Ahmedabad Chartered Accountants Journal December, 2022 513 agreement to sell as such does not provide a clear title to the property. The Supreme Court has, in the case of Durgawati Devi v Union of India,2 held that the execution of sale agreement does not transfer ownership/title of the property and the ownership/ title is transferred only by way of conveyance deed. If the agreement of sale does not create then it gives rise to another question as to whether the remedy can be exercised by the purchaser on breach of the agreement of sale? This has been answered under Sec 18 of the RERA Act which states that the promoter should compensate the purchaser if he was not able to complete the project and hand over the possession of the property within the time frame as specified in the agreement to sell or agreement of sale. If the promoter fails to do so then he can file a complaint before RERA Authority3 and claim compensation. In case he is aggrieved by the order of Authority, then he can file an appeal in the Real Estate Regulatory Appellate Tribunal under Sec 44 of the RERA Act 2016. Therefore it is appropriate to conclude that the RERA Act 2016 over-rule Registration Act for the purpose of agreement to sell because the agreement to sell does not provide a clear title, however, it can be enforced in the court of law as per the provisions of the RERA Act 2016. However, one cannot deny the fact that there are no judicial pronouncements that prove the fact that RERA Act 2016 should prevail over Registration Act 1908. Until there is judicial pronouncement regarding the above mentioned fact, one cannot to come to a proper conclusion regarding the same. Notable judgements: Bulk Booking Allotment Letters (Investors) – In Kamal Agrawal and Ors. Vs. Sakla Enterprises it has been held that in view of the said explicit provision under RERA, the respondent promoter should not have accepted the money from the complainants without first registering the agreements for sale with the complainants. Further the payment made by the complainants has not been denied by the respondent. Hence the respondent has violated the provision of section 13 of the RERA. Hence it cannot deny the claims of the complainants merely by saying that they are investors and not allottees, since the complainants have invested their money in the MahaRERA registered project. Allotment Letter given as security towards loan given by Security Holder - In Hitesh RandhirSayta Vs. Marvel Buildcon , Hon’ble Appellate Tribunal has held that the transaction between the parties is in the nature of loan for which flats were provided as security MOU entered between parties shows that the transaction between the parties is not sale and purchase of flats but it is a loan advanced for short term against security provided in the form of flats. In MOU, consequences are also given for not repaying the loan as per agreed terms. Cumulative effect of all clauses in MOU exhibits that promoter is debtor whereas Allottee is a creditor. Right to purchase the flat as per terms of agreement for sale ls different from right to sell the flat secured against loan in case of default. So letter executed between parties cannot be accepted as allotment letter to claim transaction of sale and purchase between the parties. Allotment letter has no reference of MOU and vice-versa though both are executed on same day by the same parties. In absence of transaction for sale of flats in project of promoter in favour of Allottees, the dispute does not fall within the scope and ambit under RERA for adjudication. Resultantly, promoter cannot be directed to execute agreement for sale as per Section 13 of RERA in favour of Allottee as prayed for. ❉ ❉ ❉ GujRERA Corner
514 Ahmedabad Chartered Accountants Journal December, 2022 the fifth consecutive repo rate hike since May of this year. The repo rate will go up from 5.9% to 6.25%. · RBI will remain focused on withdrawal of accommodation to bring inflation down. CPI inflation in India has softened to 6.8% in October from 7.4 per cent in September with food inflation softening due to price of vegetables and edible oils. · Indian economic activity is showing resilience and GDP in Q2FY23 was 6.3% y-o-y. However Global economy may lose momentum as countries tighten financial conditions to fight rising cost of livelihood because of food and energy price shocks and shortages. · After about 2 years, India’ exports turned negative -16.6% in October, mainly due to global demand slowdown. Imports rose 6% because of crude oil, cotton, fertilizer & machinery. Summary: Indian economic activity is showing resilience against back drop of Global slowdown. RBI again hiked the repo rate by 0.35% to 6.25% to address inflation. Climate conference COP 27 was concluded in Egypt with some developments in finance and mechanism to achieve environmental targets. The Domestic market is now seeing gains for the second month straight. Sensex and Nifty both increased by 4% each. Key Merger and Acquisition deals include Blackstone acquiring a majority stake of 52% in R Systems Ltd. and Dental chain, Clove Dental, raising Rs. 545 Crore in a round led by Investcorp. Economic Update: · The Reserve Bank of India (RBI) in its monetary policy meeting held on December 7, 2022 has yet again hiked the repo rate by 0.35%. This is CA. Karan Vora [email protected] Capital Markets
Ahmedabad Chartered Accountants Journal December, 2022 515 COP27: As covered in last update, Conference of the Parties (COP 27) of the UNFCCC (United Nations Climate Change Conference) was held and concluded in Sharm el-Sheikh, Egypt with following key developments. · Climate Finance was, as expected, a key part of COP27. The final agreement highlights that US$4 to $6 trillion a year needs to be invested in renewable energy until 2030 – including investments in technology and infrastructure – to reach net-zero emissions by 2050. However the Annex II (rich) countries legally obliged to give $100 Bn per year to climate fund have made far smaller contributions. This would hamper implementation in (poor) countries like Africa and other parts of global south like Pakistan. · Private Finance: There is a surge of interest from companies and major investors,like investment banks, hedge funds, in adopting sustainable portfolios, and trillions of dollars are waiting to be unlocked, however right mechanisms are still awaited. · A “loss and damage” fund was agreed for the first time for funding to vulnerable countries to rescue and rebuild the physical and social infrastructure of countries devastated by extreme weather. However there was no agreement on how the finance for this fund would be arranged. · 1.5°C: The goal of Cop26 to keep cutting greenhouse gas emissions to keep the temperature rise within 1.5 C was again agreed upon. Earlier in Paris agreement the goal was to keep the temperature rise within 2°C, however it is now clear that 2°C is not safe for earth. · Low emission Energy: Cop27 contained provisions to boost low emission energy, which Capital Markets could mean more focus on clean energy or relatively cleaner fuels like gas. · Fossil Fuels: Many countries, led by India, wanted to include commitment to phase down all fossil fuels, however after intense debate it failed, and like Cop 26, only a commitment to phase down use of coal was agreed. · India’s Net Zero Plan: India came out with the target to achieve net zero by 2070, as it promised in COP26. In the COP27 India deliberated upon the mechanism to achieve the target. India also promised to meet its 50% energy demand from renewable sources of energy. Trends in Secondary Markets: · The BSE Sensex was up by 2,353.06 points or 3.87% at 63,099.65 and NIFTY was up by 746.15 points or 4.20% at 18,758.35. · FPI infused funds worth Rs 32,344 Crores in November. The rally was also driven by domestic players. · Earnings growth in Q2 FY 23 was led by BFSI (banking, financial services & insurance), automobiles and telecom. Banks are doing well because of surging credit, rising interest rates and significantly reduced NPAs. Equity Markets Oct-22 Nov-22 % Change BSE Sensex 60,746.59 63,099.65 3.87% Nifty 50 18012.20 18,758.35 4.2% BSE 500 24,589.55 25,406.76 3.32% BSE Healthcare 23,924.28 23,945.64 0.09% BSE IT 28,930.65 30,511.10 5.46% BSE FMCG 16,131.19 16,525.65 2.45% BSE Metal 19,024.82 20,257.70 6.48%
516 Ahmedabad Chartered Accountants Journal December, 2022 Capital Markets Primary Market Update: There were as 9 main board IPOs in November against 2 in October as markets stayed bullish. Main board IPOs includeInox Green Energy Services Ltd., Kaynes Technology India Ltd., Archean Chemical Industries Ltd., Five-Star Business Finance Ltd., Bikaji Foods International Ltd., Global Health Ltd., Fusion Micro Finance Ltd., and DCX Systems Ltd. There were 2 SME IPOs in November as against twelve SME IPOs in October 2022. Funds Mobilization by Corporates (Crore) Particulars Oct-22 Nov-22 I. Equity Issues 2,909 13,445 a. IPOs (i+ii) 1,257 10,078 i. Main Board 809 9,974 ii. SME Platform 447 104 b. FPOs 0 0 c. Equity Rights Issues 162 1,651 d. QIPs/IPPs 500 0 e. Preferential Allotments 991 1,716 II. Debt Issues 36,751 77,431 a. Debt Public Issues 2,052 867 b. Private Placement of Debt 34,699 76,563 Total Funds Mobilized (I+II) 39,660 90,876 Mergers and Acquisitions (M&A) and Private Equity (PE) key deals: M&A: Blackstone acquires majority stake in R systems International and initiates delisting Transaction: · Blackstone, an American private equity fund, announced that it would pick up a majority stake of 52% of present promoters including of founder Dr. Rekhi, in R Systems International, a digital services firm, for Rs. 2,904 Crores. · Blackstone will also launch a conditional delisting offer, at a price of Rs. 246 per share. The delisting move will offer to buy 57.1 million shares, or 48.33%, from the public shareholders for Rs. 1,406 Crore. About Blackstone: · Founded in 1985 as a mergers and acquisitions firm by Peter G. Peterson and Stephen A. Schwarzman Blackstone Inc. is an American alternative investment management company based in New York City. · As of Q3 2022, the company’s total assets under management were over US$950 billion, making it the largest alternative investment firm globally. About R Systems: · Founded in 1993 by Satinder Singh Rekhi, the company is provider of digital Information Technology services, specializing in product engineering and serves over 250 clients in tech, media, telecom and financial services globally. · R System has capabilities in product engineering, AI, data analytics, IOT and cloud and has over 4,400 employees in 18 delivery centers in North America, Europe, Asia Pacific, and India. · R System’s revenue in the 12 months ending September 2022 was Rs. 1,445 Crores, which is a 36% year-on-year growth.
Ahmedabad Chartered Accountants Journal December, 2022 517 Capital Markets Rationale: · This investment follows Blackstone’s longstanding conviction in IT services and builds on the firm’s robust track record in the sector globally. Blackstone has invested into Indian firms like Mphasis, VFS, TaskUs IBS software, Intelenet, and Simplilearn, amongst many others. · The company’s management team will benefit from Blackstone’s scale, expertise, and global track record in IT services. · “As a leader in outsourced product development, R Systems is well-positioned to benefit from digitalization tailwinds, shorter product launch cycles and increased openness to outsource product development,” Blackstone Senior Managing Director Mukesh Mehta said in the press release. · Founder of R Systems, Satinder Singh Rekhi will continue to guide the company in his role as a non-executive advisor. PE: Dental chain, Clove Dental, raised Rs. 545 Crore in a round led by Investcorp Transaction: · Investcorp announced that it has led an investment of INR 545 Cores in the dental chain Clove Dental, operated by Global Dental Services Ltd, which is Asia’s largest dental chain and among the top 15 global Dental Services Organizations. · Tybourne Capital and other new and existing shareholders are also investing alongside Investcorp in this round in Clove Dental. About Investcorp: · Established in 1982, Investcorp is a private equity fund, acting as a bridge between the Gulf and the rest of the world. · As of June, 2022, Investcorp’s assets under management are US $42.7bn that are diversified across three continents, six asset classes and numerous product lines. · Its investments over the last four years include VEnsure, NDR Warehousing, Intergrow Brands, Bewakoof.com, Freshtohome, Zolo, InCred, Citykart, NephroPlus, Unilog, XpressBees, and Safari Industries. About Clove Dental: · Established in 2011, Clove Dental (a brand name of Star Dental Centre Private Limited) is the largest network of dental clinics in India. · The dental chain group operates 340 clinics across 24 cities and 12 states in India. It currently has a team of 841 dentists. It manages an excess of 1 million + patients every month. In addition, they have conducted about 15 lakh treatments in the last ten years. · It also offers aligners and smile correction services through its brand LoveMySmile. The D2C brand provides dentist-led hybrid solutions at home and in-clinic. Rationale: · The dental chain Clove Dental plans to use the funds to fuel expansion plans, primarily spreading its commercial footprint as well as grow its hybrid model and products for smile correction. · Investcorp said that the Indian dental services market is worth $3 billion and highly fragmented where large hospitals and dental chains accounting for under 10% of all practices. Investing in a single specialty segment, within healthcare, aligns well with Investcorp’s thesis of backing scaled and differentiated assets. · PE fund believes that with better hygiene and growing awareness about healthcare, patients are increasingly going to rely on organized chains for professional medical services. · This is Investcorp’s fourth healthcare investment in India.It earlier concluded three healthcare deals in India: V-Ensure Pharma Technologies, Neprhoplus (a dialysis chain), and ASG Eye Hospitals, where Investcorp recently sold its entire stake to General Atlantic and Kedaara. · Globally, Investcorp has invested in Acura, Germany’s second largest dental platform. Acknowledgements: RBI Bulletin (www.bulletin.rbi.org.in), SEBI (www.sebi.gov.in), NSE (www.nseindia.com), BSE (www.bseindia.com) ❉ ❉ ❉
518 Ahmedabad Chartered Accountants Journal December, 2022 IND AS 116 -Leases - AR 2021-22 Sun PharmaAdvanced Research Company Ltd The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether: (i) the contract involves the use of an identified asset (ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and (iii) the Company has the right to direct the use of the asset. Company as a lessee: The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets. i) Right-of-use assets The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets, as follows: • Building 3-5 years The right-of-use assets are also subject to impairment. Refer to the accounting policies in section (h) Impairment of non-financial assets. ii) Lease liabilities At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating the lease, if the lease term reflects the Company exercising the option to terminate. In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease CA. Pamil H. Shah [email protected] From Published Accounts
Ahmedabad Chartered Accountants Journal December, 2022 519 From Published Accounts payments) or a change in the assessment of an option to purchase the underlying asset. iii) Short-term leases and leases of low-value assets The Company applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases that are considered to be low value. Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straightline basis over the lease term. HindustanAeronautics Limited The Company recognizes, at inception of a contract a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. 6.1. The Company recognizes, at inception of a contract a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. 6.2. The Company as a lessee: a) At the date of commencement of the lease, the Company recognizes a right-of-use (“ROU”) asset representing its right to use the underlying asset for the lease term and a lease liability for all lease arrangements in which it is a lessee except for leases with a term of 12 months or less (short term leases) and leases for which the underlying assets is of low value. For such short term and assets of low value leases, the Company recognizes the lease payment as an expense on a straight line basis over the term of the lease. b) At commencement date the ROU asset is measured at cost. The cost of the ROU asset measured at inception shall comprise of the amount of the initial measurement of the lease liability adjusted for any lease payments made at or before the commencement date less any lease incentives received, plus any initial direct costs incurred. The ROU assets are subsequently measured at cost less any accumulated depreciation, accumulated impairment losses, if any. c) The ROU assets are depreciated using the straight-line method from the commencement date over the shorter of lease term or useful life of ROU asset. The estimated useful lives of ROU assets are determined on the same basis as those of PPE. Right-of-use assets are tested for impairment whenever there is any indication that their carrying amounts may not be recoverable. Impairment loss, if any, is recognized in the statement of profit and loss. d) At the commencement date, the Company measures the lease liability at the present value of the lease payments that are not paid at that date. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the Company’s incremental borrowing rate. e) Lease liability and ROU asset are separately presented in the Balance Sheet and lease payments are classified as financing cash flows. Short term lease payments and payments for leases of low value assets are classified as operating cash flows. 6.3. Company as a lessor At the inception of the lease the Company classifies each of its leases as either an operating lease or a finance lease. 6.3.1 Finance Lease: At the inception of the lease the Company classifies each of its leases as either an operating lease or a finance lease. a) A lease that transfers substantially all the risks and rewards incidental to ownership of an underlying asset to the Lessee is
520 Ahmedabad Chartered Accountants Journal December, 2022 classified as a finance lease. Title may or may not eventually be transferred. b) At commencement date, an amount equal to the net investment in the lease is presented as receivable. The interest rate implicit in the lease is used to measure the value of net investment in the lease. c) The finance income is recognized over the lease term in the statement of profit and loss account so as to reflect a constant periodic rate of return on the net investment in the lease. d) The de-recognition and impairment requirement of the underlying asset is tested as per Ind AS 109- Financial instruments. e) Any modifications in the lease are accounted as a separate lease when the recognition criteria specified in paragraph 79 of the standard are met. 6.3.2 Operating Lease: a) Lease other than finance leases are operating leases. b) The lease payment from operating leases are recognized as income on either a straight-line basis or another systematic basic, if required. c) The expenses including depreciation cost associated with earning of the lease income is recognized as an expense. d) Depreciation on underlying assets subject to operating leases are calculated on straight line basis over estimated useful life as prescribed in Schedule II of the Companies Act, 2013. e) Any modifications in the lease are accounted as a separate lease if the recognition criteria specified in the standard is met. 6.4. Transition to Ind AS 116 a) Effective April 1, 2019, the Company has applied Ind AS 116 on Lease Accounting. Ind AS 116 replaces Ind AS 17. The Company has adopted Ind AS 116 using the cumulative effect method. The effect of initially applying this standard is recognized at the date of initial application (i.e. April 1, 2019) and the comparative information continues to be reported under Ind AS 17. b) The Company has chosen the practical expedient provided by the standard to apply Ind AS 116 only to contracts that were previously identified as leases under Ind AS 17 and therefore has not reassessed whether a contract is or contains a lease at the date of initial application. TAJGVK Hotels & Resorts Limited Effective April 1, 2019 the company has applied Ind AS 116 which replaces Ind AS 17 Leases. Lessee: On inception of a contract, the company (as a lessee) assesses whether it contains a lease. A contract is, or contains a lease when it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the company assesses whether: (i) the contract involves the use of an identified asset (ii) the company has substantially all of the economic benefits from use of the asset through the period of the lease and (iii) the company has the right to direct the use of the asset. At the date of commencement of the lease, the company recognizes a right-to-use asset (“RTU”) and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (shortterm leases) and low value leases. For these shortterm and low value leases, the company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease. The right-to-use assets are initially recognised at cost, which comprises the initial amount of the lease liability adjusted for initial direct costs incurred, lease payments made at or before the commencement date, any asset restoration obligation, and less any From Published Accounts Continued to page 522
Ahmedabad Chartered Accountants Journal December, 2022 521 Income Tax 1) Notification relating to Partial relaxation with respect to electronic submission of Form 10F by select category of taxpayers in accordance with the DGIT (Systems) Partial relaxation is provided to Nonresidents not having PAN and not required to have it under the provisions of Incometax Act, 1961. They can file Form 10F manually till 31st March 2023 instead of electronically as being allowed prior to issuance of DGIT (System) Notification No. 03/2022 dt. 16th July 2022. (Full text refer Notification No. 2/2022, dated 12/12/2022) 2) All PAN holders, who do not come under the exempt category as per Notification No. 37/2017, dated 11th May, 2017 and have not linked their Aadhaar with PAN yet, are requested to do so immediately. Failure to do so will lead to the unlinked PAN becoming inoperative. (Income tax update, dated 09/12/2022) Goods and Service Tax Following are the highlights of 48th GST council meeting held on 17/12/2022 (The below mentioned proposals will come into effect only after the necessary amendments/ notifications/circulars are issued.) - Decisions have been taken to raise the minimum threshold of tax amount for launching prosecution under GST from Rs. One Crore to Rs. Two Crores, except for the offence of issuance of invoices without the supply of goods or services or both. Decisions have also CA. Kunal A. Shah [email protected] From the Government CA. Ashwin H. Shah [email protected] been taken to reduce the compounding amount and decriminalize certain offences (viz. obstruction or preventing any officer in the discharge of his duties; deliberate tempering of material evidence; failure to supply the information). - Procedure to be prescribed for the verification of input tax credit in cases involving a difference in input tax credit availed in FORM GSTR3B vis a vis that available as per FORM GSTR-2A during FY 2017-18 and 2018-19. - The Council recommended inserting Rule 37A in CGST Rules, 2017 to prescribe the mechanism for reversal of input tax credit by a registered person in the event of non-payment of tax by the supplier (vendor) by a specified date and mechanism for re-availing of such credit if the supplier pays tax subsequently. - The Council has recommended amending subrule (1) of rule 37 of CGST Rules, 2017 retrospectively with effect from 01.10.2022 to provide for reversal of input tax credit (on failure to pay within 180 days to the vendor) in terms of the second proviso to section 16 of CGST Act, only proportionate to the amount not paid to the supplier vis-a-vis the value of the supply, including tax payable. - Rule 88C and FORM GST DRC-01B are to be inserted in CGST Rules, 2017 for intimation to the taxpayer, by the common portal, about the difference between liability reported by the taxpayer in FORM GSTR-1 and in FORM GSTR-3B for a tax period, where such difference exceeds a specified amount and/ or percentage, for enabling the taxpayer to either pay the differential liability or explain the
522 Ahmedabad Chartered Accountants Journal December, 2022 difference. Further, clause (d) is to be inserted in sub-rule (6) of rule 59 of CGST Rules, 2017 to restrict the furnishing of FORM GSTR-1 for a subsequent tax period if the taxpayer has neither deposited the amount specified in the intimation nor has furnished a reply explaining the reasons for the amount remaining unpaid. - No GST is payable where the residential dwelling is rented to a registered person if it is rented in his/her personal capacity for use as From the Governments his/her own residence and on his own account and not on account of his business. - Proposal to conduct a pilot in the State of Gujarat for Biometric based Aadhaar authentication and risk-based physical verification of registration applicants. ❉ ❉ ❉ lease incentives received. They are subsequently measured at cost less accumulated depreciation and impairment losses. Right-of-use assets are also adjusted for any re-measurement of lease liabilities. Unless the company is reasonably certain to obtain ownership of the leased assets or renewal of the leases at the end of the lease term, recognised rightof-use assets are depreciated to a residual value over the shorter of their estimated useful life or lease term. The lease liability is initially measured at the present value of the lease payments to be made over the lease term. The lease payments include fixed payments and variable lease payments that depend on an index or a rate, less any lease incentives receivable. In calculating the present value of lease payments, the company uses its incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable. The lease term includes periods subject to extension options which the company is reasonably certain to exercise and excludes the elect of early termination options where the company is not reasonably certain that it will exercise the option. Lease liability and RTU asset have been separately presented in the Balance Sheet and lease payments are presented as amortization of RTU assets along with depreciation and interest on lease liability along with finance cost. Lessor: Rental income from operating lease is recognised on a straight line basis over the lease term unless payments to the Company are structured to increase in line with expected general inflation to compensate for the Company’s expected inflationary cost increase. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned. No change in recognition or disclosure is made to lease rentals earned by the company in the capacity as a lessor, pursuant to adoption of Ind AS 116 ❉ ❉ ❉ Continued from page 520 From Published Accounts
Ahmedabad Chartered Accountants Journal December, 2022 523 Understanding the Account Aggregator Framework – the next UPI moment for India The Account Aggregator Framework has been set up by the Reserve Bank of India (RBI) to create a new framework for account aggregators in India. This framework is designed to streamline operations, improve efficiency, and reduce risks for consumers and businesses. While most people in India are unbanked or underbanked, this new framework could pave the way for easier financial inclusion. Personal Data Protection in India The regulatory framework for account aggregators in India is still developing, but it is essential to understand the principles that will apply to these entities. Account aggregators are a new breed of financial service providers. They collect and store data from multiple sources, including credit bureaus and banks. The account aggregator then transfers this information to other entities through an application programming interface (API) or by sharing it with a third party that performs a service on behalf of the user. To be classified as a data fiduciary under Indian law, an entity must have control over what happens with personal information—both during its lifetime and after it has been deleted or destroyed. In addition: - Only specific parties can access this data; - It must be stored securely; - It must be used only for purposes specified when collected (such as providing loans); - If there’s any misuse or loss of personal information, then there needs to be remedial action taken immediately Indian Account Aggregators, AA - An Account Aggregator is a new framework which allows banks and non-banks to connect with customers. CA. Rushabh Shah [email protected] IT Corner - It is defined by the Reserve Bank of India (RBI) as follows: “Account Aggregators may be either a bank or non-bank entity registered under the Payments and Settlement Systems Act, 2007”. The framework is structured so that Account Aggregators can be licensed to operate in India and provide services to banks or non-banks. The RBI has issued guidelines for the regulations and security standards for Account Aggregators. Transferring Data in an AA World When you’re thinking about data flowing into and out of an AA, it’s important to remember that this is a two-way street. Data flows in both directions. - A customer may have transferred their data from one account aggregator to another, so the original AA will still have that information even if the customer has moved on. Therefore, we see companies like SBI asking customers who have moved away from them what banks they currently use—they’re trying to find out where all their former customers went. - If you’re using multiple business accounts with different AAs, your business account may collect information about each bank account but not necessarily share it with any other AAs or businesses (if you have opted out). In this case, there could be some overlap between what banks know about your banking habits and how they track spending patterns within their systems; however, because these are two completely separate entities—and because each one has access only to its private system—you can be assured that neither entity will ever know everything about your financial situation at once (unless someone hacks into both systems simultaneously).
524 Ahmedabad Chartered Accountants Journal December, 2022 Businesses and the AAs - Businesses will benefit from the AAs in several ways. First, it will allow them to expand their reach beyond where they were previously able to operate. The lack of access to capital and complicated processes has been significant hurdle for many businesses looking to expand geographically. Still, it cannot do so because of a lack of access to or understanding of banking products or services available in its area. - Second, it will give businesses more choicesinmanaging their money. Instead of having one bank tell them how much money is needed for the following year’s operations and then setting up an overdraft facility at 0% interest (which means they will never get back any income from their deposits), companies can now negotiate what works best for them. - Third, AAs will help reduce costs borne by these companies and reduce time spent managing cash flow due to better information management systems implemented by AAs. Privacy and Security When using an account aggregator, you must comply with applicable data protection laws. You should also be aware that the EU’s General Data Protection Regulation (GDPR) does not cover account aggregator services. In India, the Information Technology Act of 2000 establishes a legal framework for protecting personal information online and offline, including offline storage of electronic records. The Act also defines “personal information” – any data about an individual that can be used to identify them personally – and outlines requirements for collecting, using, disclosing, or destroying this data by existing legislation. In the US, no specific federal law requires organisations or individuals to obtain consent before sharing user information among different platforms or apps; however, many states requireapproval when sharing user information with third parties such as advertisers or marketers. Additionally, Americans enjoy protections under state law regarding the invasion of privacy, which may offer additional safeguards against having your data collected without your knowledge or consent. More accessible financial inclusion in India Over the last few years, financial inclusion has become a key priority for the Indian government. The Narendra Modi government has announced several schemes to help increase access to banking services for rural communities and unbanked populations. This new framework can pave the way for more accessible financial inclusion in India. An initiative called “Unified Payments Interface” (UPI), which was launched by the National Payments Corporation of India (NPCI) in April 2016, is one such example that could be considered an essential step towards improving access to banking services across multiple channels. UPI allows consumers with smartphones or feature phones to make payments directly from their bank accounts without needing any physical cards or cash! This technology is easily accessible through mobile apps developed by NPCI member banks or third-party developers like Paytm, Google Tez etc., enabling users who do not have debit/credit cards to make payments quickly without internet connectivity on their phones! The account aggregator model proposed under Phase 4 will allow users more flexibility when using UPI because they can link multiple accounts at different banks rather than just one account per bank, which was possible previously under Phase 3. Conclusion While the Account Aggregator framework is a step in the right direction, it is not without its pitfalls. The main issue is that it opens an account holder’s information to third parties who can use it for their purposes. Some of these may be legitimate uses, such as lending or selling financial products, but others could be malicious such as cybercrime. India needs to ensure that no one has access to your banking data unless authorised by law or contractually bound by an agreement with you as an individual customer. ❉ ❉ ❉ IT Corner
Ahmedabad Chartered Accountants Journal December, 2022 525 1. Upcoming Events. Time Program Speaker Venue 3rd January, 2023 52nd Residential Refresher CA Pankaj Shah, Sheraton Grand Tuesday Course on 3rd - 6th January 2023. CA Manoj Fadnis, Palace, Indore Adv. DR. Arvind Singh Chawla, CA Jignesh Shah. 20th January 2023 3rd Brain Trust meeting – CA Punit Prajapati AMA, Atira Saturday GST on Real Estate Complex, Abad. 28th January 2023 Decoding Common CA Palak Pavagadhi CA Association Saturday ITR Forms Office, Darshak, Navrangpura, Abad. 2. Glimpses of previous events. Time Program Speaker Venue 3rd December, 2022 2nd Brain Trust Meeting on CA Jignesh Parikh ATMA Saturday Issue under Capital Gain Auditorium 15th December 2022 Foundation Day Walkathon —- River front Thursday near Vallabh Sadan. 31st December, 2022 Cricket Match President XI v/s - Sardar Vallabhbhai Saturday Secretary XI Patel Stadium (Navrangpura) CA. Jay B. Parekh Hon. Secretary CA. Mayur H. Modha Hon. Secretary Association News ❉ ❉ ❉
526 Ahmedabad Chartered Accountants Journal December, 2022
Ahmedabad Chartered Accountants Journal December, 2022 527
528 Ahmedabad Chartered Accountants Journal December, 2022 Across 1. The contributions received towards the building fund are in the nature of _________ donations. 2. A promoter cannot accept a sum more than ________ percent of the cost of the apartment as an advance payment without first entering into a written agreement for sale. 3. Interest on delay in filing of GSTR-3B is to be paid even if tax is deposited in electronic _______ ledger. ACAJ Crossword Contest - 19 ❉ ❉ ❉ Notes: 1. The Crossword puzzle is based on this issue of ACA Journal. 2. Two lucky winners on the basis of a draw will be awarded prizes. 3. The contest is open only for the members of Chartered Accountants Association and no member is allowed to submit more than one entry. 4. Members may submit their reply either physically at the office of the Association or by email at [email protected] on or before 27-01-2023. 5. The decision of Journal Committee shall be final and binding. Prize Courtesy Winners of ACAJ Crossword Contest – 18 1. CA. Rakesh Gupta 2. CA. Chintan Doshi ACAJ Crossword Contest 18 - Solution Across: Down: 1. Communication 4. Promoter 2. Advance 5. BhagwadGita 3. Festival 6. Conditions Down 4. _________ is derived by dividing net operating profit after taxes (NOPAT) with average invested capital (IC). 5. Climate conference COP 27 was recently held in ___________. 6. “Give me the luxuries of life and I will do without the __________________.” 6 4 5 1 2 3