January 2024

Ahmedabad Chartered Accountant Journal January, 2024 661 Broad Parameter Indicator Details Deduction under Valid 80G registration under Entity to ensure disclosure whether Income-tax Act, 1961 Income Tax Act, 1961 for tax deduction is available or not to entities registered under investors. section 12A/ 12AA/ 12AB of the Income-tax Act, 1961 b) Paragraph 1 Changes/Alteration Made In sub-paragraph B The reference of “Regulation 292K(1)”in the title of sub-paragraph B is substituted by “Regulation 292K” Sub-paragraph B(2)(j) “j. Social Impact [Substituted] Details of past social impact as per the existing practice of NPOs. The past social impact should highlight trends in key metrics/ parameters relevant to the NPO (as may be determined by the Exchanges) for which it seeks to raise funds on SSE, number of beneficiary, cost per beneficiary and administrative overheads.” Sub-paragraph AA [Inserted] “AA. Procedure for public issuance of Zero Coupon Zero Principal Instruments by a not-for-profit organization. Sub-paragraph BB [Inserted] “BB. Contents of the fund-raising document. Sub-paragraph AC [Inserted] “AC. Other conditions relating toissuance of Zero Coupon Zero Principal Instruments. For detailed text, please refer: https://www.sebi.gov.in/legal/circulars/dec-2023/framework-on-social-stock-exchange_80233.html [Circular No.:SEBI/HO/CFD/PoD-1/P/CIR/2023/196 dated 28.12.2023] ❉ ❉ ❉ Corporate Law Update

662 Ahmedabad Chartered Accountant Journal January, 2024 Insurance of real estate project under the RERA Act The Real Estate (Regulation and Development) Act, commonly known as RERA, was enacted in 2016 to bring transparency, accountability, and efficiency to the real estate sector in India. Among its various provisions, Section 16 stands out as a pivotal measure that mandates insurance for real estate projects. This mandatory insurance is a significant step towards safeguarding the interests of homebuyers and fostering a healthier real estate ecosystem. The RERA Act was introduced to address the numerous challenges faced by homebuyers, including project delays, financial irregularities, and lack of transparency in the real estate sector. Before RERA, homebuyers were often left vulnerable, with incomplete or delayed projects and limited avenues for legal recourse. Section 16 of the RERA Act, which mandates insurance, was incorporated to mitigate risks and protect homebuyers from potential financial losses. This section requires real estate developers to obtain insurance against structural defects and work-related issues for a specified period after the completion of a project. Section 16 of the RERA Act states that, “..(1) The promoter shall obtain all such insurances as may be notified by the appropriate Government, including but not limited to insurance in respect of— (i) title of the land and building as a part of the real estate project; and (ii) construction of the real estate project. (2) The promoter shall be liable to pay the premium and charges in respect of the insurance specified in sub-section (1) and shall pay the same before transferring the insurance to the association of the allottees. (3) The insurance as specified under sub-section (1) shall stand transferred to the benefit of the allottee or the association of allottees, as the case may be, at the time of promoter entering into an agreement for sale with the allottee. (4) On formation of the association of the allottees, all documents relating to the insurance specified under sub-section (1) shall be handed over to the association of the allottees.” The implementation of Section 16 has had a profound impact on the real estate landscape. Developers are now obligated to procure insurance policies that cover structural defects for a period of five years after possession is handed over. This requirement ensures that developers are held accountable for any structural flaws or deficiencies in construction, providing an added layer of security for homebuyers. The insurance mandated by Section 16 not only protects the interests of homebuyers but also instills confidence in the real estate market. Developers are incentivized to focus on the quality of construction, as any structural defects discovered within the stipulated timeframe could result in financial repercussions. This has led to a positive shift in the industry, with developers prioritizing the delivery of structurally sound and high-quality projects. There are perceived risks in getting a title insurance some of which are discussed as below: a. Fragmented Land records: India has a complex and fragmented land records system, which can lead to discrepancies, errors, and ambiguities in property titles. This lack of a centralized and standardized system can make it challenging to verify and ensure the clear title of a property. b. Unorganised land acquisition: In some cases, land acquisition processes may not be wellCA. Manan Doshi [email protected] GujRERA Corner

Ahmedabad Chartered Accountant Journal January, 2024 663 GujRERA Corner documented or may face legal challenges, leading to uncertainties about the rightful ownership of the property. c. Litigation and pending cases: The Indian legal system often experiences delays, and propertyrelated disputes can linger in courts for years. This poses a risk for property buyers as they may unknowingly purchase a property with pending legal issues. d. Fraudeluent practices: Instances of fraudulent land transactions, forged documents, and illegal land grabbing can pose significant risks to property titles. e. Lack of awareness: As of my last update, awareness about the importance of title insurance was relatively low among property buyers and developers in India. This lack of awareness contributes to a slower adoption of title insurance policies. f. Regulatory challenges: The regulatory framework for title insurance may not be well-established or comprehensive, leading to uncertainties and varying standards across different regions. g. Poor underwriting: Despite a dismal credit history, insurers may be able to sell insurance. This can occur due to a multitude of factors but a noteworthy one is low-quality title records generated by underwriting lacking severely in skill and quality. Consumers and insurers may suffer financial losses as a result. Poor underwriting quality can lead to inaccurate price decisions, such as undercharging or overcharging clients or the wrong reserve allocation for indemnifying consumers. These consequences could jeopardize the insurance company’s financial viability and subsequently, the insured’s indemnification. h. Cost of title insurance: Title insurance is expensive since the premium is inclusive of other factors such as the cost of land, the building, and the developer’s profit margin, which can go up to 3%. The premium must be paid for 7 years or more, which is a hefty cost to bear. The title insurance industry appears to be in trouble, as builders of under-construction properties are unable to pass on such costs to clients with whom they have agreed on prices and signed registered agreements. It is unreasonable to expect a premium reduction. Each stage of the process demonstrates the ongoing scarcity of reliable data on property ownership and valuation. Under Section 16 of the RERA Act, promoters are explicitly mandated to bear the responsibility of paying insurance premiums and charges. This provision ensures that adequate insurance coverage is maintained throughout the construction and postconstruction phases, safeguarding the interests of the allottees and the project itself. The insurance typically covers various aspects, including structural defects, workmanship, and other unforeseen risks. Upon the formation of the association of allottees, Section 16 further stipulates that all documents pertaining to insurance shall be handed over to the association. This transfer of documents ensures a smooth transition of responsibility from the promoter to the association, placing the ongoing management and oversight of insurance matters directly into the hands of the homeowners. The formation of an association of allottees is a pivotal moment in the life of a real estate project. It marks the transition from the promoter’s direct involvement to a community-driven approach where homeowners actively participate in the management and decisionmaking processes. By handing over all relevant insurance documents to the association, the promoter empowers the collective body of homeowners to take charge of their community’s welfare. The provisions outlined in Section 16 of the RERA Act regarding insurance premiums and charges underscore the importance of protecting the interests of homebuyers. By placing the onus on promoters to pay for insurance and subsequently transferring these responsibilities to the association of allottees, the Act not only safeguards individual investments but also fosters a sense of community ownership and responsibility within the real estate sector. This legal framework contributes to building trust and confidence among homebuyers, thereby promoting a more transparent and accountable real estate industry. ❉ ❉ ❉

664 Ahmedabad Chartered Accountant Journal January, 2024 Summary: IMF in a report gave fairly optimistic outlook for Indian Economy. (COP28, the 28th annual United Nations (UN) climate meeting, was held in Dubai, where governments of 200 nations discussed how to limit and prepare for future climate change.) For the first time all countries have agreed to transit away from Fossil fuels in an orderly manner to reach net zero by 2050. Israel – Gaza war continued amid growing international pressure for a humanitarian cease fire. Key M&A and PE Deals include of Max Hospital acquiring Sahara Hospital, Lucknow at an Enterprise Value of Rs. 940 Crores and PlasmaGen Biosciences Raising $27 Million in Series C round. Economic Update: - The IMF in annual Article IV consultation report acknowledged India’s effective inflation management amidst global commodity price hikes through extensive government interventions. It has projected a balanced outlook for India’s economic growth, citing an upward revision in the mediumterm potential growth rate at 6.3 percent, from the 6 percent estimated earlier. However, the Indian government expressed greater optimism, estimating a potential growth rate of 7-8 percent. - IMF gave a fairly optimistic outlook for India’s economy, saying it has the potential to grow faster than the fund’s forecast of 6.3% in the current and next fiscal years if the government undertakes key structural reforms. - IMF however expressed concerns about the longterm sustainability of India’s debts, stating that that general government debt may exceed 100 percent of India’s gross domestic product (GDP) in the near future.The need for significant investment towards climate change targets was also stated. CA. Karan Vora [email protected] COP-28: - COP28, held in Dubai, was the 28th annual United Nations (UN) climate meeting, where governments discussed how to limit and prepare for future climate change. COP28 came at an important time for the key target to limit long term global temperature rise to 1.5C. - COP28 began on controversial note as it was held in UAE, one of the major fossil fuel producer and presided by Sultan Al-Jaber, CEO of one of the state owned oil companies. Allegations of green washing on social media were also leveled. - Around 200 nations were represented, including global leaders like Indian PM Narendra Modi, UK PM Rishi Sunak, German Chancellor Olaf Scholz, French President Emmanuel Macron etc. (US president and Chinese president did not attend but countries were heavily represented.)Over 70,000 people were accredited for the summit, with 400,000 more granted access to the surrounding blue zone. - King Charles gave the opening address, warning that “we are carrying out a vast, frightening experiment of changing every ecological condition, all at once, at a pace that far outstrips nature’s ability to cope” - The conference is significant as for the first-time countries agreed on the need to “transition away

Ahmedabad Chartered Accountant Journal January, 2024 665 Capital Markets from fossil fuels in energy systems” “in a just, orderly and equitable manner” to reach net zero by 2050. This is seen as an important recognition that richer countries are expected to move away from coal, oil and gas more quickly. However, it also received criticism because it doesn’t compel countries to take action, and no timescale is specified. - The agreement also includes a global target to triple the global renewable energy by 2030. - There was agreement on the operationalization of the Loss and Damage Fund and its funding arrangements. - The participants of the conference pledged 85 billion dollars to different climate issues and made various pledges. - COP28 however certainly missed on breakthroughs that were expected to reduce emissions by 45% by 2030 and reach net zero by 2050. There is still no consensus on urgent actions like removal of subsidies on petroleum products which account to around half a Trillion dollars and removal of them can go a long way in reaching net zero targets. Israel -GazaCrisis: - Israel – Gaza war continued amid growing international pressure for a humanitarian cease fire. - India on December 13 voted in favor of a resolution in the UN General Assembly (UNGA) that demanded an immediate humanitarian ceasefire in the IsraelHamas conflict and the unconditional release of all hostages. This was the first time India supported such a resolution since the war broke out more than two months ago. - The 193-member UN General Assembly overwhelmingly adopted the resolution at an emergency special session, with 153 nations voting in its favor, 10 voting against and 23 abstentions. Secondary Market: - The Indian stock markets continued their rally with substantial gains at Nifty 50 and Sensex gaining 7.94% at 21,731.40 and 7.84% at 72,240.26 respectively. - The Nifty Index finished the year with a gain of 20.03%, experiencing a remarkable surge of more than 65% in the final months of November and December. Notably, in December alone, the index recorded a substantial gain of 7.94%, marking its best December performance in the last two decades. - The Indian stock market has been up by around 25 percent this year, crossing the overall market valuation of $4.16 trillion. - India is the fifth largest economy in the world, and its stock market valuation is currently only behind US, China, Japan and Hong Kong, joining the ranks of superpower in the financial world. - The market rally was propelled by significant retail participation and sustained foreign portfolio investor (FPI) inflows, bolstered by improved global sentiment and strong domestic economic growth. - The decision by the US Federal Reserve to pause its rate hike trajectory and signal potential rate cuts in 2024 has significantly boosted investors’ confidence. This led to a shift in investor preference from bonds to equities. Further, the drop in key commodities such as crude oil prices further contributed to the market’s buoyancy. Equity Markets Nov - 23 Dec-23 % Change BSE Sensex 66,988.44 72,240.26 7.84% Nifty 50 20,133.15 21,731.40 7.94% BSE 500 28,442.43 30,720.28 8.01% BSE Healthcare 30,374.52 31,549.21 3.87% BSE IT 33,227.34 36,011.09 8.38% BSE FMCG 19,157.37 20,467.98 6.84% BSE Metal 24,239.95 26,990.69 11.35%

666 Ahmedabad Chartered Accountant Journal January, 2024 Primary Market Update: There were 12 main board IPO in December, 2023 of Innova Captab Limited, Azad Engineering Limited, Happy Forgings Limited, Credo Brands Marketing Limited, RBZ Jewellers Limited, Suraj Estate Developers Limited, Motisons Jewellers Limited, Muthoot Microfin Limited, Inox India Limited, DOMS Industries Limited, India Shelter Finance Corporation Limited and Flair Writing Industries Limited against 10 IPOs in November, 2023. There were 07 SME IPOs inDecember,2023 as against 05 SME IPOs in November, 2023. India’s IPO market is poised for continued growth, driven by a combination of factors, including a resilient economy, investor confidence, a supportive regulatory environment, and the rise of tech-focused companies. As India’s financial markets mature and its economy expands, the IPO market will play an increasingly crucial role in fueling the nation’s growth and creating wealth for investors. DOMS Industries Limited: About the Incorporated in 2005, DOMS Industries Company stands as a prominent entity in the stationery and art product sector. The company has cultivated a global footprint, spanning across more than 40 countries. According to the Technopak Report, DOMS Industries is the secondbiggest player in the Indian market for branded “stationery and art” products, holding a market share of about 12% by value as of fiscal 2023. The net profit increased by more than 5 Times to Rs 95.8 Crore for FY23 with revenue increasing to Rs 1,212 Crore during the same period. Funds The net proceeds from the new issue Utilization will be used, in part, to pay for general corporate purposes and the cost of building a new manufacturing facility to increase production capacity for a variety of writing instruments, watercolor pens, markers and highlighters. IPO DOMS Industries IPO comprises a fresh Perfor- issue of shares of up to Rs. 350 Crore mance and an offer for sale (OFS) of equity shares with face value of Rs. 10 each by a promoter and others aggregating up to Rs. 850 Crore. DOMS Industries IPO issue size is Rs. 1,200 Crore. The IPO was overall subscribed 93.52 times, heavy bidding from qualified institutional bidders (QIBs), whose quota was booked 115.97 times. DOMS stock was listed at Rs 1400 as against an offer price of Rs 790 by listing at nearly 80% premium over the issue price. Capital Markets

Ahmedabad Chartered Accountant Journal January, 2024 667 Funds Mobilization by Corporates (Rs. In Crore) Particulars Oct-23 Nov-23 I. Equity Issues 17,740 27,684 a. IPOs (i+ii) 5,158 13,431 i. Main Board 4,478 13,016 ii. SME Platform 680 415 b. FPOs 0 0 c. Equity Rights Issues 130 112 d. QIPs/IPPs 7,609 11,364 e. Preferential Allotments 4,843 2,778 II. Debt Issues 36,231 71,357 a. Debt Public Issues 2,972 264 b. Private Placement of Debt 33,259 71,357 Total Funds Mobilized (I+II) 53,971 99,305 Mergers and Acquisitions (M&A) and Private Equity (PE) key deals: M&A: Max Healthcare acquires Sahara Hospital, Lucknow at an Enterprise Value of Rs 940 Crores. Transaction: - Max Health said it was acquiring a 100% stake in 550 Bedded Sahara Hospital at an enterprise value of Rs 940 Crore, representing an enterprise value/ sales multiple of 4.7 times. - Crosslay Remedies Limited, a wholly owned subsidiary of Max Healthcare Institute Limited, entered into a Share Purchase Agreement to purchase of 100% stake in Starlit Medical Centre Private Limited through Business Transfer Agreement with Sahara Hospital. Starlit had entered into a Business Transfer Agreement with Sahara India Medical Institute Ltd for purchase of Healthcare Undertaking consisting of Sahara Hospital, Lucknow, on slump sale basis. About Max Healthcare Institute Limited: - Max Healthcare Institute Limited (MHIL) is one of India’s largest hospital chain operators. MHIL is concentrated in North India consisting of a network of 17 healthcare facilities, out of which eight hospitals and four centers are located in Delhi. - Max Healthcare also operates home care and pathology business under the brands Max@Home and Max@Labs. - The present amalgamated company was formed subsequent to the acquisition of 49.7% stake in erstwhile Max Healthcare Institute Limited by Radiant Life Care Pvt. Ltd. and the amalgamation of Max Healthcare with Radiant thereafter. The amalgamated entity assumed the name Max Healthcare Institute limited. Prior to the amalgamation, Radiant was led and promoted by Abhay Soi. About Sahara Hospital: - Sahara Hospital is a tertiary care NABL and NABH accredited hospital, providing integrated healthcare services with availability of all super specialties and diagnostics facilities under one roof. - Current operational bed capacity is 250 beds. The hospital is situated on a land parcel of 27 acres at Gomti Nagar, Lucknow and has a built-up area of 82,673 sq.mt. Spread across 17 floors. - Sahara Hospital also has a nursing college on the same premise with annua intake of 100+ students. - Hospital currently serves 2 lakh patients every year and has a renowned centre of excellencefor Neurosciences.FY24 Revenue run rate of Hospital is around INR 200 Cr. Rationale: - Hospital has a potential to quickly ramp up beds in existing building and expand medical programs like Oncology, Transplants, Robotics, etc. - This acquisition marks Max Healthcare’s entry into Lucknow, one of the fastest growing cities of Uttar Pradesh. Lucknow caters to demand from cities like Kanpur, Allahabad, Varansi from Uttrapradesh and also parts of Bihar. Max’s entry in Lucknow is following successful entry of Apollo and Medanta Hospital in Lucknow market. - Max Healthcare will bring high end medical programmes such as Oncology, Organ Transplants Capital Markets

668 Ahmedabad Chartered Accountant Journal January, 2024 and also strengthen the existing programmes like Orthopedics, Cardiac Sciences, Neurosciences, Renal Sciences, etc. - Abhay Soi, chairman and MD of Max, said that the acquisition was in line with Max’s strategy to enter new Tier I / II cities which have developed healthcare service ecosystem. He expected to quickly improve operating and financial performance of Sahara Hospitals based on Max’s track record of successful post-merger integration. - In the September quarter, Max’s average revenue per occupied bed (ARPOB) improved by 13% to Rs. 74,600 as against Rs. 66,000 in the same period last year. - Max’s revenue in FY23 was around Rs. 4560 Crore, up from Rs. 3950 Crore in FY22, with robust operating margin of 27% in FY23 as against 24% in FY22. Company is one of the best valued Hospital chain with stock currently valued at EV/Ebitda multiple of over 45. PE: PlasmaGen Biosciences Raises $27 Million in Series C round. Transaction: - Plasmagen Biosciences, a biopharmaceutical company focused on blood plasma-derived pharmaceutical products for India and emerging markets, has raised INR 225 crores, led by UK based Artian Investments, prominent public market investor Ashish Kacholia, pharmaceutical entrepreneurs Anurag Bagaria and Dushyant Patel and other notable HNI investors along with continued participation from Eight Road Ventures and F-Prime Capital. - With this round, the Bengaluru based company has raised close to INR 400 crores in total so far and plans to use the fresh capital to expand its presence internationally, develop products and fund working capital requirements. About PlasmaGen Biosciencess Pvt. Ltd.: - Incorporated in 2010, Plasmagen operates in the niche segment of plasma therapy, where in the company trades and manufactures human plasma derived therapeutic proteins products like Immunoglobulin, Albumin and Coagulation factors, used in the plasma protein therapy. - The company is promoted by Vinod Nahar, Bhawarlal Jain, Rahul Jain and associates having a shareholding of 41.15% followed by FIL Capital Investments (Mauritius) II Limited (Fidelity group) having 52.99% as on March 31, 2022, before latest funding round. About Eight Road Ventures & F-Prime Capital: - Eight Roads Ventures is a global venture capital firm that invests in technology and healthcare companies. - Eight Roads Ventures is backed by Fidelity and manages $11 billion in assets across offices in the UK, China, India, Japan, and the US. The portfolio includes of 401 companies, including 18 unicorns like AppsFlyer, BYJU’S, and Fireblocks. - Founded in 1969, F-Prime Capital is a venture capital firm based in Cambridge, Massachusetts. The firm seeks to invest in seed-stage, early-stage, and later-stage companies. Rationale: - Founded in 2010, the Bengaluru-based company has raised INR 400 Crores in total so far and plans to use the fresh capital to expand its presence internationally, develop products and fund working capital requirements. - Earlier this year, the company inaugurated its new manufacturing facility for blood plasma-derived protein therapeutics in Kolar, Bengaluru – India’s first plasma manufacturing facility by a pure-play, end-to-end blood-plasma Company and only the fifth plasma fractionation facility in India. - Vinod Nahar, Founder & Managing Director, PlasmaGen Biosciences said that the latest funding strengthens company’s position as market leaders in Indian biopharmaceutical company as PlasmaGen continues to improve the accessibility of blood-plasma derived products for patients in India and emerging countries - The Revenue from Operations of the company increased to Rs 103.50 Crore in FY22 from Rs. 87.28 Crore in Fy21, however the firm remained EBITDA negative till at least September 2023. Acknowledgements: RBI Bulletin (www.bulletin.rbi.org.in), SEBI (www.sebi.gov.in), NSE (www.nseindia.com), BSE (www.bseindia.com) ❉ ❉ ❉ Capital Markets

Ahmedabad Chartered Accountant Journal January, 2024 669 IND AS 109 – FINANCIAL INSTRUMENTS - ANNUAL REPORT -2022-2023 RELIANCE INDUSTRIES LIMITED i. Financial Assets A. Initial Recognition and Measurement All financial assets are initially recognised at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets, which are not at Fair Value through Profit or Loss, are adjusted to the fair value on initial recognition. Purchase and sale of financial assets are recognised using trade date accounting. However, trade receivables that do not contain a significant financing component are measured at transaction price. B. Subsequent Measurement a) Financial assets measured at Amortised Cost (AC) A financial asset is measured at Amortised Cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise to cash flows on specified dates that represent solely payments of principal and interest on the principal amount outstanding. b) Financial Assets measured at Fair Value Through Other Comprehensive Income (FVTOCI) A financial asset is measured at FVTOCI if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that represent solely payments of principal and interest on the principal amount outstanding. c) Financial Assets measured at Fair Value Through Profit or Loss (FVTPL) A financial asset which is not classified in any of the above categories are measured at FVTPL. Financial assets are reclassified subsequent to their recognition, if the Group changes its business model for managing those financial assets. Changes in business model are made and applied prospectively from the reclassification date following the changes in business model in accordance with principles laid down under Ind AS 109 – Financial Instruments. C. Other Equity Investments All other equity investments are measured at fair value, with value changes recognised in Consolidated Statement of Profit and Loss, except for those equity investments for which the Group has elected to present the value changes in ‘Other Comprehensive Income’. CA. Pamil H. Shah [email protected] From Published Accounts

670 Ahmedabad Chartered Accountant Journal January, 2024 However, dividend on such equity investments is recognised in Statement of Profit and Loss when the Company’s right to receive payment is established. D. Impairment of Financial Assets In accordance with Ind AS 109, the Group uses ‘Expected Credit Loss’ (ECL) model, for evaluating impairment of financial assets other than those measured at Fair Value Through Profit and Loss (FVTPL). Expected Credit Losses are measured through a loss allowance at an amount equal to: The 12-months expected credit losses (expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date); orFull lifetime expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument). For trade receivables, the Group applies ‘simplified approach’ which requires expected lifetime losses to be recognised from initial recognition of the receivables. The Group uses historical default rates to determine impairment loss on the portfolio of trade receivables. At every reporting date these historical default rates are reviewed and changes in the forward-looking estimates are analysed. For other assets, the Group uses 12 month Expected Credit Loss to provide for impairment loss where there is no significant increase in credit risk. If there is significant increase in credit risk full lifetime Expected Credit Loss is used. ii. Financial Liabilities A. Initial Recognition and Measurement All financial liabilities are recognised at fair value and in case of borrowings, net of From Published Accounts directly attributable cost. Fees of recurring nature are directly recognised in the Consolidated Statement of Profit and Loss as finance cost. B. Subsequent Measurement Financial Liabilities are carried at amortised cost using the effective interest method. For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments. iii. Derivative Financial Instruments and Hedge Accounting The Group uses various derivative financial instruments such as interest rate swaps, currency swaps, forwards and options and commodity contracts to mitigate the risk of changes in interest rates, exchange rates and commodity prices. At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which the Group wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are also subsequently measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. Any gains or losses arising from changes in the fair value of derivatives are taken directly to Consolidated Statement of Profit and Loss, except for the effective portion of cash flow hedge which is recognised in Other Comprehensive Income and later to Consolidated Statement of Profit and Loss, when the hedged item affects profit or loss or is treated as basis adjustment if a hedged forecast transaction subsequently results in the recognition of a non-financial asset or non-financial liability.

Ahmedabad Chartered Accountant Journal January, 2024 671 Hedges that meet the criteria for hedge accounting are accounted for as follows: A. Cash Flow Hedge The Group designates derivative contracts or non-derivative financial assets/liabilities as hedging instruments to mitigate the risk of movement in interest rates and foreign exchange rates for foreign exchange exposure on highly probable future cash flows attributable to a recognised asset or liability or forecast cash transactions. When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of the derivative is recognised in the cash flow hedging reserve being part of Other Comprehensive Income. Any ineffective portion of changes in the fair value of the derivative is recognised immediately in the Consolidated Statement of Profit and Loss. If the hedging relationship no longer meets the criteria for hedge accounting, then hedge accounting is discontinued prospectively. If the hedging instrument expires or is sold/terminated or exercised, the cumulative gain or loss on the hedging instrument recognised in cash flow hedging reserve till the period the hedge was effective remains in cash flow hedging reserve until the underlying transaction occurs. The cumulative gain or loss previously recognised in the cash flow hedging reserve is transferred to the Consolidated Statement of Profit and Loss upon the occurrence of the underlying transaction. If the forecasted transaction is no longer expected to occur, then the amount accumulated in cash flow hedging reserve is reclassified in the Consolidated Statement of Profit and Loss. B. Fair Value Hedge The Group designates derivative contracts or non-derivative financial assets/liabilities as From Published Accounts hedging instruments to mitigate the risk of change in fair value of hedged item due to movement in interest rates, foreign exchange rates and commodity prices. Changes in the fair value of hedging instruments and hedged items that are designated and qualify as fair value hedges are recorded in the Consolidated Statement of Profit and Loss. If the hedging relationship no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for which the effective interest method is used is amortised to Consolidated Statement of Profit and Loss over the period of maturity. iv. Derecognition of Financial Instruments The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition under Ind AS 109 – Financial Instruments. A financial liability (or a part of a financial liability) is derecognised from the Group’s Balance Sheet when the obligation specified in the contract is discharged or cancelled or expires. v. Offsetting Financial assets and financial liabilities are offset and the net amount is presented in the Balance Sheet when, and only when, the Group has a legally enforceable right to set off the amount and it intends, either to settle them on a net basis or to realise the asset and settle the liability simultaneously. ❉ ❉ ❉

672 Ahmedabad Chartered Accountant Journal January, 2024 CA. Kunal A. Shah [email protected] From the Government CA. Ashwin H. Shah [email protected] Taxpayers are therefore advised to promptly furnish their bank account details, who have not provided it so far if 30 Days period is shortly going to expire to avoid disruption in business activities and the subsequent suspension of GSTIN. A new functionality is being developed with the following features and will be deployed in near future:- 1. Failure to furnish the bank account in the stipulated time: It would result into following: a) Taxpayer Registration would get suspended after 30 days and intimation in FORM REG-31 will be issued to the Taxpayer. b) Get the Taxpayer debarred from filing any further GSTR-1/IFF. 2. Revocation of Suspension: If the taxpayer updates their bank account details in response to the intimation in FORM REG-31, the suspension will be automatically revoked. 3. Cancellation of Registration: If the bank account details are not updated even after 30 days of issuance of FORM REG-31, the registration after suspension may also be taken up for cancellation process by the Officer. Taxpayers are requested to take immediate action to provide the necessary information and avoid any adverse consequences. (GST updates dated 23/01/2024) INCOME TAX 1) Detailed circular explaining the provisions of Income Tax Act, 2023 (For full text refer Circular No 1, 23/01/2024) 2) ITR 6 for FY 2023-2024 has been substituted in the Income-tax Rules, 1962, in Appendix-II ( For full form refer Notification No 16, dated 24/01/2024) ❉ ❉ ❉ GOODS AND SERVICE TAX 1) Advisory on Payment through Credit Card (CC)/ Debit Card (DC) and Unified Payments Interface (UPI) To facilitate the taxpayer registered under GST with more methods of payment, two new facilities of payment have now been provided under epayment in addition to net-banking. The two new methods are Cards and Unified Payments Interface (UPI). Cards facility includes Credit Card (CC) and Debit Card (DC) namely Master card, Visa, RuPay, Diners (CC only) issued by any Indian bank. Please GST portal for the complete advisory. (GST updates dated 19/01/2024) 2) Advisory on introduction of new Tables 14 & 15 in GSTR-1 As per Notification No. 26/2022 – Central Tax dated 26th December 2022 two new tables Table 14 and Table 15 were added in GSTR-1 to capture the details of the supplies made through e-commerce operators (ECO) on which e-commerce operators are liable to collect tax under section 52 of the Act or liable to pay tax u/s 9(5). These tables have now been made live on the GST common portal. These two new tables will be available in GSTR1/IFF from January-2024 tax periods onwards. (GST updates dated 15/01/2024) 3) Advisory for furnishing bank account details by registered taxpayers under Rule 10A of the Central Goods and Services Tax Rules, 2017. Mandatory Bank Account Details Submission as per law: All Registered Taxpayers are required under the provisions of CGST Act, 2017 and the corresponding Rules framed there under to furnish details of their bank account/s within 30 days of the grant of registration or before the due date of filing GSTR-1/IFF, whichever is earlier.

Ahmedabad Chartered Accountant Journal January, 2024 673 Data Protection in the Digital Era: Unpacking the DPDP Act for Businesses and Individuals Have you ever heard what the most common type of data leaked on the dark web is? Now, the point is, what actually the dark web is? The dark web is a part of the internet where private computer networks can communicate and conduct business anonymously, without revealing identifying information like the user’s location. It is a separate world on the web where personal information, important CA. Darshil Surana [email protected] financial data, and user credentials are often leaked. Such leakage, which is sometimes inestimable in monetary terms, underscores the importance of digital data privacy. In response to this, and considering regulations like the GDPR, reputational and business risk requirement, transparent organization future the Indian government has introduced the Digital Personal Data Protection Act, 2023 (DPDP Act, 2023). This 21- page act is concise, clear, and easy to understand, featuring simple examples integrated within the act itself. Recent Indian Incidents of Data Breaches: An Overview Name of Breach Description of Breach Affected Sector Source of Information 2016 Debit Card Malware compromised 3.2 million Banking https://thewire.in/banking/debit-card-breach-indiaData Breach debit cards from major banks. banking SBI Data Breach (2019) Exposed customer data like partial Banking https://www.businesstoday.in/technology/story/sbibank account no, bank balances, data-leak-what-happened-sbi-data-breach-financialtransactions details etc. from an data-168220-2019-02-01 unprotected server. Justdial Data Breach Leaked details of nearly 100 million Technology https://www.indiatoday.in/technology/news/story/ (2019) users due to unprotected API. justdial-data-breach-personal-data-of-over-100- million-users-exposed-online-1504929-2019-04-18 Kudankulam Nuclear Malware attack collecting information, Energy https://economictimes.indiatimes.com/news/politicsPower Plant Breach not affecting critical systems. and-nation/breach-at-kudankulam-nuclear-plant-may- (2019) have-gone-undetected-for-over-six-months-group-ib/ articleshow/79412969.cms?from=mdr BigBasket Data Breach Leaked 20 million User details such E-Commerce https://www.indiatoday.in/technology/features/story/ (2020) as Full Name, E-Mail IDs, Contact bigbasket-confirms-data-breach-of-2-crore-bb-usersNumbers, Address, DOB etc. here-is-what-we-know-so-far-1739342-2020-11-09 Unacademy Data Around 20 million User data such as Education https://www.theweek.in/news/sci-tech/2020/05/07/ Breach (2020) User Name, Last Login Details, unacademy-hacked-data-of-20-mn-users-up-forJoining Date, First/Last Name, sale.html E-Mail IDs was leaked Dominos India Data Data of 18 crore orders leaked and Food Service https://www.firstpost.com/tech/news-analysis/dominosBreach (2021) was up for sale on dark web. india-data-breach-name-location-mobile-numberemail-of-18-crore-orders-up-for-sale-on-dark-web9650591.html ICMR (2023) About 815 million Indian Citizen Healthcare https://economictimes.indiatimes.com/tech/technology/ Aadhaar-Passport details were on icmr-data-leak-reveals-personal-info-of-81-5-crsale on Dark Web indians-claims-report-cbi-likely-to-probe-the-breach/ videoshow/104865182.cms?from=mdr Zivame (2023) About 1.5 million female customers E-Commerce https://www.livemint.com/news/india/zivame-datadata such as Name, Address, hack-indian-women-customers-details-up-for-saleContact details was on sale on says-report-11684772115029.html non-public domain.

674 Ahmedabad Chartered Accountant Journal January, 2024 Considering above biggest data breaches in India, it was almost necessary and compulsion to protect the data of the users. To protect the users on how their data can be used by the data Fiduciary, a consent mechanism is being introduced in the act in which a user has to give a consent to a data Fiduciary and data processor regarding use of personal data. Also, a consent withdrawal mechanism is being introduced once the need for data processing gets over. So, compliances of DPDP Act are required in each and every sector where personal information is stored digitally. From finance to education, insurance to airlines, each industry faces unique cyber security challenges. In the energy and e-commerce sectors, safeguarding sensitive data is crucial, just as it is in banking, government, and food services and many more sectors. Let’s decode the key takeaways form DPDP Act,2023: Definitions are always heart of the act and key definitions of the act are stated as under: 1. “digital personal data” means personal data in digital form. 2. “personal data” means any data about an individual who is identifiable by or in relation to such data. 3. “personal data breach” means any unauthorised processing of personal data or accidental disclosure, acquisition, sharing, use, alteration, destruction or loss of access to personal data, that compromises the confidentiality, integrity or availability of personal data. 4. “Data Fiduciary” means any person who alone or in conjunction with other persons determines the purpose and means of processing of personal data. 5. “Data Principal” means the individual to whom the personal data relates and where such individual is— (i) a child, includes the parents or lawful guardian of such a child; (ii) a person with disability, includes her lawful guardian, acting on her behalf; 6. “Data Processor” means any person who processes personal data on behalf of a Data Fiduciary. The DPDP Act’s applicability and scope: The DPDP Act,2023 applies to the processing of digital personal data within the territory of India, whether the personal data is collected in digital form or in nondigital form and subsequently digitized. Additionally, it applies to the processing of digital personal data outside the territory of India if such processing is connected to any activity related to offering goods or services to data principals within the territory of India. The act does not apply to personal data processed by an individual for personal or domestic purposes, nor does it apply to personal data that is voluntarily made publicly available by the data principal themselves such as through blogging personal views on social media or by any other individual obligated by law to make such data publicly accessible. Consent: Providing a consent for access of data by the data principal is the backbone of the DPDP Act, 2023. Without a consent, the data fiduciary can’t access the data of Data Principal. Such a consent must have been sought by the data principal by way of Notice to the Data Principal. It should be clear and unconditional and which should contain the purpose for which it is being sought by the Data Fiduciary. A consent mechanism is to be established by the data fiduciary in compliance of this Act. Consent shall be accompanied by Notice: Every request made to a Data Principal for consent shall be accompanied or preceded by a notice given by the Data Fiduciary to the Data Principal, informing them of the personal data and its purpose, the manner in which they may exercise their rights, and the procedure for making a complaint to the Board, as prescribed. IT Corner

Ahmedabad Chartered Accountant Journal January, 2024 675 Let’s understand this through an example: To fulfil the Know-Your-Customer requirements mandated by law for opening a bank account, a live, video-based customer identification process is conducted. In this process, the data fiduciary is required to describe the personal data and the purpose of its processing to the Data Principal. Pre-Act Consent: Providing Notice Post-Act Where a Data Principal has given her consent for the processing of her personal data before the commencement date of the Act, in that case, the Data Fiduciary should give information to the Data Principal with information of use of such personal data by them through In App Notification, E-Mail or other means. Let’s understand this through an example: If a person has given her consent to the processing of her personal data for an online shopping app or website before the commencement of this Act; upon the Act’s commencement, such shopping app or website shall, as soon as practicable, provide information describing the personal data and the purpose of its processing through email, in-app notification, or other effective methods. Invalid Waiver of Rights in Consent Any part of consent that breaks the law or infringes upon the Act or its rules is not valid. Let’s understand this through an example: An individual purchases an insurance policy through the mobile app or website of Company Y, an insurer. In the process, she consents to Company Y for processing her personal data for policy issuance purposes. Additionally, she agrees to waive her right to file a complaint with the Data Protection Board of India. However, such waiver of her complaint rights is deemed invalid under this act. Certain legitimate uses: A Data Fiduciary may process the personal data of a Data Principal for specified purposes.When the Data Principal has voluntarily provided their personal data to the Data Fiduciary for a specific purpose, and has not indicated to the Data Fiduciary that they do not consent to the use of their personal data. For example, when purchasing an item, one voluntarily provides personal data to get a receipt sent via SMS to their mobile phone, then in that case, the seller may process the personal data for the purpose of sending the receipt. Protocol for Data Erasure A Data Fiduciary shall, unless retention is necessary for compliance with any law currently in effect, erase personal data when the Data Principal withdraws their consent or as soon specified purpose is no longer being served, whichever occurs first. Additionally, the Data Fiduciary must ensure that its Data Processor erases any personal data that was provided for processing. For example, if you are using an online marketplace and provided your consent for the processing of your personal data to sell your used car, the online marketplace, upon concluding the sale, should no longer retain your personal data. Penalties: When imposing a monetary penalty specified in the Schedule, the person shall be given a opportunity to be heard as a part of the natural justice. The amount of monetary penalty is to be determined considering the following factors: - The nature, gravity, and duration of the breach. - The type and nature of the personal data affected by the breach. - Repetitive nature of the breach. - Whether the person realized a gain or avoided any loss as a result of the breach. - Any action taken by the person to mitigate the effects and consequences of the breach, including the timeliness and effectiveness of such action. - Whether the monetary penalty is proportionate and effective, considering the need to secure observance of and deter breach of the provisions of this Act. IT Corner

676 Ahmedabad Chartered Accountant Journal January, 2024 - The likely impact of the imposition of the monetary penalty on the person. All sums realized from penalties imposed by the Board under this Act shall be credited to the Consolidated Fund of India. Scale of Penalties: From 10,000 to 250 Crore Rupees - Penalty up to 250 crore rupees for breaching the obligation of Data Fiduciary to implement reasonable security safeguards to prevent personal data breaches in the event of a breach. - Penalty up to 200 crore rupees for failing to notify the Board or the affected Data Principal of a personal data breach, or for failing to comply with additional obligations regarding children. - Penalty up to 150 crorerupees for breaching additional obligations of Significant Data Fiduciaries. - Penalty up to 50 crore rupees for breaching any other provision of this Act or the rules made thereunder. - Penalty up to 10,000 rupees for breaching the duties of a data principal. Way Forward for Businesses and Pro-active measures: Many businesses will encounter challenges in complying with the DPDP Act, 2023 due to a lack of technical knowledge, disorganized IT systems, and data flow and data organization. Specifically, MSMEs will face difficulties in modernizing their IT infrastructure to align with this act’s compliance requirements. Some key considerations as stated below will be useful in complying the requirement of this act: 1. Evaluation of Existing Compliance status 2. Data Impact Assessments 3. Analysis of Data Flow in the organisation 4. Rejig of Data Access Controls within the organisation 5. Ongoing Employee Training and Awareness on Data Privacy 6. To consider various encryption methods while securing personal data of the user 7. Adjusting Service Level Agreements (SLAs) to Ensure Alignment with Compliance Requirements in Relation to Data Processors (If any) 8. Establishing a Consent Framework and Designating a Consent Manager 9. Implementation of Data Breach Response Mechanism Certainly, the above considerations mentioned are merely illustrative, and it’s essential to account for additional, significant factors tailored to the unique needs of the organization. Conclusion: In a digital age marked by significant data breaches and privacy concerns in India, the introduction of the Digital Personal Data Protection Act, 2023 (The DPDP Act, 2023) by the Indian government represents a positive and proactive step towards safeguarding individuals’ personal information thereby boosting confidence in Individual with respect to privacy of a personal data. This comprehensive legislation, with its emphasis on consent, transparency, and stringent penalties for non-compliance, aims to infuse trust and accountability in the digital ecosystem. ❉ ❉ ❉ IT Corner

Ahmedabad Chartered Accountant Journal January, 2024 677 CA. Mayur H. Modha Hon. Secretary CA. Prakash B. Nandola Hon. Secretary Association News 1. Glimpses of Past Events. Day & Date Program Speaker Venue Saturday 6th Lecture on Transaction Structuring in CA Malay Deliwala CAAA Office, 201, January 2024 Merger & Acquisition 2nd Floor Darshak Building Monday 8th 54th Residential Refresher Course CA Sunil Talati Hotel Hyatt Regency January 2024, to Nepal-The Land of Himalayas. Kathmandu, Nepal Friday 12th Hotel Hyatt Regency Kathmandu, Nepal January, 2024 Saturday 20th 3rd Brain Trust Meeting on CA. Pradip Modi ATMA Hall January, 2024 Navigating Taxation for Ashram Road, Non Resident Indians (NRIs) Ahmedabad 2. Forthcoming Event Day & Date Program Speaker Venue Friday 9th Lecture on Intricacies of New Provisions CA Advocate Mohit Balani Online Mode February, 2024 u/s. 43B(h) of I. T. Act for MSE Sunday 11th Cricket Match C A Association v/s — GSFC Cricket February, 2024 Baroda Branch of WIRC of ICAI Ground, Fertilizer Nagar, GSFC, Sursi, Vadodara, Gujarat 391320 Saturday 24th Box Cricket Tournament — To be announced February, 2024

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680 Ahmedabad Chartered Accountant Journal January, 2024 Across 1. COP28, the 28th annual United Nations (UN) climate meeting, was held in _______ where governments of 200 nations discussed how to limit and prepare for future climate change. 2. As per section 135(1) of the company’s act 2013, CSR is applicable to every company whose net profit is___________ crore or more during the immediately preceding financial year. 3. The powers u/s 281B of the Income Tax Act, 1961, are in the nature of _______ to the Assessing Officer before the judgment and should be exercised in appropriate cases for the proper reasons. ACAJ Crossword Contest - 32 ❉ ❉ ❉ 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 25-02-2024. 5. The decision of Journal Committee shall be final and binding. Prize Courtesy Winners of ACAJ Crossword Contest – 31 1. CA. Shailesh Shah 2. CA. Keyur Shah ACAJ Crossword Contest 31 - Solution Across: Down: 1. Funds 4. MoyeMoye 2. SeventyTwo 5. Three 3. Donation 6. Consideration Down 4. Ram Rajya is cited even today as an example of good ____________. 5. Section 2(59) of CGST Act, ____________ means any goods other than capital goods used or intended to be used by a supplier in the course or furtherance of business. 6. Section 16 of the RERA Act, requires real estate developers to obtain ____________ against structural defects and work-related issues for a specified period after the completion of a project. 4. 1. 6. 5. 2. 3.