Ahmedabad Chartered Accountant Journal June, 2023 173 1) Rent free accommodation provided by partner to partnership firm is liable to GST TN/AAR/R/2022/03 Dated 31st January 2022. SHANMUGA DURAI Facts: - The petitioner, Chennai-based Shanmuga Durai is the Managing Partner of a partnership firm who owns individual properties. The firm in which he is a partner is engaged in businesses activities at one of the premises without paying rent. In his application, he mentioned that under the Income Tax Act the property he uses for the business does not attract deeming provision for rent income. He asks for the ruling as to similar footing and position holds good under GST Laws. - The interpretation of law as referred to in Schedule I of the GST act which includes activities to be treated as supply even if made without consideration. The applicant has stated that as per Sr No 2 of the Schedule No 2 of the Schedule of Supply of goods and services or both between related persons or between distinct persons as specified in Sec 25, when made in the course of furtherance of business, it is to be treated as Supply. However, in their case the applicant as a partner has not done any furtherance of business. Applicant has stated that he has not done anything in relation to business carried out by partnership firm to mean furtherance of business. The applicant has also referred to press release of CBIC dated 13th July 2017 where in it is clarified that : “Sale of old gold by an individual is for a consideration, it cannot be said to be in the course or furtherance of his business (as selling old gold jewellery is not the business of the said individual), and hence does not qualify as to be supply - He further stated that he has 7 properties, and the properties are used as Godown and retail shops, and the owner is the partner of the partnership firm. He states that he has not charged any rent. The EB Charges and water taxes are paid by the firm – Sarvana Stores. - The Applicant has requested to note that in the FY 2016-17 he did not collect rent from Partnership Firm, namely Sarvana Stores, in which he is the Managing Partner. After introduction of GST the applicant had no intention to collect the rent from own properties listed in (i) above which are being used by his Firm, namely Sarvana Stores. Due to lack of clarity in the GST Law and as a precautionary measure, the applicant has started collecting rent from the above properties including certain properties, which are used by the Firm’s Staff as accommodation at free of Cost. The applicant has stated that he and his Partnership Firm didn’t collect any charges from the employees of the Firm in respect of the properties used by such staff-members. CA. Monish S. Shah [email protected]
174 Ahmedabad Chartered Accountant Journal June, 2023 - The details of the properties used are as under : No.7 /10,12,13, Ranganathan street T.Nagar, Chennai-17 Household Utensils showroom for own firm No.17 /3,174, Ranganathan street, T.Nagar, Chennai-17 Textile Showroom for own Firm No.25/ 12,Ramanathan Street, T.Nagar, Chennai 17 Furniture & Home Appliances showroom for own firm No.8/2,Ramanathan Street, T.Nagar, Chennai 17 Godown f warehouse for home appliances for own firm No.4, Madley Road, T.Nagar, Chennai-17 Furniture & Home Appliances showroom for own firm No.l64/6, North Usman Road, T.Nagar, Chennai 47 Home Appliances Showroom for own firm No.122/75 GN Chetty Road, T.Nagar, Chennai 17 Furniture & Home Appliances showroom for own firm No.7,9 Natesan Street, T.Nagar, Chennai 17 Ladies Hostel for the staffs of own firm No.34, Natesan Street, T.Nagar, Chennai 17 Gents Hostel for the staffs of own firm No. 71, 72Ranganathan street, T.Nagar, Chennai 17 Gents Hostel for the staffs of own firm No. 7, 18/19, Madley Road, T.Nagar, Chennai 17 Gents Hostel for the staffs of own firm Advance Ruling under GST Question Asked: - Whether GST liability arises in respect of property of the partner used by the Partnership Firm to carry out the business by the firm at Free of Rent? - If affirmative then under which section or provision under GST Law is the Partner liable to pay on notional rent? - Is it mandatory to execute Rental deed between partner and Partnership Firm, when there is no furtherance of business for that Partner? - When consideration is not fixed which valuation rule is applicable? Discussion & Findings: - The word Furtherance of Business has not been defined under GST Law, the term business has been defined u/s 2(17) and the term person is defined u/s 2(84) of the GST Act as Follows (84) person includes— (a) an individual; (b) a Hindu Undivided Family; (c) a company; (d) a firm; (e) a Limited Liability Partnership; (f) an association of persons or a body of individuals, whether incorporated or not, in India or outside India; (g) any corporation established by or under any Central Act, State Act or Provincial Act or a Government company as defined in clause (45) of section 2 of the Companies Act, 2013; (h) anybody corporate incorporated by or under the laws of a country outside India; (i) a co-operative society registered under any law relating to cooperative societies; (j) a local authority; (k) Central Government or a State Government; (l) society as defined under the Societies Registration Act, 1860; (m) trust; and (n) every artificial juridical person, not falling within any of the above; Thus, the applicant is a person and the partnership firm in which the applicant is a partner is also a “person” and hence for the purposes of GST, the applicant and the partnership firm are separate persons. - The word business has been defined u/s2(17) of CGST act as under ”business” includes––(a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit;(b) any activity or transaction in connection with or incidental or ancillary to sub-clause (a);(c) any activity or transaction in the nature of sub-clause (a), whether or not there is volume, frequency, continuity or regularity of such transaction;(d) supply or acquisition of goods including capital goods and services in connection with commencement or closure of business;(e) provision by a club, association, society, or any such body (for a
Ahmedabad Chartered Accountant Journal June, 2023 175 subscription or any other consideration) of the facilities or benefits to its members;(f) admission, for a consideration, of persons to any premises;(g) services supplied by a person as the holder of an office which has been accepted by him in the course or furtherance of his trade, profession or vocation;[amd-2018-3] “(h) activities of a race club including by way of totalisator or a license to book maker or activities of a licensed book maker in such club; and;”(i) any activity or transaction under taken by the Central Government, a State Government or any local authority in which they are engaged as public authorities. On combine reading of (a) and (c) above, it is observed that any trade whether or not for pecuniary benefit and irrespective of the volume, frequency, continuity or regularity is considered as Business. The Pecuniary benefit is nothing but the economic benefit accrued to the Service Provider in exchange for the service provided, directly or indirectly and is corelatable with the service provided. In order to qualify, any service as in course of business, should be provided with the intention of deriving economic benefits. If it accrues directly or indirectly, then the same is treated as provision of service against consideration. From the submission, the property of the applicant, who is partner in the firm along with his wife, is used for the business of the partnership firm, in which the applicant is the Managing partner and as per the details of each property stated above. The said properties are found to be rented to the Partnership Firm for carrying on its activities such as Showroom, Godown and Hostels for staff and also observed that EB and water charges are borne by Firm, it is evident from the ledger extracts of the partnership firm pertaining to such payments. For the years after introduction of GST, the applicant has stated to have collected rent from the firm in respect of the properties listed above which has been reflected as Income from Property in the Income tax Returns of the applicant. - The applicant enjoys 2/3rd of the share in the firm. Thus he enjoys major profits of the firm. The properties even if rented free to the partnership firm to a greater share. The properties even if rented free to the Partnership firm would ease the burden of rent to be paid by the firm and thus indirectly reduce the expenditure and consequently increase profit. Thus, the rent free accommodation if so provided by the applicant indirectly accrues as profit for the firm which is enjoyed by the applicant as partner. So the economic benefit accrues to him and hence the supply is in the course of and furtherance of business only. Thus it is evident that the applicant in the course of furtherance of business has rented out the properties for commercial use to the partnership firm which is a separate person. - To decide on the liability of renting and whether it amounts to supply under the GST Law, relevant legal provisions u/s 7 Scope of supply 1) For the purposes of this Act the expression “ Supply” includes (a) all forms of supply of goods or services or both such as Sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business, - The property of the individual being rented out to the Partnership Firm is a supply under the GST Act. However when consideration for such renting is considered, Schedule I of the GST Act, 2017 is Activities to be treated as Supply even if made without consideration. (2) Supply of goods or services or both between related persons or between distinct persons as specified in section 25, when made in the course or furtherance of business. “Related persons” for the purposes of this ACT is defined in the Explanation to Sec 15 as under: (a) Person shall be deemed to be “related persons” if (iv) any person directly or indirectly owns, controls or holds 25% or more of the outstanding voting stock or shares or both of them; (v) One of them directly or indirectly controls the other Applying the above, in the case in hand the applicant is the owner of the properties. He holds 2/3 of the shares of the FIRM. Therefore, the applicant and the firm who are separate persons Advance Ruling under GST
176 Ahmedabad Chartered Accountant Journal June, 2023 are “Related Persons” for the purpose of this Act. Therefore, as per the above schedule, the supply of service between such related persons i.e. the applicant and the partnership firm, when made in the course or furtherance of business, the same is taxable even when rendered without consideration. - The reliance placed on CBIC circular dated 13th July 2017 is not acceptable in the instant case as the furtherance of Business is hereby the direct and continuous accrual of economic benefit to the applicant out of renting these premises. The sale of gold ornaments is one of transaction and there is no indirect accrual of economic benefit other than the sale proceeds. Hence these two transactions cannot be equated. - Further , as per the financial statement and Statement of Income it can be seen that the applicant has been charging rent and though they claim they have done for lack of clarity of GST provisions, the rent so charged cannot be held as notional as the same has been charged in actuality. Thus the rent free accommodation proposed to be provided by the applicant to the partnership firm in which he is major shareholding partner and Managing Partner is a supply without consideration in the course of and furtherance of business and is found taxable u/s 7(1)(a) read with Schedule I of the CGST Act 2017 Now valuation needs to be seen. The relevant provision of Sec 15 are as under Section 15. Value of Taxable Supply.- (I) The value of a supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply. (2) The value of supply shall include- (a) any taxes, duties, cesses, fees and charges levied under any Jaw for the time being in force other than this Act, the State Goods and Services Tax Act, the Union Territory Goods and Services Tax Act and the Goods and Services Tax (Compensation to States) Act, if charged separately by the supplier; (b) any amount that the supplier is liable to pay in relation to such supply but which has been incurred by the recipient of the supply and not included in the price actually paid or payable for the goods or services or both; .. . . (5) Notwithstanding anything contained in sub-section (I) or sub-section (4), the value of such supplies as may be notified by the Government on the recommendations of the Council shall be determined in such manner as may be prescribed. Explanation. - For the purposes of this Act,- (a) persons shall be deemed to be “related persons” if- (iv) any person directly or indirectly owns, controls or holds twenty-five per cent. or more of the outstanding voting stock or shares of both ofthem; (v) one of them directly or indirectly controls the other; Section l 5(1) stipulates the transaction value as the value to be adopted in cases where the supplier and recipient are not related. In the present situation, the applicant and the firm are related persons. Therefore, the value to be adopted is to be arrived at following the Valuation Rules as per Sectionl5 (5) of the Act. The relevant valuation rules are as follows:- Rule 28. Value of supply of goods or services or both between distinct or related persons, other than through an agent.- The value of the supply of goods or services or both between distinct persons as specified in sub section (4) and (5) of section 25 or where the supplier and recipient are related, other than where the supply is made through an agent, shall be the open market value of such supply; (b) if the open market value is not available, be the value of supply of goods or services of like kind and quality; (c) if the value is not determinable under clause (a) or (b), be the value as determined by the application of rule 30 or rule 31, in that order: From the above, it is observed that where the supply is between related persons, the value of such supply shall be the open market value of such supply. Where the open market value is not available, the value of supply of goods or services Advance Ruling under GST
Ahmedabad Chartered Accountant Journal June, 2023 177 of like kind and quality will be the taxable value. In the instant case, the property being rented ·and the supplier and recipient being related Rule 28 of CGST /TNGST Rules applies and the value should be arrived at accordingly for the purposes of GST. To sum up, the activity of renting out the Immovable Properties owned by the applicant as an individual person to the partnership firm, another individual person in which he is a major shareholding partner and Managing Partner even without consideration is a taxable supply under Section7(1)(a) read with Schedule I of the CGST Act,20 17. The value of taxable supply shall be as stipulated under Rule 28 of the CGST Rules, 2017. Ruling: 1. GST is liable to be paid in respect of properties of the applicant rented out to the partnership firm to carry out the business of the firm even if it is free of rent as the activity is in furtherance of business and amounts to supply as per Section7(1)(a) read with Schedule I of the CGST/ TNGST Act,2017. 2. The value to be adopted for the purposes of GST shall be as per Rule 28 of the CGST /TNGST Rules, 20 17 Comments This Advance Ruling will have a wide implication. In a country like ours mostly the Partners do not differentiate between them and their firm and are same parties and not third parties. However, as per the law there is a fine line that is drawn. It would always be advisable that the Firm pays to the owner of the property some amount that may be fixed to be the rent. However, one must note that the Valuation Rules apply. Thus, while determining the rate of rent it must be properly valued. Further, even in cases where there are more than one owner of the property if he is relative of the Partner the AAR may be extended subject to certain pros and cons. We agree that AAR is relevant only in whose case it is delivered but this type of AAR can be used to take views against the assesse and thus Firms that are having rent free offices from Partners need to take care of the same and proper planning needs to be done so as to avoid such determinations 2) Tax to be charged Ex-Factory Inter State Supplies TSAAR Order No.03/2020 02-03-2020 AR Com/ 23/2018 Facts: - The petitioner M/s. Penna Cement Industries Limited, and has seeked clarification as to what tax should be charged by them on ex-factory interstate sales made by them. - They are manufacturers of cement having two cement plants in Telangana; - They occasionally make inter-State sale of cement on exfactory/works basis from their plants in Telangana - As per Sec. 10(1)(a) of IGST Act, 2017, place of supply shall be where movement of goods terminates; When they make ex-factory sales from their plant, delivery terminates at their factory gate itself and therefore, CGST and SGST should be charged on such type of supplies. - However, in the said section it is also mentioned that the movement of goods can be by supplier or the recipient or any other person and place of supply shall be location of recipient where delivery terminates to recipient. In respect of exfactory sale, though for them supply terminates at factory gate, yet further movement is carried by the recipient or transporter (other person) of goods up to the billing address state. Thus, the delivery in such cases terminates in another that State and therefore they should charge IGST in respect of such supplies. Questions What tax should be charged on ex-factory interState supplies made by them? Discussion and Finding - Sec. 9(1) of GST Act provides for levy of CGST and SGST on all intra-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption. Further, Sec. 5(1) of the IGST Act, 2017 prescribes the levy of IGST on all inter-state supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption. Advance Ruling under GST
178 Ahmedabad Chartered Accountant Journal June, 2023 - ‘Inter-State’ and ‘intra-State’ supplies have explicitly been defined in Section 7(1), 7(2) and 8(1), 8(2) of the IGST Act respectively. These provisions in essence lay down that where the ‘location of the supplier’ and the ‘place of supply’ are in the same State or Union Territory, the supply shall be considered as intra-State supply and where they are in different States or in different Union Territories or in a State and a Union Territory, the supply shall be classified as inter-State supply. Thus, ‘place of supply’ and‘location of supplier’ determine whether a supply can be treated as an intra-State supply or an inter-State supply. In the case on hand, the applicant has no uncertainty as regards to ‘the location of supplier’ and they sought clarity only with regard to the ‘place of supply’. This leads us to refer to Sec. 10(1)(a) of IGST Act, 2017 which contains provisions relating to determination of ‘place of supply’ of goods where the supply involves movement. The same is reproduced below: “10. (1) The place of supply of goods, other than supply of goods imported into, or exported from India, shall be as under – (a) where the supply involves movement of goods, whether by the supplier or the recipient or by any other person, the place of supply of such goods shall be the location of the goods at the time movement of goods terminates for delivery to the recipient.” In terms of the above provision, it is apparent that place of supply in respect of goods (where supply involves movement of goods) shall be the location of goods at the time when movement of goods terminates for delivery to the recipient - As stated by the applicant, there is a scope for inference that in case of ex-factory sales, since the delivery of goods to recipient takes place at factory gate so far as supplier is concerned, location of the supplier’s factory can be reckoned as place of supply. However a careful appraisal of the provisions of Sec. 10(1)(a) does not suppose such inference. We noted that the usage of the words ‘whether by the supplier or by recipient’ after the words ‘where the supply involves movement of goods’ under the said section perceptibly indicates that the movement can be effected by the supplier or by the recipient or by any other person authorized by the recipient. This leads to the conclusion that, in terms of Sec. 10(1)(a), movement of goods in case of ex-factory inter-State sales does not conclude at factory gate but terminates at the place of destination where the goods finally are destined as per the billing address. Accordingly, it can be inferred that the place of supply in respect of goods where the supply involves movement of goods whether by the supplier or by the recipient or by any other person authorized by him has to be determined with reference to the location where the movement of goods ultimately terminated. - What we perceive from the statement made by the applicant, is that,in case of ex-factory inter-State sales affected by the applicant, the goods are made available by the supplier to the recipient at the factory gate, but this is not the point where movement terminates since the recipient subsequently assumes the charge for transportation of the goods up to the destination in another state. Thus, termination of the movement of goods evidently takes place at the location (in a different state) to which the goods are consigned/destined and such movement is effected by the recipient or by any other person such as transporter authorized by the recipient. Applying the inference made by us in the preceding para to the facts of the case on hand, the place (in the other state) where the goods are destined turns out to be the ‘place of supply’ in terms of Sec. 10(1)(a) ibid. Consequently, the ‘location of supplier’ and the ‘place of supply’ fall under different states and the supply qualifies as inter-State supply. Accordingly, we hold that, the supplier in the stated instance is liable to charge IGST in respect of ex-factory inter-State supplies made by them. Ruling IGST is chargeable on exfactory inter-State supplies. Comments: GST is consumption based tax. The place where the goods are to be consumed. Since the material is to be consumed in some other state though the delivery has been taken in the same state on exfactory basis. ❉ ❉ ❉ Advance Ruling under GST
Ahmedabad Chartered Accountant Journal June, 2023 179 MCA Updates: 1. The Companies (Removal of Names of Companies from the Register of Companies) Second Amendment Rules, 2023: The MCA has made the following amendments in the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016, w.e.f. 10.05.2023: Rule No. Effect of Amendments Three a) The company shall not file an provisos application for removal of name, to Rule 4(1) unless it has filed overdue (Inserted) financial statements and overdue annual returns, up to the end of the financial year in which the company ceased to carry out its business operations. b) In case a company intends to file the application for removal of name after the action under section 248(1) has been initiated by the Registrar, it shall file all pending financial statements and all pending annual returns, before filing the application. c) Further, once the notice of strike off under section 248(5) has been issued by the Registrar for publication in Official Gazette pursuant to the action initiated under section 248(1), a company shall not be allowed to file the application under this sub-rule. [F. No. 1/28/ 2013-CL-V(Part-III) dated 10.05.2023] CA. Naveen Mandovara [email protected] 2. The Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2023: Vide the said amendment rules, the MCA has made the following amendments in the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, w.e.f. 15.05.2023: Rule No. Effect of Amendments Sub rule (5) Where no objection or suggestion of Rule 25 is received within a period of 30 (Substitu- days of receipt of copy of scheme ted) under section 233(2), from the RoC/ official liquidator and the Central Government is of opinion that that the scheme is in public interest then, it may, within a period of 15 days after the expiry of 30 days, issue a confirmation order of such scheme in Form No. CAA-12. Provided that if Central Government does not issue the confirmation order within a period of 60 days of receipt of the scheme under section 233(2), then, it shall be deemed that it has no objection to the scheme and a confirmation order shall be issued accordingly. Sub rule (6) Where objections and suggestions of Rule 25 are received within a period of 30 (Substitu- days of receipt of order under ted) section 233(2) from the RoC/Official Liquidator (OL) or both by Central Government (CG) and- a) such objections or suggestions of RoC/ OL are not sustainable, and CG is of opinion that scheme is in public interest/creditors interest, then, it Update
180 Ahmedabad Chartered Accountant Journal June, 2023 may issue confirmation order in form No. CAA-12. b) the CG is of the opinion that the scheme is not in the public interest/creditors interest, then, it may, file an application before the Tribunal in Form No. CAA-13 by stating its objections/opinion and requesting Tribunal may consider the scheme. Provided that if the CG does not issue confirmation order or does not file any application to Tribunal, then, it shall be deemed that it has no objection to the scheme and a conformation order shall be issued accordingly. [F. No. 2/31/CAA/2013 – CL.V Part dated 15.05.2023] IFSCA Updates: 1) Status of operations at Disaster Recovery (DR) Site of the Broker Dealers and Clearing Members registered with IFSCA: 1. Broker Dealers and Clearing Members registered with IFSCA under the IFSCA (Capital Market Intermediaries) Regulations, 2021, are permitted to set up their DR Sites in India. 2. It is hereby clarified that operations carried out by the Broker Dealers and Clearing Members, from their respective DR sites located outside GIFT-IFSC and within India, shall be deemed to have been carried out at GIFT-IFSC. [Circular No. IFSCA/CMD-DMIIT/BCP-DR/2023- 24/001 dated 09.05.2023] 2) Fee structure for the entities undertaking or intending to undertake permissible activities in IFSC: International Financial Services Centres Authority (IFSCA) has issued a circular laying down a consolidated fee structure for entities which have been granted or desirous of getting licence, registration, recognition or authorisation or availing of any permitted financial services in IFSC. The fees payable to the Authority fall into the following categories: a) Application fees and License / Registration / Recognition / Authorisation fees-payable during the process of application; b) Recurring fees- payable after grant of license, registration, recognition or authorization; c) Activity based fees- payable based on the nature and volume of activity carried out by the FIs; d) Processing fees- payable for handling specific requests such as modification of terms of license, waiver of regulations ect. For, detailed text, please refer: https://ifsca.gov.in/ Viewer?Path=Document%2FLegal%2Ffeecircular-fee-structure-for-the-entities-undertakingor-intending-to-undertake-permissible-activities-inifsc17052023022329.pdf&Title=Fee%20Structure%20 for%20the%20entities%20undertaking%20or%20 inten ding%20to%20undertake%20permissible %20 activities% 20in%20 IFSC& Date=17%2F05%2 F2023 Circular No. 865/IFSCA/Banking/Fee Revision/ 2022-23 dated 17.05.2023] SEBI Updates: 1. Introduction of Legal Entity Identifier (LEI) for issuers who have listed and/ or propose to list non-convertible securities, securitised debt instruments and security receipts: As the LEI is a unique global identifier for legal entities participating in financial transactions, the SEBI has introduced that the issuers having outstanding listed non-convertible securities as on August 31, 2023, shall report/ obtain and report the LEI code in the Centralized Database of corporate bonds, on or before September 1, 2023. Similarly, issuers having outstanding listed securitised debt instruments and security receipts as on August 31, 2023, shall report/ obtain and report the LEI code to the Depository(ies), on or before September 1, 2023. Corporate Law Update Continued to page 190
Ahmedabad Chartered Accountant Journal June, 2023 181 Advertisement under RERA Unlike sectors like telecom, insurance, food and beverages, banks etc, real estate development had been lacking a regulatory body under which such real estate developers/promoters are covered. The fundamental objective behind which RERA was introduced were transparency and accountability to what a real estate developer commits and delivers. RERA registration can be said “license to sale/ advertise/market/book/offer for booking” the inventory that he proposed to develop. In this article we shall be discussing the rules and regulations made for advertisements. Section 3 sub section 1 of the act states that, “No promoter shall advertise, market, book, sell or offer for sale, or invite persons to purchase in any manner any plot, apartment or building, as the case may be, in any real estate project or part of it, in any planning area, without registering the real estate project with the Real Estate Regulatory Authority established under this Act” In order sell, book or advertise a project the promoter has to mandatorily register the project under RERA. Section 3 can be said the charging section in terms of applicability of RERA. Section 2 clause b defines the term advertisement as, “advertisement” means any document described or issued as advertisement through any medium and includes any notice, circular or other documents or publicity in any form, informing persons about a real estate project, or offering for sale of a plot, building or apartment or inviting persons to purchase in any manner such plot, building or apartment or to make advances or deposits for such purposes;” The definition of advertisement is clearly vast to include any medium to cover itself within its purview. The FAQ issued by Gujarat RERA further clarifies that solicitation for sale via sms/ email too shall be included within the ambit of advertisement. Gujarat RERA as further issued Circular 13 which further operational guidance to promoters real estate projects and to media organisations and advertising industry intermediaries regarding appropriate nature of compliance for advertisements of RERA registered projects which is as follows: Newspaper - in Paper Print and Digital media :- Advertisement in newspaper either in paper print or in e-paper format or website advertisement of RERA Registered projects shall contain the address of the GujaratRERA website as www.gujrera.gujarat.gov.in and the RERA registration number as indicated in Registration certificate issued by the Authority is to be clearly mentioned e.g., PR/GJ/Ahmedabad/ Ahmedabad City/AUDA/CAA01234/261218. Brochures and leaflets :- All paper print Brochures and leaflets shall also contain Authority website address and project registration Number as applicable for paper print newspaper. Outdoor Publicity :- Large size outdoor publicity Billboards and hoardings must contain authority website address and RERA registration number as applicable for printed newspaper in a way which is easily readable with bare eyes by viewer . However, the small size hoarding , such as on road divided and on Street Light Poles may contain abridged registration number in the form of CAA02222 i.e., the 8- digit unique code in every RERA Registration Number, beginning with RAA/MAA/CAA/PAA. The abridged Registration number along with authority website address is to be mentioned on such small size hoardings. Audio-Visual Media :- Every Audio-Visual Media or only Audio announcements on Radio shall mention abridged RERA Registration number in a clearly Audible manner along with mention of the Authority website address. This will apply to all Audio - Visual media like Radio, TV, Video clips, Audio clips, media streaming, digital media content etc. CA. Manan Doshi [email protected] GujRERA Corner
182 Ahmedabad Chartered Accountant Journal June, 2023 GujRERA Corner Please note that circular 18 as issued by Gujarat RERA authority states that: “The Font Size of RERA registration number and website address should be mandatorily equal to or larger than the contact details of the proposed project.” The Maharashtra Real Estate Regulatory Authority (MahaRERA) has issued an order regarding the display of QR codes in promotions and advertisements related to real estate projects registered with MahaRERA. The order states that promoters are required to prominently display a QR code on all project promotions or advertisements published after August 1, 2023. The QR code should be legible, readable, and detectable with software applications. It should be published alongside the MahaRERA Registration Number and the Website Address. This requirement applies to various mediums of promotion and advertisement, including newspapers, magazines, flyers, brochures, websites, social media, and more. The order comes into effect from August 1, 2023. The order aims to enhance transparency and provide easy access to projectrelated information for homebuyers and allottees. The crux of ther order is bringing greater transparency through disclosure of information on regular basis for public viewing, through online portal and accordingly, MahaRERA has always worked towards ensuring that maximum required information is available for public viewing in the most feasible manner, thereby empowering homebuyers / allottees to make informed choice /decisions in the everchanging real estate market. The directions issued the MahaRERA authority are: a. The promoter shall prominently display Quick Response (“QR”) code on each and every Project promotion / advertisement published after “1? August 2023”. b. The QR code must be published in a manner that is legible, readable, and detectable with software application. c. The QR code must be published besides the MahaRERA Registration Number and the Website Address. d. The mandate as mentioned in Clause (a) above shall apply to the following mediums of promotion / advertisement and in any other medium as may be directed by the Authority. (i) Advertisements on Newspaper / Magazines / Journals etc. (ii) Printed Flyers / Brochures / Catalogues / Leaflets / Prospectus (iii) Standees on Project Sites / Sales Office (iv) Websites / webpages of Projects (v) Social Media Advertisements (vi) Any other Advertisements where QR codes can be published. The Andhrapradesh RERA authority are set of following norms: NO ADVERTISEMENT WITHOUT REGISTRATION: The promoter shall not issue any advertisement in any manner including by the way of issuance of brochures, pamphlets, words of mouth, or in any other manner, for booking of the apartment or plots or building in real estate project without getting their particular project registered under RERA. If he/she is found advertising the project without getting it registered, he/she will face harsh penalties that are prescribed in the norms. NO FALSE FACTS TO BE ADVERTISED: After getting the project registered, the promoter then gets the right to advertise his/her project via any sort of media like brochures, pamphlets, etc. Advertisements published for inviting buyers for the purchase of apartment/plot, shall be truthful and based on the facts as have been revealed to the authority with strictly no exaggeration or misinterpretation which may create a biased impression in the minds of the buyers about the property they are interested to buy. In case, the promoter is found advertising any false claims that he/she fails to deliver, he/she shall be exclusively liable for further penalties. MENTION REGISTRATION NUMBER: It is compulsory for the promoter to mention the registration number of the project provided by the authority on the website as well as on any advertisement. COPY OF THE BROCHURE TO BE SUBMITTED TO THE AUTHORITY: A copy of the prospectus or brochure or any pamphlet vide which an information relating to the project is sought to be conveyed to the allottees of the apartment or prospective buyers of the apartment/plots shall be submitted to the authority as soon before print/circulate. Advertisement through any medium is a big compliance task for a real estate developer post RERA implementation which is in a way a big positive development for allotees who in the past often felt cheated. Failing to comply with required rules/ regulations/circulars and orders issued by the authority shall attract heavy penalty for the real estate developers ❉ ❉ ❉
Ahmedabad Chartered Accountant Journal June, 2023 183 Summary: The Indian economy grew at a rate of 6.10% in the final quarter of the previous fiscal, pushing the overall growth rate to 7.20% for FY23 and making India fastest growing major economy for second year in the row, a remarkable achievement.Start-ups on the other hand are finding it increasingly difficult to raise funds in due to cautious investors, drying of liquidity and market volatility. Start-ups, pressed for funds might be looking at down rounds in coming months. Indian stock market continued their performance run and Sensex and Nifty 50 improved by almost 2.47% to close at 62,622.24 and 2.60% to close at 18,534.40 respectively in the month of May 2023. Key Private Equity and M&A deals include Logistics startup Ripplr raising $40 Million in Series B funding Round from Fireside Ventures and Macquarie Capital acquiring 51% stake in Network as a Service provider CloudExtel. Economic Update: India remains fastest growing major economy ● A stronger-than-expected fourth quarter lifted India’s GDP growth to 7.2% in FY23, exceeding the 7% cited in the second advance estimates released in February. CA. Karan Vora [email protected] ● This means that India remains fastest growing major economy for the second year in a row after posting 9.10% growth in FY 22. ● The government’s capital spending boosted gross fixed capital formation by 8.9% in the quarter, lifting its share in GDP to an all-time high of 35.3%, but private consumption was sluggish with a 2.9% rise. ● India’s manufacturing sector also saw a sluggish slow down in growth to 1.3% in FY23 versus 11.1% inthe previous fiscal. Financial, real estate and professional services recorded a growth of 7.1% versus 4.7% in FY22. ● In nominal terms, without adjusting for inflation, GDP rose 16.1% in FY23 compared with 18.4% expansion in the preceding year. ● India’s economic recovery post Covid-19 is remarkable in light of global turbulences and slowdown considering that China grew at just 3% in FY22 while advanced economies are faring even poorer. ● However, the way forward for India is still tricky due to global economies slowing down and Indian manufacturing sector growing lethargically. ● The Goods and Services Tax (GST) revenue surpassed Rs 1.57 lakh Crore in May, marking the fifth time it has achieved this feat since the inception of GST. Withdrawal of Rs. 2,000 Currency Notes: ● On 19th May, 2023 stating that Rs 2,000 note is not commonly used for transactions,RBI announced to withdraw Rs 2000 notes from circulation. Though notes will continue to remain as legal tender. Funding winter: ● PE/VC funding to Indian start-ups have fallen around 80% from $15.7 Bn in Jan-May 2022 to $3.3 Bn
184 Ahmedabad Chartered Accountant Journal June, 2023 Jan-May 2023 as per data by Venture Intelligence. From 2022, Startups across the world have found it increasingly difficult to raise funds and the trend has continued in 2023. ● During pandemic peak, the investors were holding record capital and marked by fear of missing out (FOMO), resulting into easy funding to start ups with attractive and at times inflated valuations. ● However, investors are becoming cautious in their approach as they are witnessing drying of liquidity, lackluster consumer growth, market volatility, lackluster IPOs and even governance issues in some cases. ● The valuations of startups have also been impacted in this scenario; some of the unicorn and decacorn startups like Swiggy, PharmEasy, Ola, Oyo and Byju’s have been marked down by 30%-60% by their investors. E.g. Invesco marked down Swiggy’s valuation from $10.7 billion to $5.5 Billion while Janus Henderson cut PharmEasy’s valuation to half. ● Funding winter is likely to continue in short term and at least late-stage startups will find it difficult to raise funds. Some of the late-stage startups which planned to raise funds through IPO will also have to put the plans on back burner as IPOs have dried down due to negative market sentiments. ● The start-ups which will need to raise capital now may be expected to go through down rounds. Down round is when pre money valuation of subsequent round is lesser than post money valuation of last round. In down round the startup’s per share value decreases and founders end up Capital Markets diluting more. Generally, the investor’s interest will be protected in down rounds due to anti-dilution provisions, and in that case the dilution of the founders will be even more pronounced. ● Start-ups would try hard to delay fund raising at present to avoid the down rounds. The focus will be on various cost cutting measures to conserve capital and at leastfor the time being a shift from growth to profitability. Next six months will also likely see a lot of consolidation in start-up space. Secondary Market Update: ● The equity markets started to gain strength with Nifty and Sensex gaining by 2.47% and 2.60% respectively over the previous month. ● The significant surge in the market was on the back of a strong fundamental performance and a pause in policy rate hikes. Foreign portfolio investors (FPIs) infused Rs 43,838 Crore into domestic equities in May. This was against Rs 11,631 Crore in flows in April. May inflow was highest since August 2022 Rs 51,204 Crores. FIIs stayed as net buyers in May. ● However, the broader market declined and underperformed the larger peers; the S&P BSE Midcap Index was down 0.03%, whereas S&P BSE Small Cap Index was lower by 0.11%. ● ITC Ltd., Infosys Ltd., HDFC Bank Ltd., Hindustan Unilever Ltd., and Larsen and Toubro Ltd. were positively contributing to the change in the Nifty 50 Index. Whereas, TCS Ltd., Adani Enterprises Ltd., Maruti Suzuki India Ltd., Cipla Ltd., and Grasim Industries Ltd. were negatively adding to the change. Equity Markets April-23 May-23 % Change BSE Sensex 61,112.44 62,622.24 2.47% Nifty 50 18,065.00 18,534.40 2.60% BSE 500 24,209.37 25,059.67 3.51% BSE Healthcare 23,033.93 23,681.37 2.81% BSE IT 27,503.49 29,346.42 6.70% BSE FMCG 17,238.74 18,253.41 5.89% BSE Metal 20,134.69 19,542.69 -2.94%
Ahmedabad Chartered Accountant Journal June, 2023 185 Primary Market Update: There was 1 main board IPO in May, 2023 of Mankind Pharma Limited against 2 main board IPOs in April, 2023. However there were 2 SME IPOs in May, 2023 as against 3 SME IPOs in April, 2023. Mankind Pharma Limited About Incorporated in 1991, Mankind is India’s fourth largest pharmaceutical company in terms of domestic sales and is engaged in developing, and manufacturing a diverse range of pharmaceutical formulations. Funds The IPO is pure offer for sale by the Utilization selling shareholders. Objective of the IPO is to get benefits of listing of shares on the stock exchange. Entire proceeds of the IPO will go to selling shareholders. IPO The IPO size was of Rs. 4326 Crores Performance with a fixed price band of Rs. 1026- 1080. The IPO is purely OFS where shareholders will offload a total of 40,058,844 equity shares. IPO saw sufficient demand and was oversubscribed 49.16 times by QIBs.The IPO was overall over subscribed 15.32 times. The IPO performed well and opened at 20% premium on listing. Funds Mobilization by Corporates (In Crore Rs.) Particulars March-23 April-23 I. Equity Issues 4,842 7,816 a. IPOs (i+ii) 995 1,110 i. Main Board 567 931 ii. SME Platform 428 179 b. FPOs 0 0 c. Equity Rights Issues 2,070 871 d. QIPs/IPPs 500 1,000 e. Preferential Allotments 1277 4,835 II. Debt Issues 92,444 53,539 a. Debt Public Issues 485 2,036 b. Private Placement of Debt 91,958 53,426 Total Funds Mobilized (I+II) 97,286 63,278 PE: Logistics startup Ripplr raises $40m in Series B Round led by Fireside Ventures Transaction: ● Ripplr, a Bangalore-based distribution and logistics start-up platform, announced that it has raised $40 million in a Series B round in a mix of equity and debt. ● The round was led by Fireside Ventures and saw participation from new investors Bikaji and Neo Foods along with existing investors 3one4 Capital, Zephyr Peacock Indiaand Sojitz Corporation. ● The round also witnessed debt participation from Stride Ventures, Alteria Capital, Northern Arc Investment and Trifecta Capital. Capital Markets
186 Ahmedabad Chartered Accountant Journal June, 2023 About Ripplr: ● Set-up in 2019 by Abhishek Nehru and Santosh Dabke, Ripplr is a tech distribution and logistics platform. It offers a plug and play service for brands to distribute their products to kirana stores. ● The platform uses AI to make predictions and decisions which helps brands deliver an integrated customer experience by elevating certainty and quality for consumers. ● The startup has presence in Maharashtra, Delhi, Kerala, Karnataka and Tamil Nadu, where it manages 24 warehouses servicing more than 80,000 retailers. ● It counts Dabur, Tata Consumer Products, and Godrej among its customers for its distribution service vertical, while its logistics services are used by the likes of Big Basket, Zomato, among others. About Fireside Ventures: ● Launched in 2017, Fireside Ventures is an early stage venture fund with a focus on consumer brands. ● The fund aims to invest in consumer brands across sectors such as food and beverages, personal care, kids and education, Lifestyle and home products etc. ● Fireside Ventures current portfolio includes of 33 brands like Boat, Smytten, Design Café, Bombay Shaving Company, Mama Earth, Pipa Bella, Kwik 24, and Slurrp Farm amongst others. Rationale: ● Ripplr said the funds will be to strengthen tech platform, expand team and build pan-India presence. ● Around $12 million of the funding is in the form of debt, while the rest is equity. ● To date, the firm has raised $56 million in funding. And, In December 2021, Ripplr had raised $12 Million in a mix of equity and debt from Sojitz Corporation, Stride Ventures, Chand Family Office Yukti, as well as Sprout Venture Partners as its investors. ● As reported by entrackr, In FY22, Ripplr’s operating revenue jumped 5.8X to Rs 275 Crore as compared to Rs 47.8 Crore in FY21, according to the standalone financial statement with the RoC. In FY23 company recorded revenue of Rs. 900 Crore and claimed to be operationally profitable. ● Rippler competes with likes of Udaan, Elastic run, Apnaklub, Jiomart partners and shop kirana. M&A:Australian Macquarie group acquires 51% stake in Network as a Service provider CloudExtel Transaction: ● Macquarie Capital, investment arm of Macquarie group, bought 51% controlling stake Bombay GasCompany Limited’s subsidiary “CloudExtel”. ● The deal value was reported to be around $100 million (approx. Rs. 821 Crores) as per media reports. ● Cloud Extel’s management will remain unchanged post the deal though the workforce count isexpected to rise from 350 to about 1000 over the next five years. About Macquarie Capital: ● Incorporated Macquarie Capital, is the corporate advisory, capital markets, and principal investment arm of Australian global financial services group Macquarie Group. ● Macquarie employs more than 20,000 staff in 34 markets and is the world’s largest infrastructure asset manager with more than $871 billion in assets under management. About CloudExtel: ● Established in 2014, Excel Telesonic India Private Limited (CloudExtel), is a subsidiary of Bombay Gas Company Limited (BGCL). ● CloudExtel is a Network as a Service (NaaS) provider offering infrastructure services such as SmallCell Hosting, FTTH, Intra-City Fibre and Virtualized Networks with a footprint in more than 400 cities and towns. ● CloudExtel has marquee customers such as Airtel, Vodafone Idea, Tata Communications, Tata Sky, RailTel, Power Grid Corporation of India, and strategic partnerships with leading global tech companies. Rationale: ● CloudExtel clocked revenue of Rs. 125 Crore in FY23, clocking a CAGR of 84% in five years with apositive EBITDA; to continue to grow at an aggressive rate, achieve the next level of scale and provide its latest offering in infrastructure sharing, it will need significant amount of capital. ● Kunal Baja CEO of CloudExtel said that as the demand for internet data via mobile networks has risen 20-fold since 2015 in India, adequate infrastructure to decongest networks and enhanceconnectivity will be required for high quality user experience. ● Also, tower fiberisation in India stands at 33 per cent, versus around 70 per cent in mature global markets. Enterprise and household Fibre penetration is even lower. ● Partnering with Macquarie Capital and their flexible balance sheet will help CloudExtel to fill this gaps by scaling the infrastructure services and imbibe global best practices. 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 June, 2023 187 Provisions, Contingent Liabilities & Contignent Assets - Annual Report 2021-2022 Tasty Bite Eatables Limited A provision is recognised if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows (representing the best estimate of the expenditure required to settle the present obligation at the balance sheet date) at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost. Expected future operating losses are not provided for. Contingencies A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of economic resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the revised financial statements. A contingent asset is not recognized unless it becomes virtually certain that an inflow of economic benefits will arise. When an inflow of economic benefits is probable, contingent assets are disclosed in the revised financial statements. Contingent liabilities and contingent assets are reviewed at each balance sheet date. Metro Brands Limited Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount can be reliably estimated. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost. Provision for Warranty: The estimated liability for product warranties is recorded when products are sold. These estimates are established using historical information on the nature, frequency and average cost of warranty claims and management estimates regarding possible future incidence based on corrective actions on product failures. The timing of outflows will vary as and when warranty claim will arise. (ii) Contingent Liabilities Contingent: Liabilities are disclosed when there is: - A possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group; or - A present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or reliable estimate of the amount cannot be made. Aditya Birla Capital Limited Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be CA. Pamil H. Shah [email protected] From Published Accounts
188 Ahmedabad Chartered Accountant Journal June, 2023 required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows to net present value using an appropriate pre-tax discount rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. A present obligation that arises from past events, where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made, is disclosed as a contingent liability. Contingent liabilities are also disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events, not wholly within the control of the Group. Claims against the Group, where the possibility of any outflow of resources in settlement is remote, are not disclosed as contingent liabilities. Contingent assets are not recognised in the financial statements since this may result in the recognition of income that may never be realised. However, when the realisation of income is virtually certain, then the related asset is not a contingent asset, and is recognised. Titan Company Limited Provisions: A provision is recognised when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of time value of money is material). Product warranty expenses: Product warranty costs are determined based on past experience and provided for in the year of sale.Contingent liabilities: A disclosure for contingent liabilities is made where there is a possible obligation or a present obligation that may probably not require an outflow of resources. When there is a possible or a present obligation where the likelihood of outflow of resources is remote, no provision or disclosure is made in the financial statements. Provision for onerous contracts. i.e. contracts where the expected unavoidable cost of meeting the obligations under the contract exceed the economic benefits expected to be received under it, are recognised when it is probable that an outflow of resources embodying economic benefits will be required to settle a present obligation as a result of an obligating event based on a reliable estimate of such obligation. Tribhovandas Bhimji Zaveri Limited The Company creates a provision when there is a present obligation (legal or constructive) as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of obligation. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the balance sheet date and are discounted to its present value if the effect of time value of money isconsidered to be material. These are reviewed at each year end date and adjusted to reflect the best current estimate. The unwinding of the discount is recognized as finance cost. Expected future operating losses are not provided for. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may or may not require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. Contingent assets are neither recognised nor disclosed in The standalone financial statements. However, contingent assets are assessed continually and if it is virtually certain that an inflow of economic benefits will arise, the asset and related income are recognised in the period in which the change occurs. From Published Accounts Continued to page 192
Ahmedabad Chartered Accountant Journal June, 2023 189 CA. Kunal A. Shah [email protected] From the Government CA. Ashwin H. Shah [email protected] 3. Comprehensive Coverage: The app supports verification of e-Invoices reported across all six IRPs, ensuring comprehensive coverage and convenience. 4. Non-Login Based: The app operates on a nonlogin basis, meaning users are not required to create an account or provide sensitive personal information to access its functionalities. This simplifies the user experience and makes it more convenient for users. How to use the e-Invoice Verifier App: a) Download the App: Visit the Google Play Store and search for “E-Invoice QR Code Verifier.” Download and install the app on your mobile device free of charge. The iOS version will be available shortly. b) QR Code Scanning: Utilize the app to scan the QR codes on your e-Invoices. The app will authenticate the information embedded in the code and one can compare it with information printed on the invoice. GSTN emphasizes that the e-Invoice Verifier App does not require any user login or authentication process. Anyone can freely scan QR codes and view the available information. For more detailed information please see the FAQs in the app. This comprehensive FAQ document will provide you with additional guidance on using the app and resolving any queries you may have. GSTN is dedicated to enhancing your experience with the E-Invoice Verifier App and providing a process of seamless e-Invoice verification. GSTN is also working towards launching Version 2 with GOODS AND SERVICE TAX 1) Advisory on Filing of Declaration In Annexure V by Goods Transport Agency (GTA) opting to pay tax under forward charge mechanism The GTAs, who commence business or cross registration threshold on or after 1st April, 2023, and wish to opt for payment of tax under forward charge mechanism are required to file their declaration in Annexure V for the FY 2023-24 physically before the concerned jurisdictional authority. The declaration may be filed within the specified time limits, as prescribed in the Notification. No. 05/2023-Central Tax (Rate), dated. 09.05.2023. (GST update 30/05/2023) 2) E-Invoice Verifier App by GSTN - Advisory The E-Invoice Verifier App developed by GSTN, has been introduced which offers a convenient solution for verifying e-Invoices and other related details. GSTN understands the importance of efficient and accurate e-invoice verification, and this app aims to simplify the process for your convenience. E-Invoice Verifier App - Key Features and Benefits: 1. QR Code Verification: The app allows users to scan the QR code on an e-Invoice and authenticate the embedded value within the code. This helps in identifying the accuracy and authenticity of the e-Invoice. 2. User-Friendly Interface: The app provides a user-friendly interface with intuitive navigation, making it easy for users to navigate through the app’s features and functionalities.
190 Ahmedabad Chartered Accountant Journal June, 2023 the Search IRN functionality, which will further streamline your e-Invoice verification. (GST Update 08/06/2023) INCOME TAX 1) Clarification regarding provisions regarding charitable and religious trust Income of any fund or institution or trust or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10 of the Income tax Act,1961 (“the Act”) or any trust or institution registered under section 12AA or section 12 AB of the Act (hereinafter referred to From the Government as “the trust”) is exempt subject to the fulfillment of the conditions provided under relevant sections of the Act. Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act,2020 amended the provisions related to application by a trust for registration or approval by amending the first and second proviso to clause (23C) of section 10, clause (ac) of sub-section (1) of section 12A of the Act, inserting section 12AB of the Act and amending the first and second proviso to subsection (5) of section 80G of the Act. (For the amended provisions refer Circular 6, dated 24/05/2023) ❉ ❉ ❉ Continued from page 180 Corporate Law Update Further, issuers proposing to issue and list nonconvertible securities, on or after September 01, 2023, shall report their LEI code in the Centralized Database of corporate bonds at the time of allotment of the ISIN. Similarly, issuers proposing to issue and list securitised debt instruments and security receipts, on or after September 01, 2023, shall report their LEI code to the Depositories at the time of allotment of the ISIN. The Depositories shall: a) map the LEI code to existing ISINs by September 30, 2023; and b) for future issuances, map the LEI code provided by the issuers with the ISIN at the time of activation of the ISIN. [Circular No. SEBI/HO/DDHS/DDHS_Div1/P/CIR/ 2023/64 dated 03.05.2023] 2. Model Tripartite Agreement between the Issuer Company, Existing Share Transfer Agent and New Share Transfer Agent as per Regulation 7(4) of SEBI (Listing Obligation and Disclosure Requirements) Regulation, 2015: As per regulation 7(4) of SEBI LODR Regulations, 2015, “in case of any change or appointment of a new share transfer agent, the listed entity shall enter into a tripartite agreement between the existing share transfer agent, the new share transfer agent and the listed entity, in the manner as specified by the Board from time to time.” In this respect, a model Tripartite Agreement has been prepared and RTAs are advised to submit compliance of the aforesaid direction to SEBI vide email at [email protected] latest by June 01, 2023, along with the link of their website containing the format of tripartite agreement. For Format of the Tripartite Agreement, please refer: https://www.sebi.gov.in/legal/circulars/may-2023/ model-tripartite-agreement-between-the-issuercompany-existing-share-transfer-agent-and-newshare-transfer-agent-as-per-regulation-7-4-of-sebilodr-regulation-2015_71657.html [Circular No. SEBI/HO/MIRSD/MIRSD-PoD-1/P/ CIR/2023/79 dated 25.05.2023] ❉ ❉ ❉
Ahmedabad Chartered Accountant Journal June, 2023 191 The Rise of Technology : How has it changed the Accounting Profession Accounting is known for being staid, traditional and slow to adopt new technologies. But is this true? No. I would argue that technology is transforming accounting—and in an equally exciting way, accounting is transforming technology. One significant development in the accounting industry over the last few decades has been the introduction of computer-based accounting software. These tools significantly automated the record-keeping process, eliminating the need for manual ledger systems. This software also provided greater accuracy, reliability, and speed in tracking financial transactions. With the advent of the Internet in the late 1990s and early 2000s, accounting software became more accessible as web-based accounting software emerged. These web-based tools allowed accountants to work remotely, access financial data online and collaborate in real time with their clients. Cloud-based accounting software such as Xero, Wave, ZohoBooks, and others have been introduced since the late 2000s. These software programs have provided a more secure and flexible accounting solution, allowing accountants to work from anywhere with an internet connection. They offer features such as automatic bank feeds and cloud storage of financial data. But is this the end? Where are we heading? The FUTURE For many years, businesses have been used to a cycle of audits. These could be quarterly or annual, but this has always been a crunch time for accountants, and a whole period had to be closed off, prepared and presented to auditors. CA. Rushabh Shah [email protected] Technology is completely upending this cycle. Today, thanks to advanced accounting systems that interface with businesses in real-time, auditors can access figures, policies and judgment calls. It allows financial information to be delivered faster, more accurately and more trustworthy, which signals an essential change in how business and decision-making within that context can be conducted today. Accounting might have been known for repetitive, manual tasks in the past. Today, technology has automated these processes, and accounting has moved beyond just “the process” into value territory. Technology has empowered accountants to discover insights, uncover trends, plan effectively, and add unprecedented value using advanced analytics, AI, machine learning, natural language processing, and multiple other technological innovations. This has moved the CFO—and the accounting team, by extension—to a central place in the company boardroom and at the right hand of the CEO in almost every major decision. Many readers will think, “All of this sounds great, but what should I expect when transitioning to more advanced technology?” In the past, accountants struggled when transitioning to more advanced technologies. This was due to various factors, including heavy on-premise super customised and clunky solutions. To help overcome these challenges, here are three best practices to get ahead regarding technology usage and value. 1. Stick with SaaS: Compared to on-premise solutions, Software-asa-Service (SaaS) solutions are generally easier to use, relatively standardised, automatically updated and feel like the tools many people are usually familiar with.
192 Ahmedabad Chartered Accountant Journal June, 2023 2. Lean on support: Most top accounting technology tools have experienced support teams ready to help you through the tool’s setup, onboarding and usage. This is a fantastic resource you should leverage to derive maximum value. 3. Engage your team: Embarking on a journey with new technology can be challenging. By approaching it as a team IT Corner instead of as an individual, you’ll feel more supported and minimise the time needed for ongoing training while creating lasting value. The coming 5-10 years are exciting for the accounting profession, where we will see many things being implemented, changed and developed. Exciting times ahead! ❉ ❉ ❉ Continued from page 188 From Published Accounts Ugro Capital Limited Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, considering the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material). A Contingent liability is disclosed unless the possibility of an outflow of resources embodying the economic benefits is remote. Contingent assets are neither recognised nor disclosed in the Financial Statements. Provisions, contingent liabilities and contingent assets are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. Blue Star Limited Provisions A provision is recognised when the Group has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Warranty provisions The estimated liability for product warranties is recorded when products are sold / the project is completed. These estimates are established using historical information on the nature, frequency, and average cost of warranty claims and management estimates regarding possible future incidence based on corrective actions on product failures. The timing of outflows will vary as and when warranty claims arise typically up to five years. Contingencies Contingent liabilities exist when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the Group, or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required or the amount cannot be reliably estimated. Contingent liabilities are appropriately disclosed unless the possibility of an outflow of resources embodying economic benefits is remote. Contingent assets are not recognised in the financial statements. However, where an inflow of economic benefits is probable, the Group discloses the same in the financial statements. ❉ ❉ ❉
Ahmedabad Chartered Accountant Journal June, 2023 193 CA. Mayur H. Modha Hon. Secretary CA. Prakash B. Nandola Hon. Secretary Association News 1. Glimpses of Previous events. Day & Date Program Speaker Venue Wednesday, Outreach program by I & CI Division —- Aykarbhavan 31st May,2023 of Income Tax Department Vejalpur. Saturday, Free Seminar on Study Abroad (Students) —- CAAA Office, 10th June,2023 and Option of Settling in Canada for 201, 2nd Floor Chartered Accountants and their Family Members. Darshak Building, Friday, 1st Meeting of Indirect Tax —- CAAA Office, 16th June,2023 Study Group 2023-24 201, 2nd Floor Darshak Building, Friday, 53rd Residential Refresher CA. Manthan Khokhani, Radisson Hotel, 23rd June 2023 to ADV. CA Mehul Patel, Nathdwara 25th June 2023 CA. Vishal Doshi, CA. Jayesh Sharedalal, CA. Mukesh Khandwala, CA. Kshitij Patel 2. Upcoming Events. Day & Date Program Speaker Venue Saturday, Online Workshop on ITR 2023 CA. Divya Jokhakar Online on 1st July,2023 Zoom Platform Saturday, 1st Brain Trust Meeting on CA. Jignesh Shah ATMA Hall 8th July,2023 "Complexity and Intricaceies on C/o. Ahmedabad Textile 3CD clauses" Mills Association, Ashram Road, Ahmedabad Wednesday, Talent Evening - Tagore Hall, Paldi, 23rd August,2023 Ahmedabad 3. Picture Gallery. Glimpses of Outreach program by I & CI Division of Income Tax Department
194 Ahmedabad Chartered Accountant Journal June, 2023 Association News Glimpses of 1st Meeting of Indirect Tax Study Group 2023-24 Glimpses of Free Seminar on Study Abroad ( Students) and Option of Settling in Canada for Chartered Accountants and their Family Members. Glimpses of 53rd Residential Refresher Radisson Hotel, Nathdwara from 23rd June 2023 to 25th June 2023
Ahmedabad Chartered Accountant Journal June, 2023 195 Association News
196 Ahmedabad Chartered Accountant Journal June, 2023 Across 1. One Main Board IPO in May 2023 was of __________ Pharma Limited. 2. In order sell, book or advertise a project the promoter has to mandatorily register the project under ________. 3. ________ is one of the cloud based accounting software. ACAJ Crossword Contest - 25 ❉ ❉ ❉ 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 20-07-2023. 5. The decision of Journal Committee shall be final and binding. Prize Courtesy Winners of ACAJ Crossword Contest – 24 1. CA. Mayank Raval 2. CA. Manan Vyas ACAJ Crossword Contest 23 - Solution Across: Down: 1. Steady 4. Food 2. Otherwise 5. Nathdwara 3. Inflation 6. Seven Down 4. __________ means any treatment or process undertaken by a person on goods belonging to another registered person. 5. In today’s era justice is not only blind but also _____________ 6. One of the significant amendment in Finance Bill 2023 is that rate of TDS for royalty and FTS is increased from ten percent to ______________ percent. 6 5 1 4 2 3