma

Central Council Member438 & 439 Mahima's Trinity Swej Farm,

New Sanganer Road Jaipur - 302019

Phone: 0141 - 2293116

Mobile: 9414053163


CA. Shyam Lal Agarwal

Central Council Member

G-2 Golden Palace Plot No. L-2-A

Krishna Marg C Scheme, Jaipur 302001

Phone: 0141-2360700, 2291467

Mobile: 98290-32565


CA. Gautam Sharma

Regional Council Member B-130, Jhotwara Industrial Area,

Jaipur - 302012

Phone: 0141 - 2345423, 2338983

Mobile: 9571799999, 8339999999


CA. Rohit Ruwatia Agarwal

Regional Council Member & YMEC Chairman, CIRCO-19, Second Floor, Amber Tower

S C Road, Jaipur - 302001

Phone: 0141-2363525, 2296493

Mobile: 9829015993

E-mail: [email protected], [email protected]

CA. Pramod Kumar Boob

Vice Chairman, CIRC

Published by : Sh. S C Chaturvedi, Administrative Officer on behalf of The Institute of Chartered Accountants of India JAIPUR (CIRC)

ICAI Bhawan, D-1, Institutional Area, Jhalana Doonagari, Jaipur-4Ph. : 0141-3989398/3044200-14 • Fax : 0141-3044215

Email : [email protected]@icai.in • website : jaipur-icai-org

Newsletter

Jaipur Chartered Accountants'The Institute of Chartered Accountants of India JAIPUR (CIRC)

CA. Anil MathurCA. B.K ChittoraCA. Brijesh MaheshwariCA. C L YadavCA. D. R. MohnotCA. Devendra JainCA. Dilip MalpaniCA. G. C. JainCA. Ganesh MaheshwariCA. H M SinghviCA. Jagdish SomaniCA. J K AgarwalCA. Rakesh GuptaCA. M L ParasrampuriaCA. Narendra MoolchandaniCA. Nitin VyasCA. O. P. AgrawalCA. P C ModiCA. P C ParwalCA. P. P. PareekCA. Puspendra KhandelwalCA. R. A. SharmaCA. R. K. Gurwala

CA. R. S. MangalCA. Rajeev SoganiCA. Rakesh TotukaCA. Rameshwar Prasad VijayCA. Ram ManoharCA. Ratan GoyalCA. Ravindra RaniwalaCA. S S DhakadCA. S. K. GoyalCA. S. L. GangwalCA. Sanjay Kumar ShahCA. Sanjay ShardaCA. Satish GuptaCA. Sharad KabraCA. Sunil AgrawalCA. Sunil GoyalCA. Sunil ShuklaCA. Suresh GargCA. Ummed Mal JainCA. Vijay GargCA. Vijendra BangarCA. Vikas RajvanshiCA. Vipin Gangwal

Chairman CA. Dinesh Kumar JainVice Chairman CA. Abhishek SharmaSecretary & CICASA Chairman CA. Sanjay Kumar MaheshwariTreasurer & YMEC Chairman CA. Ankit JainMember CA. Sushil Kumar JalanMember CA. Nikhilesh KatariaMember CA. Shiv Shanker GuptaMember CA. Shishir AgrawalCentral Council Member CA. Shyam Lal Agarwal Central Council Member CA. Prakash Sharma Vice Chairman, CIRC CA. Pramod Kumar BoobRegional Council Member & YMEC Chairman, CIRC CA. Rohit Ruwatia Agarwal Regional Council Member CA. Gautam Sharma

CA. Ajay Gaur 9982426699

CA. Ankit Maheshwari 8094869000

CA. Ankit Vijay 9783248794

CA. Anoop Dalmiya 9414368546

CA. Anuj Sharma 9828152341

CA. Ashutosh Agrawal 9828400386

CA. B N Maheshwari 9829109903

CA. Jatin Harjai 9799494482

CA. Manish Jain 9782238095

CA. Manoj Bhansali 9828061525

CA. Narendra Jain 9252040304

CA. Nitin Baradia 9829062171

CA. Pushpendra Agrawal 9672988778

CA. Rakesh Kothari 9828504428

CA. Ravi Vijayvergia 8791819191

CA. Shailesh Maheshwari 9829946484

CA. Sourabh Agrawal 9828169924

CA. T. R. Munjal 9414042869

CA. Ved Prakash Bansal 9414070001

CA. Vinod Agarwal 9414070269

CA. Anil Yadav 9660917000

CA. Ankit Sharma 9928762452

CA. Ankur Gupta 9461044624

CA. Anoop Goyal 9414043846

CA. Arvind Khandelwal 9829016335

CA. Ashwani Mundra 9828225521

CA. Devesh Garg 9414359708

CA. Mahendra Modi 9352638180

CA. Manish Jain 9929157100

CA. Mohit Barara 9571741565

CA. Naresh Motwani 9828401009

CA. P P Agarwal 9829064262

CA. Rajkumar Khandelwal 9414304422

CA. Ravi Mamodiya 9829091785

CA. Sachin Jain 9829393505

CA. Sonal Boochara 9928016490

CA. Suresh Khincha 9414071454

CA. Umesh Jethani 9314506944

CA. Vikas Barola 9414407963

CA. Vishnu Garg 9414394142

Editorial Board

CA. Dinesh Kumar Jain 9414073452

CA. Amit Gattani 9414070608

Editor in Chief

Editor

Members

Advisors

Managing Committee

Respected Professional

Colleague,

"With Great Power Comes Great Responsibility".

It is a great honour for me to

be the Secretary of the

largest branch of CIRC of

ICAI and an immense

pleasure to come up with the

first edition of Jaipur

Branch Newsletter of the new Managing Committee

of the Jaipur branch.

At the outset, I would like to thank all my colleagues

in the Managing Committee for elevating me to the

post of Secretary and contribute my services to the

Jaipur professional fraternity in that capacity. As the

secretary, I warmly welcome all the newly elected

members.

Achievement of goals, heights of success, and

fulfilment of big dreams is not on the steps of "Power

ladder", but possible with the accountability,

dedication and perseverance. We wish to have the

support of all our pillion riders to make this journey

remarkable and successful for all upcoming events of

Jaipur branch.

Success of a professional is dependent of several skills

such as character, judgment, communications, ability

to collaborate and to work as a team etc which will

result in providing strong professional development.

It is my firm belief that we can take our institute and

our profession forward in the globe if all of us remain

committed to our ethics and with good vision. We have

to develop a learning attitude. We have to see beyond

our immediate horizons and we must commit

ourselves with a continuous search for professional

excellence and we all have to be committed towards

our profession.

With warm regards,

Mobile: 9414234860Email: [email protected]

CA. Sanjay Kumar Maheshwari

CA. Atul Kumar Mansingka 9414240839Joint Editor


It is a tremendous honor for me to be the editor of such an illustrious and prestigious news letter of Jaipur Branch of CIRC of ICAI. I am grateful to the Management Committee for giving me this opportunity to shape this publication and I would also like to express my

sincere thanks and gratitude to my parents, God, and all my dear professional colleagues for entrusting confidence in me.

Friends, As we all know that our profession is a highly noble, honorable, technical and specialized profession with rapid changes taking place all around and new challenges emerging relating to liberalization, globalization, networking, dissolving business frontiers and shrinking distance etc. There has been an onward surge in the wide scale restructuring of business and an appreciation and in understanding the benefits of merger, acquisition and combinations of all kinds. In this dynamic and highly turbulent economic environment, the entire world is emerging as one global village. Thus, like the daily newspaper, we must keep our professional knowledge and skills abreast of time. I hope this news letter will immensely help in sharing academic views among members and to share views of management committee with regard to myriad of activities at the Branch.

The success of any newsletter is built primarily on four groups of the people: the contributors, the reviewers, the associate editors, and the publication staff. I would like to thank all of them and express my sincere appreciation for the unstinted support they have given.

Friends, I am open to suggestions from all our members, therefore, please feel free to give your valuable suggestions and feedback.

In the end I would like to say that:

"Within you is the power to rise above any situation or struggle, and transform into the brightest, strongest version of you ever "

Newsletter


With warm regards,


CA. Amit Gattani

Editor Desk... Joint Editor Desk...

With warm regards,


CA. Atul Kumar Mansingka


It is matter of great privilege and honor for me to be the joint editor to bring out first edition of newsletter of our Jaipur Branch of CIRC of ICAI for the term 2016-17. I am thankful to the Managing Committee of Jaipur Branch to

have shouldered me with this responsibility.

A thought that has been enduring in mind when it becomes real is truly an interesting and exciting experience. This newsletter was one such cherished work that had its roots in the persuasion. It would be a snapshot of the various activities and advancements for all associated with Jaipur Branch of CIRC of ICAI.

This news letter will be a medium to provide proper acknowledgment and respect all of these efforts and its results.

Proper communication plays a vital role in branch & its member’s development. This news letter will serve to reinforce and allow increased awareness, improved interaction and integration among all of us. Usually we fail to appreciate the good deeds of many people and activities that happen around us as we are engaged in irrelevant talks and assumptions. It could all change if we just pause to think of what is our contribution to the society from which we have been gifted with this blessed life. The progress of the society is mainly depends on many people who are working behind the scenes, overtime round the clock planning things to the smallest.

It is expected that wide support will be provided through the reader's valuable suggestions and comments. This is only a small step towards a long journey. To achieve progress and to meet objectives we have to cross numerous milestones. This newsletter should inspire all of us for a new beginning with enlighten with hope, confidence and faith in the road ahead with new managing committee...

Happy Reading!!

March-April 2016

Council Member-ICAI.08. Study Circle Meeting on Compliances & Accounting

related to Service Tax before year end (29.03.2016)The Jaipur Branch organized a Study Circle Meeting on Compliances & Accounting related to Service Tax before year end on 29.03.2016 at ICAI Bhawan. CA. Varun Khandelwal was the eminent speaker. CA. Varun Khandelwal delivered his lecture on the above subject.

09. Seminar for CA Students on Bank Audit (01.04.2016)The Jaipur Branch organized a Full Day Seminar for CA Students on Bank Audit on 1.4.2016 at ICAI Bhawan. CA. A K Jain, New Delhi was the eminent faculty. He delivered the lecture on Bank Audit. On this occasion CA. Shyam Lal Agarwal, Central Council Member-ICAI was also present. In this Seminar approx.. 650 students were present.

10. Meeting of AASB study group meeting on CARO 2016 (01.04.2016)The meeting of AASB study group on CARO 2016 , Jaipur was held at ICAI Bhawan on 01.4.2016 under the leadership of CA. Shyam Lal Agarwal-Chairman AASB & Central Council Member-ICAI.

11. Mock Tests for IPCC / Final students appearing in May 2016 exam. (4. 4.16 to 7.4.16)Jaipur Branch organized Mock Tests for IPCC & Final students appearing in May, 2016 exam from 4.4.16 to 7.4.16, for encouraging the students to evaluate their preparation for the examination as designed by the Board of Studies. Total 707 students of both the courses are registered for these mock tests. The result has been declared on 21.4.2016.

12. Study Circle Meeting on Guidance Note on Audit of Internal Financial Controls over Financial Reporting (16.04.2016)The Jaipur Branch organized a Study Circle Meeting on Guidance Note on Audit of Internal Financial Controls over Financial Reporting on 16.04.2016 at ICAI Bhawan. CA. Bhupendra Mantri was the eminent speaker. CA. Mantri delivered his lecture on the above subject.

05. Programme on VAT Clinic (23. 4.2016)The Jaipur Branch organized a Programme on Value Added Tax (VAT) Clinic on 23.04.2016 at ICAI Bhawan. CA. Mukesh Khandelwal, CA. Jatin Harjai and CA. Yashasvi Sharma were the eminent panel speakers. This programme was held in the form of question and answer (Q & A) session.

06. Joint Half Day Seminar on Awareness of various schemes under Foreign Trade Policy 2015-20 (29.04.2016)The Jaipur Branch organized a Joint Half Day Seminar on Awareness of various schemes under Foreign Trade Policy 2015-20 on 16.04.2016 with Directorate Directorate General of Foreign Trade (DGFT) at ICAI Bhawan. The speakers were from the DGFT. Sh. R. P. Meena, Jt.DGFT delivered lecture on Overview and intention of the Present F o r e i g n T r a d e P o l i c y, S h . Vi v e k S i n g h , Asstt.DGFTdelivered lecture on Foreign Trade Policy & Procedures 2015-20 and Sh. Satish Raina, I/C EDI delivered lecture on Digital /EDI Initiatives of DGFT. CA. Abhishek Sharma, Vice Chairman Jaipur Branch was the Convenor.

01. Half Day Seminar on Union Budget 2016 (01.03.2016)The Jaipur Branch organized a Half Day Seminar on Union Budget 2016 on 01.03.2016 at ICAI Bhawan. CA. Sanjay Jhanwar and CA. Brijesh Verma were the eminent speakers. CA. Brijesh Verma delivered his lecture on Provisions related to Service Tax and CA. Sanjay Jhanwar delivered his lecture on Provisions related to Direct Taxes.

02. Study Circle Meeting on Analysis of Union Budget 2016 (05.03.2016)The Jaipur Branch organized a Study Circle Meeting on Union Budget 2016 on 05.03.2016 at ICAI Bhawan. CA. P C Parwal was the eminent speaker. CA. P C Parwal delivered his lecture on Analysis of Union Budget 2016.

03. Study Circle Meeting on Analysis of State Budget 2016 (10.03.2016)The Jaipur Branch organized a Study Circle Meeting on Analysis of State Budget 2016 on 10.03.2016 at ICAI Bhawan. Adv. Moti Kotwani was the eminent speaker. Adv. Moti Kotwani delivered his lecture on Analysis of State Budget 2016.

04. 5 days Practical Training of Tally ERP 9 (11.03.2016)The Jaipur Branch organized a 5 days Practical Training of Tally ERP 9 at ICAI Branch for the benefit of the CA

thMembers from 11 March 2016. 05. Full Day Seminar on Bank Audit & Felicitation of Newly

Elected Central Council Member-ICAI and Regional thCouncil Members-CIRC (19 March 2016)

Jaipur Branch of CIRC of ICAI organized a Full Day Seminar on Bank Audit on 19th March 2016 at ICAI Bhawan. CA. A K Jain, New Delhi was the eminent speaker. He delivered the lecture on Prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances & Audit of Restructured Advances, LFAR Reporting & Other Certifications. There was a Panel Discussion also, the Panel of Experts of Central Statutory Auditors from Jaipur are : CA. Praveen Goyal, CSA-Bank of Baroda, CA. Vikas Rajvanshi, CSA-State Bank of Patiala, CA. Bhupendra Mantri, CSA-State Bank of Bikaner & Jaipur, CA. Prakash Sharma, CSA – Bank of Maharashtra, CA. Mukesh Gupta, CSA-Oriental Bank of Commerce. CA. CA. Vishnu Mantri was the Moderator. Jaipur Branch also organized a Felicitation programme of Newly Elected Central Council Members-ICAI and Regional Council Members-CIRC for the term (2016-19). Jaipur Branch felicitated CA. Shyam Lal Agarwal-Central Council Member –ICAI, CA. Prakash Sharma-Central Council Member-ICAI, CA. Pramod Kumar Boob-Vice Chairman CIRC, CA. Rohit Ruwatia Agarwal-Chairman YMEC CIRC and CA. Gautam Sharma-Regional Council Member-CIRC by presenting Shawl and Safa to them.

06. Meeting of AASB Study Group, Jaipur (22.03.2016)The meeting of AASB Study Group, Jaipur was held at ICAI Bhawan on 22.3.2016 under the leadership of CA. Shyam Lal Agarwal-Chairman AASB & Central Council Member-ICAI.

07. Meeting of AASB study group meeting on CARO 2016 (28.03.2016)The meeting of AASB study group on CARO 2016 , Jaipur was held at ICAI Bhawan on 28.3.2016 under the leadership of CA. Shyam Lal Agarwal-Chairman AASB & Central

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Newsletter


BRANCH ACTIVITIES DURING THE MONTH OF MARCH & APRIL 2016

March-April 2016

Newsletter


The Startup India Action Plan states that for a “Startup” to be considered eligible for Tax Exemptions and Incentives, the Startup should be:

a. Supported by a recommendation from an Incubator established in a post-graduate college in India or recognized by Government of India, or

b. Supported by an Incubator, funded from Government of India, or

c. Funded by an Incubation fund/ Angel fund/ Private Equity fund duly registered with SEBI that endorses innovative nature of business, or

d. Funded by Government of India as part of any specified scheme, or

e. Have a patent granted by the Indian Patent and Trademark Office.

Startup would be eligible to obtain tax benefits only after it has obtained approval from the Inter-Ministerial Board, setup for such purpose.

For the purpose of recommendation, Incubators in Rajasthan are:

a. Birla Institute of Technology and Sciences (BITS), Pilani (www.bits-pilani.ac.in/tbi/)

b. S t a r t u p O a s i s I n c u b a t i o n C e n t e r (www.startupoasis.in)

Salient features of the Action Plan are given hereinafter; the government has focused on three areas:

a. Simplification and Handholding

b. Funding Support and Incentives

c. Industry-Academia Partnership and Incubation

Startups have received a big shot in arm with the announcement of startup India Action Plan by Indian Government to promote and support startup companies. There is no doubt that whole world is undergoing a change in favor of knowledge economy. Some of the foreign countries are investing hugely in creating a wonderful ecosystem for innovation, knowledge, disruptive technologies and products. In my view, India is a little late to catch up on this bandwagon. Still it's a step in right direction which would pave way for a knowledge revolution, if handled with sincere intent.

Before I narrate further on the proposals of Startup India Action Plan 2016, it will be pertinent to note about the kind of projects, which will be approved under this scheme. Many times, a budding entrepreneur feels that she is on a big thing and is launching a startup project, which in fact is simply a business idea and is not approved as a startup.

To obtain approval under this plan, you must have:

a. A unique idea not done before,

b. A new product or service or process,

c. A vastly improved product or service or process which will add value to target customers or work flow,

d. True potential for commercialization, differentiated product or service, appreciable incremental value,

The government has launched the app for registration of startup on 1st April 2016. This app can be accessed at www.startupindia.gov.in. This app gives the benefit of registering online and applying for recognition.

Startup India Action Plan Opportunities

Compiled by :CA. Rajneesh Singhvi

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March-April 2016

h. Equal platform to Startups vis-à-vis the experienced entrepreneurs/ companies in public procurement

i. Launch of Atul Innovation Mission (AIM) with Self-Employment and Talent Utilization (SETU) program

The Central government proposes to contribute Rs. 10,000 crores in a block of four years to existing accelerator, seed, angel, venture or PE funds with equal or higher matching contribution by respective funds, which would be utilized to fund man startups after evaluating the pitch, due diligence and appraisal of the proposals in equity or debt form. The government will grant substantial subsidy for lowering of patent costs.

Road shows, conferences, interactive platform and fests would be organized for incubation, networking and hand holding of startups.

Presently startups arena has become quite hot and only those ideas, which have resulted into fruition or gained reasonable traction are being funded. It is hoped that the government initiative will act as a catalyst to catapult startup sector to the next level.

Following Tax Exemptions and Incentives are offered to Startups:

a. Freedom from tax in profits for 3 years in a block of first 5 years

b. Freedom from Capital Gains Tax for 3 years

c. Tax Exemption on Investments in share capital received above FMV

Besides that, Government is extending support in the following areas:

a. No inspection for 3 years in case of labor laws based on self certification

b. 80% rebate in filing of Patent/Cost of facilitator/ Pilot Scheme

c. Launching of various programs

d. Setup of SU fund - Rs. 10,000 crores, Fund of Funds

e. Credit Guarantee Fund

f. Startup India Hub – Mentorship, Funding, Feasibility studies, skill-set enhancement, Hub & Spoke model

g. Incubator, SU Fests

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Newsletter


!! Congratulations !!

CA. Rakesh Rathi271st Rank in

Civil Services Exam, 2015Membership No. 405624

CA. Mohit Jangid713th Rank in

Civil Services Exam, 2015Membership No. 417263

CA. Shankar Lal AgarwalAppointed as non-official

Independent Director on theBoard of Sambhar Salts Ltd.,

Jaipur (SSL)

CA. Ravindra BadayaAppointed as part time

non-official Director on theBoard of Richardson &

Cruddas (1972) Ltd. (R&C)

CA. Satish Sareen Appointed as non-official

Independent Director on theBoard of Hindustan Salts Ltd.,

Jaipur (HSL)

CA. Nirmal Kumar JainAppointed as non-official

Independent Director on theBoard of Rajasthan Electronics

& Instruments Ltd., Jaipur (REIL)

CA. Hari Mohan JohariAppointed as non-official

Independent Director on theBoard of Sambhar Salts Ltd.,

Jaipur (SSL)

March-April 2016

education course;

Further clause 9 of Mega Exemption Notification provided following services under exempt category:-

Services provided to or by an educational institution in respect of education exempted from service tax, by way of,-

(a) auxiliary educational services; or

(b) renting of immovable property;

Here, "auxiliary educational services" means any services relating to imparting any skill, knowledge, education or development of course content or any other knowledge - enhancement activity, whether for the students or the faculty, or any other services which educational institutions ordinarily carry out themselves but may obtain as outsourced services from any other person, including services relating to admission to such institution, conduct of examination, catering for the students under any mid-day meals scheme sponsored by Government, or transportation of students, faculty or staff of such institution;

From 01/04/2013 to 10/07/2014

During this period amendment was made in Mega Exemption Notification .Following clause was substituted in place of earlier clause:-

Services provided to or by(Deleted) an educational institution in respect of education exempted from service tax, by way of,-


(b) renting of immovable property;

For the words “provided to or by”, the words “provided to” had been substituted.

From 11/07/2014 onwards

Vide Notification no.06/2014 dated 11/07/2014 clause 9 was again substituted with new clause which reads as under:-

“9. Services provided,-

(a) by an educational institution to its students,

1. INTRODUCTION

In recent days department is issuing notices to schools/educational institutions regarding charging of service tax on transportation of students and faculty staff for the period 01/04/2013 to 10/07/2014.During this period there was no specific notification for exempting such services. Now question arises whether department is right in issuing such notices or even without having specific notification services were exempt. Before discussion, have a look on statutory provisions applicable prior to 01/04/2013 and after 10/07/2014.

2. STATUTORY PROVISIONS

Prior to 01/07/2012

Prior to introduction of taxation of Services based on the negative list by Finance Act, 2012 ,there was no specific service under list of taxable services which makes the above services in taxable category. Only commercial training or coaching services were taxable Hence, in this period Services related to education as above were under exempt category.

From 01/07/2012 to 31/03/2013

Finance Act, 2012 made a paradigm shift for taxation of Services based on the negative list. Except negative list and specific exemption, entire services are taxable with that amendment. Government issued Mega Exemption notification for providing exemption to certain specific Services. Clause (l) of Negative List provides specific exclusion of education services from the purview of Service Tax .Which read as under:-

Services by way of—

(i) pre-school education and education up to higher secondary school or equivalent;

(ii) education as a part of a curriculum for obtaining a qualification recognized by any law for the time being in force;

(iii)education as a part of an approved vocational

Compiled by :CA. Deepak Kalani

Whether Service tax is liable on transportation services provided to students and staff by educational institutes for the period from 01/04/2013 to 10/07/2014

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Newsletter


March-April 2016

principles of interpretation of specified descriptions of services and bundled services. Extract of provision is as under:-

(3) Subject to the provisions of sub-section (2), the taxability of a bundled service shall be determined in the following manner, namely:-

(a) if various elements of such service are naturally bundled in the ordinary course of business, it shall be treated as provision of the single service which gives such bundle its essential character;

Here, school is providing education to students for which it has to do certain other element to complete such services. Without transportation, students are unable to attend class. Hence, transportation service cannot be separated from educational services under facts and circumstances. Where various elements are natural bundled in the ordinary course of business, it shall be treated as provision of single service which gives such bundle its essential character. Student goes to school only for education not for availing transportation service. Transportation facilities are being provided them to bring them at school to attend classes.

An education guide issued by CBEC also guides in this matter. In Para 4.12.4 of Guidance Note -4 , it has been mentioned where boarding school provides hostel and food facility along with education services then their taxability will be determined in terms of principles laid down in section 66F.Such services in the case of boarding schools are bundled in the ordinary course of business .Therefore the bundle of services will be treated as consisting entirely of such services which determines the dominant nature of such a bundle. In this case dominant nature is determined by the service of education. Though, in this case , examples of food and hostel have been mentioned, but as matter is for principle, same is equally applicable to transportation activity. If the law is interpreted for taxability of such services then guidance note would have mentioned for taxability of such activity rather to exempt. Guidance note was issued to guide for interpretation of word and phrases with practical examples.

Exemption provided to educational institute by way of auxiliary services does not stands withdrawn vide notification no.3/2013 w.e.f.01/04/2013 by deleting the word “by” .Intention of legislature is to provide exemption to other service provider who are involved in such type of auxiliary educational services. If such type of services provided by educational institution then same are already exempt as these services cannot said to be auxiliary services

faculty and staff;

(b) to an educational institution, by way of,-

(i) transportation of students, faculty and staff;

(ii) catering, including any mid-day meals scheme sponsored by the Government;

(iii) security or cleaning or house-keeping services performed in such educational institution;

(iv) services relating to admission to, or conduct of examination by, such institution;”;

This amendment was made due to bring clarity in exemption, the concept of auxiliary educational services has been omitted and list of services qualified for exemption have been specified.

3. DISUCSSION

Before 01/07/2012, during 01/07/2012 to 31/03/2013 and from 11/07/2014 there is no dispute that services provided by educational institution by way of transportation of students and staff are exempt from service tax by way of clause 9 of Mega Exemption Notification .Main dispute by department is for the period from 01/04/2013 to 10/07/2014.

Though, there was no specific clause exempting services provided by educational institution by way of transportation of students and staff still provisions says that services were exempt during this period also. Following arguments justifies the contention.

Clause L of section 66D of Finance Act provides that services by way of-

(i) pre-school education and education up to higher secondary school or equivalent;


(iii) education as a part of an approved vocational education course;

Educational school is recognized by CBSE or other local boards and provides educational services as mentioned above. For the purpose of providing education to students, certain other activity which is part and parcel of educational services is also being done. Like transportation for students and staff to bring them school for their education. Hence, activities which are part and parcel of any service cannot be separated to bring them under taxable purview.

Before bringing service in taxable category, one must read provision with respect to principles of interpretation of specified description of services and bundled services. Section 66F lays down the

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March-April 2016

2. The matter is covered by two provisions of the Finance Act, 1994. Section 66D of the Finance Act contains a negative list of services and clause (l) thereof reads as under:

"services by way of -

(i) pre-school education and education upto higher secondary school or equivalent;


(iii)education as a part of an approved vocational education course;".

Further section 93(1) of the Finance Act, 1994, enables the Government to exempt generally or subject to such conditions taxable service of specified description. By virtue of the said power, Government has issued a notification No.25/2012-

thST dated 20 June, 2012, exempting certain services. Sl.no.9 thereof reads as follows:

"Services provided to an educational institution in respect of education exempted from service tax, by way of,-


(b) renting of immovable property;".

As defined in the said notification, "auxiliary educational services" means any services relating to imparting any skill, knowledge, education or development of course content or any other knowledge-enhancement activity, whether for the students or the faculty, or any other services which educational institutions ordinarily carry out themselves but may obtain as outsourced services from any other person, including services relating to admission to such institution, conduct of examination, catering for the students under any mid-day meals scheme sponsored by Government, or transportation of students, faculty or staff of such institution.

As defined in the said notification, "auxiliary educational services" means any services relating to imparting any skill, knowledge, education or development of course content or any other knowledge-enhancement activity, whether for the students or the faculty, or any other services which educational institutions ordinarily carry out themselves but may obtain as outsourced services from any other person, including services relating to admission to such institution, conduct of examination, catering for the students under any mid-day meals scheme sponsored by Government, or transportation of students, faculty or staff of such institution.

for them. These are part and parcel of educational services provided by them without which same cannot be completed.

Clarification issued by CBEC vide circular no.172/7/2013 dated 19/09/2013 also support the argument. Circular is reproduced here :-

F. No.B1/14/2013-TRU

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise& Customs

Tax Research Unit

146-F, North Blockth

New Delhi, 19 September, 2013

To

Chief Commissioners of Central Excise and Service Tax (All),

Director General (Service Tax), Director General (Central Excise Intelligence),

Director General (Audit),

Commissioners of Service Tax (All),

Commissioners of Central Excise and Service Tax (All).

Madam/Sir, Subject: Education services - clarification -- reg.

The following representations have been received seeking clarifications regarding the levy of service tax on certain services relating to the education sector:

1. P r i v a t e S c h o o l s C o r r e s p o n d e n t s Confederation, Madurai.

2. Tamil Nadu Nursery, Primary, matriculation and Higher Secondary Schools Association, Chennai.

3. Punjab Association, Chennai.

4. Association of Self financing Universities of Rajasthan

5. Unaided Schools' Forum, Mumbai.

6. Vedavalli Vidyalaya, Wallajapet.

7. Independent Schools Associations, Chandigarh.

8. Mother Teres Public School, New Delhi.

9. BVM Global, Chennai.

10. Sastra University, Tanjavur.

11. HLC International, Chennai.

12. Sodexo Food Solutions, Mumbai.

13. Federation of Associations of Maharastra, Mumbai.

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March-April 2016

institutions [providing educational services specified in the negative list] to their students, faculty and staff are exempted [section 66 D (l) of the Finance Act, 1994]; this will continue.

However, in respect of services received by such educational institutions, presently, exemption is being operated through the concept of „auxiliary educational services? [Sl.No.9]. Doubts have been raised and clarifications have been sought regarding the scope and meaning of Page 4 of 15 „auxiliary educational services?. To bring clarity, it is proposed to omit the concept of „auxiliary educational services? and specify in the notification, the services which will be exempt when received by the eligible educational institutions. Accordingly, the following services received by eligible educational institutions are exempted from service tax: (i) transportation of students, faculty and staff of the eligible educational institution; (ii) catering service including any mid-day meals scheme sponsored by the Government; (iii) security or cleaning or house-keeping services in such educational institution; (iv) services relating to admission to such institution or conduct of examination.

It may be noted that the scope of exemption remains the same as earlier in the case of services provided by eligible educational institutions; in the case of services received by the eligible educational institutions, exemption will be available only in respect of the services specified as above. Further as a rationalization measure, the exemption hitherto available to services provided by way of renting of immovable property to educational institutions stands withdrawn, with immediate effect.

4. CONCLUSION

From basic intention of Government , interpretation of law and as per discussion held all services provided by educational institution to their students, staff and faculty are exempt . The basic object of Government is to exempt educational services including all services related to providing such educational services. If this is not there, then what was the object to mention in the circular dated 10/07/2014 that all services provided to staff and faculty are exempt from tax . There cannot be any services to staff and faculty except mentioned above .There is no change in case of chargeability of service tax on transportation of staff and students before 01/04/2013 or after.

3. By virtue of the entry in the negative list and by virtue of the portion of the exemption notification, it will be clear that all services relating to education are exempt from service tax. There are many services provided to an educational institution. These have been described as "auxiliary educational services" and they have been defined in the exemption notification. Such services provided to an educational institution are exempt from service tax. For example, if a school hires a bus from a transport operator in order to ferry students to and from school, the transport services provided by the transport operator to the school are exempt by virtue of the exemption notification.

4. In addition to the services mentioned in the definition of "auxiliary educational services", other examples would be hostels, housekeeping, security services, canteen, etc.

5. Thus the apprehensions conveyed in the representations submitted by certain educational institutions and organizations have no basis whatsoever. These institutions and organizations are requested not to give credence to rumours or mischievous suggestions. If there is any doubt they are requested to approach the Chief Commissioner concerned.

From perusal of clarification, it would be clear that legislature has no intention to tax such activity which are being provided by educational institution for the purpose of education .Even scope of exemption has been enlarged by giving exemption to non educational institutions for providing such activity .Relevant text has been underlined. Clarification by Government itself clarify that no tax is leviable on activity related to education.

Circular issued by TRU vide no. D.O.F. No. 334/15/2014-TRU dated 10/07/2014 also clarifies that all services provided by educational institutions to students and staff which are providing education as per negative list are exempt from service tax. Relevant text is reproduced here for ready reference :-

2.2.2 Rationalization of Exemptions:

(i) Education:

At present, all services provided by educational

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March-April 2016

Certificate was to be obtained after incorporation and before commencing business by filing a declaration with the Regis t rar. The declarat ion for Commencement of Business Certificate stated that every subscriber to the MOA has paid the value of the shares agreed to be taken by him and the paid-up share capital of the company is not less than five lakh rupees in case of a public company and not less than one lakh rupees in case of a private company.

The requirement of obtaining Commencement of Business Certificate post incorporation has been removed in the Companies Amendment Act, 2015.

Common Seal is Optional

In Companies Act, 2013, a common seal was required for a Company to provide various authorizations and attestations on behalf of the Company. The requirement for common seal has now been made optional and the Directors signature is acceptable in lieu of the common seal of the Company.

Stringent Penalty for Company Inviting or Accepting Deposit

The Companies Act, 2013 was silent with respect to the penalty or fine for Companies inviting or accepting deposits from Public without approval from the Regulatory Authorities. The Companies Amendment Act, 2015 has introduced stringent penalty for Directors of Companies that invite or accept or renew deposits contravening to the Companies Act, 2013.

Through the Companies Amendment Act, 2015, the following sections have been added to the Companies Act, 2013 prescribing penalty for inviting or accepting or renewing public deposit:

“Where a company accepts or invites or allows or causes any other person to accept or invite on its behalf any deposit in contravention of the manner or

The Indian Government is actively working to improve ease of doing business in India. Key initiative in this aspect is the Amendment to Companies Act, 2015 to make it more business or investor friendly. The Companies Amendment Bill, 2015 was passed in Lok Sabha on 17/12/2014 and it was passed in the Rajya Sabha in 13/5/2015. The Companies Amendment Bill got the Presidents assent on 25/5/2015 and was published in the Official Gazette of India on 26/05/2015 as the Companies Amendment Act 2015. In this article, we look at important highlights of the Companies Amendment Act, 2015.

No Minimum Paid-Up Capital

The Companies Act, 2013 defied a Private Limited Company as: “private company” means a company having a minimum paid-up share capital of one lakh rupees or such higher paid-up share capital as may be prescribed”.

This effectively meant that every private limited company in India must have a minimum paid-up capital (invested funds) of one lakh rupees irrespective of the authorized capital.

The Companies Amendment Act, 2015 removes the words “of one lakh rupees or such higher paid-up share capital” relating to Private Limited Company thereby necessitating NO minimum capital requirement for starting a private limited company. The words “of five lakh rupees or such higher paid-up capital,” has also been removed wherein it pertains to the minimum paid-up share capital of a Limited Company. Hence, a public limited company can also be started without a minimum capital of rupees five lakhs.

No Requirement for Commencement of Business Certificate

The Companies Act, 2013 introduced the concept of Commencement of Business Certificate for Private Limited Company. The Commencement of Business

Compiled by :CA. Ankur Kumar Gupta

Highlights of Companies Amendment Act, 2015

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Company had to be filed with the Ministry of Corporate Affairs. The Board Resolutions were public documents and could be downloaded by paying a fee. However, to protect company confidentiality, the clause ““provided that no person shall be entitled under section 399 to inspect or obtain copies of such resolutions” has been inserted. Therefore, board resolutions now cannot be accessed publicly.

Dividend Cannot Be Declared by Company Having Losses

The Companies Amendment Act, 2015 has inserted the section “Provided also that no company shall declare dividend unless carried over previous losses and depreciation not provided in previous year or years are set off against profit of the company for the current year”. Hence, companies having losses or negative reserves cannot declare dividends.

Loan can be Provided by Holding Company to Subsidiary Company

Loans or guarantees can be provided by the holding company to the subsidiary company. Though the Companies Act, 2013 did not have any restrictions on holding company providing loan to subsidiary company, the new Companies Amendment Act, 2015 has clarified the same in abundance of caution.

the conditions prescribed under section 73 or section 76 or rules made thereunder or if a company fails to repay the deposit or part thereof or any interest due thereon within the time specified under section 73 or section 76 or rules made thereunder or such further time as may be allowed by the Tribunal under section 73,

1. the company shall, in addition to the payment of the amount of deposit or part thereof and the interest due, be punishable with fine which shall not be less than one crore rupees but which may extend to ten crore rupees; and

2. every officer of the company who is in default shall be punishable with imprisonment which may extend to seven years or with fine which shall not be less than twenty-five lakh rupees but which may extend to two crore rupees, or with both:

Provided that if it is proved that the officer of the company who is in default, has contravened such provisions knowingly or wilfully with the intention to deceive the company or its shareholders or depositors or creditors or tax authorities, he shall be liable for action under section 447.”

Board Resolution are Confidential

So far Board Resolutions executed by the

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CONGRATULATIONS on Being Nominated as Co-opted Member in CIRC of ICAI Committees 2016-17

CA. Abhishek Jain : IND AS (IFRS) Implementation Committee

CA. Akhil Bhala : Young Member Empowerment Committee

CA. Anoop Dalmia : Committee on Corporate & laws Allied Laws and Corporate Governance

CA. Chhavi Bengani : GMCS Co-ordination Committee

CA. Durgesh Vijayvargiya : Committee on Capacity Building of CA Firms & SMPs

CA. Gaurav Rawat : Committee on Financial Markets & Investor's Protection

CA. Kamal Jain : Committee on Financial Markets & Investor's Protection

CA. Lokesh Kasat : Committee for Members In Industry

CA. M L Parasrampuria : Internal Audit Committee

CA. Mohit Patni : Committee on Corporate & laws Allied Laws and Corporate Governance

CA. Naman Shrimal : International Taxation Committee

CA. R.P. Vijay : Members Grievances Committee

CA. Rohit Badaya : Committee on Public Finance & Government Accounting

CA. Saurabh Agarwal : Young Member Empowerment Committee

CA. Shailendra Agarwal : Public Relations Committee

CA. Vijendra Bangar : Committee for Members In Industry

March-April 2016

falling under tariff heading 7113. This notification has been amended vide notification no. 12/2016-CE dated 1.3.2016 and now excise duty @ 1% is leviable on articles of jewellery provided no Cenvat Credit is taken under provisions of Cenvat Credit Rules, 2004. However, exemption already available to articles of silver jewellery, other than those studded with diamond, ruby, emerald or sapphire is being continued. The effect being that all types of jewellery items except pure silver jewellery are now subject to excise duty @ 1% provided facility of Cenvat Credit is not availed.

OPTIONS REGARDING RATES OF EXCISE DUTY:-

If the benefit of notification no. 12/2012-CE is not availed, the excise duty @ 12.5% can be paid with Cenvat facility. Thus, the two options are being given to jewelers:–

• Excise duty of 1% (without CENVAT credit); or

• 12.5% (with CENVAT credit.

PAYMENT OF TAX :-

Vide Circular no.1026/14/2016 - CX dated April 23 ,2016 (“Circular') it has been clarified that as a special case Assessee jeweller may pay Excise duty of March 2016 to May 2016 with duty liability of June 2016i.e till July 06,2016.

It has been specified that if the aggregate turnover in FY 2014-15 does not exceed INR 12 crores, then for the month of March 2016- clearances up to INR 50 lakhs would be exempt from excise duty.

CHARTERED ACCOUNTANT CERTIFICATE :-

For the purpose of claiming SSI exemption, a certificate from Chartered Accountant basis books of accounts would have to be obtained .

INTRODUCTION:-

It is the most expensive amendment ever… Yes, now by virtue of amendments made by Budget, 2016; excise duty is being levied on articles of jewellery [excluding silver jewellery, other than studded with diamonds/other precious stones]. Thus, all the jewellery items except pure silver jewellery will now be subject to excise duty w.e.f. 01.03.2016. This article is about the changes brought by the recent budget with respect to jewellery.

SEPARATE THRESHOLD:-

Notification no. 8/2003-CE dated 1.3.2003 which prescribes the threshold exemption for the small scale manufacturers have been amended to incorporate the separate threshold for jewellery. According to amendments made, if the turnover of jeweler does not exceed Rs. 12 crores in previous financial year, no excise duty will be payable up to clearance of Rs. 6 crores in current financial year. In other words, jewellery manufacturer having aggregate value of clearances in a financial year exceeding Rs. 12 crore will not be eligible for this threshold exemption in the subsequent financial year. Since the excise duty is to be levied w.e.f. 01.03.2016; the proportionate SSI exemption of Rs. 50 lacs has been fixed for the month of March. This exemption shall be available only if value of clearances for home consumption from one or more manufacturer from one or more factory or premises of production or manufacture during the financial year 2014-15 did not exceed Rs. 12 crores.

AMENDMENT IN NOTIFICATION NO. 12/2012-CE:-

Entry no. 199 to the notification no. 12/2012-CE allowed the exemption to all types of jewellery items

EXCISE DUTY STUDDED ONJEWELLERY BY BUDGET, 2016

Compiled by :CA. Durgesh Vijay

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UNDER CENTRAL EXCISE TO BE OBTAINED UP TO JULY 01,2016 WHICH WAS EARLIER 60 DAYS FROM MARCH 01,2016.

SPECIAL PROVISION FOR RETURNED GOODS:-

TRU letter issued vide D.O.F. no. 338/8/2016-TRU dated 29.2.2016 states that full exemption from Central Excise duty will be available to duty-paid goods returned to the manufacturer during a financial year. This exemption will be allowed up to a limit of 10% of the value of clearances for home consumption made in the preceding financial year. However, following conditions shall have to be satisfied:-

1. An intimation within 48 hours of the receipt of the returned goods is to be submitted to department about the value of returned goods received in his factory/registered premises;

2. Proper accounts/record of the receipt, finishing operations, and dispatch of returned stock indicating the monthly and cumulative value of the returned stock received during the financial year shall be required to be maintained.

This facility has been provided since it is a common practice in this industry that the duty-paid stock cleared to the wholesale dealer/retailer on consignment basis that remains unsold is returned to the manufacturer either at the end of the season or from time to time. Such returned goods are cleared either as such or after re-finishing operations to another wholesaler or retailer for sale (often at reduced prices). The re-finishing operations could involve cleaning, ironing, re-folding, repacking or relabeling, some of which constitute “manufacture” in terms of the relevant Chapter Notes. This facility obviates the need to pay excise duty twice on the same goods.

WHILE WINDING:-

At last, the jewellery has been brought under excise net. It will perhaps bring a lot of revenue to Government particularly in the Country where buying the jewellery is treated as customary on the various occasions. However, at the same time, the chances of litigation on this levy are on much higher side and may face ignition by the various jewelers associations'.

NON-APPLICABILITY ON JOB-WORKERS :

Rule 12AA of the Central Excise Rules, 2002 provides that in case of article of jewellery covered under Chapter Heading 7113 of Central Excise Tariff Act,1985 –it is the liability of the principal manufacture to obtain registration , pay duty and comply with all the provisions of these rules.

However, if the principal manufacture is a unit located in SEZ/ EOU then the job worker would be required to obtain registration and undertake all the requisite compliances.

PROCEDURE TO BE FOLLOWED:-

A simplified procedure has been prescribed for this purpose which is being explained as follows:-

• Jewellery produced on or before 29.02.2016 but lying in stock as on 29.02.2016 will attract excise duty at the time of clearance.

• To claim the Cenvat Credit, CA certificate will be required on the stock declaration of finished goods, goods-in-process and inputs as on 29.02.2016. However, no stock declaration will be required to be made to the jurisdictional central excise authorities.

• Registration will be granted within two working days from the date of application.

• Documents maintained by the jewellery manufacturers for State VAT or Bureau of Indian Standards (in the case of hallmarked jewellery) shall be accepted for Excise purposes also.

• The private records of the jewellery manufacturers, giving details of daily stock for his own purposes, shall be accepted for the purposes of Rule 10 of the Central Excise Rules 2002.

• Option of centralized excise registration for jewellery manufacturers with centralized billing or accounting system is also being given.

• Jewellery manufacturers will be eligible for a simplified return applicable for optional excise duty of 1%/2% without CENVAT credit under notification No.1/2011-CE.

VIDE THE CIRCULAR NO 1026/14/2016 HAS BEEN SPECIFIED THAT THE REGISTRATION

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March-April 2016

estimated basis in respect of any business except the business mentioned below ,if his gross turnover or gross receipts in the previous year does not exceed Rs. 2 Crore:-1. A person carrying on profession as referred

u/s44AA(1)2. A person carrying income in the nature of

Commission or brokerage.3. A person carrying on any agency business4. A person who is in the business of plying , hiring

or leasing goods carriages.Thus income on estimated basis can not be declared u/s 44AD if the gross turnover or gross receipts exceeds Ra. 2 crore during the financial year.This is because if we declare income u/s 44AD, which is not less than 8% ,then we are not required to maintain books of accounts as per the provisions of Sec 44AD however sec 44AB states that audit is compulsory in case the turnover exceeds Rs. 1 crore during the year which requires proper maintenance of books of accounts . Hence an assessee can not apply Sec 44 AD and declare income on estimated basis if the gross trnover or gross receipts exceeds Rs. 2 crore during the financial year. However the Budget 2016 provides that where an eligible assessee declares profit for any previous year under Sec 44AD and the elegible assessee has not declared income u/s 44AD in any of the five consecutive assessment years succeeding the assessment year in which the income was declared u/s 44AD, , then he shall not be eligible to claim the benefit of declaring the income on presumptive basis u/s 44AD for five assessment years subsequent to the assessment year in which the profit has not been declared under sec 44AD.This limitation will take effect from F.Y. 2016-17.Let us have a clarification of this Budget amendment with an example :-

This section is nothing but provides a relaxation to the tax payers to declare income on presumptive basis, which should not be less than 8% of the gross turnover or gross receipt during the financial year. However this relaxation is provided to certain persons and certain business subject to specified conditions which are provided under Sec 44AD of Income Tax Act, 1961. These certain business and certain persons are named as Eligible Business and Eligible Assessee in the Act. Let us discuss this Section.This section provides that ELIGIBLE ASSESSEES in respect of ELIGIBLE BUSINESS can declare his business income on estimated basis if not maintaining the books of accounts or because of other reasons unable to calculate the business income. This declared income on estimated basis should not be less than 8% of Gross turnover or gross receipts of the business during the financial year. Now the question arises what's the meaning of eligible business and eligible assesses as given above. Here the eligible assessee means –a) An individual, HUF or a partnership firm who

is resident other than a LLP. andb) Who has not claimed any deductions under

section 10A, 10AA, 10B, 10BA, or deductions under any provisions of Chapter VIA under the heading 'C' i.e Deductions in respect of certain incomes in relevant assessment year.

Interpretation : - Only resident individual, HUF and Partnership firm can declare income under SEC 44AD. An LLP can not declare income under this section . Moreover in case a resident individual, HUF or a partnership firm claims any deduction under section mentioned above also can not declare income under this sectionThese eligible assesses can declare income on

Compiled by :CA. Manshi Baid

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Section 44AD of the Income Tax Act, 1961SPECIAL PROVISIONS FOR COMPUTATION

OF PROFIT/ GAIN OF BUSINESS ON PRESUMPTIVE BASIS (After Budget 2016)

March-April 2016

WDV value of the assets in the balance sheet. However the depreciation amount will be assumed to be already deducted from the income and no further amount of deprecation can be deducted from the income declared under section 44AD.

Advance Tax : After Budget 2016 , the person declaring income u/s 44AD will also be required to pay the advance tax. However he can pay the advance tax by 15th March of the financial year..

Applicabilty of Section 44AB : if the assessee is covered u/s 44AD(4) and his total incomeand his total income exceeds the maximum amount which is not chargeable to tax , then such assessee is required to maintain the books of accounts and get his accounts audited under Section 44AD and furnish the prescribed report.

Current year losses and brought forward losses: Since this section overrides Section 28 to Sec 43C but does not overrides Chapter VI , so current year losses and brought forward losses can be set off from the income declared under this section

To have a clarification of Sec . , let us have some classifications.

Suppose an eligible assessee declared income U/s 44AD for A.Y. 2017-18. He continues to declare the income u/s 44AD for A.Y 2018-19 and 2019-20. However for A.Y 2020-21 he has not declared income u/s 44AD, Then the eligible assessee will not be able to avail the benefit of declaring income u/s 44AD for five assessment years succeeding the AY in which he fails to declare income u/s 44AD i.e he will not be allowed to declare income u/s 44AD from A.Y 2021-22 to 2026-27.

Allowability of the Expenses from the Income Declared under Section 44AD

All the expenses are already deemed to be already deducted from the income under this section. It means no further deductions are allowed under this section from the income declared , for expenses. Even the interest , salary , remuneration etc paid to partners by the partnership firm will not be allowed as deduction if income declared u/s 44AD wef F.Y. 2016-17 as the provision in this respect prvided under Section 44AD(2) has been deleted by the Finance Act 2016.

Depreciation : The assessee can provide deprecation to the assets of the business in respect of which the provisions of Section 44AD is claimed and can show

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TOTAL INCOME DURING

THE FINACIAL YEAR

GROSS TURNOVER/GROSS RECEIPTS IS LESS THAN Rs. 2 Crore

HAVE OPTION TO DECALRE INCOME U/S 44AD

DECLARED INCOME U/S 44AD

DECLARED INCOME IS 8% OR MORE OF THE GROSS RECEIPTOR GROSS TURNOVER DURING

THE FINANCIAL YEAR

DECLARED INCOME IS LESS THAN 8% OF THE GROSS RECEIPT

OR GROSS TURNOVER DURING THE FINANCIAL YEAR

BENEFITS DISCUSSED ABOVE WILL BE

AVAILABLE

TOTAL INCOME IS MORE THAN THE EXEMPTION

LIMIT

TOTAL INCOME IS BELOW THE EXEMPTION

LIMIT

REQUIRED TO MAINTAIN BOOKS OF ACCOUNTS U/S

44AA AND GET ITS ACCOUNTS AUDITED U/S

44AD

NEITHER REQUIRED TO MAINTAIN BOOKS OF

ACCOUNTS NOR REQUIREDTO GET ITS AUDITED U/S 44AB.

MOREOVER BENEFITS AS DISCUSSED ABOVE WILL BE

AVAILABLE

CANNOT DECLARE INCOME U/S 44AD. BUT WILL BE REQUIRED TO

MAINTAIN BOOKS OF ACCOUNTS U/S 44AA AND GET ITS AUDITED U/S 44AB

GROSS TURNOVER/GROSSRECEIPTS IS MORE

THAN Rs. 2 Crore

March-April 2016

To be more precise, if turnover of all business of eligible assessee, excluding business covered by section 44AE, exceeds Rs.2 Crore, taxpayer has to get accounts audited u/s 44AB and option to file return on presumptive basis u/s 44AD in respect of any particular business or part of business or division thereof will not be available. Your business other than the business of plying and hiring vehicle declared u/s 44AE is already covered by tax audit provision u/s 44AB for the reason that your turnover therefrom is exceeding Rs. 1 Crore. Resultantly, the benefit of presumptive taxation u/s 44AD in respect of I and III business would not be available to you. You have to get the Business I and III also audited & income of it cannot be offered for taxation on presumptive basis u/s 44AD. Limit of Rs. 1 Crore for tax audit is assessee-wise and not business-wise. Only exception is in respect of income from plying, hiring or leasing of your own goods carriages. You can offer income from goods carriages on presumptive basis u/s 44AE & tax audit would not be mandatory in such case

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CASE I

CAN NOT DECLARE INCOME OF ANY BUSINESS U/S 44AD AS THE GROSS TURNOVER OF BOTH THE BUSINESSES TAKEN TOGETHER EXCEEDS

RS. 2 CRORE

BUSINESS – IGROSS TURNOVER – RS. 80 LAKH

BUSINESS – IIGROSS TURNOVER – RS. 150 LAKH

CASE II

CAN DECLARE INCOME U/S 44AD FOR BUSINESS I. FOR PROFESSION HAVE TO COMPULSORILY GET HIS BOOKS OF ACCOUNTS AUDITED U/S

44AB. (Can Opt for 44ADA provided the Gross receipt is below the limit )

BUSINESS –IGROSS TURNOVER- RS. 50

PROFESSION – IGROSS RECEIPT – RS. 70 LAKH

CASE III

BUSINESS – IGROSS TURNOVER – RS. 80 LAKH

BUSINESS – IIIGROSS TURNOVER – RS, 170 LAKH

BUSINESS –IICLAIMED U/S 44AE

March-April 2016

environment. These are just few examples and there

are many more. The more we take a step towards

keeping our country clean, the happier we will feel.

There are a lot of benefits from the Swachh Bharat

mission

1. We can improve the health of our countrymen

2. We can enhance our tourism

3. We can prevent many diseases.

4. We can have a happy and healthy society

5. We can attract global players to invest in India

6. We can give better life for the upcoming

generations

7. We can build a better eco-friendly

environment

8. We can reduce cost of maintenance

9. We can feel proud

When we have an intolerance policy towards our

house cleanliness, why can't we have the same

mindset for our home country Just an introspection

question to all of us - if we being the citizens don't

value the importance of keeping our country clean, is

it worth to follow it in abroad countries just because

we are bound by the law of the land, we must never

forget- Charity begins at home. So if today we put

some efforts, which could be as small as retaining the

waste packet until we locate a dustbin or encouraging

others to do the same, It does make a difference…

Discipline comes from within, and it's time we make

that discipline a part of our culture with the Swach

Bharat Mission.

“A clean India would be the best tribute India could

pay to Mahatma Gandhi on his 150 birth anniversary

in 2019,” said PM of India as he launched the Swachh

Bharat Mission on 2nd October 2014 throughout

length and breadth of the country as a national

movement. He gave the mantra of 'Na gandagi

karenge, Na karne denge.'

A sense of responsibility and awareness has been

evoked among the people through the Clean India

Movement. With citizens now becoming active

participants in cleanliness activities across the nation,

the dream of a 'Clean India' once seen by Mahatma

Gandhi has begun to get a shape.

The government has created a platform for the

citizens to keep our country clean. There is an

enormous effort put in by the government to keep our

country clean. This can be successful only if we

contribute to the mission. We cannot ask the country

to do everything. What is more important is what we

have done for our country. When we go abroad for a

trip or whatsoever reasons, we throw the waste in

dustbins and not just openly on the road. Then why

can't we do the same in our country.

It's about following the basics to keep the

surroundings clean, simple things like to put the waste

in dustbins, while travelling in train, many people

normally throw the food outside the window and thus

pollute the environment. Instead of throwing it

outside the window, people can just wait for the next

station and put the waste in dustbin. We must also

think about using the handkerchiefs to the extent

possible instead of tissue paper to further save the

SWACHH BHARAT

Compiled by :CA. Deepak Kumar Agarwal

- 19 -

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