Part 6 - Allied Laws

Allied Laws 6.iii R7ima5ine Celebrating 1949 - 2023 BCAS REFERENCER 2023-24 61 Years of Continuous Publication Allied Laws Contents Subject Page I. Chartered Accountants Act and Regulations 6.1 II. Insolvency and Bankruptcy Code, 2016 (IBC) 6.44 III. Maharashtra Public Trusts Act, 1950 as amended by Maharashtra Public Trusts (Second Amendment) Act, 2017 6.52 IV. Maharashtra Stamp Act, 1958 6.58 The Maharashtra E-Payment of Stamp Duty and Refund Rules, 2013 6.69 The Maharashtra e-Registration and e-Filing Rules, 2013 6.72 V. The Micro, Small and Medium Enterprises Development Act, 2006 6.74 VI. NBFC Regulations 6.89 VII. Partnership Firms – Procedures (Maharashtra) 6.101 VIII. Period of Preservation of Accounts/Records under different laws 6.105 IX. Prevention of Money Laundering Act, 2002 6.108 X. Real Estate (Regulation & Development) Act, 2016 6.110 XI. Related Party Transactions under various Laws 6.118 XII. Right to Information Act, 2005 6.125 XIII. Startup Regulation Framework in India 6.130 XIV. Succession and Wills 6.138 XV. The Banning of Unregulated Deposit Schemes Act, 2019 6.145 XVI. The Benami Transactions (Prohibition) Amendment Act, 2016 6.148 XVII. Valuation Reports – Requirements under various Laws 6.150 XVIII. Leave and Licences 6.155

Allied Laws 6.iv R7ima5ine Celebrating 1949 - 2023 BCAS REFERENCER 2023-24 61 Years of Continuous Publication

Chartered Accountants Act and Regulations 6.1 R7ima5ine Celebrating 1949 - 2023 BCAS REFERENCER 2023-24 61 Years of Continuous Publication I. Chartered Accountants Act and Regulations (1) Provisions • Statute — The Chartered Accountants Act, 1949. — As amended by The Chartered Accountants (Amendment) Act, 2011 (updated as on 1st July, 2013). — The Chartered Accountants Regulations, 1988 as amended by Regulations, 2020. • Membership Eligibility (S. 4 & 8 and Regn. 4) — The applicant should have Completed prescribed period of practical training. Passed the CA Final Examination. Attained twenty-one years of age. Completed the course on General Management & Communication Skills (GMCS) Applied in Form 2 on ICAI Self Service Portal, with the prescribed membership and entrance fees. • Eligibility to join the CA Course & Examinations — Admission to Foundation Course (Regn. 25F): registered on or before 30th June for November attempt; or registered on or before 31st December for May attempt has passed (10+2) SSC Exam recognized by any state or Central Government. — Eligibility for Registration as Articled / Audit Assistant (Regn. 45, 46) for CA student who: has to complete 100 hrs. or I.T.T. course and 35 hrs. of orientation course before joining articleship or has completed Integrated Course on IT & Soft Skills has executed a Form 102 generated on Self Service Portal and filed statement in Form 103 as well on Self Service Portal — Admission to Intermediate (Regn 28E) Requirements for Intermediate Registration: 1. Pass in 12th Standard and Foundation; or 2. Graduate or Post Graduate in Commerce with minimum 55% marks Requirements for appearance in IPCC /Intermediate Exam Completion of not less than 8 months study course as on 1st day of month of exam — Direct Entry to Chartered Accountancy Course Exempted Categories: The following categories of students shall be exempted from passing the Common Proficiency Test (CPT): Graduate or Post Graduate in Commerce having secured in aggregate a minimum of 55% of the total marks or its equivalent grade in the examination conducted by any recognised University (including Open University) by studying any three papers of 100 marks each out of Accounting, Auditing, Mercantile

Allied Laws 6.2 R7ima5ine Celebrating 1949 - 2023 BCAS REFERENCER 2023-24 61 Years of Continuous Publication Laws, Corporate Laws, Economics, Management (including Financial Management), Taxation (including Direct Tax Laws and Indirect Tax Laws), Costing, Business Administration or Management Accounting; or Graduates or Post Graduates other than those falling under Commerce stream mentioned above having secured in aggregate a minimum of 60% of the total marks or its equivalent grade in the examination conducted by any recognised University (including Open University) OR has passed the intermediate level exam of ICWA or ICSI. For more details, please visit website www.icai.org (BOS/ Announcement/227/12(1) dated 16th August, 2012. — Final Examinations (Regn. 29) Examination held in May and November every year. Conditions for eligibility as given below: Should have passed Old Intermediate/PE-II Examination/ Professional Competence Examination (PCE)/IPCC / Intermediate) Should have completed or is serving the last twelve months of Articleship as on the first day of the month in which the examination is held. (applicable in case of three years articleship; i.e., for the students who commence articles after PE II) Should have completed or is serving the last 6 months of articleship as on the first day of the month in which examination is held (applicable to students who commence articles after CPT, for a period of three and half years or IPCC / Intermediate for a period of 3 years)

Chartered Accountants Act and Regulations 6.3 R7ima5ine Celebrating 1949 - 2023 BCAS REFERENCER 2023-24 61 Years of Continuous Publication • Proposed New Scheme of Education (Source: Board of Studies, ICAI) Register for Foundation after passing class 10 (Reg valid for 4 yrs) Appear for Foundation after appearing for 10+2 exam & completion of 4 months from reg (Passing Marks = Min. 50% in each paper) Register for Intermediate course after passing Foundation exam / graduate or post graduate with requsite marks (Reg valid for 5 yrs + 5 yrs revalidation) Registration of Intermediate Course would also be treated as registered for Business Accounting Associate (BAA) Appear for Intermediate (6 papers - 2 groups) after completion of study period of 8 months (passing marks 40% in each paper and 50% aggregate in each group) Pass both groups of Intermediate, complete integrated course on Information Technology and soft skills and commence articleship Register for Final Course (Reg valid for 10 years & can be revalidated thereafter) Articleship period will be 2 years of which 2nd year can be for industrial training (eligible for 24 days leaves for 2 years) Undergo Advanced ICITSSC, Pass self paced online modules and complete articleship before appearing for final examination Appear for Final exam (6 papers - 2 groups) after and completion of 6 months from end of articleship (passing marks 40% in each paper and 50% aggregate in each group) If unsuccessful, apply for Business Accounting Associate A candidate getting exemption in any paper will need to pass the remaining papers within next 3 attempts. The exemption can be availed further subject to passing marks of 50% in each paper Pass both groups of Final exam and apply for ICAI Membership. To apply for Certificate of Practice, undergo 1 year work experience under a fellow CA in practice. No. of years in Practice No. 0-3 years 1 3-5 years 3 5-10 years 7 10 yrs. and above 10 In addition to the above, full-time salaried employees who have continued as employee with the same employer for 3 years as on the date of registering as articled assistant shall also be entitled to give practical training as under – • Members Entitlement to train articled assistant (Regn. 43) Eligibility requirement for member giving practical training — Member should be in full time continuous practice. — No. of trainees (articled assistants) given below:

Allied Laws 6.4 R7ima5ine Celebrating 1949 - 2023 BCAS REFERENCER 2023-24 61 Years of Continuous Publication Total number of members – irrespective of whether associate or fellow, who are full time salaried employees Entitlement for articled trainees Up to 100 1 per employee Between 101 and 500 100 + 50% of the number of such employees above 100 (i.e., a maximum of 300) From 501 or more 300 + 20% of the number of such employees above 500 In case of discontinuance of practice, or resignation of partner such member shall not be entitled to train article assistant/s for the balance of their training period. Such articled assistant/s will continue to be trained in the same firm even though the other partners are already training up to their maximum entitlement. • Practical Training Record (Regn. 64) A monthly record of practical training of the Articled/Audit Assistant is required to be maintained w.e.f. 1-4-1995 in respect of all articled trainees commencing articles thereafter. — A monthly training record specifying the areas in which the articled assistant has obtained work experience with corresponding no. of days is to be maintained by the member in charge of training (MIT) or Principal. — A report of the practical training on the basis of such monthly record is to be enclosed with Forms 108/109 [Regulations 64(1) & 64(2)], in all cases of completion/ termination. (Refer Training Guide issued by the Institute - https://www.icai.org/post.html?post_ id=4117&c_id=115) • Stipend for Articled Assistant (Regn. 48) Minimum monthly stipend as shown below (w.e.f. 23rd January, 2015) Amt (`) Population of normal place of service 1st year 2nd year 3rd year 20 lakh or above 2,000 2,500 3,000 4 lakh or more but below 20 lakh 1,500 2,000 2,500 Below 4 lakh 1,000 1,500 2,000 Payment to be made by account payee cheque or credit to bank account of articled assistant. Stamped receipt to be obtained by principal. Population figures on the basis of last published census figures. • Leave (Regn.59) Entitlement of leave** = Period worked (excluding leave) /6 ** Subject to a maximum entitlement of 156 days for three years articleship. Stipend is payable only for such period and not for period of excess leave taken. • Period of training (Regn. 50, 71) Article assistant, 3 years for Intermediate qualified students/Direct Entry Scheme. Audit assistant 4 years for Intermediate qualified students • Transfer/Termination of Articleship [Regulation 56(1)] In partial modification of the announcement dated 30th June, 2009 regarding transfer/ termination of articles the Council has recent decided that the transfer/termination of articleship in terms of Regulation 56(1) of the Chartered Accountants Regulations, 1988 (https://www.icai.org/new_post.html?post_ id=4639) shall be permissible on the grounds as stated below: –

Chartered Accountants Act and Regulations 6.5 R7ima5ine Celebrating 1949 - 2023 BCAS REFERENCER 2023-24 61 Years of Continuous Publication — Transfer/termination of articles is permitted without any restriction during the first year of articles. — During rest of the articleship period on satisfying anyone or more of the conditions as stated below: – Medical grounds requiring discontinuance of articles for a minimum period of three months (on production of a Medical Certificate issued by a Government Hospital). Transfer of parent(s) to another city. [Proof of Relocation, eg registered rent agreement, transfer warrant of parents in employment] Misconduct involving moral turpitude. Other justifiable circumstances/ reasons: — 1. Grounds already permissible in the Chartered Accountants Regulations, 1988 as amended (on submission of requisite proof of the Act warranting transfer/termination of articleship): — a. Industrial Training (Regulation 51) b. Secondment of articles (Regulation 54) c. Conversion from PCC to IPCC (for termination of articles only. Reregistration of articles to be allowed only after passing Group-I of IPCC) d. Death of Principal [Regulation 57(1)(c)] e. Ceasing of practice by the Principal [Regulation 57(1)(a)] f. Removal of name of the Principal from the Register of Member due to any reason [Regulation 57(l)(b)] 2. Marriage (only if there is relocation to another city involving distance of 50 kms). 3. Irregular payment or nonpayment of stipend with reference to Regulation 67. 4. Articled assistant desires to serve balance period of training outside India. 5. Shifting by the Principal to another city involving distance more than 50 kms. The articled assistants are required to get the consent of the Institute, with a letter from Principal to be filed along with Form 109 filed on ICAI Self Service Portal with consent OTP by the Principal in their own interest. The request, on anyone or more of the aforesaid grounds of an articled assistant on a plain paper along with the recommendation/ consent of the Principal for transfer/termination of articleship accompanied by evidence/proof (selfattested by the articled assistant) to the satisfaction of the Institute be made. Request for transfer not accompanied by consent of Principal shall not be accepted. Not applicable in case of Transfer for Industrial Training In case of dispute between Principal and articled assistant, the matter be settled amicably among the articled assistant and the Principal concerned and the Institute shall not interfere in such cases. • Training in Industry (Regn. 51, 72) — Eligibility: Articled or audit assistant passing Intermediate/ PE-II/PCC/IPCC Examination.

Allied Laws 6.6 R7ima5ine Celebrating 1949 - 2023 BCAS REFERENCER 2023-24 61 Years of Continuous Publication — Period: Minimum period may range between 9 and 18 months during last year of practical training. — Only with recognised financial/ commercial/industrial undertaking with minimum fixed assets of ` 1 crore or minimum total turnover of ` 10 crore or a minimum paid- up share capital of ` 50 lakh or in any other institution or organisation approved by the Council. — Training under a member of the Institute who has been a member for continuous period of at least three years. (Associates-1 trainee. Fellows- 2 trainees) — Intimation of intention to Principal under whom serving earlier, at least three months in advance. — Agreement in triplicate in Form 104 to be executed. • Office hours (Regn. 60) — An articled assistant shall work 35 hours per week. — The articled assistant should undergo practical training in accordance with the guidelines of the Institute between 9.30 a.m. and 5.30 p.m. — The articled assistant shall not be permitted to attend colleges/other institutions for graduation or any other course between 9.30 a.m. and 5.30 p.m. • Other courses of study during training (Regn. 65) — Cannot be undertaken without prior permission of the Council of the Institute. — Permission is normally granted on a specific prior online application in Form 112 on self service portal for permission in respect of all courses other than those specified in a negative list that may be specified by the Council from time to time. — In case of attending of regular classes, the same should be outside normal office hours. — Only one course permitted at a time during training period. — In the event of breach of guidelines and not taking permission as required, the articles already undergone shall be derecognised for such period as the Institute may decide. In case an articled assistant is found not undergoing articles in the manner prescribed, he shall be debarred from appearing in the exam up to 3 consecutive exams besides cancellation of such period of articles. The concerned member who allowed him to be such an articled assistant be subject to punitive action besides withdrawing either partly or fully his eligibility to train articled assistant. In Peer Review, the reviewer be required to verify whether training is imparted to the articled assistants in the manner prescribed. • Other occupation during training (Regn. 65) — Cannot engage without permission of Council. — Permission normally granted for being sleeping partner in a firm, directorship in a family company and lectureship in college (not exceeding 9 hours per week) in subjects useful for CA course, subject to fulfilment of certain conditions. • Implementation of New GMCS Programme The Council has decided that the General Management and Communication Skills (GMCS) Programme, presently being organised for 15 days for the CA students should be organised twice during the period of articled training as under: — GMCS-I (15 days) – during 1st year of articled training

Chartered Accountants Act and Regulations 6.7 R7ima5ine Celebrating 1949 - 2023 BCAS REFERENCER 2023-24 61 Years of Continuous Publication — GMCS-II (15 days) – after completion of 18 months of training but before completion of articled training The fee for each programme of GMCS I & II shall be ` 9,000/- only. • Miscellaneous — Secondment The articled assistant can be seconded to another member eligible to train articled assistant/s by mutual consent. Student has to submit form for secondment to his Principal who after completing the same has to submit the same to Regional Office of ICAI. The Principal can, with the prior consent of the articled assistant/s, second the articled assistant/s to another eligible member as per above procedure. The member to whom the articled assistant/s is seconded to should be eligible to train articled assistant/s. Maximum articled assistant/s a member can train in case of secondment shall be 2. Aggregate period of secondment shall not exceed 1 year, minimum duration under one member should be four months. In case secondment done to a member in an industry the period shall not exceed 1 year. Principal to – Pay the stipend during secondment – Keep record of training undergone in secondment. No need to execute a separate deed in case of secondment. (2) Commonly Used Forms – to be applied on The ICAI Self Service Portal Form No. Description 2 Application for Associate Membership 3 Application for Fellow Membership 6 Certificate of Practice – as an Associate Member – as a Fellow Member 9 Application for Restoration of Membership" (i) within 3 years of removal (ii) after 3 years of removal but before 5 years (iii) after 5 years of removal 18 Particulars of offices and firms 101 Restoration of Certificate of Practice 102 Agreement for Articled Assistantship 104 Agreement for Industrial Training 105 Completion/Termination of Industrial Training 107 Supplementary Deed of Articles (on account of excess leave) 108 to 113 & 117 Completion of Articled Assistantship, Terminations; Other engagements; Registration of Audit assistant; Approval of Firm Name

Allied Laws 6.8 R7ima5ine Celebrating 1949 - 2023 BCAS REFERENCER 2023-24 61 Years of Continuous Publication (3) Membership Fees Particular Fees for all Members not holding Certificate of Practice Fees for Members of the age 60 years or above (as on 01.04.2021) but not holding Certificate of Practice Associate Membership Fee ` 1,500 + 18% GST = 1,770 ` 1,100/- + 18% GST = 1,298 Fellow Membership Fee ` 3,000/- + 18% GST = 3,540 ` 2,300/- + 18% GST = 2,714 Fees for all Members holding Certificate of Practice Particular Associate Membership Fee Fellow Membership Fee Membership Fees 1,500 3,000 Certificate of Practice fee 3,000 4,000 GST @ 18% 810 1,260 Total 5,310 8,260 ICAI announced on 19/04/2020 that 10 Year Membership/COP fees can be paid in advance, if paid so in lump sum there would be protection from escalation of fees if any. (4) Recommended scale of fees for work done by Chartered Accountants (Refer to guidelines of ICAI Committee for Capacity Building of Members in Practice – Visit “www.icai. org.in” or https://cmpbenefits.icai.org/wp-content/uploads/2020/02/Details-download.pdf (5) Students Fees Payable All fees are to be paid online through the ICAI Self Service Portal. • FOUNDATION COURSE FEE S. No. Details of Fee ` For Foreign Student US$ 1 Cost of Prospectus 200 20 2 Foundation Registration Fee 9,000 700 3 Subscription for Students’ Journal (For one Year) (Optional) 200 20 4 Subscription for Members’ Journal (For one Year) (Optional) 400 40 Total 9,800 780 • INTERMEDIATE COURSE FEE Registration Options/Various charges Both Groups Both Groups Group I / II Group I / II ` US$ ` US$ Registration fee 15,000 -- 11,000 -- Students’ Activities Fee 2,000 -- 2,000* -- Registration fee as articled assistant 1,000 -- -- -- Total Fees 18,000 1,000 13,000 600 *to be paid once

Chartered Accountants Act and Regulations 6.9 R7ima5ine Celebrating 1949 - 2023 BCAS REFERENCER 2023-24 61 Years of Continuous Publication Cost of Prospectus ` 200/- (US$ 20) to be paid by Direct Entry students in addition to above fees. • FINAL COURSE FEE Details ` For foreign students US$ Final Registration Fee 22,000 1,100 (6) Activities allowed or not as per Schedule I or Schedule II offences to the Chartered Accountant’s Act [Read with the Revised Code of Ethics effective from 01-07-2020] A practicing CA CANNOT A practicing CA CAN Solicit work Give his audit report to the client on his letterhead Give a client’s balance sheet on his letterhead. Use a prescribed logo on visiting cards, letterheads, etc. Describe on his letterhead or visiting cards association with other Indian/ Foreign firms. Describe himself as a CA. in greeting cards and invitation cards. Can use the prefix CA. before his name. Use a firm name not approved by the Institute Advertise in the official Yellow pages brought out by the telephone authorities. Have his name displayed in Yellow pages in bold. Display his firm’s name board in a manner that it does not smack of advertisement. — Advertise as per the notified guidelines. Respond to advertisements inviting applications for appointment of auditors Respond to advertisements/circular/tenders or enquiries in other areas when competing with non CAs. — In case of any other services, including audit services to be provided out of country Pay earnest money/security deposit in areas which are exclusive to CA as per law Pay – A reasonable amount as price for tender/bid document. – Earnest money/security deposit in other areas open to both Chartered Accountants and other professionals at their discretion. – Reasonable amount towards earnest money/security deposit, if any CAs are recruited in non-exclusive area. – Be a director simplicitor in a company without prior permission of Council. [The expression “Director Simplicitor” means an ordinary / simple Director. A member in practice is permitted generally to be a Director Simplicitor in any Company including a board-managed Company and as such he is not required to obtain any specific permission of the Council in this behalf unless he or any of his partners is interested in such Company as an auditor, irrespective of whether he and/or his relatives hold substantial interest in that Company] – Be a promoter or promoter director in a company without prior permission of Council.

Allied Laws 6.10 R7ima5ine Celebrating 1949 - 2023 BCAS REFERENCER 2023-24 61 Years of Continuous Publication – Be a Managing Director or Whole-time Director of a company with prior permission of Council. This permission is granted if such CA. and/or relative do not have substantial interest (i.e., more than 20%) in the company. However, w.e.f. 1-4-2005 the member is not permissible to do attest function. Website The Institute has permitted each member to – Establish their own websites – Ensure that their Websites are run on a ‘pull’ model and not a ‘push’ model of the technology – Ensure that any person who wishes to locate the member would only have access to the information – Ensure the information should be provided only on the basis of specific ‘pull’ request. A practicing CA CANNOT A practicing CA CAN Accept contingency or percentage based fees, except in the following cases: – A liquidator can accept his fee based on percentage of realisation of assets – An auditor of a co-operative society can accept fees based on percentage of paid-up capital, working capital, gross income/profits, or net income/profits – A valuer for direct tax purposes can accept fees based on the value of property valued. CAN share fees with other practicing CA. but not with others. Carry on any other business except with prior permission of the Council. Be involved in business through HUF so long as he is not Karta of HUF. Act as portfolio manager for his client. Carry on the profession of practicing Chartered Secretary, Cost Accountancy or as an Advocate with prior permission of the Council and provided the other professional body permits the same. Express his opinion on the financial statements of a concern in which his relatives as defined under the Companies Act or such relatives along with himself are substantially interested. Be the author of any books or articles and act as editor of professional journals. — Hold office in an honorary capacity in a charitable, educational or other noncommercial organisation. Disclose confidential information relating to client to a third party without client’s permission or unless he is required to do so under law.

Chartered Accountants Act and Regulations 6.11 R7ima5ine Celebrating 1949 - 2023 BCAS REFERENCER 2023-24 61 Years of Continuous Publication (7) Rules of Network and Merger–Demerger • RULES OF NETWORK AND MERGER– DEMERGER Practical framework of Network — Network is coming together of two or more firms to facilitate the better professional functioning of the affiliate member firms. — The Network is formed by two or more Firms registered with ICAI. — The approval of name is carried out by filing of Form ‘A’ — The Network is named by having the prefix “Affiliates/Members of ……” before the name of the network. — The Network is registered by making an Application in Form “B”. The Application has to be signed by the Authorised Partners of all the firms constituting the Network. — Only 1 Network is permissible per Firm amongst Indian firms. — The Network with a Foreign Firm is to be registered by Filing of Form “D” with ICAI by the Indian Firm. — Only 1 Network is permissible with a foreign firm. — The withdrawal from the Network by any Firm can be done by Filing Form “C”. Practical Framework of Mergers — The Rules of Merger & Demerger are as notified by ICAI. — The Merger takes place by Registration of a Merger Agreement in Form “E” to be submitted to ICAI. — The Merger Agreement has to be filled within 30 days of the reconstituted Partnership Deed. — Demerger can take place only if 75% or more of the Partners agree to Demerge. — The Demerger takes place by submission of Form “F”. Demerger cannot take place after 5 years of Merger. The Guidelines for Networking of Indian CA Firms 2021 dated 1st April 2022, are available at ICAI website at below link: https://resource.cdn.icai. org/64061mss51444.pdf Online Process of Formation of Networking of CA Firms is launched w.e.f. 01-04-2022. The networking tab is available under Firm Module in Self Service Portal (SSP) and members can now directly apply through Portal for approval and registration of Network. Three models of Networking – Options offered to Members o Following approaches are placed before the Members in practice, any one of which can be adopted by those desirous of expanding their practice: Approach I – Different firms coming together to form an Alliance with a new name of Alliance and continuing to practice independently and can showcase as an Alliance to the world. Approach II – Different firms coming together to form a Network with a new Network name and practicing in the name of firms belonging to Network. This Model is subdivided into following two options: Network of firms in existing model by practising in individual firm name Network of firms with a Lead firm acting on behalf of constituent firms of Network A B1 B2

Allied Laws 6.12 R7ima5ine Celebrating 1949 - 2023 BCAS REFERENCER 2023-24 61 Years of Continuous Publication o Firms may adopt any of the three Models that will be best suited for expansion of practice. It may be noted that different models may be suitable for different practitioners, depending upon their needs and inhibitions. Therefore, the intention is not to force any one particular model upon members, rather members are at liberty to continue with their existing model of practice and need not adopt any of the following models: New Approach A Registered Not recognised Partially regulated Existing Model B1 Registered To be recognised Regulated New Approach B2 Registered To be recognised Regulated S. No. Criteria Approach A Alliance Model Approach B1 Network Model Approach B2 Lead Firm Model 1 Name When four firms A & Co., B & Co., C & Co. and D & Co. come together to form an Alliance, they may name their Alliance as “ABCD”. In case they wish to use suffix, they will use the suffix “& Alliance” to their common name to make it “ABCD & Alliance”. When four firms A & Co., B & Co., C & Co. and D & Co. come together to form a Network, they may name their Network as “ABCD”. In case they wish to use suffix, they will use the suffix “& Affiliates” or “Network” to their common name to make it “ABCD & Affiliates” or “ABCD Network”. When four firms A & Co., B & Co., C & Co. and D & Co. come together to form a Network, they will suffix “& Affiliates” or “Network” to one of the firms selected by constituent firms as Lead firm e.g. if A & Co. is chosen as Lead firm, then name of Network will be “A & Co. & Affiliates” In all professional stationery, the memberfirms can mention that they are member-firms of so & so Alliance. The Alliance can also mention in its professional stationery that so & so firms are part of its Alliance. In all professional stationery, the memberfirms can mention that they are member-firms of so & so Network. The Network can also mention in its professional stationery that so & so firms are part of its Network. In all professional stationery, the memberfirms can mention that they are member-firms of so & so Network. The Network can also mention in its professional stationery that so & so firms are part of its Network.

Chartered Accountants Act and Regulations 6.13 R7ima5ine Celebrating 1949 - 2023 BCAS REFERENCER 2023-24 61 Years of Continuous Publication 2 Registration Alliance will be registered with ICAI. ICAI will allot unique Alliance Registration Number (ARN) Network will be registered with ICAI. ICAI will allot unique Network Registration Number (NRN) Network will be registered with ICAI. ICAI will allot unique Network Registration Number (NRN) 3 Practice Firms are free to carry on practice as independent firms, despite being constituents of Alliance. Alliance may direct the best practices to be followed by individual constituent firms. Firms belonging to one Alliance can’t be allowed to become Associates of another Alliance or Network, so that regulatory complexities are avoided. Firms are bound by internal integration agreement, and practice as independent firms, subject to internal agreement. Network’s decision prevails upon other firms. Firms belonging to one Network can’t be allowed to become Associates of another Network or Alliance, so that regulatory complexities are avoided. Firms can have an internal agreement recognising one of the firms as the lead firm, depending upon the specialism and expertise required for each assignment. The individual firms can carry on practice as independent firms. The lead firm and its constituents can’t be allowed to become Associates of another Network or Alliance, so that regulatory complexities are avoided. 4 Empanelment All firms in Alliance can apply for empanelment separately as individual firms. Their coming together is basically for nonaudit services. For audit practice, they all remain as independent practitioners All firms belonging to Network can apply for empanelment, separately as individual firms. ICAI will put in efforts to secure recognition of the combined strength and resources. Lead firm is entitled to apply for empanelment in its own name, but by way of internal agreement, it will be on behalf of entire Network. When Lead firm applies for empanelment, other constituent firms cannot apply. ICAI will put in efforts to secure recognition of the combined strength and resources 5 Conflict Conflict exists e.g. if one firm does statutory audit of an entity, another firm in Alliance cannot do internal audit. If one firm does audit work, another firm in the Alliance cannot perform non-audit services of same client. Rotation of audit amongst constituent firms will not be permitted Conflict exists e.g. if one firm does statutory audit of an entity, another firm in Network cannot do internal audit. If one firm does audit work, another firm in the Network cannot perform non-audit services of same client. Rotation of audit amongst constituent firms will not be permitted Conflict exists e.g. if one firm does statutory audit of an entity, another firm in Network cannot do internal audit. If one firm does audit work, another firm in the Network cannot perform non-audit services of same client. Rotation of audit amongst constituent firms will not be permitted

Allied Laws 6.14 R7ima5ine Celebrating 1949 - 2023 BCAS REFERENCER 2023-24 61 Years of Continuous Publication 6 Characteristics Firms come together for mutual benefits Individual firms take up professional work on their own Since all constituents are Indian CA firms, referral of work and sharing of fees/ profits is permitted. They should have own bye-laws, the provisions of which should not run contrary to CA Act, CA Regulations, ICAI Code of Ethics and Council Guidelines Firms come together for mutual benefits by pooling resources, showcase their combined strength, and have uniform policies, technology and collaterals, and showcase themselves as one big unit Quality control is well documented and complied with, which is applicable to network as well as to individual constituent firms. Individual firms take up professional work on their own, and a partner of said firm can sign the reports and documents Since all constituents are Indian CA firms, referral of work and sharing of fees/ profits is permitted. Bye-laws / agreement is entered by all firms, the provisions of which should not run contrary to CA Act, CA Regulations, ICAI Code of Ethics and Council Guidelines Firms come together for mutual benefits by pooling resources, showcase their combined strength, and have uniform policies, technology and collaterals, and showcase themselves as one big unit Quality control is well documented and complied with, which is applicable to network as well as to individual constituent firms. Individual firms take up professional work on their own, and a partner of said firm can sign the reports and documents Since all constituents are Indian CA firms, referral of work and sharing of fees/ profits is permitted. Bye-laws / agreement is entered by all firms, the provisions of which should not run contrary to CA Act, CA Regulations, ICAI Code of Ethics and Council Guidelines 7 Accountability In case delinquency occurs in a particular assignment, then the firms that have jointly executed the assignment will be accountable. Therefore, division of work needs to be well documented. Whatever is taboo for a firm under Code of Ethics, is taboo for the Alliance as well i.e. whatever cannot be done by a firm, cannot be done by Alliance as well A partner of firm that gets appointment will sign reports and certificates In case delinquency occurs in a particular assignment, then the firms that have jointly executed the assignment will be accountable. Therefore, division of work needs to be well documented. Whatever is taboo for a firm under Code of Ethics, is taboo for the Network as well i.e. whatever cannot be done by a firm, cannot be done by Network as well In case delinquency occurs in a particular assignment, then the firms that have jointly executed the assignment will be accountable. Therefore, division of work needs to be well documented. Whatever is taboo for a firm under Code of Ethics, is taboo for the Network as well i.e. whatever cannot be done by a firm, cannot be done by Network as well

Chartered Accountants Act and Regulations 6.15 R7ima5ine Celebrating 1949 - 2023 BCAS REFERENCER 2023-24 61 Years of Continuous Publication Alliance shall have to submit to ICAI copy of internal agreement signed by an authorised partner of all constituent firms. A partner of firm that gets appointment will sign reports and certificates Network shall have to submit to ICAI copy of internal agreement signed by an authorised partner of all constituent firms A partner of lead firm will sign reports and certificates, as it is the lead firm which will get the appointment in its name Network shall have to submit to ICAI copy of internal agreement signed by an authorised partner of all constituent firms 8 Reconstitution Firms are free to join and exit Alliance. Reconstitution has to be registered with ICAI Firms are bound by Network’s internal integration agreement. Reconstitution has to be registered with ICAI Firms are bound by Network’s internal integration agreement. Reconstitution has to be registered with ICAI 9 Exit/ closure Much more easier to quit the arrangement If one or more firms quit the Alliance, it will not deprive the remaining firms from doing the work they have already secured by virtue of Alliance. If one or more firms quit the Network, it will not deprive the remaining firms from doing the work they have already secured by virtue of Network. Easy to quit the arrangement If one or more firms quit the Network, it will not deprive the remaining firms from doing the work they have already secured by virtue of Network. If Lead firm quits the network, after having secured professional work, then it will have to share the fees with other constituent firms. A clause to this effect can be incorporated in the internal agreement (8) Auditor • Appointment of Auditors – Section 139 of Companies Act, 2013 — Instead of reappointment at each AGM, auditor to be appointed for a block of five years. — Reappointment needs to be ratified at each AGM. — Appointment shall be made taking into recommendations of the Audit Committee/Board — At each AGM, members will have option to: Rotate Audit partner/team Appoint joint auditor — Maximum of 20 companies (including private limited companies) can be audited by an individual Auditor — Auditors need to provide a written consent and also indicate whether they satisfy the criteria provided in Section 141 of Companies Act, 2013

Allied Laws 6.16 R7ima5ine Celebrating 1949 - 2023 BCAS REFERENCER 2023-24 61 Years of Continuous Publication — Firm includes an LLP incorporated under the Limited Liability Partnership Act, 2008 • Rotation of Auditors – Section 139 of Companies Act, 2013 — Mandatory auditor rotation Companies covered by rotation (Listed companies, unlisted public companies with paid-up share capital > ` 10 crore, private limited companies with paid-up share capital > ` 20 crore, all companies having public borrowings from banks/financial Institutions or public deposit > ` 50 crore) — While a partnership firm would be eligible for two consecutive five year terms an individual as auditor would be eligible for one such term. — Term prior to commencement of Companies Act, 2013 will be retrospectively reckoned for computing 5-10 year validity. — After completion of audit engagement term, the Auditor will be subject to a continuous five year cool off period. — Incoming auditor cannot be an associate or from same network as the outgoing auditor. — If a partner who is in charge of an audit firm and also certifies the financial statements of a company, retires from the said firm and joins another firm of chartered accountants, such other firm shall also be ineligible to be appointed for a period of five years. — Where a company has appointed two or more persons as joint auditors the rotation shall be done in such a manner that all of the joint auditors do not complete their term in the same year. • Disqualification and Independence criteria – Section 141 of Companies Act, 2013 He is not a — Officer/employee of company (or partner of/in employment of such person) — Auditor in more than 20 companies — Convicted by Court — Body Corporate, other than LLP — Holding security of/interest in or indebted to company/ its subsidiary/ associate/holding company/subsidiary of its holding company exceeding ` 1 lakh/ ` 5 lakh. — Person whose relative is Director/KMP of company — Full time employment elsewhere • Non-audit services – Section 144 of Companies Act, 2013 The following are the prohibited services by auditor and related entities, the transition period is 1 year: — Management services — Outsourced financial services — Design and implementation of financial information system — Investment advisory — Actuarial services — Investment banking — Internal Audit — Accounting & Book-keeping — Any other prescribed service Prohibition extends to holding and subsidiary companies. All non-audit services to be approved by Audit Committee or Board of Directors

Chartered Accountants Act and Regulations 6.17 R7ima5ine Celebrating 1949 - 2023 BCAS REFERENCER 2023-24 61 Years of Continuous Publication • Duties and Liabilities of auditors – Sections 143 and 147 of Companies Act, 2013 Sr. No. Duties of Auditor u/s. 143 of the New Companies Act, 2013 Liabilities of Auditor u/s. 147 of the New Companies Act, 2013 1 Auditor to report on specified matters, in the audit report Contravention of provisions punishable with fine not less than ` 25,000 up to ` 5,00,000 2 Responsibility to report offence involving fraud to the Central Government In case of wilful or contravention done knowingly or with wilful intent to deceive, imprisonment up to one year and fine not less than ` 1,00,000 but which may extend up to ` 25,00,000 3 National Financial Reporting Authority can specify additional matters for reporting If convicted also liable to refund remuneration and liable to pay damages (to company, statutory bodies or authorities) arising out of the incorrect reporting • Fraud reporting requirements – Section 143 and Rule 13 of Companies (Audit and Auditors) Rules — Auditor to report within 2 days of knowledge of fraud to Board/Audit Committee — Reporting of frauds by auditor involving amount more than ` 1 crore Audit Committee/Board must give response to Auditor within 45 days Within 15 days of receiving response, Auditor must report to Central Government the response along with comments. (report even if no response is received) — Reporting of frauds by auditor involving amount less than ` 1 crore — Auditor must report to the Board/Audit Committee describing approximate amount involved; and parties involved — Board Report to disclose: nature of fraud, approximate amount, parties involved, if remedial action not taken and remedial action taken. — Fraud reporting provisions apply also to secretarial, cost auditors, branch auditor and internal auditor — In case of non-compliance with the reporting obligation on frauds punishable with fine not less than ` 1 lakh but which may extend up to ` 25 lakhs. • Tax Audit under Income-tax Act — Firm of CAs not to accept more than 60 tax audits per partner in each assessment year. — Member not to accept more than 60 tax audits. — Record of Tax Audit Assignments to be maintained. (Refer ICAI Journal May, 2003 page 1127 for the format) — Tax Auditor cannot act as an Internal Auditor.

Allied Laws 6.18 R7ima5ine Celebrating 1949 - 2023 BCAS REFERENCER 2023-24 61 Years of Continuous Publication (9) Frequently Asked Questions on Code of Ethics - Existing Question Answer Council Decision and Date / Condition Clarification on a member in practice being a Karta of a HUF making investment. A member in practice engaged as Karta of a Hindu undivided Family (HUF) doing family business will be within the limits prescribed by Council if he makes investments from the funds pertaining to HUF only, provided he is not actively engaged in the management of the said business S.No. 4 of “Permission to be granted specifically” of Appendix 9 to the Chartered A c c o u n t a n t s Regulations, 1988 Clarification on prohibition of simultaneously undertaking Concurrent Audit and Quarterly Review of the same Bank Since queries are being received from members at large on the issue, it is accordingly hereby clarified that concurrent audit and the assignment of quarterly review of the same Bank cannot be undertaken simultaneously as the concurrent audit being a kind of internal audit and the quarterly review being a kind of statutory audit undertaken simultaneously are prohibited under the provisions of ‘Guidance Note on Independence of Auditors Whether a member can accept appointment as Statutory Auditor of certain branch(es) of a Bank, while he is the Revenue Auditor of different branch(es) of the same Bank No, a member is not permitted to accept the appointment as Statutory Auditor of certain branch(es) of a Bank while he is the Revenue Auditor of different branch(es) of the same Bank FAQ 22-04-2020 Whether the Internal Auditor of an entity/ Bank can undertake consultancy work of the same Bank? There is no restriction for the consultancy work if it is undertaken by a member along with the assignment of Internal Audit FAQ 22-04-2020 Whether the Statutory Auditor of a Bank can accept Stock audit of the same branch or different branch of the same Bank The Stock Audit and Statutory Audit are not permissible to be done simultaneously since Stock Audit is kind of management function, which cannot be done simultaneously with the Statutory Audit (whether pertaining to the same branch of different branch) FAQ 22-04-2020 Whether the Concurrent Auditor of a Bank can accept Tax audit of the same Bank? No, the Concurrent Auditor of a Bank cannot accept the Tax audit assignment of the same Bank, as it would affect independence in terms of the provisions of Code of Ethics that Statutory Audit and Internal Audit cannot be done together, as also in terms of the provisions of Section 288 of the Income Tax Act, 1961 which prohibits undertaking Concurrent Audit and Tax Audit simultaneously. FAQ 22-04-2020

Chartered Accountants Act and Regulations 6.19 R7ima5ine Celebrating 1949 - 2023 BCAS REFERENCER 2023-24 61 Years of Continuous Publication Question Answer Council Decision and Date / Condition Whether the Auditor of a Bank can hold credit card of the same Bank There is no prohibition in holding credit card of bank where a CA Firm is Auditor of the Bank. Indebtedness will apply if there is outstanding balance of ` 10, 000/-* beyond prescribed credit period limit on credit card given to holder of credit card. * As per the limit of indebtedness existing as on date FAQ 22-04-2020 Whether the Concurrent Auditor of a Bank can accept the assignment of its Statutory Audit, after relinquishing the assignment of the Concurrent Audit of the Bank? Yes, the Concurrent Auditor of a Bank can choose to relinquish the Concurrent Audit, and accept the assignment of Statutory Audit. He can, of course, also choose to continue with the Concurrent Audit assignment, without accepting the Statutory Audit. Provided, where the Concurrent Audit Assignment for the relevant year has already been commenced at the time of acceptance of Statutory Audit, the Statutory Audit for the said year should not be accepted. FAQ 22-04-2020 Can Internal Auditor undertake Goods and Service Tax (GST) Audit simultaneously Internal auditor of an assesee, whether working with the organization or independently practising Chartered Accountant being an individual chartered accountant or a firm of chartered accountants, cannot be appointed as Tax auditor (under the Income Tax Act, 1961). Upon consideration, the Council has decided that based on the conflict in roles as statutory and internal auditor simultaneously, the bar on internal auditor of an entity to accept tax audit (under Income Tax Act, 1961) will also be applicable to GST Audit (under the Central Goods and Service Act, 2017). Accordingly, it is clarified that an Internal Auditor of an entity cannot undertake GST Audit of the same entity. 378th Meeting of Council held on 26th and 27th September, 2018, Whether a member in practice is permitted to have his name published in Telephone Directory Yes, a member in practice is permitted to have his name published in the telephone directory subject to certain conditions Para (c) under Clause (6) of Part I of the First Schedule to the Act Can a Chartered Accountant provide `Portfolio Management Services’ (PMS) as part of CA practice? No, the Explanation expressly bars the activities of broking, underwriting and Portfolio Management. Clause (xix) of the definition of ‘ M a n a g e m e n t Consultancy and other Services’ as appearing in Appendix-3

Allied Laws 6.20 R7ima5ine Celebrating 1949 - 2023 BCAS REFERENCER 2023-24 61 Years of Continuous Publication Question Answer Council Decision and Date / Condition Can a Chartered Accountant in practice seek professional work from his professional colleagues? A member is permitted to apply or request for or to invite or to secure professional work from another Chartered Accountant in practice. The issue of advertisement or a circular by a Chartered Accountant, seeking work from professional colleagues on any basis whatsoever is in violation of Clause (6) of Part I of the First Schedule to the Act. However, classified advertisement in the Journal/Newsletter of the Institute is permissible in this regard. A member is permitted to issue a classified advertisement in the Journal/Newsletter of the Institute intended to give information for sharing professional work on assignment basis or for seeking professional work on partnership basis or salaried employment in the field of accounting profession provided it only contains the accountant’s name, address, telephone, fax number and E-mail address. proviso (i) of Clause (6) of Part-I of the First Schedule Whether a member in practice can be a Director Simplicitor of a company? Yes, a member in practice is permitted generally to be a Director Simplicitor in a company provided he is not a Managing Director or Wholetime Director and is required only in the Board Meetings of the company and not paid any remuneration except for attending such meetings. Specific permission of the council is not required in this regard. FAQ July 2018 Can a member in practice print QR (Quick response) code on his visiting cards, facilitating easy access to information? Yes, printing of QR Code on the visiting Cards is permissible, provided that it does not contain information that is not otherwise permissible to be printed on a visiting Card. FAQ July 2018 Whether a member in practice can transact in derivatives’ transactions? Yes. It is permissible for a member in practice to transact in derivatives in his individual capacity (and not for clients or any other person). FAQ 04-08-2021 What are the types of derivative instruments allowed to be transacted in by members in practice? Members in practice are allowed to transact only in future and options derivatives. FAQ 04-08-2021 Which products of derivatives are permissible to be transacted by members in practice? Members in practice are allowed to transact in equity and currency derivatives. FAQ 04-08-2021 Whether members in practice are allowed to transact in commodity derivatives? No. It is not permissible for members in practice to transact in commodity derivative transactions. FAQ 04-08-2021

Chartered Accountants Act and Regulations 6.21 R7ima5ine Celebrating 1949 - 2023 BCAS REFERENCER 2023-24 61 Years of Continuous Publication Question Answer Council Decision and Date / Condition Whether members in practice are allowed to transact in derivatives’ transactions in the name of his proprietary firm or partnership firm ? No. Members in practice are not allowed to transact in derivatives in the name of his proprietary firm or partnership firm. FAQ 04-08-2021 Whether members in practice allowed to transact in Index derivatives? Members in practice are allowed to transact in Index derivatives with respect to equity and currency. FAQ 04-08-2021 Whether members in practice are required to seek permission from the council to transact in derivative transactions? No, there is no requirement to take permission from the Council. FAQ 04-08-2021 Whether member not holding Certificate of Practice can transact in Derivative Transaction on behalf of others? There is no restriction for members not holding Certificate of Practice to transact in Derivatives transaction on his own account or on behalf of others. FAQ 04-08-2021 Can members in practice advice their clients on investment in securities or other financial instrument? Yes, in view of the entry number (xx) of Management Consultancy and other Services u/s 2(2)(iv) of Chartered Accountants Act, 1949, member in practice is generally permitted to provide Investment counseling in respect of securities [as defined in the Securities Contracts (Regulation) Act, 1956 and other financial instruments. FAQ 04-08-2021 Whether communication on E-mail would suffice the requirement of Clause (8) of Part-I of First Schedule to The Chartered Accountants Act, 1949? The requirement of communication under Clause (8) of Part-I of First Schedule to The Chartered Accountants Act, 1949 is deemed to be complete on the delivery of communication to the retiring auditor. Accordingly, members are required to communicate in such a manner as to retain in their hands positive evidence of the delivery of the communication to the addressee. With regard to communication through E-mail, the communication would be deemed as complete on receipt of acknowledgement from the retiring auditor’s E-mail address registered with the Institute or his last known official E-mail address. FAQ 10-06-2021

Allied Laws 6.22 R7ima5ine Celebrating 1949 - 2023 BCAS REFERENCER 2023-24 61 Years of Continuous Publication Question Answer Council Decision and Date / Condition Has the communication vide E-mail replaced the other modes of communication? No. the earlier modes of communication continue to be valid. The communication vide E-mail is only an additional alternative mode of communication. FAQ 10-06-2021 How can the Incoming auditor know the E-mail id. of retiring auditor? The Incoming auditor may seek the E-mail id. from the retiring auditor on phone, or from the client. FAQ 10-06-2021 Which of the two mail ids – registered with the Institute , or last known official id. is preferable for communication? The member may communicate on either of the two. There is no order of the preference. FAQ 10-06-2021 Whether communication on E-mail would be valid only where post offices or offices of CA Firms are not open? No, the members may use the option of E-mail irrespective of opening of post office or office of CA Firm. FAQ 10-06-2021 What will be the position if the Incoming auditor sends an E-mail , however, does not receive an acknowledgement from the retiring auditor ? In such situation, it would not be reckoned as valid communication, as the positive evidence of delivery is not available FAQ 10-06-2021 What kind of acknowledgment from the retiring auditor will be deemed as valid to qualify for positive evidence of delivery? Any kind of acknowledgement would be deemed as positive evidence of delivery, e.g. writing “ok” , “Received” , etc. FAQ 10-06-2021 Whether the Incoming auditor can send request for acknowledgement of receipt of communication from the retiring auditor? Yes, the Incoming auditor can send request for acknowledgement of receipt of communication from the retiring auditor. However, it would be deemed as positive evidence of delivery only if the retiring auditor accepts the request, and sends acknowledgement. FAQ 10-06-2021 Whether the Incoming auditor may commence the Audit immediately after receiving acknowledgement from the retiring auditor? As the communication through E-mail is instant, the receipt of acknowledgement will be a valid proof of delivery as well as entitlement to , acceptance of the Audit, unless of course, the retiring auditor has raised some objection(s) to such change. FAQ 10-06-2021

Chartered Accountants Act and Regulations 6.23 R7ima5ine Celebrating 1949 - 2023 BCAS REFERENCER 2023-24 61 Years of Continuous Publication Question Answer Council Decision and Date / Condition Whether a member of the Institute will be deemed to be guilty of professional misconduct if he accepts his appointment as an auditor immediately after intimating his appointment over the phone to the previous auditor? Yes, the member would be held guilty of professional misconduct for the following reasons: (a) That he had failed to communicate with the retiring auditor in writing; and (b) That he did not wait for a reasonable length of time for a reply to be received from him. FAQ 10-06-2021 In case of appointments done by Government entities/Companies/ Banks or their Branches, the time for acceptance of audit is sometimes so little that there is no time to wait for the reply of the Retiring auditor. What should be the recourse in such case? In case the time schedule given for the assignment is such that there is no time to wait for the reply from the retiring auditor, the Incoming auditor may give a conditional acceptance of the appointment and commence the work which needs to be attended to immediately after he has sent the communication to the retiring auditor in accordance with this clause. In his acceptance letter, he should make clear to the client that his acceptance of appointment is subject to professional objections, if any, from the retiring auditor and that he will decide about his final acceptance after taking into account the information received from the retiring auditor. FAQ 10-06-2021 Recent Decisions of Ethical Standards Board — A CA Firm may register itself on Udyog Aadhar, a web portal of Ministry of Micro, Small and Medium Enterprises. — There is no prohibition for internal auditor of a company to acquire/purchase shares of the said Company. — It is not permissible for a member to use WhatsApp to send messages to make people aware about his practice, and mention the services provided therein. — A Chartered Accountant in practice being Director Simplicitor in a Company cannot sign ROC Forms of the Company as it is a direct conflict of role. — A Chartered Accountant in practice can act as Authorized Representative of a Foreign Company, provided he is not the auditor of the said Company. — It is permissible for two or more Chartered Accountants in practice collectively to have joint training session for their clients on GST, and share the fees collected from the clients thereof. — A Chartered Accountant in practice can provide services through kiosk only if the services provided are professional activities of a practicing chartered accountant, permitted under the Act. — A Chartered Accountant in service is allowed to take e-return registration if it does not conflict with employment obligation. However, he cannot certify the return. — In case where Chartered Accountant in practice is a non- executive director in a company, he or a Firm in which he is a partner, should not accept the appointment as a statutory auditor of a Company which is

Allied Laws 6.24 R7ima5ine Celebrating 1949 - 2023 BCAS REFERENCER 2023-24 61 Years of Continuous Publication a joint venture of the original Company, as it would impact independence. — A Chartered Accountant in practice may be an equity research adviser, but he cannot publish retail report, as it would amount to other business or occupation. — A Chartered Accountant, who is a member of a Trust, cannot be the auditor of the said trust. — A Chartered Accountant in practice may engage himself as Registration Authority (RA) for obtaining digital signatures for clients. — A Chartered Accountant can hold the credit card of a bank when he is also the auditor of the bank, provided the outstanding balance on the said card does not exceed Rs 10000 beyond the prescribed credit period limit on credit card given to him — A Chartered Accountant in practice can act as mediator in Court, since acting as a “mediator” would be deemed to be covered within the meaning of “arbitrator’; which is inter- alia permitted to members in practice as per Regulation 191 of the Chartered Accountants Regulations, 1988. — A Chartered Accountant in practice is not permitted to accept audit assignment of a bank in case he has taken loan against a Fixed Deposit held by him in that bank — The Ethical Standards Board in 2013 generally apply the stipulations contained in the then amended Rule 11U of Income Tax generally, wherein statutory auditor /tax auditor cannot be the valuer of unquoted equity shares of the same entity. The Board has at its Meeting held in January, 2017 has reviewed the above, and decided that where law prohibits for instance in the Income Tax Act and the rules framed thereunder, such prohibition on statutory auditor/tax auditor to be the valuer will continue, but where there is no specific restriction under any law, the said eventuality will be permissible, subject to compliance with the provisions, as contained in the Code of Ethics relating to independence. — The Ethical Standards Board had in 2011 decided that it is not permissible for a member who has been Director of a Company, upon resignation from the Company to be appointed as an auditor of the said Company, and the cooling period for the same is 2 years. The Board has at its Meeting held in January, 2017 has reviewed the above, and noted that the Section 141 of Companies Act, 2013 on disqualification of auditors does not mention such prohibition; though threats pertaining to the said eventuality have been mentioned in Code of Ethics. Further, the Board was of the view that a member may take decision in such situation based on the provisions of Companies Act, 2013 and provisions of Code of Ethics — A Chartered Accountant in practice cannot become Financial Advisors and receive fees/ commission from Financial Institutions such as Mutual Funds, Insurance Companies, NBFCs etc — A Chartered Accountant cannot exercise lien over the client documents/records for nonpayment of his fees. — It is not permissible for CA Firm to print its vision and values behind the visiting cards, as it would result in solicitation and therefore would be violative of the provisions of Clause (6) of Part-I of First Schedule to the Chartered Accountants Act, 1949. — It is not permissible for Chartered Accountants in practice to take agencies of UTI, GIC or NSDL. — It is permissible for a member in practice to be a settlor of a trust. — A member in practice cannot hold Customs Brokers Licence under section 146 of the

Chartered Accountants Act and Regulations 6.25 R7ima5ine Celebrating 1949 - 2023 BCAS REFERENCER 2023-24 61 Years of Continuous Publication Customs Act, 1962 read with Customs Brokers Licensing Regulations, 2013 in terms of the provisions of Code of Ethics. — A Chartered Accountant in service may appear as tax representative before tax authorities on behalf of his employer, but not on behalf of other employees of the employer. — A Chartered Accountant who is the statutory auditor of a bank cannot for the same financial year accept stock audit of the same branch of the bank or any of the branches of the same bank or sister concern of the bank, for the same financial year — A CA Firm which has been appointed as the internal auditor of a PF Trust by a Government Company cannot be appointed as its Statutory Auditor — A concurrent auditor of a bank ‘X’ cannot be appointed as statutory auditor of bank ‘Y’, which is sponsored by ‘X’. — A CA/CA Firm can act as the internal auditor of a company & statutory auditor of its Employees PF Fund under the new Companies Act (2013). — The Ethical Standards Board while noting that there is requirement for a Director u/s 149(3) of the Companies Act, 2013 to reside in India for a minimum period of 182 days in the previous calendar year, decided that such a Director would be within the scope of Director Simplicitor (which is generally permitted as per ICAI norms) , if he is non – executive director, required in the Board Meetings only , and not paid any remuneration except for attending such Board Meetings (10) Code of Ethics, 2019 (New) – Effective from 01 July 2020 [Ref ICAI Publication on Code of Ethics – January 2019 Edition – Soft Copy available on Ethical Standard’s Board Page of ICAI - https:// www.icai. org/new_post.html?post_id=958&c_id=50] Part A – Based on International standards - IFAC / IESBA Part B - Based on Indian laws - SAs, CA Act, Council Guidelines, etc New Code of Ethics Structure of New Code of Ethics, 2019 Part 1 – Complying with the Code, Fundamental Principles and Conceptual Framework, which includes the fundamental principles and the conceptual framework and is applicable to all professional accountants Part 2 – Professional Accountants in Service, which sets out additional material that applies to professional accountants in service when performing professional activities. Professional accountants in service include professional accountants employed, engaged or contracted in an executive or nonexecutive capacity. Part 3 – Professional Accountants in Public Practice, which sets out additional material that applies to professional accountants in public practice when providing professional services Independence Standards, which sets out additional material that applies to professional accountants in public practice when providing assurance services, as follows Part 4A – Independence for Audit and Review Engagements, which applies when performing audit or review engagements. Part 4B – Independence for Assurance Engagements Other than Audit and Review Engagements, which applies when performing assurance engagements that are not audit or review engagements

Allied Laws 6.26 R7ima5ine Celebrating 1949 - 2023 BCAS REFERENCER 2023-24 61 Years of Continuous Publication The Code contains sections which address specific topics. Some sections contain subsections dealing with specific aspects of those topics. Each section of the Code is structured, where appropriate, as follows: • Introduction – sets out the subject matter addressed within the section, and introduces the requirements and application material in the context of the conceptual framework. Introductory material contains information, including an explanation of terms used, which is important to the understanding and application of each Part and its sections. — Complying with the Code requires knowing, understanding and applying: All of the relevant provisions of a particular section in the context of Part 1, together with the additional material set out in Sections 200, 300, 400 and 900, as applicable. All of the relevant provisions of a particular section, for example, applying the provisions that are set out under the subheadings titled “General” and “All Audit Clients” together with additional specific provisions, including those set out under the subheadings titled “Audit Clients that are not Public Interest Entities” or “Audit Clients that are Public Interest Entities.” All of the relevant provisions set out in a particular section together with any additional provisions set out in any relevant subsection. Requirements and application material are to be read and applied with the objective of complying with the fundamental principles, applying the conceptual framework and, when performing audit, review and other assurance engagements, being independent • Requirements – establish general and specific obligations with respect to the subject matter addressed. — Requirements are designated with the letter “R” and, in most cases, include the word “shall.” The word “shall” in the Code imposes an obligation on a professional accountant or firm to comply with the specific provision in which “shall” has been used. — In some situations, the Code provides a specific exception to a requirement. In such a situation, the provision is designated with the letter “R” but uses “may” or conditional wording. — When the word “may” is used in the Code, it denotes permission to take a particular action in certain circumstances, including as an exception to a requirement. It is not used to denote possibility. — When the word “might” is used in the Code, it denotes the possibility of a matter arising, an event occurring or a course of action being taken. The term does not ascribe any particular level of possibility or likelihood when used in conjunction with a threat, as the evaluation of the level of a threat depends on the facts and circumstances of any particular matter, event or course of action. • Application material – provides context, explanations, suggestions for actions or matters to consider, illustrations and other guidance to assist in complying with the requirements. — In addition to requirements, the Code contains application material

Chartered Accountants Act and Regulations 6.27 R7ima5ine Celebrating 1949 - 2023 BCAS REFERENCER 2023-24 61 Years of Continuous Publication that provides context relevant to a proper understanding of the Code. In particular, the application material is intended to help a professional accountant to understand how to apply the conceptual framework to a particular set of circumstances and to understand and comply with a specific requirement. While such application material does not itself impose a requirement, consideration of the material is necessary to the proper application of the requirements of the Code, including application of the conceptual framework. Application material is designated with the letter “A.” — Where application material includes lists of examples, these lists are not intended to be exhaustive • Appendix to Guide to the Code provides an overview of the Code. — Part 1 – Complying with the Code (sec 100), Fundamental Principles (sec 110) and Conceptual Framework (sec 120) Conceptual Framework (sec 120) Complying with the Code (sec 100), Fundamental Principles (sec 110) The 5 fundamental principles of ethics for professional accountants Threats to compliance with the fundamental principles fall into one or more of the following categories (a) Self-interest threat – the threat that a financial or other interest will inappropriately influence a professional accountant’s judgment or behaviour; (b) Self-review threat – the threat that a professional accountant will not appropriately evaluate the results of a previous judgment made; or an activity performed by the accountant, or by another individual within the accountant’s firm or employing organization, on which the accountant will rely when forming a judgment as part of performing a current activity; (c) Advocacy threat – the threat that a professional accountant will promote a client’s or employing organization’s position to the point that the accountant’s objectivity is compromised; (d) Familiarity threat – the threat that due to a long or close relationship with a client, or employing organization, a professional accountant will be too sympathetic to their interests or too accepting of their work; and (e) Intimidation threat – the threat that a professional accountant will be deterred from acting objectively because of actual or perceived pressures, including attempts to exercise undue influence over the accountant.

Allied Laws 6.28 R7ima5ine Celebrating 1949 - 2023 BCAS REFERENCER 2023-24 61 Years of Continuous Publication Sec 120 - The conceptual framework specifies an approach for a professional accountant to: Address the threats by eliminating or reducing them to an acceptable level. Identify threats to compliance with the fundamental principles; Evaluate the threats identified; The circumstances in which professional accountants operate might create threats to compliance with the fundamental principles. Section 120 sets out requirements and application material, including a conceptual framework, to assist accountants in complying with the fundamental principles and meeting their responsibility to act in the public interest. Sec 100 & Sec 110 - Every Professional Accountant must comply with following fundamental principles (a) Sub Sec 111 - Integrity – to be straightforward and honest in all professional and business relationships. (b) Sub Sec 112 - Objectivity – not to compromise professional or business judgments because of bias, conflict of interest or undue influence of others. (c) Sub Sec 113 - Professional Competence and Due Care – to: (i) Attain and maintain professional knowledge and skill at the level required to ensure that a client or employing organization receives competent professional service, based on current technical and professional standards and relevant legislation; and (ii) Act diligently and in accordance with applicable technical and professional standards. (d) Sub Sec 114 – Confidentiality – to respect the confidentiality of information acquired as a result of professional and business relationships. (e) Sub Sec 115 - Professional Behaviour – to comply with relevant laws and regulations and avoid any conduct that the professional accountant knows or should know might discredit the profession. Breaches of the Code R100.4 Paragraphs R400.80 to R400.89 and R900.50 to R900.55 address a breach of Independence Standards. A professional accountant who identifies a breach of any other provision of the Code shall evaluate the significance of the breach and its impact on the accountant’s ability to comply with the fundamental principles. The accountant shall also: (a) Take whatever actions might be available, as soon as possible, to address the consequences of the breach satisfactorily; and (b) Determine whether to report the breach to the relevant parties. 100.4 A1 Relevant parties to whom such a breach might be reported include those who might have been affected by it.

Chartered Accountants Act and Regulations 6.29 R7ima5ine Celebrating 1949 - 2023 BCAS REFERENCER 2023-24 61 Years of Continuous Publication Part Sec / Sub sec Coverage Part 2 – Professional Accountants in Service 200 Applying the Conceptual Framework – Professional Accountants in Service 210 Conflicts of Interest 220 Preparation and Presentation of Information 230 Acting with Sufficient Expertise 240 Financial Interests, Compensation and Incentives linked to Financial Reporting and Decision Making 250 Inducements, Including Gifts and Hospitality 260 Responding to Non-Compliance with Laws and Regulations in case of employment with Listed Entities [effective from 01-Oct-2022] 270 Pressure to Breach the Fundamental Principles Part 3 – P r o f e s s i o n a l Accountants in Public Practice 300 Applying the Conceptual Framework – Professional Accountants in Public Practice 310 Conflicts of Interest 320 Professional Appointments 321 Second Opinions 330 Fees and Other Types of Remuneration 340 Inducements, Including Gifts and Hospitality 350 Custody of Client Assets 360 Responding to Non-Compliance with Laws and Regulations during the course of Audit Engagements of Listed Entities [effective from 01-Oct-2022] Part 4A – Independence for Audit and Review Engagements 400 Applying the Conceptual Framework to Independence for Audit and Review Engagements 410 Fees [R 410.3 to R 410.6 [effective from 01-Oct-2022] 411 Compensation and Evaluation Policies 420 Gifts and Hospitality 430 Actual or Threatened Litigation 510 Financial Interests 511 Loans and Guarantees 520 Business Relationships 521 Family and Personal Relationships 522 Recent Service with an Audit Client 523 Serving as a Director or Officer of an Audit Client 524 Employment with an Audit Client 525 Temporary Personnel Assignments 540 Long Association of Personnel (Including Partner Rotation) with an Audit Client 550 Auditor Rotation 600 Provision of Non-Assurance Services to an Audit

Allied Laws 6.30 R7ima5ine Celebrating 1949 - 2023 BCAS REFERENCER 2023-24 61 Years of Continuous Publication Part Sec / Sub sec Coverage 601 Accounting and Bookkeeping Services 602 Administrative Services 603 Valuation Services 604 Tax Services [effective from 01-Oct-2022] 605 Internal Audit Services 606 Information Technology Systems Services 607 Litigation Support Services 608 Legal Services 609 Recruiting Services 610 Corporate Finance Services 800 Reports on Special Purpose Financial Statements that Include a Restriction on Use and Distribution (Audit and Review Engagements) Part 4B – Independence for Assurance Engagements Other than Audit and Review Engagements 900 Applying the Conceptual Framework to Independence for Assurance Engagements Other than Audit and Review Engagements 905 Fees 906 Gifts and Hospitality 907 Actual or Threatened Litigation 910 Financial Interests 911 Loans and Guarantees 920 Business Relationships 921 Family and Personal Relationships 922 Recent Service with an Assurance Client 923 Serving as a Director or Officer of an Assurance Client 924 Employment with an Assurance Client 940 Long Association of Personnel with an Assurance Client 950 Provision of Non-Assurance Services to Assurance Clients Other than Audit and Review Engagement Clients 990 Reports that Include a Restriction on Use and Distribution (Assurance Engagements Other than Audit and Review Engagements) 11. CPE hours requirements for each Calendar Year applicable from 1-1-2023 Onwards 1. All the members (aged less than 60 years) who are holding Certificate of Practice (except all those members who are residing abroad) are required to: a. Complete at least 40 CPE credit hours in each Calendar Year. b. Complete minimum 20 CPE credit hours of structured learning during the calendar year. c. Balance 20 CPE credit hours can be completed either through Structured or Unstructured learning (as per Member’s choice).

Chartered Accountants Act and Regulations 6.31 R7ima5ine Celebrating 1949 - 2023 BCAS REFERENCER 2023-24 61 Years of Continuous Publication 2. All the members (aged less than 60 years) who are not holding Certificate of Practice; and all the members who are residing abroad (whether holding Certificate of Practice or not) are required to: a. Complete at least 20 CPE credit hours of either structured or unstructured learning (as per Member’s choice) during the calendar year. 3. All the members (aged 60 years & above) who are holding Certificate of Practice, are required to: a. Complete at least 30 CPE credit hours of either structured or unstructured learning (as per member’s choice) during the calendar year. 4. The following class of members are exempted from CPE credit hours requirement: A. A member is exempted only for the particular Calendar year during which he gets membership for the first time. B. Other Exemptions to members: i. All the members (aged 60 years and above) who are not holding Certificate of Practice. ii. Judges of Supreme Court, High Court, District Courts and Tribunal iii. Members of Parliament/MLAs/ MLCs iv. Governors of States v. Centre and State Civil Services vi. Entrepreneurs (owners of Business (manufacturing) organizations other than professional services) vii. Judicial officers viii. Members in Military Service C. Temporary Exemptions: i. Female members for one Calendar year on the grounds of pregnancy. ii. Physically disabled members on case to case basis having permanent disability of not less than 40% and above (Supported with medical certificates from any doctor registered with Indian Medical Council with relevant specialisation as evidenced by Post Qualifications (M.D., M.S. etc.). iii. Members suffering from prolonged critical diseases/ illnesses or other disability as may be specified or approved by the CPED. (Supported with medical certificates from any doctor registered with Indian Medical Council with relevant specialisation as evidenced by Post Qualifications (M.D., M.S. etc.). Note:- 1. The Council has decided to have mandatory 2 Structured CPE Hours each on topics of “Standards on Auditing” and “Code of Ethics” (total 4 Structured CPE Hours) during every Calendar year through Digital Learning Hub/Physical mode (applicable from Calendar Year 2020 onwards) for the Categories of members who are required to complete minimum 20 Structured CPE Hours in a Calendar year (COP Holder). This may be completed any time during the year through DLH/Physical mode. 2. Out of 20 Structured CPE Hours which is mandatory to be completed by Members below 60 years and holding COP, in each Calendar year starting from 2023 (including mandatory CPE hours on “Code of ethics” and “Standard on auditing”), 4 Structured

Allied Laws 6.32 R7ima5ine Celebrating 1949 - 2023 BCAS REFERENCER 2023-24 61 Years of Continuous Publication CPE Hours can be completed in virtual mode through DLH till any further modification. For Calendar Year 2023, the members who have already earned 4 or less Structured CPE hours in online mode (through VCM/DLH) till 31.03.2023 will get credit on actual basis. (12) Peer Review (1) Meaning • ‘Peer’ means a person of equal standing, and ‘Review’ means to verify again the work already done (2) Peer Review Board (PRB) • Peer Review Board was established in 2002 by ICAI — Issues and revises the Peer Review Guidelines from time to time (3) Purpose • To ensure the quality of Assurance Services rendered by the members of ICAI • To verify adherence of Technical, Professional and Ethical standards Peer Review Certificate is a conclusive evidence of Quality of Services rendered by the Practice Unit (PU) (4) Applicability • Focus on Attest Functions only • Peer Review Certificate is a pre-requisite for accepting appointment if any one of the following criterion is met: Statutory Audit of (i.e. Auditee criterion) OR PU rendering attest services, having Peer review applicable from an enterprise whose equity / debt are listed in India / abroad as defined under SEBI (LODR) --- 1 April 2022 Unlisted public companies having: — Paid up ShCap NOT < ` 500 cr., or — Annual Turnover NOT < ` 1000 cr., or — in aggregate (o/s loans, debentures and deposits) NOT < ` 500 cr. as on 31st March of previous FY > 5 partners 1 April 2023 — Deferred till 1 J u l y 2023 — Entities which have raised funds from public / banks / financial institutions > ` 50 cr. during the period under review, or — Of any body corporate incl. trusts which are covered under public interest entities ≥ > 4 partners 1 April 2024 Branches of PSBs > 3 partners 1 April 2025

Chartered Accountants Act and Regulations 6.33 R7ima5ine Celebrating 1949 - 2023 BCAS REFERENCER 2023-24 61 Years of Continuous Publication (5) Documentation to be maintained by a PU • Irrespective of the size of PU, the documents to be maintained all the time by a PU: — Formats of various Declarations eg. Independent Policy Declaration — List of files subject to Peer Review i.e. Attest Function and Audit Files — Induction Manual — Policy Manual — Procedural Manual — Check – lists if any, used in Audit (6) Initiation of Peer review process by a PU • Fill up Form 1 along with the prescribed Application Cum Questionnaire • Answer all the questions in the Questionnaire based on the facts, and not hypothetically • In case of difficulty to answer any question seek guidance from some other member/s to prepare the required documentation The Questionnaire is well-designed and revised by the ICAI as and when required, throws light on the working of PU, indicates the documentation to be maintained by the PU (7) Obligations of a PU • Furnish Questionnaire and Other Documents to the PRB • During Peer Reviewer’s visit, provide access to the relevant records of the PU • Provide explanation to resolve the queries, if any, of the Peer Reviewer • Provide other relevant information, if any (8) Obligations of a Peer Reviewer • Judge the quality of the PU • Provide declaration of confidentiality to PRB • Select sample as per the ICAI Guidelines • Verify the answers of the PU to the questions in the Questionnaire and confirm the same with supporting documents, working papers in files etc. • Maintain proper working papers incl. documenting the process followed by him/her in conducting the Peer Review, the basis of sample selection, etc. • Provide suggestions for improvement • DO NOT TAKE EXTRACTS FROM ANY DOCUMENTS • Discuss draft report with the PU • Issue Final Report • Complete the billing process • Follow the timelines

Allied Laws 6.34 R7ima5ine Celebrating 1949 - 2023 BCAS REFERENCER 2023-24 61 Years of Continuous Publication (9) Peer Review Reports • Preliminary Report is prepared and submitted by the Peer Reviewer to the PU — Also submitted to the PRB only if the procedures followed by the PU are deficient or non-compliant and wants to seek clarification — The reviewer before making his report to the Peer Review Board, communicates a preliminary report to the PU. The reviewer shall report the areas where systems and procedures were deficient or where non-compliance with reference to any other matter has been noticed by him. The PU shall make its submissions or written representations, in writing to the reviewer within 15 days of it receiving the preliminary report. • Interim Report — The reviewer on receiving satisfactory reply from the PU shall submit an appropriate report to the Board. In case the reviewer is not satisfied with the reply of the PU, the reviewer shall accordingly submit a Modified Report to the Board, incorporating his reasons for the same. — On receiving a report from a reviewer, the Board, having regard to the Report and any submissions or representations attached to it, may make recommendations to the PU concerned regarding the application of Technical, Professional and Ethical Standards, regarding further improvements that could be made to internal quality systems. — A further “follow on” review after a period of 1 year from the date of issue of a modified report shall be ordered by the Board. The areas for improvement recommended with specific instructions will be carried out and implementation of the recommendations will be examined during the follow on review. — PU to make its submissions and representations, in writing to the Reviewer within 2 working days from the date of receipt of the findings • If the Peer Reviewer is satisfied he shall submit an Unqualified Peer Review Report to the PRB along with Annexures with a copy to the PU • If the Peer Reviewer is not satisfied with the response submitted by PU he shall submit a Qualified Report to the PRB with reasons along with Annexures with a copy to the PU • Final Report The reviewer will prepare a final report to the Board (The Reviewer’s Report), incorporating the findings as discussed with the PU.

Chartered Accountants Act and Regulations 6.35 R7ima5ine Celebrating 1949 - 2023 BCAS REFERENCER 2023-24 61 Years of Continuous Publication The Board shall consider the report within a period of three months and if satisfied, will issue Peer Review Certificate. If not satisfied, it may issue recommendations to PU • The Annexure to the Final Peer Review Report by Peer Reviewer indicates the total process flow and order in which the peer review is to be conducted. The answer to each question in this Questionnaire will help the PRB of ICAI to judge Audit Quality of PU as well as the work done by Peer Reviewer (10) Time lines • to be completed within 20 working days from the date of receipt of application from the PU or from the date of notifying the PU about its selection for Peer Review (11) Guidance material • Latest Peer Review Guidelines published by ICAI in November’22 — Appendix to the said Guidelines provides various formats and specimens (which form part of Peer Review Process) • Peer Review Manual is published by ICAI, a proper guide for the Members to follow all the time to maintain the Qualitative Documentation • Visit PRB website for latest / revised notifications / guidelines (12) Best practice • Establish Internal Peer Review system so that any deficiency in documentation can be identified instantly Selection of PU by PRB or Voluntary Application by PU Submission of Declaration by PU Selection of PRV one out of three suggested by PRB PRV to select Samples and inform PU PLANNING PU to submit Questionnaire to PRB and PRV PU = Practice Unit, PRB = Peer Review Board, PRV = Peer Reviewer

Allied Laws 6.36 R7ima5ine Celebrating 1949 - 2023 BCAS REFERENCER 2023-24 61 Years of Continuous Publication • MEMBERS/FIRMS (PRACTICE UNIT) SUBJECT TO REVIEW Any Practice Unit not selected for Peer Review may suo moto apply to the Board for the conduct of its Peer Review. The peer review certificate shall be valid for 3 years and can be done again on request of practice unit. The Auditee can also request the Board for the Peer Review of the Auditor (13) UDIN Unique Documents Identification Number (UDIN), a unique number will be required to be generated for each and every document type being certified or attested by Practicing Chartered Accountants. Registration will be required to be done for the same at UDIN portal. UDIN is mandatory from 1st July 2019 for all Audit, Assurance and Attestation and Certification functions. UDIN will ensure authenticity of documents, will enable the Government and other parties in obtaining certified documents, will promote accountability and transparency and help eliminate malpractices like forgery. The first 2 digits of UDIN represent the calender year while the next 6 digits are the Membership number of Member generating the UDIN. The balance 10 digits are unique alpha numeric combination generated from UDIN Portal For further information and FAQs, refer https:// udin.icai.org (14) Fees - Recommended by ICAI Revised Minimum Recommended Scale of Fees For The Professional Assignments done by The Chartered Accountants [Published as on 11.02.2020} The Committee for Capacity Building of Members in Practice (CCBMP) of ICAI as a part of its commitment to strengthen the Small & Medium EXECUTION REPORTING Initial visit by PRV to PU Final Clean Report or Preliminary Report if compliances are pending from PU Verification of General Controls and Conversation with PU PU to comply additional requirements Review of Documents and Samples Final Report – If Clean, PRB to issue Certificate. If qualified, PRB to hold back the Certificate PU = Practice Unit, PRB = Peer Review Board, PRV = Peer Reviewer PU = Practice Unit, PRB = Peer Review Board, PRV = Peer Reviewer

Chartered Accountants Act and Regulations 6.37 R7ima5ine Celebrating 1949 - 2023 BCAS REFERENCER 2023-24 61 Years of Continuous Publication Practitioners has initiated the Revised Minimum Recommended Scale of Fees for the professional assignments done by members of ICAI. The recommendation is about the fees to be charged as per the work performed for various professional assignments. The fees has been recommended separately for Class A, B & C cities of India. PARTICULARS Revised Minimum Recommended scale of Fees Class A Class B Class C I) ADVISING ON DRAFTING OF DEEDS/AGREEMENTS (a) i) Partnership Deed ` 15,000/- ` 10,000/- ` 8,000/- ii) Partnership Deed (With consultation & Tax Advisory) ` 20,000/- ` 15,000/- ` 10,000/- (b) Filing of Forms with Registrar of Firms ` 7,000/- Per Form ` 5,000/- Per Form ` 3,000/- (c) Supplementary / Modification in Partnership Deed ` 12,000/- ` 9,000/- ` 6,000/- (d) Joint Development Agreements/ Joint Venture Agreements ` 12000/- (Note-1) ` 9000 (Note-1) ` 6000/- (Note-1) (e) Others Deeds such as Power of Attorney, Will, Gift Deed etc. ` 5000 ` 4000 ` 3000 II) INCOME TAX A. Filing of Return of Income I) For Individuals/ HUFs etc. (a) Filing of Return of Income with Salary/Other Sources/Share of Profit ` 8,000/- ` 6,000/- ` 4,000/- (b) Filing of Return of Income with detailed Capital Gain working i) Less than 10 Transactions (For Shares & Securities) ` 11,000/- ` 8,000/- ` 5,000/- ii) More than 10 Transactions (For Shares & Securities) ` 17,000/- ` 12,000/- ` 8,000/- (c) Filing of Return of Income for Capital Gain on Immovable property ` 32,000/- ` 22,000/- ` 15,000/- (d) Filing of Return of Income with Preparation of Bank Summary, Capital A/c & Balance Sheet. ` 12,000/- ` 9,000/- ` 6,000/- II) (a) Partnership Firms/Sole Proprietor with Advisory Services ` 15,000/- ` 11,000/- ` 8,000/- (b) Minor’s I.T. Statement ` 8,000/- ` 6,000/- ` 4,000/- (c) Private Ltd. Company: i) Active ` 25,000/- ` 18,000/- ` 12,000/- ii) Defunct ` 12,000/- ` 9,000/- ` 6,000/- (d) Public Ltd. Company i) Active ` 65,000/- ` 45,000/- ` 30,000/- ii) Defunct ` 25,000/- ` 18,000/- ` 12,000/-

Allied Laws 6.38 R7ima5ine Celebrating 1949 - 2023 BCAS REFERENCER 2023-24 61 Years of Continuous Publication PARTICULARS Revised Minimum Recommended scale of Fees Class A Class B Class C B. Filing of Forms Etc. (Quarterly Fees) (Quarterly Fees) (Quarterly Fees) (a) Filing of TDS/TCS Return (per Form) i) With 5 or less Entries ` 4,000/- ` 3,000/- ` 2,000/- ii) With more than 5 Entries ` 9,000/- ` 7,000/- ` 5,000/- (b) Filing of Form No. 15-H/G (per Set) ` 4,000/- ` 3,000/- ` 2,000/- (c) Form No. 49-A/49-B ` 4,000/- ` 3,000/- ` 2,000/- (d) Any other Forms filed under the Income Tax Act ` 4,000/- ` 3,000/- ` 2,000/- C. Certificate Obtaining Certificate from Income Tax Department ` 14,000/- ` 10,000/- ` 7,000/- D. Filing of Appeals Etc. (a) First Appeal Preparation of Statement of Facts, Grounds of Appeal, Etc. ` 32,000/- ` 22,000/- ` 15,000/- (b) Second Appeal (Tribunal) ` 65,000/- ` 45,000/- ` 30,000/- E. Assessments Etc. (a) Attending Scrutiny Assessment/Appeal (i) Corporate (Note-1) (Note-1) (Note-1) (ii) Non Corporate ` 32,000/- ` 22,000/- ` 15,000/- (b) Attending before Authorities ` 10,000/- Per Visit ` 7,000/- Per Visit ` 5,000/- Per Visit (c) Attending for Rectifications /Refunds/Appeal effects Etc. ` 7,000/- Per Visit ` 5,000/- Per Visit ` 3,000/- Per Visit (d) Income Tax Survey ` 80,000/- ` 55,000/- ` 35,000/- (e) T.D.S. Survey ` 50,000/- ` 35,000/- ` 25,000/- (f) Income Tax Search and Seizure (Note-1) (Note-1) (Note-1) (g) Any other Consultancy (Note-1) (Note-1) (Note-1) III) CHARITABLE TRUST (a) (i) Registration Under Local Act ` 25,000/- ` 18,000/- ` 12,000/- (ii) Societies Registration Act ` 32,000/- ` 22,000/- ` 15,000/- (b) Registration Under Income Tax Act ` 25,000/- ` 18,000/- ` 12,000/- (c) Exemption Certificate U/s 80G of Income Tax Act ` 20,000/- ` 14,000/- ` 10,000/- (d) Filing Objection Memo/other Replies ` 10,000/- ` 7,000/- ` 5,000/- (e) Filing of Change Report ` 10,000/- ` 7,000/- ` 5,000/- (f) Filing of Annual Budget ` 10,000/- ` 7,000/- ` 5,000/- (g) Attending before Charity Commissioner including for Attending Objections ` 8,000/- per visit ` 6,000/- per visit ` 4,000/- (h) (i) F.C.R.A. Registration ` 35,000/- ` 25,000/- ` 18,000/-

Chartered Accountants Act and Regulations 6.39 R7ima5ine Celebrating 1949 - 2023 BCAS REFERENCER 2023-24 61 Years of Continuous Publication PARTICULARS Revised Minimum Recommended scale of Fees Class A Class B Class C (ii) F.C.R.A. Certification ` 8,000/- ` 6,000/- ` 4,000/- IV) COMPANY LAW AND LLP (a) Filing Application for Name Approval ` 8,000/- ` 6,000/- ` 4,000/- (b) Incorporation of a Private Limited Company/LLP ` 35,000/- ` 25,000/- ` 18,000/- (c) Incorporation of a Public Limited Company ` 65,000/- ` 45,000/- ` 30,000/- (d) Advisory or consultation in drafting MOA, AOA ` 15,000/- ` 11,000/- ` 8,000/- (e) (i) Company’s/LLP ROC Work, Preparation of Minutes, Statutory Register & Other Secretarial Work (Note-1) (Note-1) (Note-1) (ii) Certification (Per Certificate) ` 15,000/- ` 10,000/- ` 8,000/- (f) Filing Annual Return Etc. ` 10,000/- per Form ` 8,000/- per Form ` 5,000/- per Form (g) Filing Other Forms Like: F-32, 18, 2 etc. ` 5,000/- per Form ` 4,000/- per Form ` 3,000/- per Form (h) Increase in Authorised Capital Filing of F-5, F-23, preparation of Revised Memorandum of Association/ Article of Association/LLP Agreement ` 25,000/- ` 20,000/- ` 14,000/- (i) DPIN/DIN per Application ` 4,000/- ` 3,000/- ` 2,000/- (j) Company Law Consultancy including Petition drafting (Note-1) (Note-1) (Note-1) (k) Company Law representation including LLP before RD and NCLT (Note-1) (Note-1) (Note-1) (l) ROC Representation (Note-1) (Note-1) (Note-1) V) AUDIT AND OTHER ASSIGNMENTS Rate per day would depend on the complexity of the work and the number of days spent by each person (i) Principal ` 18,000/- per day ` 12,000/- per day ` 8,000/- per day (ii) Qualified Assistants ` 10,000/- per day ` 7,000/- per day ` 5,000/- per day (iii) Semi Qualified Assistants ` 5,000/- per day ` 4,000/- per day ` 3,000/- per day (iv) Other Assistants ` 3,000/- per day ` 2,000/- per day ` 1,000/- per day Subject to minimum indicative Fees as under: (i) Tax Audit ` 40,000/- ` 30,000/- ` 22,000/- (ii) Company Audit (a) Small Pvt. Ltd. Co. (Turnover up to ` 2 Crore) ` 50,000/- ` 35,000/- ` 25,000/- (b) Medium Size Pvt. Ltd. Co./ Public Ltd. Co. ` 80,000/- ` 55,000/- ` 35,000/-

Allied Laws 6.40 R7ima5ine Celebrating 1949 - 2023 BCAS REFERENCER 2023-24 61 Years of Continuous Publication PARTICULARS Revised Minimum Recommended scale of Fees Class A Class B Class C (c) Large Size Pvt. Ltd. Co./ Public Ltd. Co. (Note-1) (Note-1) (Note-1) (iv) Review of TDS Compliance ` 25,000/- ` 18,000/- ` 12,000/- (v) Transfer Pricing Audit (Note-1) (Note-1) (Note-1) VI) INVESTIGATION, MANAGEMENT SERVICES OR SPECIAL ASSIGNMENTS Rate per day would depend on the complexity of the work and the number of days spent by each person (a) Principal ` 35,000/- +per day charge ` 25,000/- +per day charge ` 18,000/- +per day charge (b) Qualified Assistant ` 18,000/- +per day charge ` 12,000/- +per day charge ` 8,000/- +per day charge (c) Semi Qualified Assistant ` 10,000/- +per day charge ` 7,000/- +per day charge ` 5,000/- +per day charge VII) CERTIFICATION WORK (a) Issuing Certificates under the Income Tax Act i.e. U/s 80IA /80IB /10A/10B & other Certificates See Note 1 See Note 1 See Note 1 (b) Other Certificates For LIC/Passport/Credit Card/Etc. ` 10,000/- ` 7,000/- ` 5,000/- (c) Other Attestation (True Copy) ` 3,000/- per form ` 2,000/- per Form ` 1,000/- per Form (d) Net worth Certificate for person going abroad ` 18,000/- ` 12,000/- ` 8,000/- VIII) RERA (a) Audit of Accounts ` 10,000/- ` 7,000/- ` 5,000/- (b) Appearance Before Appellate Tribunal or Regulatory Authority or Adjudicating Authority ` 50,000/- ` 40,000/- ` 25,000/- (c) Advisory & Consultation (Note-1) (Note-1) (Note-1) (d) Certification for withdrawal of amount (Note-1) (Note-1) (Note-1) IX) CONSULTATION & ARBITRATION Rate per hour would depend on the complexity of the work and the number of hours spends by each person. (a) Principal ` 35,000/- (initial fees)+ additional fees @ ` 8,000/- per hour ` 25,000/- (initial fees)+ additional fees @ ` 6,000/- per hour ` 18,000/- (initial fees)+ additional fees @ ` 4,000/- per hour

Chartered Accountants Act and Regulations 6.41 R7ima5ine Celebrating 1949 - 2023 BCAS REFERENCER 2023-24 61 Years of Continuous Publication PARTICULARS Revised Minimum Recommended scale of Fees Class A Class B Class C (b) Qualified Assistant ` 6,000/- per hour ` 4,000/- per hour ` 3,000/- per hour (c) Semi Qualified Assistant ` 3,000/- per hour ` 2,000/- per hour ` 1,000/- per hour X) NBFC/RBI MATTERS (a) NBFC Registration with RBI (Note-1) (Note-1) (Note-1) (b) Other Returns ` 18,000/- ` 12,000/- ` 8,000/- XI) GST (a) Registration ` 20,000/- ` 15,000/- ` 10,000/- (b) Registration with Consultation (Note-1) (Note-1) (Note-1) (c) Tax Advisory &Consultation i.e. about value, taxability, classification etc. (Note-1) (Note-1) (Note-1) (d) Challan/Returns ` 15,000/- + (` 4,000/- Per Month) ` 10,000/- + (` 3,000/- Per Month) ` 8,000/- + (` 2,000/- Per Month) (e) Adjudication/Show Cause notice reply ` 30,000/- ` 20,000/- ` 15,000/- (f) Filing of Appeal / Appeals Drafting ` 30,000/- ` 20,000/- ` 15,000/- (g) Furnish details of inward/outward supply (Note-1) (Note-1) (Note-1) (h) Misc services i.e., refund, cancellation/revocation registration, maintain electronic cash ledger etc. (Note-1) (Note-1) (Note-1) (i) Audit of accounts and reconciliation Statement ` 40,000/- ` 20,000/- ` 12,000/- (j) Any Certification Work ` 10,000/- ` 7,000/- ` 5,000/- XII) FEMA MATTERS 1 Filing Declaration with RBI in relation to transaction by NRIs/ OCBs ` 35,000/- ` 25,000/- ` 18,000/- 2 Obtaining Prior Permissions from RBI for Transaction with NRIs/ OCBs ` 50,000/- ` 35,000/- ` 25,000/- 3 Technical Collaboration: Advising, obtaining RBI permission, drafting and preparing technical collaboration agreement and incidental matters (Note-1) (Note-1) (Note-1) 4 Foreign Collaboration: Advising, obtaining RBI permission, drafting and preparing technical collaboration agreement and incidental matters (incl. Shareholders Agreement) (Note-1) (Note-1) (Note-1) 5 Advising on Non Resident Taxation Matters including Double Tax Avoidance Agreements including FEMA (Note-1) (Note-1) (Note-1)

Allied Laws 6.42 R7ima5ine Celebrating 1949 - 2023 BCAS REFERENCER 2023-24 61 Years of Continuous Publication PARTICULARS Revised Minimum Recommended scale of Fees Class A Class B Class C XIII) PROJECT FINANCING (a) Preparation of CMA Data (Note-1) (Note-1) (Note-1) (b) Services relating to Financial sector (Note-1) (Note-1) (Note-1) Notes: 1) Fees to be charged depending on the complexity and the time spent on the particular assignment. 2) The above recommended minimum scale of fees is as recommended by the Committee for Capacity Building of Members in Practice (CCBMP) of ICAI. 3) The aforesaid table states recommendatory minimum scale of fees works out by taking into account average time required to complete such assignments. However, members are free to charge varying rates depending upon the nature and complexity of assignment and time involved in completing the same. 4) Office time spent in travelling & out-of-pocket expenses would be chargeable. The Committee issues for general information the above recommended scale of fees which it considers reasonable under present conditions. It will be appreciated that the actual fees charged in individual cases will be matter of agreement between the member and the client. 5) GST should be collected separately wherever applicable. 6) The Committee also recommends that the bill for each service should be raised separately and immediately after the services are rendered. 7) Classification of Cities in Different classes as per each state is given in Annexure A 8) The amount charged will be based on the location of the service provider. Annexure A – Classification of Cities State / Union Territory Cities Classified as Class “A” Cities Classified as Class “B” Cities Classified as Class “C” Andaman & Nicobar Island, Arunachal Pradesh, Dadra & Nagar Haveli - Daman & Diu, Goa, Himachal Pradesh, Ladakh, Lakshadweep, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura ----- ----- All Cities Andhra Pradesh ----- Vijayawada, Greater Vishakhapatnam, Guntur, Nellore Other Cities Assam ----- Guwahati Other Cities Bihar ----- Patna Other Cities Chandigarh ----- Chandigarh ----- Chattisgarh ----- Durg-Bhilai Nagar, Raipur Other Cities

Chartered Accountants Act and Regulations 6.43 R7ima5ine Celebrating 1949 - 2023 BCAS REFERENCER 2023-24 61 Years of Continuous Publication State / Union Territory Cities Classified as Class “A” Cities Classified as Class “B” Cities Classified as Class “C” Delhi Delhi ----- ----- Gujarat Ahmedabad Bhavnagar, Jamnagar, Rajkot, Surat, Vadodara Other Cities Haryana ----- Faridabad, Gurgaon Other Cities Jammu & Kashmir ----- Jammu, Srinagar Other Cities Jharkhand ----- Bokaro Steel City, Dhanbad, Jamshedpur, Ranchi, Other Cities Karnataka Bengaluru Belagavi, Gulbarga, HubliDharwad, Mangaluru, Mysuru Other Cities Kerala ----- Kannur, Kochi, Kollam, Kozhikode, Malappuram, Thiruvananthpuram, Thrissur Other Cities Madhya Pradesh ----- Bhopal, Gwalior, Indore, Jabalpur, Ujjain Other Cities Maharashtra Greater Mumbai, Pune Amaravati, BhiwandiNizampur, Chatrapati Sambhaji Nagar, Kolhapur, Malegaon, Nanded-Waghala, Nagpur, Nashik, Sangli, Solapur, VasaiVirar Other Cities Odisha ----- Bhubaneshwar, Cuttak, Rourkela Other Cities Puducherry ----- Puducherry ----- Punjab ----- Amritsar, Jalandhar, Ludhiana Other Cities Rajasthan ----- Ajmer, Bikaner, Jaipur, Jodhpur, Kota Other Cities Tamil Nadu Chennai Coimbatore, Erode, Madurai, Salem, Tirrupur, Tiruchirapalli Other Cities Telangana Hyderabad Warangal Other Cities Uttar Pradesh ----- Agra, Aligarh, Bareilly, Firozabad, Ghaziabad, Gorakhpur, Jhansi, Kanpur, Lucknow, Meerut, Moradabad, NOIDA, Prayagraj, Saharanpur, Varanasi. Other Cities Uttarakhand ----- Dehradun Other Cities West Bengal Kolkata Asansol, Durgapur, Siliguri Other Cities 2

Allied Laws 6.44 R7ima5ine Celebrating 1949 - 2023 BCAS REFERENCER 2023-24 61 Years of Continuous Publication (1) Overview In India, the legal and institutional machinery for dealing with debt default was not in line with global standards. The recovery action by creditors, through various laws has not been able to aid recovery for lenders nor aid restructuring of firms. The objective of IBC is to promote entrepreneurship, availability of credit, and balance the interests of all stakeholders by consolidating and amending the laws relating to reorganisation and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner and for maximisation of value of assets of such persons and matters connected therewith or incidental thereto. IBC is a bankruptcy law which seeks to consolidate and amend among others the following legislative framework relating to reorganisation and insolvency resolution of corporate persons, partnership firms and individuals: • Recovery of Debts due to Banks and Financial Institutions Act, 1993 • Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 • Sick Industrial Companies (Special Provisions) Act, 1985 (‘SICA’) repealed • Winding up provisions of the Companies Act, 1956, Companies Act, 2013 and LLP Act, 2008 • The Presidential Towns Insolvency Act, 1909 • Provincial Insolvency Act, 1920 The legal framework contains a set of Rules and Regulations framed under this Act and is still in its nascent stage. The Insolvency and Bankruptcy Board of India was established on October 1, 2016 as the regulator. II. Insolvency and Bankruptcy Code, 2016 (IBC) (2) Salient features • Applies to Companies, Partnerships, LLPs, Individuals and any other body specified by the Central Government. • Also applies to personal guarantors to corporate debtors; partnership firms and proprietorship firms; and individuals (other than personal guarantors). [Insolvency and Bankruptcy Code (Amendment) Act, 2017] • Provides for clear, coherent and speedy process for early identification of financial distress and resolution of companies and limited liability entities if the underlying business is found to be viable. • Two distinct processes for resolution of individuals, namely- “Fresh Start” and “Insolvency Resolution”. • Four pillared institutional infrastructure: - — Insolvency Professionals (IPs’) – the resolution processes will be conducted by licensed IPs. They would play a key role in the efficient working of the bankruptcy process. They would be regulated by ‘Insolvency Professional Agencies (IPA). The Insolvency and Bankruptcy Board of India (‘IBBI’) has recently notified the Model by laws and Governing body of IPAs. As per recently notified regulations, not-forprofit companies having a minimum net worth of ` 10 crore will be eligible to act as an IPA. IBC has become operational with IPAs getting registered. — Information Utilities (‘IUs’)– IUs will be established to collect, collate and disseminate financial information to facilitate insolvency resolution. This would eliminate delays and disputes about facts when default does take place.

Insolvency and Bankruptcy Code, 2016 6.45 R7ima5ine Celebrating 1949 - 2023 BCAS REFERENCER 2023-24 61 Years of Continuous Publication — National Company Law Tribunal (NCLT) – it will be the forum where companies’ insolvency will be heard and Debt Recovery Tribunal (DRT) will be the forum where individual and firms’ insolvencies will be heard. These institutions, along with their appellate bodies, viz., NCLAT and DRATs will be adequately strengthened so as to achieve world class functioning of the bankruptcy process. — The Insolvency and Bankruptcy Board of India – this body will have regulatory oversight over the IPs, IPAs and IUs. (3) Initiation of Corporate Insolvency Resolution Process (CIRP) If Corporate Debtor commits default of more than ` 1 crore, financial creditor, operational creditor or corporate debtor itself may initiate CIRP. (4) Insolvency Resolution by Financial Creditor Financial Creditor, either by itself or jointly with other financial creditor or any other person on behalf of financial creditor may file an application against corporate debtor before Adjudicating Authority. [Insolvency and Bankruptcy Code (Second Amendment) Act, 2018] (5) Insolvency Resolution by Operational Creditor Operational Creditor may deliver demand notice along with copy of Invoice. Corporate Debtor shall within 10 days bring to notice of creditor either existence of dispute if any or payment of unpaid dues [Insolvency and Bankruptcy Code (Second Amendment) Act, 2018] On expiry of 10 days Operational Creditor may file an application before Adjudicating Authority. (6) Insolvency Resolution Process • The Code specifies insolvency resolution processes for companies and individuals, which will have to be completed within 180 days. This limit may be extended to 270 days in certain circumstances by vote of minimum sixty-six per cent voting share. The resolution process will involve negotiations between the debtor and creditors to draft a resolution plan. CIRP can also be completed under Fast Track Corporate Insolvency Resolution Process within a period of 90 days as specified under section 57. The essential idea of the new law is that when a firm defaults on its debt, control shifts from the shareholders / promoters to a Committee of Creditors, who have 180 days in which to evaluate proposals from various players about resuscitating the company or taking it into liquidation. When decisions are taken in a time-bound manner, there is a greater chance that the firm can be saved as a going concern, and the productive resources of the economy (the labour and the capital) can be put to the best use. This is in complete departure with the experience under the SICA regime where there were delays leading to destruction of the value of the assets of the firm. • Adjudicating Authority (AA) shall within 14 days accept or reject the application. Upon acceptance of application the CIRP shall commence and Interim Resolution Professional be appointed till the date Resolution Professional is appointed. • The IP will invite applications from Resolution Applicants for submission of resolution plans. The Resolution plan may be submitted by the applicants, either singly or jointly. The resolution applicant is required to fulfil such criteria as may be determined by the IP with the approval of the Committee of Creditors, depending upon the complexity and scale of operations of the business of the corporate debtor, and such other conditions as may be specified by the Board. [Insolvency and Bankruptcy Code (Amendment) Act, 2017]. • A person shall not be eligible to submit a resolution plan if such person or any

Allied Laws 6.46 R7ima5ine Celebrating 1949 - 2023 BCAS REFERENCER 2023-24 61 Years of Continuous Publication other person acting jointly or in concert with such person does not meet the conditions specified under section 29A the Act. [Insolvency and Bankruptcy Code (Amendment) Act, 2017]. • Adjudicating Authority shall pass order of Liquidation if resolution plan has not been received and Resolution Professional shall act as liquidator. • The assets will be distributed in the following order, in case of liquidation: (i) fees of insolvency professional and costs related to the resolution process, (ii) workmen’s dues and secured creditors, (iii) employee wages, (iv)unsecured creditors, (v) government dues and remaining secured creditors (any remaining debt if they enforce their collateral)(vi) any remaining debt, and (vii) shareholders. • Liquidator shall make an application to Adjudicating Authority for dissolution where the assets have been completely liquidated. • The process will end under two circumstances, (i) when the creditors decide to evolve a resolution plan or sell the assets of the debtor, or (ii) the 180-day time period for negotiations has come to an end. In case a plan cannot be negotiated upon during the time limit, the assets of the debtor will be sold to repay his outstanding dues. The proceeds from the sale of assets will be distributed based on an order of priority. The assets cannot be sold to a person not eligible to be a resolution applicant. [Proviso to section 35 inserted vide Insolvency and Bankruptcy Code (Amendment) Act, 2017]. • For cross border insolvency, the Central Government may enter into agreements with other countries to enforce provisions of the Code. (Cross border insolvency relates to an insolvent debtor who has assets abroad). There is a general penalty of minimum of ` 1 lakh and maximum ` 2 crore for offences or violations for which there is no penalty or punishment prescribed under the Code. [Insolvency and Bankruptcy Code (Amendment) Act, 2018] The Insolvency and Bankruptcy Code is thus a comprehensive and systemic reform, which will give a quantum leap to the functioning of the credit market. It would take India from having among relatively weak insolvency regimes to providing businesses a stronger framework. It lays the foundations for the development of the corporate bond market, which would finance the infrastructure projects of the future. The Stringent implementation of the Code will give a big boost to ease of doing business in India. (7) Report of the Insolvency Law Committee dated 26-3-2018 Insolvency Law Committee set up in November 2017 presented its report to the Government on views and issues arising from implementation of the Insolvency and Bankruptcy Code, 2016. The key recommendations of the Report are as follows: • In recognition of the importance of Micro, Small and Medium Enterprises (MSMEs) to the Indian economy and the unique challenges faced by them, it has been recommended to allow the Central Government to exempt MSMEs from application of certain provisions of the Code; • In order to address the problem of unintended exclusions under section 29A that disqualifies certain persons from submitting resolution plans under the Code, it has been recommended to streamline it so that only those who contributed to defaults of the company or are otherwise undesirable are rendered ineligible. Moreover, being mindful of the Non-Performing Asset (NPA) crisis in the country, the need to encourage the market for NPAs was felt and accordingly several carve-outs from section 29A have been recommended for pure play financial entities. In order to prevent retrospective application of any proposed change, it has been recommended to add a proviso that the amendments shall be applicable to resolution