The Chartered Accountant Student

WICASA - Akola Branch E-Newsletter-Aug 2019

INDEX

□ ICAI MOTO

□ WICASA CHAIRMAN’S COMMUNICATION

□ QUIZ CORNER

□ ARTICLES

□ HIGHLIGHTS OF WICASA EVENTS PHOTOGALLERY

□ UPCOMING EVENTS

□ DUE DATE CHARTS OF SEPTEMBER

Warm Greeting to all the readers!

WICASA CHAIRMAN’S COMMUNICATION

Dear Students

Winston Chruchill said “ Success is not final,failure is

not fatal:

It’s the courage to continue that counts. We may

stumble, we may fall, but you have not lost till you quit.

Results were announced during the month and I

sincerely congratulate all the students who cleared their

exams and moved to next level. Never be complacent,

never take anything for granted . It only gets tougher

from here on. For those students who were not foutunate

enough to clear the exam , I would say, get up and fight

back. There is nothing that one cannot achieve if they

invest all their time and energy into something. Paulo

Coehlo said- When you want something, all the Universe

conspires in helping you to achieve it, but remember

universe only help. The implementation part is upto the

person.

This year we are celebrating 73rd Independence Day. We

should remember our brave soldier because of them we

can sleep at our homes with our families in peace. Now

we are entering the month which is feared by most

articles. SEPTEMBER ! Tax Audit and long working

hours will now be normal in all offices. But it is up to you

how you want to tackle this. According to me it is golden

opportunity to learn and grow as professional.

So grab it and don’t let it slip, as it is rightly said in middle of

difficulty ,lies opportunity.

In first week of September we are planning to keep fully Day

Seminar on Clause to Clause analysis of Tax Audit. Students

should take benefit of this .

On 5th September we have planned to felicitate our Teachers and

Principals who make us capable for making us ready for Practical

Life Senario WICASA Team is also planning to celebrate Ganesh

Utsav at branch. Ganpati means

Ga Symbolises Buddi ( Intellect)

Na stands for Vijnan (Wisdom)

Pati means Master

So Ganpati is Master of Buddhi and Vijnan. I urge students to

actively participate in Ganesh Utsav at Branch.

CA Jalaj R Baheti

Chairman WICASA Akola Branch

PREFACE

The E-Newsletter of Western India Chartered Accountant

Students Association (WICASA), Akola is one of the channel

to reach student of Chartered Accountancy Profession to keep

them updated with the latest amendments in Law and Various

Acts. Its motive is to encourage students to come forward with

their writing skills and actively participate in WICASA Events.

The team behind this E-Newsletter have put their hard

efforts for collective improvement of pursuant of these common

professions. In this regards, we request you to contribute to

these “Initiative of Monthly E-Newsletter” by enthusiastically

providing quality materials (articles, legal updates, case law

analysis, crosswords puzzles).

We believe that, with your active participation, we shall be

regularly providing you the E-Newsletter on Timely Basis. Hope

this E-Newsletter will be useful to you all. Let us make this

initiative “both way efforts” and a grand success.

The views expressed in this E-Newsletter are of respective

auditors and neither the Akola Branch of ICAI nor WICASA,

Akola authenticate such views. Yet maximum efforts are put to

ensure the correct and up -to-date information in the E-

Newsletter.

For contributing to WICASA, Akola E-Newsletter through

articles or other materials kindly contact CA Prasad

Deshpande & Miss. Shivani Kariya.

Quiz Corner

1. Top & Top Limited has set up its business in a designated

backward area which entitles the company to receive from

the Government of India a subsidy of 20% of the cost of

investment. Having fulfilled all the conditions under the

scheme, the company on its investment of Rs. 50 crore in

capital assets received Rs. 10 crore from the Government in

January 2017 (accounting period being 2016-2017). Which

of the following options is correct as per AS 12.

a) Accounting treatment desired by the company is correct.

b) The subsidy should be credited to capital reserve.

c) The subsidy should be treated as a capital grant.

d) The accounting treatment should be as per accounting

policy of the company in relation to any grant.

2. SA 315 establishes requirements and provides guidance on

identifying and assessing the risks of material misstatement

-

a) at the financial statement levels only.

b) at the assertion levels only.

c) at the financial statement and assertion levels.

d) at the financial statement or assertion levels.

3. Which of the following position provides protection from an

increase in prices of a share in cash market?

a) Buying of Future Contract in the share

b) Buying Call Option in the share

c) Selling of Future Contracts in the share

d) Selling Call Option in the share

Nandini Yelwankar

4. Demographic dividend is related to a large number of

populations in the age group of.

a) 15-64.

b) below 15.

c) above 64

d) above 75.

5. The Business Continuity Life Cycle is broken into four

broad and sequential sections. Which are these?

a) Risk Assessment, Determination of Recovery Alternatives,

Recovery Plan implementation, and Recovery Plan

Validation

b) Security, RAD, Data modelling, monitoring

c) Risk Management, Risk Plan, Risk Mitigation and Risk

Control

d) Security, Normalization, optimization and Monitoring

6. Shareholders of Limited company made a requisition to the

Board of Directors to call an Extra Ordinary General

Meeting(EOGM) to discuss two matters which cannot wait till

Annual General Meeting. However Board did not call such

meeting within twenty one days from the date of receipt of a

valid requisition. In this case, shareholders called and hold

EOGM on their own. Within how many days requisitonists

can hold such meeting themselves?

a) within a period of three months from the date of the

requisition;

b) within a period of one month from the date of the

requisition;

c) within forty five days from the date of the requisition;

d) within twenty one days from the date of the requisition;

7. Mr. J and Ms. K wants to incorporate a Private Limited

Company. They hired consultant to assist them in process of

incorporation. Both are Indian citizens and residents. All the

documents were prepared. While filing Form SPICe, which

document is not required to be attached with?

a) Affidavit and declaration by first subscriber(s) and

director(s);

b) Proof of Office address ;

c) Articles of Association;

d) Proof of identity & residential address of subscribers

8. Mr. Raj incurred Rs. 42,000 on medical expenditure of his

father, a senior citizen and . Rs. 32,000 as medical premium for

his mother, aged 56 years. Assume, no insurance is taken for

his father and no expenditure is incurred in cash. He would be

eligible for deduction under section 80D –

a) Rs. 50,000

b) Rs. 42,000

c) Rs. 30,000

d) Rs. 25,000

9. Mr. R, a resident of Delhi, holds an account in ICICI Bank in

Delhi. Mr. R goes to Jaipur for work. During his visit to Jaipur

he takes certain services relating to his account from ICICI

bank in Jaipur in relation to some transaction to be carried out

at Mumbai. What will be place of supply in this case?

a) The place of supply shall be Delhi

b) The place of supply shall be Jaipur

c) The place of supply shall be Mumbai

d) None of the above

10. . A request that the confirming party respond directly to the

auditor only if the confirming party disagrees with the

information provided in the request.

a) Positive confirmation request

b) Non-response

c) Exception

d) Negative confirmation request

Answers

1. B 6. A

2. C 7. C

3. A 8. A

4. A 9. A

5. A 10. D

WHAT IS RETAIL FINANCING?

Retail finance is the offering of credit facilities or stage

payments to suitable creditworthy customers generally for non-

commercial purpose.

Retail financing is not based on the motive to infuse the

borrowed funds in some business or commercial activity (except

in case of business loan), but are borrowed for some specific

purpose such as purchase of home, vehicle, educational

facilities etc.

Retail financing basically consists of loans & advances usually

for non-commercial purposes, which includes following types

of loans:

• Loan Against Immovable Property

• Housing loan

• Auto Loan (Hypothecation)SECURED

• Personal Loan

• Business/ Profession LoanUNSECURED

Ajay M. Panjwani

WRO0574247

ARTICLES

1. Loan against immovable Property:

A loan against immovable property (LAIP) is exactly what the

name implies - a loan given or disbursed against the

mortgage of property. The loan is given as a certain percentage of the property's market value, usually around 40% to 70%

Varies from Lender to Lender.

Loan against immovable property belongs to the secured loan category

where the borrower gives a guarantee by using his property as security

Key Issues Involved:

1. Loan-to-value (LTV): The loan-to-value (LTV) ratio is a

financial term use by lenders to express the ratio of a loan to

the value of an asset purchased/provided for security.

2. Purpose of Loan: The borrower is not obliged to state the

purpose for which the loan is being borrowed from any financial

institution.

Types of LAIP:

1. Loan against Commercial/ Residential property

2. Loan against Open Plot (N.A.)

Rate of Interest: Generally Loan against immovable property

are financed at rate of interest varying from 9.50% to 14%.

2. HOUSING LOAN:

A sum of money borrowed from a financial institution or

bank to purchase a house/plot, to construct a house or to

renovate a house.

The terms “Housing Finance” or “Home Loan” means finance

for buying or modifying a property. The different housing

loan products could be classified as:-

(a) Home Loans (Construction/Purchase)

(b) Home Extension Loans

(c) Home Improvement Loans

(d) Land Loans

(e) Home Equity Loans

(f) Short Term bridging Loans

(g) Converting high interest housing loan to low interest

housing loan

• Housing loans are usually financed at low interest

rates and for longer time period.

• The margin (Own Contribution) in this case can be

10% to 20%, varies from lender to lender.

• The amount of housing loan that a financial

institution will finance depends upon the eligibility

which is computed on the basis of the past Income

statements as well as credit history of borrower.

Key terms Involved:

• Fixed Income to obligations Ratio (FOIR): Fixed Obligations to

Income Ratio is generally meant to look at all your present

obligation/bills plus the new obligation/loan you are applying for.

FOIR generally means the ratio/Percentage of income that is free to

use for any obligations.

Rate of Interest: Home loans are usually financed at 8.30% to

12.50%.

3. AUTO-LOANS:

An auto loan is a loan that person borrows in order to purchase a

motor vehicle.

Auto loans are typically structured as instalment loans and are

secured by the value of vehicle being purchased.

The amount of auto loan to be financed by the financial institutions

depends upon the eligibility criteria which is calculated on the basis

of past Income statements as well as credit history of borrower

It is usually financed as a percentage of On-road price which

Includes Ex-showroom price, RTO registration charges &

Mandatory Insurance charges.

The Margin (own contribution) in this category of loan is

usually 15% to 20% but it can also be 0% in some special

cases of strong Financial position of the borrower

Rate of Interest: Auto loans are usually financed at a rate of

interest varying from 9% to 10.50%.

4. PERSONAL LOANS:

Personal loans are advanced on the basis of the borrower's credit-history

and ability to repay the loan from personal income.

Repayment is usually through fixed amount instalments over

a fixed term & it’s also called consumer loan.

The main characteristic of a personal loan is that it is not

secured by collateral. "Collateral" means something of value,

like a home, boat or car that the lender can repossess if you

don't repay the account as agreed. Personal loans are backed

only by your promise to repay, and for this reason they are

also known as "signature loans" or "unsecured loans”.

Rate of Interest: Generally the rate of interest on personal

loans is high and varies from 14% to 20%.

Personal loans are issued for up to 4 years

The amount of personal loan that a financial Institution will

provide depends on the repayment capacity of the applicant

which is judged by past Income Statements as well as credit

history of borrower.

.

5. BUSSINESS/PROFESSIONAL LOAN:

Business or Professional loans (BL/PL) refers to a type of

financial assistance for a self-employed Businessman or

Professional.

Business or Professional loans (BL/PL) can be availed for

requirements pertaining to business such as purchase of

equipment, construction or renovation of a premises & working

capital etc.

Usually Business or Professional loans (BL/PL) is Unsecured &

it is sanctioned on the basis of eligibility criteria determined on

the basis of past income statements as well as credit history of

borrower.

These loans are primarily available from Government owned

banks, however some private banks also offer these loans.

Margin usually ranges from 15% to 25% of the loan amount.

Rate of Interest : 14 % to 20 %

DOCUMENTS REQUIRED TO OBTAIN LOAN (Varies According to

type of Loan):

KYC ( Know your customer):

• Aadhaar Card

• Pan Card

• Election card

• Electricity Bill (Residence)

• Electricity Bill (Business premises

INCOME PROOF:

• Income Tax returns For Last 3 Years with computation

• Financial Statements For last Three years

• Audit Report For Last Three Years (As applicable)

• Form No. 16 ( In case of Salaried Person)

• Salary certificates ( In case of Salaried Person)

)

BANKING DOCUMENTS:

All saving, Current, Loan Account statements of Last One Year

PROPERTY DOCUMENTS:

• Sale Deed/Purchase deed

• Previous sale deed / Purchase Deed (Link Deed)

• Agreement To Sale ( In case Of Home Loan-Flat Purchase)

• Latest Namuna-D / 7/12/ Gaon Namuna 8A

• Latest Tax Receipt

• Sanctioned Map

• Layout Map

• Commencement Certificate

• N.A. Order

• Ferfar – 30 Years (Mutation)

• Deed Of Declaration (In case of Apartment Or Complex)

•DOCUMENTS IN CASE OF VEHICLE LOAN

• Original RC

• Original Invoice

• Quotation

• Applicable forms of the Motor Vehicle Act, 1988 (Such as form

29, 33, 34, 35 etc.

NOTE: THE ABOVE MENTIONED DOCUMENTS ARE

GENERALLY REQUIRED DOCUMENTS IN CASE OF LOAN. THE

REQUIREMENT OF DOCUMENTS VARIES ACCORDING TO

THE LOAN TYPE.

Income Tax Audit under Section 44AB – Criteria, Audit

Report, Penalty

What is tax audit?

• There are various kinds of audit being conducted under

different laws such as company audit/statutory

audit conducted under company law provisions, cost audit,

stock audit etc.

• Similarly, income tax law also mandates an audit called ‘Tax

Audit’. As the name itself suggests, tax audit is an

examination or review of accounts of any business or

profession carried out by taxpayers from an income

tax viewpoint. It makes the process of income computation for

filing of return of income easier.

Objectives of tax audit

Tax audit is conducted to achieve the following objectives:

• Ensure proper maintenance and correctness of books of

accounts and certification of the same by a tax auditor

• Reporting observations/discrepancies noted by tax auditor

after a methodical examination of the books of account

• To report prescribed information such as tax depreciation,

compliance of various provisions of income tax law etc.

All these enable tax authorities in verifying the correctness of

income tax returns filed by the taxpayer. Calculation and

verification of total income, claim for deductions etc. also

becomes easier.

Harsh Naondhar

Category of person Threshold

Carrying on business (not opting

for presumptive taxation scheme*)

In case of losnot opting s from

carrying on of business and for

presumptive taxation scheme

Taxpayer’s income exceeding basic

threshold limit but taxpayer incurs

loss from carrying on business (not

opting for presumptive taxation

scheme)

Total sales, turnover or gross receipts

exceed Rs 1 crore

Total sales, turnover or gross receipts

exceed Rs 1 crore

Even in case of loss from business when

sales, turnover or gross receipts exceed

1 crore, taxpayer is subject to audit

Key Points the assess must keep in mind for

preparation of Tax AuditProper maintenance and correctness of books of accounts be

ensured

The books so maintained have to be certified in line with the

requirements of the applicable laws by the tax auditor

Proper methodical examination of books of accounts be done by

the assesse before submitting the same to Tax Auditor

The prescribed information such as tax depreciation, related

compliances etc must be ensured by the assesee

Who is mandatorily subject to tax audit?Following categories of taxpayers are required to get tax audit

done:

Carrying on profession Gross receipts exceed Rs 50 lakhs

Carrying on business eligible for

presumptive taxation under

Section 44AE

Claims profits or gains lower than the

prescribed limit under presumptive

taxation scheme

Carrying on the profession eligible

for presumptive taxation under

Section 44ADA

Claims profits or gains lower than the

prescribed limit under presumptive

taxation scheme and income exceeds

maximum amount not chargeable to tax

Carrying on the business and is not

eligible to claim presumptive

taxation under Section 44AD due

to opting for presumptive taxation

in one tax year and not opting for

presumptive tax for any of the

subsequent 5 consecutive years

If income exceeds maximum amount not

chargeable to tax in the subsequent 5

consecutive tax years from the tax year

where presumptive taxation is not opted

for

Carrying on business (opting

presumptive taxation scheme

under section 44AD

Carrying on business (presumptive

taxation scheme under section

44AD applicable) and having a

business loss but with income

exceeding basic threshold limit

Declares taxable income below the

limits prescribed under the

presumptive tax scheme and has

income exceeding the basic threshold

limit

Carrying on business (opting

presumptive taxation scheme

under section 44AD and having a

business loss but with income

below basic threshold limit

Tax audit not applicable

What happens if a person is required to get

his accounts audited under any other law

for eg. statutory audit of companies under

company law provisions?

In such cases, the taxpayer need not get his accounts

audited again for income tax purposes. It is sufficient if

accounts are audited under such other law before the due

date of filing the return. The taxpayer can furnish this

prescribed audit report under Income tax law

What constitutes Audit report?

Tax auditor shall furnish his report in a prescribed form

which could be either Form 3CA or Form 3CB where:

• Form No. 3CA is furnished when a person carrying on

business or profession is already mandated to get his

accounts audited under any other law.

• Form No. 3CB is furnished when a person carrying on

business or profession is not required to get his accounts

audited under any other law.

In case of either of the aforementioned audit reports, tax

auditor must furnish the prescribed particulars in Form No.

3CD, which forms part of audit report.

How and when tax audit report shall be

furnished?The tax auditor shall furnish tax audit report online by using

his login details in the capacity of ‘Chartered Accountant’.

Taxpayer shall also add CA details in their login portal. Once

the tax auditor uploads the audit report, same should either be

accepted/rejected by taxpayer in their login portal. If rejected

for any reason, all the procedures need to be followed again till

the audit report is accepted by the taxpayer.

You must file the tax audit report on or before the due date of

filing the return of income. It is 30 November of the subsequent

year in case the taxpayer has entered into an international

transaction and 30 September of the subsequent year for other

taxpayers

Significant points to be taken care of while

filling the Form 3 CD

1. GSTIN & GSTIN number to be mentioned

2. Allowances under Section 32 AD to be reported(Additional

Depreciation, Investment Allowance etc)

3. Deemed Gains under section 32 AD to be reported

4. Reporting of any sum payable to Railways under section 43

B(g) which is not allowable as deduction for non payment

5. Details of repayment of loans in addition to taken or

accepted

6. Reporting details of transactions no disclosed / specified in

form 61/ 61 A/ 61 B

7. Reporting of Amount Chargeable under section 56(2)(ix) as

income from other sources

1. Reporting details of interest expenditure incurred exceeding

one crore rupees as referred u/s 94B(1)

2. Reporting of impermissible avoidance arrangements as

referred in Section 96

3. Reporting details of each cash receipt or payment in excess

of the limit specified under section 269 ST

4. Reporting details of transactions not disclosed/ specified in

Form No. 61/ 61A/ 61B

5. Reporting whether assessee or its parent entity or alternate

reporting entity is liable to furnish the report (CBCR) u/s

286(2)

6. Reporting Break-up of total expenditure into expenditure

with registered or not registered entities under the GST

Consequences of non-compliance

If any taxpayer who is required to get the tax audit done but

fails to do so, the least of the following may be levied as a

penalty:

1. 0.5% of the total sales, turnover or gross receipts

2. Rs 1,50,000

HIGHLIGHTS OF WICASA OF EVENTS PHOTOGALLERY

Independance Day Celebration

DUE DATES FOR SEPTEMBER

Particulars Due Dates

TDS/TCS Liability Deposit 7th Sept

GSTR3B 20th Sept

GSTR1- Monthly (Taxpayer exceeds 1.5Crore) 11th Sept

Income Tax Audit for FY 18-19 30th Sept

PF and ESIC Payment 15th Sept

Ganest Festival, Teachers Day Celebration, Income Tax Audit Seminor

Kaun Banega CA