NEWSLETTER OF NORTHERN INDIA REGIONAL … August Newsletter...At last I would like to wish you all a very Happy Independence Day, Shubh Janmashtmi and Happy Teacher's Day. May almighty

NEWSLETTER OF NORTHERN INDIA REGIONAL COUNCIL OF THE ICAI

VOL. XLVI, NO. 5

August, 2016

Happy Independence Day

SALUTE TO INDIA ON THIS

INDEPENDENCE DAY

From the Desk of the Chairman...

Dear Professional Colleagues,

“Success is going from failure to failure without losing

enthusiasm.”

Determination, Initiative & persistence are the

foundation of success.

Success is the sum of small efforts, repeated day in and day

out. From the core of my heart I would like to congratulate all

the newly qualified Chartered Accountants who have

recently qualified their examinations. I would like to apprise

all of you that 11.36 percent candidates passed the both

groups and if we look at the individual group wise result

14.47 percent candidates cleared group -I and 21.30

percent candidates cleared group -II Final Examinations. On

behalf of Team NIRC I welcome all the Successful candidates

to our glorious profession.

I would advise the students who have not yet qualified in the

recent examinations to work harder and harder and prepare

themselves for the next examinations. I pray to almighty for

their success too.

In order to promote, a sense of comradeship among

members and for bringing them closer to our own institute,

the ICAI organize Convocation at New Delhi & Chandigarh

(Northern Region) on 17th August, 2016 for distributing

certificates to the newly qualified Members. Members

enrolled during the period October, 2015 to March, 2016 are

supposed to participate in the Convocation for awarding the

“Certificate of Membership”. You are requested to please

EDITORIAL BOARD

Printed and Published by Shri. Ajay JainSr. Assistant Secretary, on behalf of the NorthernIndia Regional Council of The Institute of Chartered Accountants of India “ICAI Bhawan”,Indraprastha Marg, New Delhi-110 002

[email protected] ; [email protected]

Date: 10th August, 2016Place: New Delhi

CA. Deepak Garg

Chairman, NIRC of ICAI

M : 9811064105

also organized for the Students. Immediately after the

green Signal of Rajya Sabha on GST your NIRC has

organized Workshop on GST on 10th August. A series

of programme on GST will be organized for the

members in the month of August.

In the days to come your NIRC is planning to organize

number of programmes for the members which are

circulated in this news letter.All of you are requested to

please block your diaries and attend all the CPE

programmes.

A joint Regional Conference jointly with EIRC, SIRC,

WIRC and CIRC is also scheduled for 19th to 21st

August, 2016 at Goa. You are requested to register

yourself for the same and gain a maximum from

various technical sessions during the conference.

Institute of Chartered Accountant of India is also

organizing two days International Conference jnana

yajna - The quest for excellence on 22nd and 23rd

October, 2016 in Hyderabad. You are requested to

block your diary to exchange the ideas between local

and global accountancy fraternities.

On behalf of TEAM NIRC, I once agian request you to

become Member of the CABF and contribute

voluntarily for the noble and pious cause. If you have

already registered for the same, I again request you to

come forward and make more and more contribution

for this noble cause.

At last I would like to wish you all a very Happy

Independence Day, Shubh Janmashtmi and Happy

Teacher's Day. May almighty God shower His Choicest

blessings over all of us always and always.

apprise to all the members regarding this Mega

Programme who have enrolled themselves in the

above period.

A moment of pride and happiness for all the Indians is

near approaching i.e. our 70th Independence Day .

We all celebrate the Independence Day to pay tribute

and remember all the freedom fighters who had

contributed a lot and fought for the Independence of

India. My heartiest greetings to all of you! This is the

day when we all should take stock of our achievements

and failures in the past and how best we can serve the

future of our nation by performing the tasks we are

trained to conduct in a better and more efficient

manner at various levels.

With the continuous and hard efforts of our esteemed

Institute ICAI and their detailed representation to

CBDT and Hon'ble Finance Minister for deferment of

applicability of ICDS, and non-revision of tax audit

report formats, it is worthwhile to apprise to all of you

once again that Government has deferred the

applicability of ICDS by one year.

The long delayed constitution (122nd Amendment)

Bill 2014 on GST has finally got green signal of Rajya

Sabha on 3rd August, 2016. GST is the biggest

Indirect Tax Reform since Independence, is aimed at

dismantling Inter State Barriers to Trade in Goods and

Services. The proposed GST would subsume various

Central (Excise Duty, Additional Excise Duty, Service

tax, Additional Custom Duty, of Customs etc.) as well

as State level Indirect taxes (VAT / Sales Tax,

Purchase Tax, Octroi, Entry tax etc.) .

Learning is continuous Journey. In order to apprise

with the fast changing developments, Your NIRC has

organized various programmes for members and

Students during last month. Seminar on Valuation was

organized for the Members. Seminar on Tax Audit was

“Together we can, together we will”

Date: 10th August, 2016Place: New Delhi

CA. Sumit Garg

Secretary, NIRC of ICAI

M : 9560064645

From the Desk of the Secretary...From the Desk of the Secretary...From the Desk of the Secretary...

“True independence and freedom can only exist if

we do what's right without being irrational.”

Perform your duties, as action is far better than

inaction.”

Tax Audit

GST

Members Grievance Cell

Wishing all a very happy 69th Independence Day. The

freedom which we live has taken sacrifice of many of our

real heroes and on this Independence day, we all should

pay tribute to our real warriors who waved the flag of our

nation into the world and made the entire world realize

that we are independent.

Wishing all a very happy Rakhi and Krishan Janmashtmi.

Apart from our regular professional activities we should

consider our duties towards our society and human

beings. We should voluntary undertake activities like

blood donation, cleanliness, old clothes distribution, food

and accommodation facilities for the poor etc.

Tax Audit is an area of practice where maximum number of

professionals prefer to work. But as per Budget 2016,

there arises a confusion among professionals regarding

the limit of Tax Audit u/s 44AB. In this respect CBDT

clarifies the position on turnover threshold and

applicability of audit in case of presumptive taxation

regime u/s 44AD and regular tax audit u/s 44AB; Sec.

44AB mandates that every person carrying on business to

get his accounts audited if in the previous year, his

sales/turnover/ gross receipts exceed Rs. 1 crore;

However, if taxpayer opts for presumptive taxation

scheme u/s 44AD(1), audit is not required for turnover

limit upto Rs 2 crores; CBDT clarifies that the higher

turnover threshold of Rs. 2 crores for non-audit of

accounts is granted only to assessees, opting for

presumptive taxation scheme u/s 44AD.

The much awaited amendment of GST in the Taxation

reform of our country has taken place, when Rajya Sabha

approved the GST and requested Lok Sabha to made the

required amendments. The Introduction of GST will open

ample number of areas for the professionals.

Grievances are part and parcel of any system but

providing solutions is very important. We at NIRC have

been working in the direction of addressing maximum

grievance of members as well as students and try our best

efforts to resolve the problems as and when it arises.

Further you may mail us at [email protected] with an assurance

to get back with proper resolution.

Students- Backbone of our Profession

NIRC future events

Concluding remark

We are regularly organizing the classes for CA Students with

a very nominal fee so that every student can afford the

same. Student's knowledge plays a greater role in effective

functioning and discharge of duties in CAs workplace so we

always organize free workshop for CA students for practical

knowledge updates and request members to encourage their

trainees to attend the same. We also have tie-up with

Vedanta Foundation who offers full scholarship /free financial

assistance to the deserving underprivileged students willing

to make a career in CA.

NIRC has conducted multiple numbers of programs for CAs in

July 2016 and also successfully organized National

Convention for CA Students as well. We are also planning to

conduct many programs in near days to come. For details

please refer “Forthcoming Programs section” in this

newsletter.

At the last but not the least, I would like to say that your

words of wisdom, suggestions are our basic essentials which

provides us the basis to act in a proactive and effective

manner, and I wish that you will always make an active

participation by sharing your views, contributing articles to

e-News, as your active participation will take all of us to new

heights. I sincerely thanks to each one of you.

Sec

reta

ryDear Professional Colleagues,

August, 2016 NIRC NEWSLETTER

undisclosed income”

The CBDT has issued a directive dated 11th July 2016 stating that the

statutory notice to be issued under section 143(2) of the Income-tax

Act has been modified. There will henceforth be three formats of the

said notice namely:

(I) Limited Scrutiny

(ii) Complete Scrutiny

(iii) Manual Scrutiny.

The CBDT has directed that all scrutiny notices shall henceforth be

issued in revised formats.

In a bid to end taxpayers' harassment, the Finance Ministry has

"modified" the Income Tax department notice issued for the tedious

scrutiny procedure by bringing in "three new formats" that will

clearly stipulate if the inqury against them is "limited, complete or

manual".

The usage of words on the new notices have also been modified with

the addition of phrases like "for your kind information", an invite to

get the inquiry done in an e-enabled and paperless fashion (in select

cities) and a "yours faithfully" sign off in the end by the concerned

Assessing Officer (AO).

For fast tracking the allotment of PAN and TAN to company

applicants, Digital Signature Certificate(DSC) based application

procedure has been introduced on the portals of PAN service

providers M/s NSDL eGov and M/s UTIITSL. Under the new process

PAN and TAN will be allotted within one day after completion of valid

on-line application.

For a greater ease of doing business in India, the Central Board of

Direct Taxes (CBDT) said it has put in place new protocols which will

ensure that corporate are allotted PAN and Tax Deduction Account

Number (TAN) within a day.

The Central Board of Direct Taxes (CBDT) has made it more difficult

for assessing officers to expand the scope of a 'limited' scrutiny to a

complete one. They will also have to substantiate any contention of

possible under-reporting of income and loss of taxes, apart from

Issue of notices under section 143(2) of Income-tax Act,

1961 in revised format.

Finance Ministry modifies IT scrutiny notices; adds words of

courtesy.

CBDT launches paperless PAN and TAN application process -

PAN, TAN for Corporates in a Day.

CBDT tightens scrutiny rules for assessing officers.

Greetings of the Day!!!

Its my pleasure to present some important updates for the month of

July 2016, which was brought into various changes and amendments

of Acts, Notifications and Circulars.

The Central Board of Direct Taxes has vide Press Release dated

6.07.2016 clarified that the Income Computation & Disclosure

Standards shall be applicable from 1.4.2016 i.e. previous year 2016-

17 (Assessment Year 2017-18).

Some of the tax payers might have filed their return of income and

obtained Tax Audit Report without incorporating the compliance with

the ICDS and related disclosures in the absence of the revised Tax

Audit Report. Considering these facts, it has been decided that the

ICDS shall be applicable from 1.4.2016 i.e. previous year 2016-17

(Assessment Year 2017-18).

Senior Indian Revenue Service (IRS) officer Rani Singh Nair took

over as the new chairperson of Central Board of Direct Taxes (CBDT),

the policy-making body of the Income Tax (I-T) department under

the Union Finance Ministry.Her predecessor Atulesh Jindal, who was

appointed CBDT chief in February this year, retired.

Nair, a 1979-batch IRS officer of the I-T cadre, worked as member

(Legislation and Computerisation) at CBDT.

Taking into consideration the practical difficulties of the stakeholders,

the Government has decided to revise the time schedule for making

p a y m e n t s u n d e r t h e S c h e m e a s u n d e r :

(i) a minimum amount of 25% of the tax, surcharge and penalty to be

paid by 30.11.2016; (ii) a further amount of 25% of the tax,

surcharge and penalty to be paid by 31.3.2017; and (iii) the balance

amount to be paid on or before 30.9.2017.

The government clarified that blackmoney declarants using the one-

time compliance window cannot pay tax and penalty from

undisclosed income to bring down their liability and such acts will not

get any immunity. The clarification in the form of frequently asked

questions (FAQs) stated that there is no intent to “modify or alter the

rate of tax, surcharge and penalty payable under the Scheme which

have been clearly specified in the Scheme itself”. It said further

“Sections 184 & 185 of the Finance Act, 2016 unambiguously provide

for payment of tax, surcharge and penalty at the rate of 45% of

Direct Tax Updates :-

ICDS notified under Section 145 (2) of the Income -tax Act,

1961 to be applicable from 01-04-2016.

Rani Singh Nair appointed CBDT chairperson.

IDS 2016 – Government Revises Time Schedule for Making

Payments under the Scheme.

IDS 2016 - Blackmoney declarants cannot pay tax from

undeclared income.

CA. Vivek Khurana

The views expressed herein are personal views of the author and do not necessarily represent the views of the NIRCs 5

Important Updates

Dear Professional Colleagues,


procedure and compliance relating to excise duty of articles of

jewellery. The Sub-Committee has given its report which has been

accepted by the Government.

In a relief for listed companies, the Securities and Exchange Board of

India (Sebi) deferred the timelines for implementation of new

accounting standards.

Starting financial year 2017 companies were required to transition

from the current reporting format for financial results that is based

on Generally Accepted Accounting Principles (GAAP) to Indian

Accounting Standards Rules, 2015 or IndAS Rules. As per the Sebi

circular, banks and insurance companies will not need to comply with

the new accounting norms, and follow the prescriptions of their

respective regulators, that is the Reserve Bank of India and

Insurance Regulatory and Development Authority of India

Seeking to check black money, Lok Sabha passed a comprehensive

Benami Transactions Amendment Bill, with Finance Minister Arun

Jaitley assuring that genuine religious trusts will be kept out of the

purview of the legislation. Moving the Benami Transactions

(Prohibition) Amendment Bill 2015 for the consideration and

passage, the Minister said the legislation was predominately an anti-

black money measure and its purpose is to seize benami property

and prosecute those indulging in such activities.

A nine judge constitution bench of the Supreme Court bench will hear

from Tuesday a batch of petitions by some top corporate houses and

business associations challenging the imposition of entry tax by the

various state governments, contending that it was violative of the

freedom of trade and commerce provided under the Constitution.

The entire issue of entry tax that is under challenge through these

petitions involve financial implications of about Rs 30,000 crore - a

huge sum for the cash-strapped states like Odisha which would be

getting something like Rs 1,600 crore from the tax.

“If you always do

what you've always done,

you'll always get

what you've always gotten.”

- Anthony Robbins.

SEBI defers implementation of new accounting standards.

Lok Sabha passes comprehensive bill to check benami

transactions.

SC to examine if entry tax violates constitutional guarantee

freedom of trade.

To conclude it, I just want to share a famous quote

requiring approval of senior officers.

The guidelines issued recently by the apex direct taxes body call for

assessing officers to form a "reasonable view" that there is a

possibility of income under-assessment, said an official aware of the

move. Besides, when manually selecting cases for scrutiny in the

current financial year, the threshold for metros has been raised to Rs

25 lakh from Rs 10 lakh for instances involving additions in the earlier

year. That is, if an assessing officer finds that some income should

have been added to the declaration, the return can't be opened for

scrutiny if the incremental amount is less than Rs 25 lakh.

Government has constituted a Committee to examine the desirability

and feasibility of having a new financial year and give its

recommendations by 31st December, 2016. The Committee may,

after due examination of all relevant factors, recommend the date of

commencement of the financial year which in its view is the most

suitable for the country. The Committee may interact with experts,

institutions, Government Departments and others as deemed

necessary.

Central Board of Direct Taxes (CBDT) on Monday came out with draft

rules for determining the quantum of distributed income arising out

of buy back of shares of unlisted companies for levy of tax. The

distributed income was defined as the consideration paid by the

company on buy back of shares as reduced by the amount which was

received by the company for issue of such shares, the draft said.

Lok Sabha, unanimously passed the 122nd Constitutional

Amendment Bill as amended by the Rajya Sabha with all 443

members voting in favour.

Earlier Bill was passed by Lok Sabha on May 6, 2015 and transmitted

to Rajya Sabha for concurrence. Rajya Sabha passed the Bill with

amendments at its sitting held on the August 3, 2016 and returned it

to Lok Sabha.

The Government has set the target of 1st April next year for roll out of

the Goods and Services Tax (GST).

The Reserve Bank of India (RBI) launched a portal to curb illegal

collection of money by companies. This website will enable public to

obtain information regarding entities who accept deposits, lodge

complaints and also share information regarding illegal acceptance

of deposits. The website also incorporates regulations prescribed by

all financial regulators that one has to follow.

In this year's Budget, central excise duty of 1% without input and

capital goods tax credit or 12.5% with credit was imposed on articles

of jewellery falling under heading 7113 of the First Schedule to the

Central Excise Tariff 1985. Subsequent to that, the Government had

set up a Sub-Committee of the High Level Committee, headed by Dr.

Ashok Lahiri to interact with Trade & Industry on issues relating to

Synchronisation of financial accounting year with calendar

year.

CBDT issues draft rules for taxing buy back of unlisted shares.

Indirect Tax Updates

India's biggest tax reform measure, GST Bill passed in Rajya

Sabha & Lok Sabha..

RBI launches 'Sachet' portal to check illegal money

collection.

Simplified Central Excise norms for Jewellery Sector notified.


Nominated As

Central Council Member

of ICAI

Shri. Vijay Kumar Jhalani

NIRC CONGRATULATE



• Date on which the goods are removed for supply to the

recipient

• Date of issuing invoice by supplier; or

• Date of receipt of payment by supplier; or

• Date on which recipient shows the receipt of the goods

in his books of account.

4 Taxable Event

The taxable event will be supply of goods or services.

Supply includes all forms of supply of goods and/or

services such as sale, transfer, barter, exchange, license,

rental, lease or disposal made or agreed to be made for a

consideration.

Deemed Supply:

• Importation of service, whether or not for a

consideration

• Permanent transfer/disposal of business assets.

• Temporary application of business assets to a private

or non-business use.

• Services put to a private use.

• Assets retained after deregistration.

5 Valuation of supply

Valuation will be same for IGST/CGST/SGST, which

aregiven below:

• Transaction Value.

• Transaction value of goods or services of like kind:

Where value of supply cannot be determined under

previous method, the value shall be determined on the

basis of transaction value of goods and/or services of like

kind and quality supplied at or about the same time to

customers.

• Computed Value Method: Where value cannot be

determined under previous method, it shall be based on

computed value which shall include cost of production,

manufacturing or processing of the goods or, the cost of

the provision of services.

1 Registration

The dealer is required to take registration under this law if

his aggregate turnover in a financial year exceeds Rs.9

lakhs. However, if the dealer is conducting business

inNorth Eastern State then,he is required to take

registration if the turnover exceeds Rs.4 lakhs.

Following categories of persons are compulsorily required

to get registered under this Act:

(i) Person making any inter-State taxable supply

(ii) Casual taxable person

(iii) Person who are required to pay tax under reverse

charge

(iv) Non-resident taxable persons

(v) Person who are required to deduct tax at source

(vi) Person who supply goods and/or services as an

agent

(vii) Input service distributor;

(viii) Persons who supply goods and/or services

through E-commerce operator

(ix) Every E- commerce operator

(x) An aggregator of services

The dealer has to take registration in the State from

where taxable goods or services are supplied. A supplier

has to obtain registration in every such Statefrom where

taxable goods or services are supplied. Also, a person

having multiple business verticals in the State may obtain

a separate registration for each business vertical.

2 GST score card

Every taxable person shall be assigned a GST compliance

rating score based on his record of compliance with the

provisions of this Act. The GST compliance rating score

shall be updated at periodic intervals and intimated to the

taxable person and also placed in the public domain.

3 Time of Supply

CGST/SGST shall be payable at the earliest of the

following dates, namely:

CA. Rajat Mohan

Highlights of Model GST LAW



(c) TDS Return: Every dealer who is required to

deduct tax at source shall furnish a return electronically

within 10 days after the end of month in which such

deduction is made.

(d) Return for Input Service Distributor: Every Input

Service Distributor shall file e-return for every calendar

month or part thereof, within 13 days after the end of such

month.

(e) Return for Composition Dealer: Dealers paying

tax under composition scheme shall have to furnish a

return for each quarter or part thereof, electronically

within 18 days after the end of such quarter.

(f) Annual return: Every registered taxable person

shall have to furnish an annual return for every financial

year electronically on or before the 31st day of December

following the end of such financial year in which such

supplies were made.

(g) Final return: Every registered taxable person

who applies for cancellation of registration shall have to

furnish a final return within 3 months of

The date of cancellation or

Date of cancellation order,

Whichever is later

10 Special Audit

When any officer, not below the rank of [Deputy/Assistant

Commissioner] is of the opinion that the value has not

been correctly declared or the credit availed is not within

the normal limits, he may direct such taxable person by

notice in writing to get his records including books of

account examined and audited by a chartered accountant

or a cost accountant.

11 Transitional Provisions

• Every person already registered under existing law will

be issued a certificate of registration on a provisional

basis. This certificate shall be valid for period of 6 months.

Such person will have to furnish the requisite information

within 6 months and on furnishing of such information,

final registration certificate shall be granted by the

Central/State Government.

• A registered taxable person will be entitled to utilize

CENVAT credit/Value Added Tax carried forward in a

return furnished by him in respect of the period ending

with the day immediately preceding the appointed day.

• A registered taxable person shall be entitled to

takecredit of the unavailed CENVAT credit/input tax credit

in respect of capital goods for the period ending with the

day immediately preceding the appointed day.

• Residual Method: In any other case the value shall be

determined using reasonable means consistent with the

principles and general provisions of these Rules.

6 Utilization of credit:

Note: The input tax credit on account of CGST shall not be

available for payment of SGST.

7 TDS

The Central orState Government may mandate certain

departments (via, local authority, Govt. agencies) to

deduct tax at the rate of one percent on notified goods or

services, where the total value of such supply, under a

contract, exceeds Rs 10 lakhs. Such that any refund of

more than Rs. 10 lakhs provided by the authorities will not

be liable to TDS provisions. The Deductee will be able to

claim credit of the tax deducted and reflected in the return

of the deductor in his electronic cash ledger. Which means

that this amount may be used for making any payment

towards tax, interest, penalty, fees or any other amount

payable under the Act or the rules

8 Refund

A person can claim refund of any tax interest and even

input tax credit (prescribed cases) by making an

application to the prescribed officer of IGST/CGST/SGST

before the expiry of 2 years from the relevant date as may

be prescribed. It has been provided that the limitation of

two years shall not apply where such tax or interest or the

amount has been paid under protest. No documentary

evidence is required to be furnished if the claim of refund

is below Rs. 5, 00,000.

9 Returns

Following returns are to be filed by various suppliers:

(a) First Return: Every registered taxable person

paying CGST/SGST on all intra-State supplies of goods

and/or services shall have to furnish the first return from

the date on which he became liable to registration till the

end of the month in which the registration has been

granted.

(b) Monthly Return: Every registered taxable person

shall have to e-file a monthly return for inward and

outward supplies of goods and/or services, input tax

credit availed, tax payable, tax paid and other particulars

within 20 days after the end of such month.



Information regarding Income under any

other head:

• Sub-Section 2B of section 192 enables the

employee to furnish particulars of income other

than "Salaries" ( not being a loss under any such

head other than the loss under the head “Income

from house property”) received by the taxpayer

for the same financial year and of any tax

deducted at source thereon. & any TDS thereon

to the employer/DDO (drawing & disbursing

officer).

• The particulars may be furnished in a simple

statement, which is properly signed and verified

by the taxpayer in the manner as prescribed

under Rule 26B(2) of the Rules and shall be

annexed to the simple statement.

• It is reiterated that the DDO can take into

account any loss only under the head “Income

from house property”. Loss under any other head

cannot be considered by the DDO for calculating

the amount of tax to be deducted.

Computation of income under the head “ Income

from house property”:

Following details generally obtained and kept by

the employer in respect of loss claimed under the

head “ Income from house property” separately

for each house property:

a) Gross annual rent/value

b) Municipal Taxes paid, if any

Double taxation by the employers on salaried

class employees for self lease payments as they

are deducting TDS under section 194I & further

u/s 192 on the income (House Property) other

than Salaries declared by the employees without

giving the credit of TDS already deducted u/s

194I.

• Employees of PSUs and others companies,

benefits go beyond salaries includes Self lease

accommodation. However, it is not clear to the

DDO of the organizations how to give the benefits

of TDS deductions u/s 194I on self lease

payments while finalizing the TDS deductions u/s

192 on salary of the Employees.

• The employers emphasis that “The tax

deducted on self lease payment will not be

adjusted against tax due on salary income &

further impressed upon to declare the full amount

of lease under I/H/P without adjusting the TDS.

• Resulting the employees are bound to declare

their self lease Income as a full under income

from House Property & taxed under salary income

without giving the benefit of TDS on self lease

bearing double taxation in the financial year.

• At this situation, option to get the TDS refund

on self lease only at the time of filing the IT return

by the employees, which generally takes time

from the end of the relevant financial year at least

4 months to get the refund as the income tax

return filing date is 31st July.

Income Tax provision

CA. Sanjay Goyal

Article on Taxation issueTDS deduction on SELF LEASE Payments to

salaried taxpayers -Practical approach.



Conclusion

Under reverse Calculation mechanism as the TDS on

self lease has already been deducted to Rs.31320 agst.

payable amount of tax under I/H/P is of Rs.10398, the

employees are entitled to get the benefit of extra TDS

deducted of Rs.20922/ while computing their total

income by the employer on finalization of salary &

accordingly they need to show the income/loss Rs.-

67709/-from House property after adjustment of TDS

of Rs.20922/- for considering under final computation

of salary resulting no need of refund from the I T deptt.

c) Deduction claimed for interest paid, if any

d) Other deductions claimed

e) Address of the property

f) Amount of loan, if any; and

g) Name and address of the lender (loan provider)

The case study for Avoiding Double taxation

? A company is providing self lease to their

employees & as per IT act section 194I, TDS is

being deducted @10%.

? As Sub-Section 2B of section 192 enables

employees to furnish TDS deductions on the

Income other than salary. Considering this the

employees may furnish to the employer

concerned the Income/Loss from House property

after taking the affect of TDS which has already

been deducted by the employer from self lease

income.

? In other words the employees may declare

their net income from house property after taking

the benefit of TDS which has already been

deducted from their self lease income.

Reverse Calculation for Avoiding Double taxation

First Step

Compute income under the head “Income from

house property”



registration Exemption: Non-resident taxable person

may be granted registration on the basis of any other

prescribed document.

• On failure to obtain registration, where a person is

liable to be registered, proper office may proceed to

register such person

• Per sub section (6) of section 19 of this Act,

Applicability: -Specialized agency of the United

Nations Organization or

-Multilateral Financial Institution or

-Organization notified under the United Nations

(Privileges andImmunities) Act,1947 or

-Embassy of foreign countries

or

-Any other person or class of persons as may be

notified

Requirement: Obtain a Unique Identity Number

• The registration or Unique identity number may be

granted or rejected

• Show cause: No rejection of application without giving

show cause notice Opportunity of being heard: No

re jec t i on o f app l i ca t i on w i thout g iv ing

reasonable opportunity of being heard

• Deemed registration in case no deficiency

communicated within period prescribed

• Grant/ rejection of registration under CGST Act/ SGST

Act shall be deemed to be grant/ rejection of

registration under SGST Act/ CGST Act.

• Exemption from registration: By notification by

Central / State Government

Special Provision (Section 19A):

• Applicability: Casual taxable person & non-resident

Introduction:

The 122nd Constitution Amendment Bill ('Bill') , A bill to

amend the constitution of India, widely known as GST Bill

that will enable the introduction of Goods and Services

Tax (GST), was passed in the Lok Sabha on 12 May 2015 &

in Rajya Sabha on 03 August 2016.

The introduction of GST would be a major step in the

reform of Indirect Taxation in India. The GST bill would be

a Value Added Tax (VAT) to be implemented in India from

April 2017. GST is proposed to be comprehensive indirect

tax levy on manufacture, sale and consumption of goods

and services.

On 14June 2016, the Ministry of Finance released Model

Goods and Service Tax “GST” Law comprising of the draft

Central / State Goods and Service Tax Act, 2016 which

consists of XXV chapters, 162 Sections, 4 Schedules &

GST Valuation (Determination of the Value of supply of

Goods and Services) Rules, 2016.

Chapter VI- REGISTRATION

Registration (Section 19):

• Applicability: Every person who is liable to be

registered under schedule III Place: Every such State

where he operates Time Limit: within 30 days when he

becomes liable to registration Exemption: Other than

Input service distributor “ISD” registered under an

earlier law

• Person with multiple business verticals in a state may

obtain separate registration for each business

verticals.

• A person may get himself voluntarily registered even if

not liable to be registered under schedule III

• Permanent Account Number “PAN” is must for grant of

CA. Vishal Agarwal

GST: Simplifying Registration Procedure



-If registered person contravened prescribed

provisions of act, or

-Default in furnishing of returns for three consecutive tax

periods or continuous period of six months as the case

may be, or

-Non commencement of business with in a period of six

month in case of voluntary registration

-Registration obtained by means of fraud, wilful

misstatement or suppression of facts

• Show cause: No cancellation of registration without

giving show cause notice Opportunity of being heard: No

cancellation of registration without giving reasonable

opportunity of being heard

• Tax liability: No effect on tax liabilities and other dues

for any period before / after cancellation of registration

• Cancellation of registration under CGST Act/ SGST Act

shall be deemed to be cancellation of registration under

SGST Act/ CGST Act

• Payment of taxes: by way of debit in the electronic

credit or cash ledger Amount: Equivalent to higher of

credit of input tax on input, semi finished goods, finished

goods or output tax payable Capital goods: Higher of

amount equal to ITC taken reduced by prescribed

percentage or tax on transaction value of such capital

goods Basis of calculation: Generally accepted accounting

principals

Revocation of cancellation of registration (Section

22)

• Revocation request by: Registered taxable person

Authority: Proper officer

Time Limit: within 30 days from date of service of

cancellation order

• Show cause: No rejection of application for revocation

without giving show cause notice Opportunity of being

heard: No rejection of application for revocation

without giving reasonable opportunity of being heard

• Revocation of cancellation of registration under CGST

Act/ SGST Act shall be deemed to be revocation of

cancellation of registration under SGST Act/

CGST Act

taxable person

Validity: 90days from effective date of registration

Extension: Further period of upto 90 days by proper

officer

Condition: To make an advance deposit of tax of an

amount equivalent to estimated tax liability. On

extension of registration to deposit an additional

amount of advance tax equivalent to estimated tax

liability.

Amendment of registration (Section 20):

• Inform the proper officer of any changes in the

information furnished at time of registration or

furnished subsequently

• Power of approval/ rejections of amendments in

information lies with proper officer Exempt ion: In

respect of amendment in information as m a y b e

prescribed

• Show cause: No rejection of amendments in

information without giving show c a u s e n o t i c e

Opportunity of being heard: No rejection of

amendments in information without giving reasonable

opportunity of being heard

• Rejection/ approval of amendment under CGST Act/

SGST Act shall be deemed to be rejection approval

under SGST Act/ CGST Act.

Cancellation of Registration (Section 21)

• Authority: Proper officer Cancellation request by: On

his own motion by proper officer, or Application by

registered taxable person, or Application by legal heirs

(In case of death of registered person)

Reason:-Business has been discontinued, or

-Business transferred fully, or

-Death of proprietor, or

-Amalgamated with other legal entity, or

-Demerged, or

-Otherwise disposed off, or

-Change in constitution of business, or

-No longer liable to be registered in schedule III, or



currency

(3) Where transactions are priced at an amount that

includes compensation for the future expected loss

of the purchasing power of the local currency. This

characteristic would be taken into account even if

the credit period is quite short.

(4) Where prices, wages, and interest rates are

closely linked to a price index

(5) Where cumulative inlation rates over a period of

three years approaches or exceeds 100%.

• CEASING TO BE HYPERINFLATIONARY

Judgment will be required in determining whether

an economy is no longer hyperinlationary. The

criteria used for this is whether the cumulative

inlation rate drops below 100% in a three-year

period. When the economy ceases to have

hyperinlation, then the entity should discontinue

preparing inancial statements in accordance with

Ind AS 29.

• FUNCTIONAL CURRENCY AND HYPERINFLATION

The functional currency should be based on the

economic circumstances relevant to the entity and

not based on choice. If the functional currency is one

of a hyperinlationary economy, the inancial

statements should be stated in terms of the

measurement unit current at the balance sheet

date.

CFS: If a parent entity operates in a hyperinlationary

economy but a subsidiary does not, then the

parent’s results should be restated for hyperinlation

but the subsidiary’s results need not be restated but

No Accounting Standard is available in case of Hyper

Inlation in I-GAAP.

• Objective of Ind AS – 29

This Standard sets out procedures for adjusting the

inancial information for the effects of hyperinlation.

Financial information reported in historical terms

would present a distorted picture of the entity’s

performance and inancial position. Ind AS-29

provides a methodology for restatement of inancial

statements using suitable price index so that the

accounts can be comparable.

DO YOU KNOW

India is not suff ering from hyper - infl ation……..!

Thanks God. In the entire world following countries

suff er from hyper - infl ation : Venezuela (situated

near North America), Iran.

IN INFLATION YOU SHOULD KNOW: TOO MUCH

MONEY CHASES TOO FEW GOODS. THE

PURCHASING POWER OF MONEY COMES DOWN.

• DEFINITION OF HYPERINFLATION

The Standard does not deine hyperinlation but sets

out the general characteristics of a hyperinlationary

economy:

These characteristics would include

(1) Where the preference is to keep wealth in

nonmonetary assets or in a stable foreign currency.

Any local currency would be immediately invested in

order to attempt to maintain its purchasing power.

(2) Where prices are quoted in a stable foreign

currency and the population regards monetary

amounts in that currency, as effectively a local

CA. Pankaj Periwal

Ind AS 29: Accounting in Case of Hyper Inflationery Conditions



should comply with IAS 21. Step

1: Holding Company Ind AS-29 Step

2: Apply Ind AS – 21 Step

3: Prepare CFS as per Ind AS-110

If a subsidiary is operating in a hyperinlationary economy and the parent entity is not.

Step 1: Subsidiary would use Ind AS 29.

Step 2: Apply Ind AS-21

Step 3: Prepare CFS as per Ind AS-110.

• RESTATEMENT OF FINANCIAL STATEMENTS: BALANCE SHEET MEASUREMENT PRINCIPLES FOR

RESTATEMENT

Ind AS 29 requires the restatement of inancial statements including the cash low statements and requires

the use of a general price index.

1) Monetary items: Monetary items are already stated in the measuring unit at the balance sheet dates and

are therefore not restated.

2) Nonmonetary items carried at Cost: All nonmonetary items are restated using the change in the general

price index between the date that those items were acquired and the current balance sheet date.

3) Nonmonetary items carried at Fair Value: , NMI carried at current values (e.g., net realizable value and

market value) at the balance sheet date, does not require any restatement.

4) Owners Capital: Owners capital requires restatement at current rate.

5) Retained earnings: Net Proits at monthly index rate. Others Reserves balancing igure.

The difference in the trial balance is to be considered as the balancing igure. It is to be included in the

Retained earnings.

PROBLEMS AND SOLUTIONS

Problem 1: XYZ Inc operates in a hyperinlationary economy. It is incorporated in Venezuelan. The currency

is VEF. Its balance sheet at December 31, 2016, follows:

The general price index had moved in this way:

December 31:

2012: 100 2013 : 120 2014 : 180 2015 : 300 2016 : 450

The property, plant, and equipment was purchased on December 31, 2014, and there is six months’

inventory held.



Required: Show the balance sheet of XYZ Inc after adjusting for hyperinlation.Solution:

XYZ Inc Balance sheet at December 31, 2016, follows: (VEF)

Notes:

1) For Plant, machine its 450 / 140 not 450 / 100 because the restatement is from date of acquisition till balance sheet date. The non -

monetary item was acquired on that date.

2) 375 in case of inventory = (450+300) / 2.

3) Share Capital requires very old base lets say 100. If additional capital is introduced then it should be restated from that date.

4) The inventory had been restated assuming that the index has increased proportionately over time. The loan is a monetary item and

therefore is not restated. If the loan had been index linked, then it would have been restated in accordance with the loan agreement. Other

monetary items are also not restated

Election to the Managing Committee of

Northern India Chartered AccountantsStudents’ Association (NICASA), Delhi - 2016-17

The Annual General Meeting (AGM) of Members of the Northern India Chartered

Accountants Students’ Association (NICASA) will be held on Saturday, the 10 th September,

2016 at 10.00 A.M. in the premises of the ICAI, ICAI Bhawan, 52-53- 54, Institutional Area,

Vishwas Nagar, Shahdara, Near Karkardooma Courts, Delhi -110 032.

Elections to the Managing Committee of the Association for the year 2016-17 would be held

from 11.00 AM to 4.00 PM on the same day. Complete details are at www.nirc-icai.org.

The views expressed herein are personal views of the author and do not necessarily represent the views of the NIRCs

ANNOUNCEMENT



virtue of covenant vis-à-vis availing full credit in the same F.Y., shall

be admissible as ITC in the eyes of GST subject to the fulfilment of

condition that this transferred ITC is eligible as credit both under the

earlier law as well as under GST.

D. Treatment of Duties/Taxes in respect of Stock Available

on Appointed Date

The credit of eligible 'duties and taxes' in respect of:

• Inputs held in stock,

• Inputs contained in semi-finished goods in stock or

• Inputs contained in finished goods in stock on the appointed date

Shall also beavailable to below mentioned three (3) categories of

assessee subject to the compliance of infra mentioned conditions:

a. Person who was not liable to be registered under the earlier law

but falls under the charging section of proposed GST or

b. Person who was engaged in the manufacture of exempted goods

under the earlier law but in GST, falls under the taxable supply of

goods.

c. Person who has opted for composition scheme in the earlier law

but registered as normal taxable person in the GST regime.

Now, below mentioned conditions are sine qua non for this registered

taxable person under GST to take credit, in their electronic credit

ledger, of these eligible 'duties and taxes' on inputs-goods held in

opening stock:

• Use for Taxing Supply

Such goods are used or intended to be used for making taxable

supply under GST,

• Competent ITC

Under both law i.e. in the earlier law as well as in the upcoming GST,

credit concomitant with such stock falls under the category of

competent ITC.

• Documentary Evidence of Payment

Credit would be admissible subject to the possession of requisite

invoice or other prescribed documents evidencing payment of

duty/tax under earlier law.

• Time Limitation Such invoice must be issued not earlier than one

(1) year preceding to the appointed date of GST.

• GAAP Computation of credit shall be done as per GAAP.

E. Switching from Normal Taxpayer to Composition One

If any registered taxpayer under existing statute opted for

The long journey of Good & Service Tax law which is flagged off

during the captainship of Sh. Atal Bihari Vajpayee Ji, the then prime

minister of India, in 2000 via setting up of a committee headed by

the then finance minister of West Bengal, Sh. Asim Dasgupta Ji, to

design the GST model and put in place the back-end technology and

logistics for its implementation; is now appearing to be completed

during the leadership of Sh. Narendra Modi Ji.

During the implementation phase of this new taxing statute, the

transitional period would be the most crucial time period wherein

various impugned Central Laws/State Laws shall be subsumed in a

single statute viz. GST and the books of accounts that have been

maintained rely upon the principle of 'Going Concern' would be

ushered towards the era of GST.

Extending support from the Draft Model GST Law, the various legal

provisions contained in Chapter-XXV of this draft model vis-à-vis

metamorphosis from the existing regime of various indirect taxes

towardsthe umbrella of GST has been discussed as follows:

A. GST Officers or Competent Authorities

The person already appointed, for discharging the functions

entrusted by the Central Law or State Law which are now being

subsumed in GST, shall be deemed to be the GST Officers or the

Competent Authorities under the legal provisions of

CGST/SGST/IGST Law.

B. Migration of Existing Taxpayers to GST

Prior to getting final registration under this new taxing statute, the

existing registered person under Central Law/State Law shall be

issued a provisional registration certificate for a period of six (6)

months during which various prescribed information are required to

be submitted before the GST Officers.

Post receipt of requisite information, the final registration certificate

shall be issued by Central/State Government.

Contrary to this, no final certificate of registration shall be issued, if

an application has been made by the existing taxpayer submitting

the fact of their non-taxing supply under the pool of GST ambit which

make them non-liable to take registration.

C. Treatment of balance of CENVAT Credit Availed or

Unavailed on Appointed Date

C.1. Treatment of Availed CENVAT Credit

Registered taxable person shall be eligible to take credit of the

CENVAT Credit/VAT-ITC carried forward by them in the return

furnished for the period ended with the day immediately preceding

the appointed date.

This eligibility is connected with the vital condition that such

impugned CENVAT Credit/VAT-ITC is admissible for creditboth under

provisions of the earlier law as well as eligible as ITC under the

proposed bag of GST.

C.2. Treatment of Unavailed CENVAT Credit

Unavailed CENVAT Credit/Vat-ITC on capital goods which is not

carried forward in the last return submitted in the earlier law by

CA. Harsh Garg

TRANSITIONAL PROVISIONS UNDER DRAFT MODEL GST LAW



to be refunded in lieu of revision of return filed for the period ended

prior to the appointed date.

Calling Recovery

If any amount becomes recoverable from the taxable person, then

the same shall be recovered as an arrear of tax under this GST Act

and the amount so recovered shall not be admissible as input tax

credit.

Calling Refund

If any amount becomes refundable to the taxable person, then the

same shall be refundable to them under the earlier law and not under

this GST Act.

J. Treatment of Long-term Construction or Work Contracts

Pursuant to contract executed before the introduction of GST regime,

the supply of goods or services on or after the appointed date of GST

shall be considered as supply made under the web of GST and

consequently, the liability to tax arises as per the legal provision of

CGST/SGST/IGST law.

K. Progressive or Periodic Supply of Goods or Services

Supply of good and/or service does not attract GST liability:

a. If consideration in lieu of such supply has been received prior to

the appointed date and

b. Duty or tax liability thereon has already been paid under earlier

law.

L. Return of Goods Sent on Approval Basis on or after

Appointed Date

Return of goods which were sent on approval basis not earlier than

six (6) months before the appointed date shall not attract tax under

GST legal provision subject to the condition that such goods are

returned within a period of six (6) months of GST applicability.

Obligation on Person Returning the Goods

Post completion of six (6) months' time period from appointed date,

return of any such goods would raise obligation on the person

returning the goods to tax such return of goods as supply provided

that supply of such goods falls under the taxing room of GST.

Obligation on Person Originally Sent Goods on Approval Basis

Person who has sent the goods on approval basis is liable to pay tax

under GST:

o If such goods are liable to tax under GST and

o Goods are not returned within a period of six (6) months from the

appointed date.

M. Deduction of Tax at Source

No deduction of tax at source under thecave of GST shall arise on

makingthe payment tothe supplier subject to the compliance of

following three (3) limbs:

a. Payment made is in pursuance of saleexecuted in the earlier law,

b. Such sale attracts tax deduction at source under the legal

provision of earlier law and

c. Event of issuance of invoice also occurs before this appointed

date.

composition scheme in GST, the amount equivalent to credit of input

tax in respect to:

• Inputs held in stock,

• Inputs contained in semi-finished goods in stock or

• Inputs contained in finished goods in stock on the appointed date

Is required to paid via debit in electronic credit ledger and post debit

of this amount, if any balance of tax still prevails then such lying

balance shall be lapsed in GST.

F. Return of Goods on or after Appointed Date

Return of goods which were originally removed/sent not earlier than

six (6) months before the appointed date shall not attract tax under

GST legal provision subject to the condition that such goods are

returned within a period of six (6) months of GST applicability.

Post completion of six (6) months' time period from appointed date,

return of any goods would raise obligation on the person returning

the goods to tax such return of goods as supply provided that supply

of such goods falls under the taxing room of GST.

G. Price Revisions on or after Appointed Date

Issuance of supplementary invoices in pursuance of price revision

shall be deemed to have been issued in respect of an outward supply

made under the net of GST subject to the compliance of below

mentioned conditions:

a. Contract for supply of goods entered prior to appointed date of

GST,

b. Price revision takes place after the implementation of GST and

c. Such supplementary invoices must be issued within a period of

thirty (30) days from such revision.

Upward Revision

Supplier of goods shall be liable to charge CGST/SGST/IGST on such

supplementary invoice raised within the stipulated time period.

Downward Revision

Supplier of goods shall be liable to reduce their CGST/SGST/IGST

liability in lieu of issuance of such supplementary invoice provided

that the receiver of such supplementary invoices has also

correspondingly reduced their input tax credit.

H. Recovery or Refund pursuant to Assessment or

Adjudication

Below mentioned is the treatment of the amount to be recovered or

to be refunded in lieu of assessment or adjudication undertaken for

any year ended prior to the appointed date.

Calling Recovery

If any amount of tax, interest, fine or penalty becomes recoverable

from the taxable person then the same shall be recovered as an

arrear of tax under this GST Act and the amount so recovered shall

not be admissible as input tax credit.

Calling Refund

If any amount of tax, interest, fine or penalty becomes refundable to

the taxable person then the same shall be refundable to them under

the earlier law and not under this GST Act.

I. Recovery or Refund pursuant to Revision of Returns

Below mentioned is the treatment of the amount to be recovered or



Presently, the products manufactured by the automobile sector are

separately classified in the excise tariff and are taxed at various rates

leading to interpretation and classification disputes. Further, there

are disputes over availability of CENVAT credit on input services like

group insurance, canteen services and freight paid on outward

transportation.

The Industry is plagued with inverted duty structure with differential

duty being charged on automotive components and parts falling

under Chapter 8707, 8708, 8714 and 4011 which leads to

accumulation of CENVAT credit with OEMs.

3. IMPACT OF GST

The automobile industry is sensitive to the changes in economy as

well as fiscal policy and is accepted as a measure of economic well

being of the country. The introduction of GST will have far reaching

consequences on the Industry. The general impact of GST on the

automobile industry is discussed below:

1.SINGLE GST RATE FOR MAJORITY ITEMS: Currently, products

manufactured by the automobile sector are taxed at various rates

due to interpretation and classification disputes. Introduction of GST

will end their woes of multiple rates of taxes. Based on the Report of

Revenue Neutral rate by Chief Economic Advisor, Arvind

Subramanian, it is recommended that majority of goods will be

taxed at the Standard rate which may be 18-20% . There will be very

few items which will be under exemption list. The table below

provides the comparison of current regime with GST regime;

2. BETTER PRICING AND BETTER MARGINS: The cars consists of

four categories, Small passenger cars below four meters in length

and under 1,200cc, mid-size passenger cars, between 1,200-

1,500cc, luxury cars, over 1,500cc and SUVs over 1,500cc.

1.INDUSTRY OVERVIEW

The automobile industry accounts for 22 per cent of the country's

manufacturing gross domestic product (GDP). The auto sector is one

of the biggest job creators, both directly and indirectly. India is

expected to become a major automobile manufacturing hub and the

third largest market for automobiles by 2020, according to a report

published by Deloitte.

The current production trend for automobile sector is given below

(Figures in Numbers)

2. ISSUES WITH CURRENT INDIRECT TAXATION

The automobile Industry is currently facing very heavy taxes on

account of differential duty rates given to luxury cars, small cars,

trucks and other products in the excise tariff. The overall excise duty

structure itself is complex with multiple duties such as automobile

cess, National Contingent Calamity Duty, being levied

simultaneously.

For imports, besides the basic customs duty, Additional Customs

Duty equivalent to the duty of excise (with the present complex

structure) and Special Additional Customs Duty of four percent is

levied. Various States also provide for entry tax on entry of motor

vehicles in their jurisdiction.

CA. Chitresh Gupta

GST Impact Assessment on Automotive Industry

1919


20%. Through credit will be allowed on the same to the company, the

company will have to initially pay a higher rate of tax thus the

requirement of working capital will be higher and the company may

need to increase its working capital borrowings.

6. DOING AWAY WITH AREA BASED EXEMPTIONS: Generally

car manufacturers today, having very large investments, enjoy

various state incentives. The incentives are there in many

manufacturing states like Maharashtra, Gujarat, Tamil Nadu and so

on and so forth.

So, one of the facts that the car manufacturers and automobile

manufacturers have to keep in mind is that these state incentives are

based on the current value added tax (VAT) and CST that they pay. In

GST regime, CST will be phased out & VAT will be subsumed. It is

important that auto manufacturers will have to go and renegotiate

those memorandums of understanding (MoU) that they have with

the states

As per the first discussion paper, the existing schemes may continue

up to the legitimate expiry time both for Centre and States. However,

no such new exemptions will be allowed. The Centre or State may

either reimburse after collection of GST (as per the Discussion paper)

or provide an investment linked Cash subsidy (as recommended by

the Task Force Report). It will require reengineering of costing

models by the auto companies to analyze the actual impact on

pricing.

7. VALUATION OF STOCK TRANSFERS: As per Section 3 of Model

GST Law, 2016, Stock transfer is included in the definition of supply.

Hence, it will give rise to new challenges. The first and the foremost

among them is the valuation of the stock transfers in the absence of

sales value to calculate the applicable tax. As per Sec 15 of Model

GST Law, the value of a supply of goods and/or services shall be the

transaction value, that is the price actually paid or payable for the

said supply of goods and/or services where the supplier and the

recipient of the supply are not related and the price is the sole

consideration for the supply. The valuation of stock transfer has to be

done based on one of the methods as prescribed under law. This is

going to lead litigations.

8. POST SUPPLY DISCOUNTS: The Model GST Law stipulates that

post supply discounts are to be excluded from the transaction value,

provided such post supply discounts are known at or before the time

of supply of goods and are linked to the invoices for such supply.

Companies may need to analyse existing post supply

discounts/incentive schemes where the quantum of discount is not

known at the supply stage.

CONCLUSION

The Indian automotive industry which was at its nascent stage at the

beginning of the 21st century has now become an industry that

accounts for around 7% of the India's Gross Domestic Product (GDP)

and is one of the largest employers in the economy. In order to

eliminate the inherent tax inefficiencies in auto sector and to provide

a much needed impetus, there is an urgent need to implement the

GST, which would help in making India a globally competitive market

for the sector. It is also important that all the participants of

automotive industry may proactively assess the impact of GST on

their costing, procurement and supply management strategies in

order to be better equipped to embrace and capitalize this

monumental change in Indirect taxation statute as it comes.

Currently, we pay 12.5 percent excise duty on small cars, 24 percent

on mid-size cars, 27 percent on luxury cars and 30 percent on SUVs.

Then there is the NCCD of 1.1 percent, 14 percent VAT on all of the

above. If the GST bill is passed, the total tax on small cars will come

down by ten percent, the tax on mid-size cars will be lower by no less

than twenty percent whereas the luxury cars and SUVs will see a tax

reduction of approx two and five percent.

Now manufacturers like Maruti-Suzuki and Hyundai are all in favour

of the GST in its current format as it gives small car manufacturers

massive tax reductions. Even after the lowering of price and

distribution of margins at each level of the distribution process still

leaves enough margin for the car makers. This is possible as both

these car makers have most of their portfolio between the 800cc-

1500cc range. Car makers like Toyota and Honda get their sales from

larger cars which get only two percent tax reduction

3. BETTER PROCUREMENT STRATEGIES: Currently, it is tax

efficient for manufacturers to have OEMs situated in the same state

in which they have a manufacturing plant. This allows them to get

credit on the Input VAT since the above transaction is a local sale.

Since there is a seamless credit in GST with no distinction between

Inter-state or Intra-state purchase, the car manufacturers may also

chose OEM based on cost and other considerations rather than Tax

considerations.

4. CHANGE IN SUPPLY CHAIN MANAGEMENT PRACTICES: The

practice in this industry is to sell vehicles to a dealer network that

sells as well as services the vehicles. More than 80% of the sale is

generally outside the state of manufacture. The distribution of

vehicles may be either through

a)Direct sale to Dealer: At present subject to CST @2% which gets

embedded in the cost or

b)Transfer to Depots/Stock yards across country: Presently

considered as Stock transfer and CST is not levied. However, State

Vat laws provide for retention or reduction of input tax credit in the

exporting state.

In GST, both the above transactions will be considered as Supply and

full GST will be charged on the same. However, full credit will be

allowed on both the transactions.

Today the tier-1 auto component manufacturers operate through

multiple plants which are set up in the states where the automobile

manufacturer plant is located. This is specifically done with a view to

avoid the CST and availing the VAT credit. With the GST the whole

country is likely to become one market with no inter-state barriers.

This will allow the tier-1 manufacturers to consolidate their

operations in one place and enjoy economies of scale.

Goods and Services Tax will give an opportunity to both automobile

manufacturers and OEMs to improve margins. The setting up and

maintaining of the warehouse adds up to the cost to the

OEM/automobile manufacturers. Further, the cumbersome process

at every state border delays the delivery of vehicles and adds up to

the cost. GST is seen to ease out the cumbersome process and make

movement of vehicles quicker and simpler. The better the turnaround

time, the better will be the scale of margins. Logistics costs make up

to 2-3% of the sale of the vehicle. This can be reduced through better

management of supply chain.

5. INCREASE IN WORKING CAPITAL REQUIREMENT: In

automotive sector, majority of procurement and sales happen on

concessional rate of CST@ 2%. In GST, there will not be any

declaration forms thus GST will be levied on the standard rate i.e. 18-

STUDENTS ACTIVITIES

th5 June, 2016 (Sunday) 183

CPT Mock Test for CPT Students.

Venue: ICAI Bhawan, Vishwas Nagar, Delhi. th12 June, 2016

(Sunday) 240Seminar for CA Students on CARO 2016

Venue: ICAI Bhawan, Vishwas Nagar, Delhi.

th19 June, 2016 (Sunday) 270

Seminar for CA Students on WHAT AFTER CA

Venue: ICAI Bhawan, Vishwas Nagar, Delhi.

th21 June, 2016 (Tuesday) 78

A Programme on YOGA for Members & CA Students (On the occasion of 2nd International Day of Yoga)

Venue: The Institute of Engineers of (India), Near ICAI Bhawan, ITO, Delhi.

th29 June, 2016 (Wednesday) 150

Swachh Bharat Abhiyan

Venue: ICAI Bhawan I.P. Marg New Delhi.

th30 June, 2016 (Thursday) 746

Motivational Talk for GMCS Scholars

Venue: Talkatora Indoor Stadium, Talkatora Road, New Delhi.

1625CA Utsav (Cultural Evening) followed by dinner


st1 July, 2016 (Friday) 105

Run for Society

Venue: From Yamuna Sports Complex (Gate No. 4 to ICAI Bhawan, Vishwas Nagar, Delhi.

101Flag Hoisting

Venue: ICAI Bhawan, Vishwas Nagar, Shahdara, Delhi.

125Blood Donation Camp, Health Checkup Camp, Tree Plantation, Food/Books/Clothes, distribution to

under privileged and old age home


nd2 July, 2016 (Saturday) 31

"Citizen & Member Awareness Programs on the Income Declaration Scheme, 2016”

Venue: ICAI Bhawan, Annexe Building, 7th Floor, Auditorium, I.P. Marg, New Delhi – 110 002

th8 July, 2016 (Friday) 35

Industrial VISIT for CA. Students

Venue: M/s, Northern Distributors, Sanjay Gandhi Transport Nagar, Delhi.

th14 & July,2016 (Thursday & Friday)

th151028

National Convention for CA Students


DATE TOPIC & VENUE STUDENTS

REGIONAL COUNCIL ACTIVITIES

Date Name of Programme/Venue Chief Guest/Speakers CPE Hrs

TotalParticipants

Seminar on ValuationsVenue : India Habitat Centre, Lodhi Road, New Delhi

23rd July 2016( Saturday)

6

Guest of Honour Dr. BhaskarChatterjee, DG & CEOIndian Institute of Corporate Affairs

170

Overview & Perspective of Valuation CA. Avineesh Matta

Fair Value – Basics and Beyond CA. Rajiv Singh

Valuation under FEMA CA. Vijay Gupta

Valuation requirement under Ind AS & Common Errors in Valuation Report CA. Amit Singh

Open House: Question Answer Session CA. AseemChawla,

CA. Rajiv Singh

CA.Amit Singh

CA. Vijay gupta

Seminar on Learn, Earn & Return for CA. ProfessionalsVenue : ICAI Bhawan, Vishwas Nagar, Delhi

30th July 2016( Saturday)

3

Learn, Earn & Return - How to Build Sustainable Practice which contributes to Self, TEAM,

Clients and Society

CA. Parveen KumarCA. Ajay Sethi

61

Workshop on GSTVenue : Institution of Engineers, I P Marg, New Delhi

10th August 2016( Saturday)

3

Goods & Service Tax Act CA. Puneet Agrawal

1920


th7 August2016 (Sunday)

Seminar on Tax Audit for CA Students


239

258

Forthcoming Programmes of NIRC of ICAI

Timings 23rd August 2016 (Tuesday)

Fee for Seminar Rs.300/- Pay Online at www.nircseminars.org( On the Spot Payment Rs. 400/- only through Cheque / DD)No Fee for Annual Members of NIRC ( Seminars 2016-17)Registration and Attendance at Registration Counter outside the Workshop Hall is compulsory.

Workshop on Peer Review

Date & Day 23rd August 2016 (Tuesday)

CPE HRS.3

MEMBERS

Venue ICAI Bhawan, Vishwas Nagar, Shahdara, Delhi

Timings 9.45 AM – 05.30PM

Fee for Seminar Rs.2000/- Pay Online at www.nircseminars.org(On the Spot Payment Rs.2300/- only through Cheque / DD)No Fee for Annual Members of NIRC ( Seminars 2016-17)Registration and Attendance at Registration Counter outside the Seminar Hall is compulsory on both the Days.

12 CPE hours Seminar on

Audit Planning, Audit Working Papers, Pre Audit Study,

Checklist for Audit, ROC Compliances, Audit Report &Tax Audit

Date & Day 26th & 27th August 2016 ( Friday & Saturday)

CPE HRS.12

MEMBERS

Venue NDMC Convention Centre, Opposite JantarMantar, Near Parliament Street, CP, New Delhi

Timings 11.30 AM -02.30 PM followed by Lunch

Fee for Seminar Rs.400/- No Fee for Annual Members of NIRC ( Seminars 2016-17)

Seminar on Tax Audit

J/W MayurVihar CPE Study Circle of NIRC

Date & Day 4th September 2016 (Sunday)

CPE HRS.3

MEMBERS

Venue Riverside Sports Club, MayurVihar Phase I Extension, New Delhi


Fee for Seminar Rs.1500/- ( On the Spot only through Cheque / DD)Rs.1400/- ( If Paid Online before 7th September 2016 at www.nircseminars.orgNo Fee for Annual Members of NIRC ( Seminars 2016-17)

Seminar on Emerging Issues of Anti Money Laundering laws and FEMA

Organized by

Committee on Economic, Commercial Laws & WTO of ICAI

Hosted by NIRC of the ICAI

Date & Day 10th September 2016 (Saturday)

CPE HRS.6

MEMBERS

Venue To be hosted on NIRC Website

Timings 05.00 PM – 08.30 PM followed by Dinner


Workshop on CARO 2016

Date & Day 20h September 2016 (Tuesday)

CPE HRS.3

MEMBERS

Venue ICAI Bhawan, Vishwas Nagar, Shahdara, Delhi


Fee for Seminar Rs.1500/- ( On the Spot only through Cheque / DD)Rs.1400/- ( If Paid Online before 31st August 2016 at www.nircseminars.orgNo Fee for Annual Members of NIRC ( Seminars 2016-17)

Seminar on Labour & Allied Laws

Date & Day 3rd September 2016 (Saturday)

CPE HRS.6

MEMBERS

Venue India Habitat Centre ( Jacranda hall) Lodhi Road, Delhi


Fee for Seminar Rs.700/- No Fee for Annual Members of NIRC ( Seminars 2016-17)

Seminar on Tax Audit

J/W Karol BaghWestened CPE Study Circle of NIRC

Date & Day 5th September 2016 (Monday)

CPE HRS.4

MEMBERS

Venue Hotel Jivitesh, Pusa Road, Near Metro pillar 87-Pusa Road, New Delhi



Workshop on Taxation of Non Profit / Charitable

Organizations

Date & Day 13th September2016 (Tuesday)

CPE HRS.3

MEMBERS

Venue Institution of Engineers, I P Marg, Near ICAI Bhawan, ITO, New Delhi

1921



1922

A View the workshop on GSTA View the workshop Real Estate

(Regulation & Development) Act 2016

A View the workshop Real Estate (Regulation & Development) Act 2016

A View the National Convention for CA Student

A View the National Convention for CA Student

A View the National Convention for CA Student A View the seminar on Valuation

1923


A View the seminar on Valuation

A View the 64th annual General Meeting

A View the seminar on Learn, Earn & Return for CA professionals

A View the seminar on Tax Audit for CA Students

Total Number Of Pages : 24 (Twenty Four)

NIRC Newsletter- August, 2016

DL( )-01/1192/2015-17U(C)-257-2015-17

C

24

CPT, IPCC & Final Classes of NIRC of ICAI

Announcement For Regular Classes

Team NIRC is pleased to inform that we are organizing state of the Art, Coaching

Classes for CPT, IPCC & Final Exams.

* Focused study plan as per ICAI Exams. * Experienced and Subject Expert Faculty.* Separate class Notes for each Subject. * Suitable timings for all classes before and after the office hours.* Most comfortable environment for studies.

For more information visit us on www.nirc-icai.org.

NICASA Chairman

NIRC Newsletter- August, 2016

Documents

NEWSLETTER OF NORTHERN INDIA REGIONAL … August Newsletter...At last I would like to wish you all a very Happy Independence Day, Shubh Janmashtmi and Happy Teacher's Day. May almighty