Baroda Branch of WIRC of ICAI - The Institute of Chartered Accountants of … · 2019-09-02 · Baroda Branch of Western Indian Regional Council of The Institute of Chartered Accountants

Baroda Branch of Western Indian Regional Council ofThe Institute of Chartered Accountants of India

NewsLetterThe Institute of Chartered Accountants of India

VOL. IV MAY 2011 l(Setup by an Act of Parliament)

SUCCESS

VacationVacation

Half Day

Seminar on

AS for SMEs and

Non Corporate

Entities

on 21.05.2011

Direct Tax

Refresher Courseon

04.06.2011, 11.06.2011

& 18.06.2011

Half Day

Workshop on

E-filing under

Income Tax

on

28.05.2011

INDEX

Chairman Communication ............. 2

Forthcoming Events ...................... 3

Income Tax Updates ...................... 4

Seven Steps to Protect your Computer from Hackers ......... 5

Latest Developments in Banking, Finance, Commerce and Industry ... 6

Inventory Valuation ........................ 7

Appeal .......................................... 8

Rupay - The Indian Card Payment Gateway ........................................ 9

Mountain Story.............................. 10

Photoflash .................................... 11

Baroda Branch of WIRC of The Institute of Chartered Accountants of India

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VOL. IV MAY 2011 l

CA. Rahul ParikhImmediate Past Chairman 98253 29995

CA. Rajesh ShahEx-officio 98250 41142

CA. Nayan KothariTreasurer 98244 33445

CA. Yash BhattMember 99243 88339

CA. Viral ShahMember 98243 62211

MANAGING COMMITTEE

CA. M J ParsiyaChairman 98251 10620

CA. Pradeep AgrawalVice Chairman 98985 60967

CA. Ashish ParikhSecretary 98252 31545

DISCLAIMER

The ICAI and the Baroda Branch of WIRC of ICAI is not in any way responsible for the result of any action taken on the basis of the advertisement published in the Newsletter. The members, however, may bear in mind the provisions of the Code of Ethics while responding to the advertisements.

The views and opinion expressed or implied in the Newsletter are those of the authors / contributors and do not necessarily reflect those of ICAI. Unsolicited articles and transparencies are sent at the owner's risk and the publisher accepts no liability for loss or damage. Material in this publication may not be reproduced, whether in part or in whole, without the consent of ICAI.

Members are requested to kindly send article / paper of professional interest to [email protected]. The same may be published in the newsletter subject to availability of space & editorial editing.

EDITORIAL BOARDCA. Manilal ParsiyaCA. Arpan DodiaCA. Vihang BakshiCA. Vishal DoshiCA. Narendra HindochaCA. Bimal BhattCA. Ashok ThakkarCA. Neena PatelCA. Rachana ParikhCA. Chandrika Parsiya

THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIAICAI Bhawan, Post Box No. 7100, Indraprastha Marg, New Delhi - 110002. Tel. : +91 (11) 39893989 E-mail : [email protected] Web : www.icai.org

WESTERN INDIA REGIONAL COUNCILICAI Bhawan, 27, Cuffe Parade, Post Box No. 6081, Colaba, Mumbai - 400 005. Tel. : +91 (22) 39893989 Email : [email protected] Web : www.wirc-icai.org

BARODA BRANCH OF WIRC OF ICAI“ICAI Bhawan”, Kalali-Tandalja Road, Atladra, Vadodara - 390 012. Telefax : +91 (265) 2681115 / 2680593 E-mail: [email protected] Web : www.baroda-icai.org

DECENTRALISED OFFICE - VADODARA“ICAI Bhawan”, Kalali-Tandalja Road, Atladra, Vadodara - 390 012. Tel. : +91 (265) 2681115 / 2680593 E-mail: [email protected] Web : www.baroda-icai.org

CA. Arpan DodiaMember 98983 83530

Dear Members

Month of May brings Indian summer with its scorching heat accompanied by a desire to escape to cooler environs. Vacation used

to be a luxury but in today’s world it has become a necessity and after gruelling hours spent in bank audits in the month of April, a vacation can truly increase our efficiency in our vocation. Sam Ewing suggested in a lighter vein “Vacation: Two weeks on the sunny sands - and the rest of the year on the financial rocks.” Nevertheless, we cannot subsist without lawful recreation sometimes in the year.

The calendar for first half of month of April was kept clear and no program was organised keeping in view the members’ attention focussed at bank audit assignments. However, 22nd April was a landmark day for Baroda Branch as Honourable President CA. G. Ramaswamy, and our Vice-President CA. Jaydeep Shah visited Baroda Branch on the occasion of WIRC Accounting and Tax Convention. The members came forward in huge numbers to honour as well as hear the views of the leaders of 2011 and the program was well attended by participants. At the convention, Baroda Branch blazed a new trail by becoming the first branch of ICAI to launch e-payment gateway facility on its website for program registration. We also arranged press conference with local media and interaction meeting of President and Vice President with luminaries from Vadodara.

Lecture meeting on the topic “Service Tax and Cenvat Credit – Recent Amendments and Changes” and a Study Circle Meeting were the other two programs organised during the month of April.

I am going to give a brief overview of the various programs planned for the coming months for members. Workshop on Information Technology will bring exposure to SAP and the same has been divided in two sessions. Baroda Branch has joined hands with Confederation of Indian Industries to organise a Seminar with topic “Protect your Director” to know the perils of being a director and the protections available to them. Half Day Seminar on AS for SMEs and Non-corporate Entities has been planned to refresh the knowledge of members about Accounting Standards while discharging their attestation function. To address the issues in E-filing of Income Tax Return and post activities after e-filing of Income Tax Return like online intimation u/s. 143 and refund, online rectification u/s. 154 etc. and issues in E-filing of TDS Returns, we have organised Half Day Workshop on E-filing under Income Tax. Direct Tax Refresher Course is an annual feature and this year again it will be held in the month of June in three parts. Current and relevant topics of day to day practice have been incorporated in the DTRC.

CA. students should feel proud as Baroda Branch has brought home the privilege of hosting National CA. Students’ Convention at Vadodara on June 24th and 25th. The convention will not only provide fruitful learning, it will allow students to network as well as have fun. I advise members to encourage their articles/students to attend the convention and reap maximum benefit out of the same.

Members Directory forms collection drive has been at its peak level and I, once again, urge those members, who haven’t had a chance to send updated information, to deliver the forms to the branch at the earliest. Latest database will facilitate efficient communication with members and correct delivery of newsletters and other circulars.

As the Chinese wisdom says, “Be not afraid of moving slowly, be afraid of standing still”. Therefore, I always invite feedbacks and suggestions to give momentum to branch activities, strengthen the branch performance and bringing excellent technical programs for the benefit of all the members.

Sincerely Yours,

CA. Manilal Parsiya

Chairman's Communication


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VOL. IV MAY 2011 l

Quiz Competition

Date & Day : Wednesday, 25.05.2011Time : 06:30 pm to 08:30 pmSubject : Pop the Question – Current AffairsVenue : JRS Patel Class room, ICAI Bhawan

Study Circle Meeting

Date & Day : Thursday, 26.05.2011Time : 06:30 pm to 08:30 pmSubject : Impact of IFRS on different accounting

aspectVenue : JRS Patel Class room, ICAI Bhawan

Workshop on Excel

Date & Day : Thursday, 19.05.2011Time : 06:30 pm to 08:30 pmFaculty : CA. Pathik Shah, AhmedabadVenue : ITT Lab, ICAI Bhawan

CPT Mock Test

Date & Day : Sunday, 05.06.2011Timeings : 10:30 to 12:30 pm and 02:00 to 04:00 pmFees : `. 200 per student, last date of registration

is 24.5.2011, Tuesday.Venue : ICAI Bhawan, Baroda

FORTHCOMING EVENTS

WICASA EVENTS

WORKSHOP ON INFORMATION TECHNOLOGYTimings : l

03:00 pm to 06:00 pm lSunday, 08.05.2011,

10:00 am to 01:00 pmSubject : Journey from Tally to SAPFaculty : Mr. Narayana Karanam, VadodaraFees : ` 600 upto 05.05.2011 and 700 thereafterVenue : Conference Hall, ICAI Bhawan

Saturday, 07.05.2011,

`

CPE HRS06

HALF DAY SEMINAR

Date & Day :Time : 03:00 pm to 06:30 pmSubject : AS for SMEs and Non Corporate Entities Faculty : CA. Rashmi Thakkar, Vadodara

CA. Alok Shah, VadodaraFees : ` 300 up to 18.05.2011 and 350 thereafterVenue : Conference Hall, ICAI Bhawan

Saturday, 21.05.2011

`

CPE HRS03

STUDY CIRCLE

SEMINAR ON PROTECT YOUR DIRECTORS

Date :Timing : 09:30 am to 01:15 pmFees : Nil Venue : Chandarva, Welcom Hotel, R C Dutt Road

Topics Faculty

Expectations from a Director - Eminent Faculty An Industry Perspective

Independent Directors; Mr. Ashish KumarEvolving Scenarios Company Secretary

Boards - Challenges; Mr. Kiran KumarProtection & Pitfalls

Global perspective of exposure Mr. Anup Dhingrato Boards

(Seminar will be followed by Lunch)

Wednesday, 11.05.2011,

CPE HRS02Date & Day : Tuesday, 17.05.2011

Time : 06.00 pm to 08.00 pmSubject : Value of stamp is value of paperSpeaker : Advocate, Shree Avadhoot SumantVenue : Conference Hall, ICAI BhawanFees : ` 150 for non member of Study Circle

CPE HRS02Date & Day : Tuesday, 31.05.2011

Time : 06.00 pm to 08.00 pmSubject : Labour Laws - ESIC e-filing procedure.Speaker : CA. Hitesh AgrawalVenue : Conference Hall, ICAI BhawanFees : ` 150 for non member of Study Circle

Topics Faculty

E-filing of Income Tax Return and CA. Nirav Shah, Vadodara Post e-filing activities

Issues in E-filing of TDS Returns CA. Dharit Shah, Vadodara

HALF DAY WORKSHOP ON E-FILING UNDER INCOME TAXDay & Date : Saturday, 28.05.2011 Timing : 03:00 pm to 06:30 pm Venue : Conference Hall, ICAI BhawanFees : ` 300 up to 25.05.2011 & ` 350 thereafter

CPE HRS03

DROP BOX FACILITY FOR REGISTRATION

Members can avail drop-box facility by dropping their cheques for registration in Drop Box at 2-B Ramkrishna Chambers, BPC Road, Baroda. Kindly mention your name, membership number and the program for which registration is sought, on the backside of the Cheque.

Not receiving Branch Updates via SMS?

To start receiving updates

to SMS ICAIBRD 9220092200 today

NATIONAL CA. STUDENTS' CONVENTION

on th th24 & 25 June, 2011

More details in next Newsletter

CPE HRS02


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VOL. IV MAY 2011 l

DIRECT TAX REFRESHER COURSE

Timings : Session-1 : 02:30 pm to 04:30 pmSession-2 : 05:00 pm to 07:00 pm

Venue : Auditorium, ICAI Bhawan

CPE HRS12

Fees : before 1st June’ 2011 and ` 450/- per part or ` 1,200/- for entire series thereafter.

CPE Hours : 12 hrs for entire series or 4 hrs for each part

` 400/- per part or ̀ 1000/- for entire series on or

Dates Topics Faculty

04.06.2011 Session 1 Important Issues in Capital Gains CA. Tarun Ghia, Mumbai

Saturday Session 2 Recent Important Judicial Decisions [High Court and Tribunal Adv. Tushar Hemani, A'bad more emphasis to Unreported]

11.06.2011 Session 1 Taxation Issues of Mutual Benefit Society, Non Profit Organization, CA. Anil Sathe, MumbaiSaturday Maintenance Society, Clubs etc.

Session 2 Deemed Income under Tax Laws [Deemed Dividend, Gifts, S. 68 to 69 C, 94A] CA. Mahesh Sarda, Rajkot

18.06.2011 Session 1 Application and Interpretation of Section 9 along with CA. Nihar Jambusaria, MumbaiSaturday Provisions of DTAA and Tax Liability in India

Session 2 Accounting Issues in Computation of Total Income CA. Amar Shah, Vadodara

INCOME TAX UPDATES : CA. Narendra HindochaCompiled by

1. New Income-tax return forms

New forms of Income-tax returns for Assessment Year 2011-12 are now prescribed. However, until about the end of April 2011, the facilities for refiling of returns for Assessment Year 2011-12 which should ideally be available by 1st of April, are yet to be made operational. I am aware of professionals who used to file Income-tax returns in hundreds on the 1st of April every year. Possibly, in course of time, the efficiency shown by the Department in issue of refunds as also in transfer of Officers will extend to notifying the forms and operationalising software sufficiently in advance.

The wordplay continues to be used to indicate Government’s desire to be tax payer friendly. The Saral Form will not be described as Sahaj(ITR 1). For the small businessmen, covered by the redrafted section 44AD, there will be new Sugam Form (4S).

2. Penalty in cases of survey

Penalties are often levied under section 271(1)© in cases of survey, even if the relative income is duly declared in the return of income filed after survey. The penalty is levied based on attractive logic that such income would, but for the survey, go untaxed. However, such logic is not backed by the provisions of law. Under Income-tax Act, by virtue of Explanation 5A, in cases of search and seizure, penalty can be levied even if certain income is declared in the return of income. However, in other cases, penalty apply only if some income is not declared in the return of income until the time limit under section 153. Accordingly, Ahmedabad Bench of ITAT deleted penalty levied in case of survey, when the assess had duly shown the relative income in the Return of income- DCIT V. Dr. Satish Gupta, 42 SOT 48.

3. Deduction of tax at source when transport organized by the seller

In many cases, the supplier organizes transport and bills the cost to the buyer. In such case, an issue arises as to who should deduct tax at source. The cost of freight is borne by the buyer, and in case he is held to be so liable and there is failure to deduct tax at source, he also becomes liable to suffer disallowance under section 40(a) apart from the liability to pay the tax and penalty. However, Mumbai Bench of ITAT, in case of Chang Hing Tannery (42B BCAJ 32) held that the buyer in such a case is not liable to deduct tax at source for the reason that he has not entered into any contract with the transporter.

4. Payment for software-whether royalty

Decision of Delhi Bench of ITAT in case of Gracemac Corporation/Microsoft Corporation ( 8 ITR (Trib) 522) goes contrary to other earlier decisions and has potential to create problems for many other cases. It holds that payments for off the shelf software products in this case are to be considered payments for royalty. Consequently such payments become taxable in India attracting liability to deduct Income-tax at source in case of n o n r e s i d e n t payees. If this v i e w i s c o n s i d e r e d cor rect , there may be obligation to deduct tax at


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source even in respect of payments to residents. The decision holds that distinction between transfer of copy rights right and transfer of copyrighted article in the US regulations and OECD commentary is irrelevant as these sources cannot be considered valid aids for interpretation of Indian laws. It holds that computer program is a process when it executes instructions lying in it in passive state and consideration for use of process amounts to royalty. It has also relied on section 115(1A) which contemplates tax rate in respect of cases in which royalty is in consideration of transfer of rights in software. It has also relied on exclusion of certain categories of software provided in second proviso to section 9(1)(vi). It also relied on the fact that the software are protected by copy right and patent laws in the USA and hence constitute payments for use of patent/copy right and consequently, royalty. It also relied on the user agreement according to which there is no sale but only a license to use.

5. Nature Value of assurances by Government

If the Government states that an industrialist can set up factory in a particular area and profits therefrom will be entitled to 100% tax exemption, industrialist should think twice before believing it. He can read the law himself or, may be, ask a Chartered Accountant. In 2003, Joint Secretary in the Ministry of Commerce and Industry,

Government of India propounded industrial policy stating that new units in Uttaranchal land Himachal will be entitled to 100% tax exemption. While this was followed by insertion of section 80IC, unless section 115JB was amended, the promised 100% exemption was effectively not available. CBDT stated that tax would be chargeable under section 115JB and writ petition against such order was dismissed by Uttarakhand High Court, on the ground that there was no provision under section 115JB for excluding profits of such companies and there being no provision in statute, the Government even if it wanted, had no power to grant the benefit under section 115JB. The worse part is, even if exemption is there in law, the Government can still propose its withdrawal as seen in case of provisions in Finance Bill 2011 relating SEZ units.

6. Deduction for payment by son to father

When a son earns a fortune, it is nature for him to share it with his family members including father. But can you claim deduction for what you pay to your father ?. Tennis star Mahesh Bhupathy entered into agreement with his father to reimburse all the expenses that his father incurred to bring up his son since birth and claimed deduction for the same. The Court did not consider it necessary to discuss the claim in detail before rejecting the claim. 235 CTR 301.

The best option is to call a computer expert or engineer and instruct them to secure your connection to avoid Hackers to steal information from your system or implant virus into it.

Here is how to do it:

1. Enable Firewall On Each Computer & Router :

Modern network routers contain built-in firewall capability, but the option also exists to disable them. Ensure that your router’s firewall is turned on.

2. Position The Router or Access Point Safely :

While installing WiFi, ensure that the position of the access point or router prevents its reach to the exterior as much as possible. Try to position the device as far away from the windows as possible.

SEVEN STEPS TO PROTECT YOUR COMPUTER FROM HACKERS Compiled by : CA Sanjeev Shah

3. Turn Off Network During Extended Periods of Non-Use :

Avoid leaving your network available when you are not using it. Shutting down your network will most certainly prevent outside hackers from breaking in.

4. Avoid Using Default Username & Passwords :

Use a login/password on your router that is different than the default settings. Most routers are made available with a default combination that can be hacked.

5. Enable MAC Address Filtering :

Each wireless device has a unique identifier called the MAC address. Access points and routers keep track of the MACs for all devices that connect to them. It ensures that rogues cannot connect to it.

6. Avoid Auto-Connect to Open Wireless Networks :

Your connection allows you to connect to an open wireless network such as a free wireless hotspot or your neighbor’s router. This exposes your PC to security risks and attacks.

7. Limit the No. of People Who Can See your Network by Disabling the SSID Broadcast :

The wireless access point or router typically broadcasts the SSID over the air at regular intervals. Home users can avoid this facility.


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Latest Developments in Banking, Finance, Commerce and Industry Compiled by : CA. Vihang Bakshi

1. What’s balance, This Credit Card Will Talk to You:

Imagine your credit card talking to you and displaying your balance, while doubling as a reward card. Well your imagination will soon turn into reality. Dynamics Inc is developing such cards due to be introduced in the US later this year – which will have wafer-thin microprocessors and would run on batteries that can last up to three years. However, the credit card will only display personal information after a security code entered. Citibank has released the new 2G card, which has programmable magnetic strip and buttons on front for users to choose to use it as credit card or just to sped reward points. Even master card has released a card that has small LCD screen which display a one time code which customer can use to make online purchase. It means even if some one’s credit card details are stolen, they will be useless to buy anything without one-off code. Banks, phone providers, Google and Apple are also working on mobile payment system which relay on short range wireless technology that allows electronic devices to transcript encrypted data.

2. Fraudulent Transfer of Funds Trough Net Banking:

The complaint was regard to unauthorized transfer from the account of complainant through net banking even though she had never applied for net banking facility. The complainant alleged that with the connivance of her ex-husband, who was also banks’ deputy manager, the banks staff had transfer the fund from saving bank account through net banking and other instruments with forged signatures. The banking ombudsman observed that bank has converted saving bank account (with single operation) as joint with her ex-husband without her consent. The bank was, therefore, directed to pay the complainant the amount so appropriated immediate with up-to-date interest at the fixed deposit rate from the date of debit to the date of payment, restore the account as single operated account in name of complainant, cancel the net banking facility and allow operations to the complainant on her accounts.

3. SBI Arms Merger Bill Cleared:

The government cleared a bill to empower itself to effectively manage the affairs of subsidiary bank of State Bank of India. The move will also facilitate the merger of five subsidiaries with SBI for which government has indicated time frame of 12-18 months. While SBI executive said they were in favor of merging the remaining associated banks-State Bank of Bikaner and Jaipur, State Bank of Hydrabad, State Bank of Mysore, State Bank of Patiala and State Bank of Travancore-the remaining would depend on clearance from the government.

4. NPCI to Charge Banks For Mobile Transactions:

The National Payment Corporation of India (NPCI) will charge 10 paisa to remaining banks for mobile transaction on Inter Bank Mobile Payment Services (IMPS) from 1st April 2011. To provide momentum and impetus to mobile based financial transactions, the charge has been brought down from 25 paisa as planned earlier. The fee was fully waived for the current financial year to promote the product. However banks are free

to charge their respective customers according to their policies. To receive payments, one would just need an identification proof. However to make payment, the user should have particular software on his or her mobile phone, which will be provided by respective banks.

5. Compensation For Closure of Saving Bank Account Without Notice:

One saving Bank (SB) account holder alleged unilateral closure of her saving bank account, without any intimation to her. The bank had submitted that the inoperative account was automatically closed by levying minimum charges as per banks extent rule. However, bank was silent on issue of not following prescribe procedure for closing the account. According to its schedule of service charges, no service charge is applicable if stipulated minimum balance is maintained in account. Otherwise Rs 75 would be levied, and of balance bellow Rs 75 account is closed with notice/advice to customer. However, the account was closed by bank unilaterally without any notice/advice to the complainant. Hence deficiency in the service on the part of bank was clearly established. In view of observation, the bank was directed to pay a token compensation Rs 500.

6. Coins of 25 paise and Below will Cease To Be Legal Tender:

The Government of India has decided to call in from circulation coins of denomination 25 paise and below, with effect from 30th June 2011. From this date this coins cease to be legal tender for payment. Coins of domination 25 paise and below will not be accepted for exchange from 30th June 2011. Therefore the publication can approach branches of all banks maintaining small coins depots to exchange such coins.

7. Cheque payments to get costlier from 01st April 2011:

Making payments through cheques may become a costlier affair from 01st April 2011 as RBI has allowed banks to levy higher service charges for their clearing, especially of high-value and out station cheques. As per a RBI circular coming into effect from 01st April 2011 banks would be free to fix service charges on speed clearing of cheques of value above Rs. 1 Lakh. At present, RBI does not allow banks to charge more that Rs. 150 per cheque for speed clearing of cheques worth over Rs. 1 Lakh.

8. Imprisonment not must for issuer of bounced cheque (Supreme Court):

Imprisonment is not a must while punishing a person who issues cheques which bounce, the Supreme Court stated in the case, Kaushalya Devi Vs. Roopkishore. In this case, the drawer of cheques was convicted under the Negotiable Instruments Act. However, he deposited Rs. 2 Lakh out of Rs. 3.50 Lakh against the cheques. The magistrate felt that under those circumstances, fine would suffice and imprisonment was not necessary. He imposed a fine of Rs. 4 Lakhs and allowed time to pay the balance. This order was challenged by the payee, but the Supreme Court agreed with the magistrate that jail sentence was not called for in this particular case.


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Inventory Valuation Compiled by : CA Bharat Gajjar

Entrances to inventory are valued with goods acquisition price or with the production cost. Exits from inventory intervene at various moments, either for sale, or for incorporation in the production process.

In case of fixed acquisition price of all goods which enter the inventory, the acquisition price A is applied to the total quantity in inventory X. Stock value is then X x A.

But, the economic reality makes that acquisition prices vary. Furthermore it is not

always easy to identify which exact product is taken out inventory.

So, the inventory can, at some point, be composed of: X quantities of an article acquired at a price A, and Y quantities of the same article acquired at a price B …

In most of the companies, every product in stock is not identified alone. We do not know if the outgoing product is the first one that had been bought, the last one or the intermediary.

It is thus necessary to use a method which allows estimating inventory exits at any moment by taking in a consideration the changes of products acquisition prices or production costs.

The rule recommends applying the MAP (Moving Average Price) method. But it is allowed to choose FIFO or LIFO methods if the company considers that it can improve the global management.

Once chosen the valuation method, the company will have to conform to the uniformity in the management method principle.

Changes in this method will be accepted only in exceptional and justified cases.

1. MAP (Moving Average price). The prices moving average is calculated taking into account the received quantities at a given price.

2. FIFO (First In, First out). Last exit valuation is made using the first reception acquisition price. So shipments are valued in the same order as the inventory was constituted. Inventory is recorded with its receiving value respecting the chronological order.

3. LIFO (Last In, First Out). Last exit valuation is made using the last reception acquisition price. So shipments are valued in the inverse order as the inventory was constituted. Inventory is recorded with its receiving value respecting the chronological order.

Example :

Date Quantity Value

Initial inventory 01.03.2011 1000 4000

In 12.03.2011 500 3000

Out 13.03.2011 700 -

Out 15.03.2011 700 -

In 22.03.2011 900 6300

Final inventory 31.03.2011 1000 -

MAP (Moving Average Price)

There are two ways to calculate it:

End of period

Before every exit.

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VOL. IV MAY 2011 l

The example below corresponds to this more common way of calculating the MAP.

In Out Inventory

Qty. Price Value Qty. Price Value Qty. Price Value

Initial inventory 1000 4 4000

In 500 6 3000 1500 4.67 7000

Out 700 4.67 3266 800 4.67 3736

Out 700 4.67 3266 100 4.67 467

In 900 7 6300 1000 6.77 6767

Detailed MAP calculation:

[(1000 x 4) + (500 x 6)] / (1000 + 500) = 4.67

[(100 x 4,67)+(900 x 7)] / (100 + 900) = 6.77

Inventory value at 31.03.2011 is 6767

FIFO

In that case, we build a board with two dimensions (Prices and Quantities by movement type). For each product reception with different price we open a new column. To cover the exit needed quantities, we consume firstly the most former units.

Price 4 6 7

Initial inventory 1000

In 500

Out (700)

Out (300) (400)

In 900

Final inventory 0 100 900


LIFO

We apply the same principle as FIFO. But to cover the exits needed quantities, we consume firstly the last entered units.

Price 4 6 7

Initial inventory 1000

In 500

Out (200) (500)

Out (700)

In 900

Final inventory 100 0 900


Inventory value according to each method is:

Method Value of Inventory

MAP 6767

FIFO 6900

LIFO 6700

FIFO and LIFO methods lead to extreme values while the MAP method produces an intermediate value.

FIFO method leads to a stronger valuation of assets in case of inflation, because it values inventories at the last acquisition prices. Observation is inverse with the LIFO method.

Using FIFO method while the market is rising, while profit is serving for dividends distribution, risks to uncapitalize the company because sales income would not allow supplying the inventory.

Commitments Received under the Financial Assistance Scheme for CA Students (IPCC/Final)

Name of Member

No. of students sponsored

CA. Manish Baxi 1 10,000

CA. Mayur Swadia 1 10,000

CA. Neena Patel 4 40,000

CA. Rachana Parikh 1 10,000

CA. Jay Chaira, RCM 5 50,000

CA. S. R. Parikh 3 30,000

CA. K. K. Shah 1 10,000

CA. Divyesh Mehta 1 10,000

CA. Darshan Bhootwala 1 10,000

CA. Dhruv Agrawal 1 10,000

CA. Jayesh Verma 1 10,000

Amount `

*Commitments from the said funds are based on utilization of interest accruals from Corpus already available with the Branch in the said funds plus additional donation received from fund benefactors for direct utilization.

Members desirous of contributing to the above scheme are requested to kindly contact the Chairman, Baroda Branch on +91-9327243479.

Commitments Received under the Financial Assistance Scheme for CA Students (CPT)

Name of No of Students AmountMember Sponsored `

C D Amin & R J Parikh Fund* 2 7,000

Shantaben R Parikh Fund* 1 4,000

CA. Neena Patel 1 3,000

RUPAY - THE INDIAN CARD PAYMENT GATEWAY Compiled by : CA. Pradeep Agrawal


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The outset…

The idea of Indian card payment gateway was born when the central bank released a vision document in 2005 containing a proposal to set up an umbrella institution for all retail payment systems in the country

Since plastic money is gaining more and more popularity, and Indians going for more cashless t ransact ions, an a l ternat ive payment infrastructure provider quoting significantly lower charges and backed by the banking regulator was required. At present, close to four crore plastic cards (credit and debit cards put together) are in circulation in the country, and transactions done using a debit or credit card issued by a domestic bank here, are connected through a system owned by Visa or MasterCard, which are located outside country. Collectively for all the transactions done last year, the domestic banks paid around Rs 500 cores as fees to these global card firms for processing debit and credit card payments, 90 percent of which were domestic deals.

The usage of debit & credit cards arose by 28% & 25% respectively as compared to last year.

Looking to the stunning rise in the usage of plastic money and the high cost borne by the domestic banks, the RBI asked the Indian Bank Association to launch a non-profit payment solutions company to meet the requirements of domestic banks.

The launch….

After a lot of planning, thinking and hard work, the National Payments Corporation of India (NPCI) finalized the proposal of unique India Card, which once commercially launched would be a domestic alternative to the global real-time payment processing firms like Visa and MasterCard.

NPCI has finalized the name of the proposed card as RUPAY and will resemble China’s Union Pay (CUP) launched in March 2002, is the domestic real-time payment processing firm for Chinese banks.

A leading financial consultancy firm Ernst & Young (E&Y) will develop and roll out the entire architecture, including the design and software for the Rupay card rollout.

The NPCI will initially launch a domestic ATM/debit cards to begin with and then would hit the credit card market later on.

The interesting statistics….

According to the RBI, debit card transactions in India rose 49% in January 2011 to reach Rs. 37 billion (approximately $830 million) from about Rs. 25 billion ($557 million) last year. The number of debit cards in use also rose by 25% during this period. Credit card transactions also rose 28% in January 2011 compared to last year to about Rs 69 billion ($1.54 billion).

Debit card transactions rose 49 percent to Rs 3,712.67 crore in

January 2011, against Rs 2,491 crore y-o-y. The number of debit cards in use also rose by 25 percent in the reporting month to 21.82 crore up from 17.41 crore as on January 31, 2010.

In the April-January period, the total transactions carried out by debit cards jumped by 47.06 percent, to Rs 32,029.24 crore, from Rs 21,779.83 crore in the first 10 months of the last fiscal, said the RBI data.

Against this, credit card transactions rose 28 percent in January to Rs 6,934.65 crore, despite a 10 percent drop in the number of credit cards in circulation. As of January 31, 2011, there were 1.81 crore active credit cards in the country, down from 2.02 crore y-o-y.

During the April-January period of the current fiscal, the total transactions carried out via credit cards increased 21.78 percent to Rs 62,335.44 crore as against Rs 51,188.94 crore in the year-ago period.

So, every time card holders use credit or debit cards at ATMs, point-of-sale (POS) terminals or for making online payments, banks have to pay fees to Visa and MasterCard for facilitating the processing of such transactions. Due to the absence of a domestic card.

Domestic banks had no option but to tie up with Visa or MasterCard for connectivity between cardholders, merchants and issuing banks not just within the country, but across the globe.

The consequence….

The launch of this India card Rupay will substitute Visa & MasterCard. These two, American giants that play a role nine out of ten times when anyone uses a credit card in the world, will face an unusual rival in India. Once the Indian pay card goes on-stream, it will not only dilute the dominance of Visa and MasterCard in the payment processing space, but also bring down transaction charges for banks. Every operation done here using a debit or credit card issued by a domestic bank is routed through network switches owned by Visa or MasterCard, But now the Rupay would eliminate the need for this connectivity

The Rupay initiative entails the setting up of a network switch, which acts as a payment gateway that connects all the ATMs and points-of-sale terminals. The domestic system is meant to gradually replace payment settlement providers like MasterCard and Visa, which now control all payments and settlements that happen through cards.

Finally, India will have its own gateway payment system. The Indian pay card Rupay will replace Visa, MasterCard and any other foreign gateways.

The commercial launch is expected in a few months, once the systems and networks are in place.

Thank You


10

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VOL. IV MAY 2011 l

CA. Rajiv D KhatlawalaManaging Director

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11

NewsLetterSUCCESS

VOL. IV MAY 2011 l

WIRC Accounting and Tax Convention on 22.04.2011

Inauguration by lighting of lamp by worthy hands of CA. G. Ramaswamy, President, ICAI and CA. Jaydeep Shah, Vice President, ICAI.

CA. G. Ramaswamy, President, ICAI addressing the gathering.

CA. Jaydeep Shah, Vice President, ICAI addressing the gathering.

E- Payment Gateway launching by worthy hands of CA. G. Ramaswamy, President, ICAI.

CA. Manoj Fadnis, Chairman of Accounting Standard Board speaking on topic “Ind AS An Overview.

CA. Dhinal Shah, CCM, speaking on topic “Recent Judgement with reference to Accounting and Tax”

CA. Vishal Gada, Mumbai, speaking on topic “Taxation on Executive Remuneration with Special Emphasis on Cross Border Movements”.

CA. Narendra Hindocha, Vadodara, speaking on topic “Taxation of Real Estate Transaction”

Cross-section of audience.

CA. G. Ramaswamy, and CA. Jaydeep Shah, Vice President, ICAI, interacting with luminaries of Vadodara.

President, ICAI CA. G. Ramaswamy, andCA. Jaydeep Shah, Vice President, ICAI addressing the media persons.

President, ICAI CA. G. Ramaswamy, and CA. Jaydeep Shah, Vice President, ICAI with the students of Vadodara.

President, ICAI


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VOL. IV MAY 2011 l

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CA.Anirudh Sonpal, Vadodara, speaking on Recent Changes & Amendments” on 23.04.2011

“Service Tax & Cenvat Credit – CS. Niraj Trivedi, Baroda, speaking on “Managerial Remuneration, Legal & Procedural Aspects on 19.04.2011

Lecture Meeting

Mega Career Counselling at C. C. Mehta Auditorium, M. S. University, Vadodara on 03.04.2011

Industrial Visit at Hotel Surya Palace, Vadodara on 29.04.2011

WICASA

Study Circle

Congratulations to

Congratulations to

CA. Abhishek Nagori,

CA. Rahul Parikh,

Past Chairman, Baroda Branch of WIRC of ICAI, on being appointed as Co-Opted member of Internal Audit Committee constituted by Western India Regional Council of ICAI

Immediate Past Chairman, Baroda Branch of WIRC of ICAI, on being appointed as Co-Opted member of Taxat ion Committee constituted by Western India Regional Council of ICAI

Congratulations to

Congratulations to

CA. Samir Parikh

CA. Maulik Mehta

on being appointed as Co-Opted member of Co-Operative Society (Gujrat) Committee constituted by Western India Regional Council of ICAI

on being appointed as the Vice Chairman of the Central Gujarat Zonal Council of CII (Confederation of Indian Industries)

Documents

Baroda Branch of WIRC of ICAI - The Institute of Chartered Accountants of … · 2019-09-02 · Baroda Branch of Western Indian Regional Council of The Institute of Chartered Accountants