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Published by INCOME TAX BAR ASSOCIATION AHMEDABAD, 2023-07-09 01:05:28

I.T. MIRROR 23-24 VOL 1

Pages:

1 - 50
51 - 56

23-24 Vol I

Room No. 204, Nature View Building, Nr. Mrudul Tower, Ashram Road, Ahmedabad - 380009. Tel. No. : 079-48011947 I e-mail: [email protected] I www.incometaxbar.org Vol.1 /itbarahm @ITBA_ABAD @ITBA_abad @incometaxbarassociationahm4864 Income Tax Bar Association

Managing Committee for The Year 2023-24 Glimpses of Activities 2 Chairman Message - CA (Dr.) Vishves Shah 3 President Message - CA Ashish Tekwani 4 Hon. Secretary Message - CA Jaykishan Pamnani 5 Message of Vice Chancellor - Dr. Himanshu Pandya 6 The New Scheme of e-Appeals before the Joint Commissioner (Appeals) Explained – Sr. Adv Tushar Hemani and CA Kushal Fofaria 11 Penalty Under Section 271D cannot be levied if there is reasonable cause shown - Adv (CA) Hirak Shah 13 Provisional Assessment under GST Law - Adv Bharat Sheth 16 GST on Housing Society - How Much and How far Applicable - CA Harsh Mehta 22 E-invoice regime, its benefits and common questions therein - CA Mihir Modi 26 Harnessing the Power of Blockchain: Revolutionizing Finance and Accounting - CA Jaymit Mehta 30 RERA Act, 2016 - A New Area of Practice for Professionals - Adv (CS) Lokesh Shah & CA Harsh Mehta 35 Financial Incentives to MSMEs - CS Mukesh Pamnani 39 Decoding The LLP - CA Suvrat S. Shah 44 Exemptions from “Deposit” under the Companies (Acceptance of Deposits) rules, 2014 – a critical analysis - CS Umesh Vyas 46 GIFT City : The Financial Hub - CA Bhavin Soni 1 Adv. Ashutosh R. Thakkar Adv. (Dr.) Dhruven V. Shah Adv. (Dr.) Kartikey B. Shah Dhruvin D. Mehta (IPP) Bhavesh K. Govani Hiren C. Thakkar CA Kenan M. Satyawadi Narendra D. Karkar CA Parth H. Doshi Parth K. Katharia CA Pratik P. Kaneria CA Suvrat S. Shah Adv Dhiresh T Shah President Emeritus CA Ashish T. Tekwani President CA Shridhar K. Shah Vice President CA Jaykishan P. Pamnani Hon. Secretary CA Maulik B. Patel Hon. Joint Secretary CA Shivam K. Bhavsar Hon. Treasurer CA (Dr.) Vishves Shah Chairman CA NishaTekwani CA Suvrat Shah CA Rajesh Mewada Co – Chairman Jinal Shah CA Kaivan Parekh CA Pratik P. Kaneria Members Room No. 204, Nature View Building, Nr. Mrudul Tower, Ashram Road, Ahmedabad - 380009. Tel. No. : 079-48011947 I e-mail: [email protected] I www.incometaxbar.org Mouth Piece of Income Tax Bar Association INVITEE MEMBERS COMMITTEE MEMBERS IT MIRROR COMMITTEE OFFICE BEARERS Vol.1 CONTENTS 51 List of Relatives covered Under Section 56(2) of Income Tax Act 52 Compliance Calender

Chairman Message CA (Dr.) VISHVES SHAH Chairman 2 3 Dear Readers, Welcome to the First Edition of I.T. Mirror – Mouth Piece of Income Tax Bar Association - for the Activity Year 2023-24. I.T. Mirror is the premier source of information and analysis on the latest developments in the field of taxation. Income tax is a vital source of revenue for the government and a key instrument for achieving social and economic objectives. It is also a complex and dynamic subject that requires constant updating and learning. As Tax Professionals, we have a responsibility to keep ourselves abreast of the changes and challenges in the tax laws and practices, and to serve our clients and society with integrity and excellence. That is why we have “I.T. Mirror” - a platform for sharing knowledge, opinions and best practices among tax experts, practitioners, academicians, students and enthusiasts. We aim to cover a wide range of topics related to Income Tax and Goods and Service Tax such as legislation, case laws, international taxation, compliance, planning, administration and more. We also intend to cover topics related to allied laws, upcoming technological changes etc. We hope that you will find these articles informative, insightful, and inspiring. We also encourage you to share your feedback, comments, and suggestions with us. We value your input and participation, as we strive to make this magazine a valuable resource for you. ITmirror is for the members, by the members and of the members. If members need articles on a particular topic to be published in IT Mirror, they can write to us at [email protected]. We will try our best to get the articles on the particular topic in our next edition. We also invite you to join us in this endeavour by contributing your own articles and presentations, which will enhance the knowledge of our members and the tax professional community at large. In case you wish to share your article / thoughts you can write us at [email protected] I must personally thank CAVishves Shah, Chairman of IT Mirror Committee & the Co – Chairmen and Members of the Committee who have undertaken this task of publication of the IT Mirror for selection and publication of such unique and useful topics ins such a short duration. We look forward to serving you in the months ahead. Thank you for your support and patronage. Sincerely, CA Ashish Tekwani President Income Tax Bar Association President Message CA ASHISH TEKWANI President Dear Members, It gives me immense pleasure to present to you the first issue of IT Mirror for the activity year 2023-24, the mouthpiece of the Income Tax Bar Association. IT Mirror is a platform for sharing knowledge, insights and opinions on various topics related to direct tax, indirect tax, allied laws and other information relevant to tax professionals. The Income Tax Bar Association is a prestigious and vibrant organization of tax practitioners, representing the interests of the tax fraternity and taxpayers. We have been organizing various seminars, workshops, webinars and conferences to update our members on the latest developments and trends in the field of taxation. We have also been actively participating in various representations and consultations with the authorities on various issues affecting the tax profession. The IT Mirror is an initiative to showcase the talent and expertise of our members and to provide them with an opportunity to express their views and share their experiences on various aspects of taxation. At the same time, we get to know about the latest in the vast field of taxation through the articles contributed by our experts. IT Mirror regularly features articles written by eminent experts, practitioners and academicians on various topics of interest and relevance to the tax community. It also covers news, events, activities and achievements of the association and its members. I hope that this issue of IT Mirror will serve as a valuable source of information and inspiration for our members and will enhance their professional knowledge and skills. I also hope that it will foster a spirit of camaraderie and cooperation among our members and will strengthen the bond of the association. I would like to thank all the contributors, editors and designers for their hard work and dedication in bringing out this issue of IT Mirror. I would also like to thank the entire team of IT Mirror committee for their untiring efforts to make it possible to issue IT Mirror in such a short time. My sincere thanks to President CA Ashish Tekwani to put faith and appoint me as Chairman of this prestigious publication. I congratulate him for having the first issue in such a short span of less than a month from assuming office of the association. I look forward to your feedback and suggestions for improving the quality and content of this publication, which is the mouthpiece of the association. I also invite you to contribute your articles, views and opinions for the future issues of this magazine. With warm regards, CA(Dr.) Vishves A. Shah Chairman - ITMirror

Dear Members, It is my privilege to address you as the Secretary of the Income Tax Bar Association, Ahmedabad. I am honored to have been given this opportunity to serve the association and its members and contribute to its growth and development. I hope this message finds you in good health and high spirits. It is a moment of great exhilaration both as the Secretary of the IT Bar Association and as a member myself when the Association issues it first edition of IT Mirror for the activity year 2023-24. The objective of the IT mirror is to bring you the latest updates on tax regulations and laws that affect our professional assignments. Now a days, lot of changes are happening with respect to Tax Laws and other allied Laws for bringing transparency in filing of returns, integration of data and much more. The same is becoming very complex and that's why the need of updation is required in the professional practice by the members. We, at the association are committed to providing you with the latest updates, resources and information to support your need and hunger for knowledge. I also believe that it is important for us to work towards creating greater awareness and understanding the role and importance of Tax professionals in today's business environment. I hope all the articles of this magazine will be helpful to the members and readers in their professional work. I urge all the members to contribute to IT Mirror by submitting articles of their interest. I want to express my gratitude to all the writers who have contributed their time for writing the articles for IT Mirror. I also recognize and appreciate their efforts for this magazine. Without their efforts, the publication of this magazine would not have been possible. In conclusion, I would like to thank all the members of the association for their support and encouragement. I look forward to working with you all and taking our Association to new heights of success and achievement. I wish you all prosperity and success in your personal and professional endeavors. Happy reading!!! Sincerely, CA Jaykishan Pamnani Hon. Secretary Income Tax Bar Association Hon. Secretary Message CA JAYKISHAN PAMNANI Hon. Secretary 4 5 Message of Vice Chancellor

I. T. MIRROR (2023-24) The Finance Act, 2023 provided for an additional appellate authority viz. Joint Commissioner (Appeals) [in short “JCIT(A)”]. Section 246 of the Income Tax Act, 1961 (in short “Act”) which was applicable upto 1st June, 2000 has been substituted in order to provide for provisions of appeals to be adjudicated by JCIT(A). Originally before the year 2000, there were two appellate authorities in existence viz. (i) Commissioner of Income Tax (Appeals) [in short “CIT(A)] and (ii) Deputy Commissioner of Income Tax (Appeals) [in short “DCIT(A)”]. Section 246 of the Act originally gave the appellate powers to DCIT(A) which was done away with by the Finance (No. 2) Act, 1998, ironically as a measure to reduce litigation and to avoid overlapping of appeals between the two appellate authorities. SUMMARY OF AMENDMENTS MADE BY FINANCE ACT, 2023: Amendment of Section 116 of the Act: Section 116 of the Act prescribing the income tax authorities was amended to provide for the JCIT(A) as an income tax authority. The hierarchy of income tax authorities has been reproduced as under: a. Central Board of Direct Taxes b. Principal Directors General of Income-tax or Principal Chief Commissioners of Income-tax c. Directors-General of Income-tax or Chief Commissioners of Income-tax d. Principal Directors of Income-tax or Principal Commissioners of Income-tax e. Directors of Income-tax or Commissioners of Income-tax or Commissioners of Income-tax (Appeals) f. Additional Directors of Income-tax or Additional Commissioners of Income-tax or Additional Commissioners of Income-tax (Appeals) g. Joint Directors of Income-tax or Joint Commissioners of Income-tax or Joint Commissioners of Income-tax (Appeals) h. Deputy Directors of Income-tax or Deputy Commissioners of Income-tax or Deputy Commissioners of Income-tax (Appeals) i. Assistant Directors of Income-tax or Assistant Commissioners of Income-tax j. Income-tax Officers k. Tax Recovery Officers l. Inspectors of Income-tax Amendment of Section 246 of the Act : (1) Section 246 of the Act is being substituted by Finance Act, 2023 for providing the provisions of appeals before JCIT(A). The same has been reproduced as under: “246. (1) Any assessee aggrieved by any of the following orders of an Assessing Officer (below the rank of Joint Commissioner) may appeal to the Joint Commissioner (Appeals) against— Sr. ADV TUSHAR HEMANI CA KUSHAL FOFARIA The New Scheme of e-Appeals before the Joint Commissioner (Appeals) – Explained (a) an order being an intimation under sub-section (1) of section 143, where the assessee objects to the making of adjustments, or any order of assessment under sub-section (3) of section 143 or section 144, where the assessee objects to the amount of income assessed, or to the amount of tax determined, or to the amount of loss computed, or to the status under which he is assessed; (b) an order of assessment, reassessment or recomputation under section 147; (c) an order being an intimation under sub-section (1) of section 200A; (d) an order under section 201; (e) an order being an intimation under sub-section (6A) of section 206C; (f) an order under sub-section (1) of section 206CB; (g) an order imposing a penalty under Chapter XXI; and (h) an order under section 154 or section 155 amending any of the orders mentioned in clauses (a) to (g): Provided that no appeal shall be filed before the Joint Commissioner (Appeals) if an order referred to in this sub-section is passed by or with the prior approval of, an income-tax authority above the rank of Deputy Commissioner. (2) Where any appeal filed against an order referred to in sub-section (1) is pending before the Commissioner (Appeals), the Board or an income-tax authority so authorised by the Board in this regard, may transfer such appeal and any matter arising out of or connected with such appeal and which is so pending, to the Joint Commissioner (Appeals) who may proceed with such appeal or matter, from the stage at which it was before, it was so transferred. (3) Notwithstanding anything contained in sub-section (1) and sub-section (2), the Board or an income-tax authority so authorised by the Board in this regard, may transfer any appeal which is pending before a Joint Commissioner (Appeals) and any matter arising out of or connected with such appeal and which is so pending, to the Commissioner (Appeals) who may proceed with such appeal or matter, from the stage at which it was before, it was so transferred. (4) Where an appeal is transferred under the provisions of sub-section (2) or sub-section (3), the appellant shall be given an opportunity of being reheard. (5) For the purposes of disposal of appeal by the Joint Commissioner (Appeals), the Central Government may make a scheme, by notification in the Official Gazette, so as to dispose of appeals in an expedient manner with transparency and accountability, by eliminating the interface between the Joint Commissioner (Appeals) and the appellant, in the course of appellate proceedings to the extent technologically feasible and direct that any of the provisions of this Act relating to jurisdiction and procedure for disposal of appeals by the Joint Commissioner (Appeals), shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the notification. (6) For the purposes of sub-section (1), the Board may specify that the provisions of that sub-section shall not apply to any case or any class of cases. Explanation.—For the purposes of this section, "status" means the category under which the assessee is assessed as "individual", "Hindu undivided family" and so on.'” Appealable Orders before JCIT(A): The following orders, passed by an Assessing Officer lower in rank than JCIT, are appealable before JCIT(A) u/s. 246 of the Act: 6 7

I. T. MIRROR (2023-24) • It is worthwhile mentioning that CIT(A) are also having concurrent power to adjudicate the appeal arising out of all the above stated orders u/s. 246Aof the Act. • The Board is given the powers to internally transfer any of the above stated categories of appeals between CIT(A) and JCIT(A) u/s. 246(3) of the Act. • CBDT has also been empowered u/s. 246(6) of the Act to prescribe any case or any class of cases where the appeal shall not lie to JCIT(A). Scheme of faceless appeals: Subsection (5) of Section 246 of the Act provides for the framing of a scheme for faceless appeals by the Central Government. Pursuant to the same, the Central Government has notified a scheme called e-Appeals Scheme, 2023 vide Notification No. 33/2023 dated 29th May, 2023. The scheme covers the provisions of appeals before JCIT(A) which are broadly similar to the provisions of appeals before CIT(A) as prescribed under Faceless Appeal Scheme, 2020 notified u/s. 250(6B) of the Act vide Notification No. 76/2020 dated 25th September, 2020. Major points of differences between both the schemes are enumerated as under: Difference between the two Scheme of e-appeals Sr. No. Orders appealable before JCIT(A) u/s. 246 1 Intimation u/s. 143(1) 2 Order u/s. 143(3) 3 Order u/s. 144 4 Order u/s. 147 5 Intimation u/s. 200A(1) 6 Order u/s. 201 7 Intimation u/s. 206C(6A) 8 Order u/s. 206CB(1) 9 Order imposing a penalty under Chapter XXI 10 Order u/s. 154 or 155 amending any of the orders mentioned above Appeals to JCIT(A) [eAppeals Scheme, 2023] Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems), shall with approval of CBDT, devise a process to randomly allocate or transfer the appeals to JCIT(A). The appellant or the Assessing Officer shall communicate directly with the JCIT(A). Appeals to CIT(A) [Faceless Appeal Scheme, 2020] National Faceless Appeal Centre (NFAC) shall assign appeal to a specific appeal unit in any one Regional Faceless Appeal Centre through automated allocation system. Point of difference Allocation of appeals Communication with appellate authority The appellant, National e-Assessment Centre (NeAC) or Assessing Officer (AO) shall communicate with appeal unit via National Faceless Appeal Centre only. There will be no direct communication with the appeal unit. Appeals to JCIT(A) [eAppeals Scheme, 2023] JCIT(A) may approve the request for personal hearing through video conferencing. The role of Principal Chief Commissioner of Income-tax (NFAC) shall be as under: a. transfer in and transfer out of cases from e-appeal Scheme; b. transfer of cases from one JCIT(Appeals) to another; c. co-ordinate with the Principal Director General or Director General of Income-tax (Systems) for devising processes for allocation of appeals, if required; d. approval of Formats of notices or letter; e. issuing Standard Operating Procedures for various processes and for conducting Video Conference; and f. any other procedural function assigned by the Board from time to time. Appeals to CIT(A) [Faceless Appeal Scheme, 2020] Point of difference Approval of video conferencing Role of NFAC The Chief Commissioner or the Director General, in charge of the Regional Faceless Appeal Centre, under which the concerned appeal unit is set up, may approve the request for personal hearing through video conferencing. The role of NFAC shall be as under: a. Allocation of appeals to specific appeal unit b. Acting as a mediator between the appellant, NeAC, AO and the appeal unit during the appellate proceedings, penalty proceedings and rectification proceedings. c. Passing of order under appellate proceedings, penalty proceedings and rectification proceedings. CONCLUSION: • On perusal of the provisions of both schemes, it can be inferred that the role of NFAC has been eliminated to a great extent in the appeals before JCIT(A). All the functions of the NFAC regarding exchange of information and conduct of the appellate proceedings, penalty proceedings and rectification proceedings have been directly assigned to JCIT(A). Under the appeals to CIT(A), the appellants can only communicate with NFAC without knowing the identity of their appellate authority leading to greater transparency in disposal of appeals. While in the appeals before JCIT(A), the appellants may come to know the identity of their appellate authority as they would be directly communicating with the concerned JCIT(A) which may lead to complications prevalent in the earlier scheme of physical hearing if proper care is not taken in that regard. Moreover, the new scheme may lead to a reduction in transparency in disposal of appeals, thereby defeating the basic purpose of introduction of faceless appeals. That said, removal of NFAC as a mediator in the appeals would certainly speed up the disposal of appeals. • One more issue is also worth discussing here. Since JCIT(A) is relatively a junior officer in the departmental hierarchy, they may not have adequate experience in handling the appeal cases. In the past, the department 8 9 I. T. MIRROR (2023-24)

has tried to assign the cases of appeals to DCIT(A). However, such experiment did not yield desired results eventually leading to amendment brought in by the Finance (No. 2) Act of 1998 taking aways the appellate powers from DCIT(A). Once again, Parliament has introduced a similar amendment giving appellate powers to junior officers! • The intention behind this amendment is to speed up appellate proceedings. However, those who are regularly practicing on the appellate side, would know that CIT(A) alone are not to be blamed entirely for huge pile up of pending appeals. Due to Covid-19, in the years 2020 to 2022, there were hardly any assessment orders and hence institution of fresh appeals before the CIT(A). Having said that, during the same time period, there were no effective hearings and/or proceedings being conducted before the CIT(A) because of non-functioning of the Appellate Authority resulting into hardly any disposal of appeals. Now, NFAC is passing a large number of assessment orders and therefore, huge inflow of fresh appeals resulting into large pendency of first appeals. The law makers by relegating the appellate powers to JCIT(A) are trying to increase the number of appellate authorities. A more disciplined approach and some intelligent bunching of appeals before the CIT(A) also could have resolved the problem of pendency and this reintroduction of appellate system that has failed in the past could have been avoided. • The function of the First Appellate Authority is very crucial under the Income Tax Act. In so far as challenge to the assessment orders are concerned, the First Appellate Authority has a power co-terminus with that of assessing officer and therefore the CIT(A) can do what the AO can do and much more. That apart, CIT(A) is the first superior authority above the AO who has an opportunity to examine the correctness and judiciousness of the assessment order passed by the AO. Keeping that aspect in mind, the Parliament in its own wisdom has delegated this work to the Commissioner of Income Tax who is a senior authority, in terms of number of years in service in the departmental hierarchy. In fact, the Appellate Authorities are specifically excluded from the purview of section 119 of the Act. That shows the seriousness of the Parliament in so far as the independence of appellate proceedings are concerned. Now, the appellate work is assigned to JCIT(A) who is a very junior officer compared to CIT(A) and therefore in what manner such authority can discharge its independent judicial function could be anybody's guess. One would only hope that Parliament is proved right in time to come in assigning the appellate work to JCIT(A) so that effective justice to the assessees at large is delivered. 10 11 The Hon’ble Income Tax Appellate Tribunal, Ahmedabad recently allowed the appeal filed by the Assessee challenging the penalty levied under section 271D of the Income Tax Act, 1961 and held that penalty shall not be levied if there is reasonable cause shown by the assessee for failure to comply with provisions of Section 269SS of the Income Tax Act, 1961. BACKGROUND Brief facts of the case: The assessee is an individual and engaged in the business of repairing of gold/silver ornaments. For the Assessment Year 2017-18, the assessee filed its Return of Income on 09.09.2018 declaring total income of Rs.8,00,000/-. The assessee’s case was selected for scrutiny assessment, since cash deposits were made during demonetization period. The assessee was asked to furnish source of cash deposit alongwith documentary evidences and copy of the bank statements. The assessee replied that the cash deposit is out of his sale proceeds of residential flats and his income from repairing of gold/silver ornaments. In support of the same, the assessee submitted copy of the sale deed, cash book and bank statement. The Assessing Officer issued a summons u/s. 133(6) of the Act to the purchaser of the flat, received reply from the purchaser and was satisfied with the explanation offered by the purchaser that she being an agriculturist, purchased the flat from the assessee by cash transaction. Thus, the Assessing Officer completed the assessment accepting the returned income as the assessed income. Thereafter the assessee was issued a notice u/s. 274 read with section 271D calling for explanation on the cash transaction in connection with violation of section 269SS of the Act. The assessee replied that during the year, he sold his immovable property for a sum of Rs.12,00,000/- to an individual. The purchaser being an agriculturist from a small village, she paid the sale consideration of Rs.12,00,000/- by cash, which is being duly and truly reflected in the Registered Sale Deed and also in the Return of Income filed by the assessee. Further the assessee was not aware of the violation of Section 269SS which will attract penalty u/s. 271D of the Act. The above explanation offered by the assessee was not accepted as satisfactory, therefore the Joint Commissioner levied a penalty u/s. 271D of Rs.12,00,000/-. Aggrieved by the order passed by the Joint Commissioner, the assessee filed an appeal before Ld. NFAC (Delhi). The Ld. NFAC considered the submissions of the assessee and held that as per the explanation to Section 269SS, “specified sum” means any sum of money receivable in relation to transfer of an immovable property also. In this case, undisputedly, the assessee has received a sum of Rs.12,00,000/- in cash as sale consideration for transferring the immovable property which is clear violation of the provisions of section 269SS of the Act. The assessee had not demonstrated any “reasonable cause” for violation of the above provisions of law. Therefore Ld. NFAC confirmed the levy of penalty u/s. 271D of the Act of Rs.12,00,000/-. Aggrieved against the order passed by Ld. NFAC, the assessee filed an appeal before the Ld. Tribunal raising elaborate grounds of appeal and stating that penalty shall not be imposed upon demonstration of “reasonable cause” by the assessee. Penalty Under Section 271D cannot be levied if there is reasonable cause shown by the assessee for failure to comply with provisions of Section 269SS of the Income Tax Act, 1961 ADV (CA) HIRAK SHAH I. T. MIRROR (2023-24)

RELEVANT LEGAL PROVISIONS Provisions of Section 271D and Section 273B of the Income Tax Act, 1961 are as follows: Section 271D: Penalty for failure to comply with the provisions of section 269SS (1) “If a person takes or accepts any loan or deposit or specified sum in contravention of the provisions of section 269SS, he shall be liable to pay, by way of penalty, a sum equal to the amount of the loan or deposit or specified sum so taken or accepted. (2) Any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner.” 273B: Penalty not to be imposed in certain cases: “Notwithstanding anything contained in the provisions of clause (b) of sub- section (1) of section 271, section 271A, section 271AA, section 271B, section 271BA, section 271BB, section 271C, section 271CA, section 271D, section 271E, section 271F, section 271FA, section 271FAB, section 271FB, section 271G, section 271GA, section 271GB, section 271H, section 271-I, section 271J, clause (d) of sub-section (1) or sub-section (2) of section 272A, sub-section of section 272AA or section 272B or subsection (1) or sub-section (1A) of section 272BB or sub-section (1) of section 272BBB or clause (b) of subsection (1) or clause (b) or clause (c) of subsection (2) of section 273, no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the said provisions if he proves that there was reasonable cause for the said failure.” RULING The Ld. Tribunal gave thoughtful consideration and perused the materials available on record. The Ld. Tribunal held that it was an undisputed fact that the assessee sold immovable property for consideration of Rs.12,00,000/- to an individual who is an agriculturist from a small village, wherein Banking facilities are not available. However, the cash sale consideration was very much reflected in the Registered Sale Deed which was executed on 29.04.2017 by the Purchaser. When the Purchaser was summoned u/s. 133(6) of the Act by the Ld. A.O., he was satisfied with the reply of the Purchaser and passed the assessment order accepting the Returned Income without making any additions. Thus, the grievance made out by the assessee is found to be genuine and reasonable cause. In the above circumstances the levy of penalty under Section 271D in our considered opinion is unwarranted. ANALYSIS AND COMMENTS Provisions of Section 273B of the Income Tax Act, 1961 act as relaxing provisions whereby penalty cannot be imposed under various provisions of the Income Tax Law and thus the said provision can be very well utilized in order to provide a pass through arrangement for the assessee and prevent unnecessary financial burden. However, it is pertinent to note that the said provision can only come to our help provided we demonstrate genuine and reasonable cause to the Departmental authorities for non-compliance or failure of the provisions of the Income Tax Law. Thus, maintenance of adequate documentary evidence can be construed as of being of prime importance in order to avail benefits of provisions of Section 273B of the Income Tax Act, 1961. The views prescribed here in above are strictly based on the author’s own interpretation of the legal provisions and their implications and do not have any legal impact. 12 13 PREAMBLE The provisions of assessment are in Chapter XII of GSTAct, 2017. It includes section 59 to section 64. The rules regarding assessment are provided in Chapter XI of GSTRules, 2017. It includes rule 98 to rule 100 for assessment. Self-assessment and assessment by tax authorities are the two forms of assessment provided in GST Law. Self-assessment is carried out by the taxpayer themselves through filing returns and payment of tax as per returns filed. Tax authorities can also conduct an evaluation to confirm the accuracy of the self-assessed tax liability. In order to ensure compliance with tax rules and help in the prevention of tax evasion, assessment is a fundamental part of the GST system. The assessment procedure makes sure that the taxpayer pays the appropriate amount of tax in order to promote transparency and fairness in the tax system. The different types of assessment under GSTlaw are as under: · Section 59 – Self-assessment · Section 60 – Provisional assessment · Section 61 – Scrutiny returns · Section 62 – Assessment of non-filers of returns · Section 63 – Assessment of unregistered persons · Section 64 – Summary assessment in certain special cases PROVISIONAL ASSESSMENT Section 60 of the Central Goods and Services Tax Act, 2017 provides for Provisional Assessment. Provisional assessment under GSTis used in cases where the taxpayer is unable to determine the value of the goods or services or both or determine the rate of tax applicable on such goods or services or both. The provision of this section cannot be used for any other purpose or subject matter except determination of the value of goods or services or both or determination of rate of tax on goods or services or both. The provisional assessment cannot be requested in any other matter like, determination of kind of tax i.e. IGST or CGST/SGST/UTGST are applicable or time and place of supply or supplies to be treated as supply of goods or supply of services or supplies are composite supply or mixed supply or admissibility of Input tax Credit or quantum of reversal of input Tax Credit or whether any transactions are supply or not. The area of determination of any issue under provisional assessment and advance Ruling is very much different. RELEVANT DEFINITIONS Section 2(11) of the Central Goods and Services Tax Act, 2017, defines “assessment” as determination of tax liability under this Act, and includes self-assessment, re-assessment, provisional assessment, summary assessment and best judgment assessment; Section 2(94) of the Central Goods and Services Tax Act, 2017, defines “registered person” as a person who is registered under section 25 but does not include a person having a Unique Identity Number; Section 2(107) of the Central Goods and Services Tax Act, 2017, defines “taxable person” as a person who is registered or liable to registered under section 22 or section 24; Provisional Assessment under GST Law ADV BHARAT SHETH I. T. MIRROR (2023-24)

PROCEDURE FOR PROVISIONAL ASSESSMENT • Where the taxable person feels that he is unable to determine the value of the goods or services or both or the tax rate applicable thereto, he shall along with the required set of documents, shall submit FORM GST ASMT-01 (See Rule-98(1) of The Central Goods and Services Tax Rules-2017) electronically on the common portal directly or through a facilitation Centre notified by the commissioner. The Provisional assessment cannot be done by proper officer suo-motu. It can be done only on the request of taxable person. • The Asst. Commissioner/Dy. Commissioner shall scrutinize the application received. In case, additional information or documents in support is required to decide the case, notice in FORM GST ASMT-02 (See Rule-98(2) of The Central Goods and Services Tax Rules-2017) will be issued to the taxable person requesting for submission of the same. • The taxable person has to file a reply to the notice in FORM GST ASMT – 03 (See Rule-98(1) of The Central Goods and Services Tax Rules-2017) and if he desires can also appear in person before the Asst. Commissioner/Dy. Commissioner of Central Tax to explain his case. • The Asst. Commissioner/Dy. Commissioner will then issue an order in FORM GSTASMT-04 (See Rule98(3) of the Central Goods and Services Tax Rules-2017) within a period not later than ninety days from the date of receipt of the request, allowing the payment of tax on a provisional basis. The order will indicate the value or the rate or both on the basis of which the assessment is to be allowed on a provisional basis and the amount (this amount shall include the amount of integrated tax, central tax, State tax, or Union territory tax and cess payable in respect of the transaction) for which the bond is to be executed along with the security to be furnished. The proper officer cannot pass an order rejecting the application of provisional assessment as section 60(1) provides that “… the proper officer shall pass an order, within period not later than ninety days from the date of receipt of such request, allowing payment of tax on provisional basis at such rate or on such value as may be specified by him.” • The taxable person is required to execute a bond in FORM GSTASMT-05 (See Rule-98(4) of the Central Goods and Services Tax Rules-2017) along with a security in the form of a bank guarantee for an amount as mentioned in FORM GST ASMT-04. The Amount mentioned in FORM GST ASMT-04, shall include the amount of Integrated tax, Central tax, State tax or Union territory tax and cess payable in respect of the transaction. The security in the form of bank guarantee should not exceed 25% of bond amount. • The Bond furnished under the State Goods and Services Tax Act or Integrated Goods and Services Tax Act shall be deemed to be a bond under the provisions of the Central Goods and Services Tax Act and the rules made there under. On execution of the bond, the procedure of Provisional assessment is completed and the supplier can supply the goods or services or both and pay the tax at the rate or on the value that has been indicated in the order in FORM GSTASMT-04. If the bond and security prescribed in GSTASMT-05 is not provided within the period specified in notice, the provisional assessment permitted in GSTASMT-04 shall lapse. • A provisional assessment shall be finalized within a period not exceeding six months from the date of issuance of the order in FORM GST ASMT-04. The Joint Commissioner or Additional Commissioner can extend the tenure for finalization of a provisional assessment provided that the reason for such extension is sufficient and such reasons are recorded in writing. However, the extension shall not be more than six months. The Commissioner has power to further grant an extension not exceeding four years. • The Asst. Commissioner/Dy. Commissioner will issue a notice in FORM GSTASMT-06 (See Rule-98(5) of the Central Goods and Services Tax Rules-2017), calling for information and records required for the finalization of assessment and shall issue a final assessment order, specifying the amount payable by the registered person or the amount refundable, if any, in FORM GSTASMT-07 (See Rule-98(5) of the Central Goods and Services Tax Rules-2017). • If the amount of tax determined to be payable under final assessment order is more than the tax already paid with the returns filed, the registered person is liable to pay interest on shortfall, at the rate @18% as per 14 15 section 50(1) of the GST Act, 2017, from the first day after due date of payment of tax till the date of payment. Likewise, if the amount of tax determined to be payable under final assessment order is less than the tax already paid with the returns filed, the registered person will get refund with interest at the rate @ 9% as per proviso of section 56 of GSTAct, 2017. As the refund is arising out of order of adjudicating authority, the interest on refund will be given after 60 days from the date of receipt of application of refund till the date of refund. • Before making application for provisional assessment, the registered person is required to evaluate the fact with utmost care and consideration. The claim for refund of taxes paid in excess under this section would be processed in accordance with section 54 of the GSTAct, 2017. The refund is subject to the concept of “unjust enrichment” under clause (e) of sub-section (8) of section 54 of the GSTlaw. Moreover, this section does not sanction refund itself. The application of refund is required to be done within two years from the relevant date defined in clause (f) of Explanation 2 to section 54 of the GSTAct, 2017. The application is required to be done within two years from the date of adjustment of tax after the final assessment. • On finalization of the assessment and issuance of an order in FORM GSTASMT-07, the registered person shall make an application in FORM GSTASMT-08 (See Rule-98(6) of the Central Goods and Services Tax Rules-2017) for the release of the security. • On receipt of the application, the Asst. Commissioner/Dy. Commissioner ought to release security furnished, after ensuring that the payment of the amount specified in the final assessment order issue an order in FORM GSTASMT-09 (See Rule-98(7) of the Central Goods and Services Tax Rules-2017) within seven working days from the receipt of the application. CONCLUSION Provisional assessment under the GST law is an essential concept that enables the taxpayers to estimate their tax liabilities in some circumstances where the actual value of goods or services cannot be established or where there is disagreement over the value or rate of tax is not ascertainable properly. Due to lack of clarity on the actual value or rate of tax, it allows the taxpayer to avoid paying an excessive tax liability or penalty. It is crucial to remember that provisional assessment also has a number of drawbacks too, which include the potential for interest to be added to the tax liability and a delay in the final assessment. Taxpayers must thus carefully weigh the advantages and disadvantages of provisional assessment before choosing it. I. T. MIRROR (2023-24) I. T. MIRROR (2023-24)

1. INTRODUCTION Co-operative Housing Societies are entities registered under the co-operative laws of the respective States. “Housing society” means a society, the object of which is to provide its members with maintenance and management of the common amenities and services. Simply put, these are a collective body of persons, supplying certain services to its members, be it collecting statutory dues from its members and remitting to statutory authorities, maintenance of the building, security etc. 2. SOCIETIES WHICH MAY BE REGISTERED UNDER GUJARAT COOPERATIVE SOCIETIES ACT, 1961 Asociety, which has as its object the promotion of the economic interests or general welfare of its members, or of the public, in accordance with co-operative principles, or a society established with the object of facilitating the operations of any such society, may be registered under this Act; provided that it shall not be registered if, in the opinion of the Registrar, it is economically unsound, or its registration may have an adverse effect upon any other society, or it is opposed to, or its working is likely to be in contravention of public policy. 3. APPLICABILITY OF GST At present the Goods and Service Tax Act, 2017 has no scope for differential treatment based on Profitability. Unlike in Income Tax Law, where there is benefit for non-profit organization, in GST same rules are applicable whether an organization makes profit or not. 4. DEFINITIONS UNDER GST ACT WHICH ATTRACTS THE TAXABILITY TO COOPERATIVE SOCIETIES As per Section 7 “supply” includes– All forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; Section 2(84) “Person” includes a co-operative society registered under any law relating to co-operative societies or Society as defined under the Societies Registration Act, 1860 Sec 2(31) “Consideration” in relation to the supply of goods or services or both includes (a) any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government. Sec 2(17) “Business” includes provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members; Aco-operative society (being a person as defined above) provides services to its member in the form of facilities or benefits to its member (in course of business) for a consideration. Hence based on above definition and concept of supply co-operative society also gets covered under GST. 5. WHETHER COOPERATIVE SOCIETY IS LIABLE FOR REGISTRATION UNDER GST? When the aggregate turnover of a Cooperative Society in a financial year exceeds twenty lakh rupees, such Cooperative Society becomes liable for Registration under GST as per Sec 22(1) of CGSTAct. That means if the collection of money for maintenance charges by society exceeds Rs 20 Lakhs per annum then the Society need to be registered under GST. GST on Housing Society - How Much and How far Applicable CA HARSH MEHTA 16 17 Aggregate turnover (total receipts) of the Housing Societies includes all mode of receipts of the society such as society maintenance charges from its members, receipts from investments, income receipts from advertisement board, receipts from mobile towers in premises, share transfer fee from members, receipts from special purpose use of common area by member (for example marriage function, parties, etc). Thus, Co-operative Housing Society or Residential Welfare Association Turnover (including exempted receipts) of which crosses Rs 20 Lakhs per annum become liable for Registration under GST and should charge GSTfrom its members. 6. REGISTRATION UNDER GST Limit for registration under GST for providing services is Rs. 20,00,000. Whereas, for goods, the limit has increased to Rs. 40,00,000 w.e.f 01/04/2019. However, for Housing Societies' the following table suggests registration criteria. Scenario Condition Liable to take registration Aggregate Turnover Monthly Contribution per member per month 1 Less than Rs. 20 lakhs Less than Rs.7500 No 2 Less than Rs. 20 lakhs More than Rs.7500 No 3 More than Rs. 20 lakhs Less than Rs.7500 No* 4 More than Rs. 20 lakhs More than Rs.7500 Yes *No OtherTaxable services given by the society 7. CHARGEABILITY AND PAYMENT OF TAX ON MONTHLY SUBSCRIPTION Further, if the aggregate turnover of such Housing Society/ Residential Welfare Association is up to Rs20 lakh in a financial year, then such supplies would be exempted from GSTeven if charges per member are more than Rs 7500.AHousing Society / Residential Welfare Association shall be required to pay GSTon monthly subscription / contribution charged from its members if such subscription is more than Rs 7500 per member and the annual turnover of Residential Welfare Association by way of supply of services and goods is also Rs 20 Lakhs ormore. Ø Let's understand the Implication of GSTwith different scenario:- Scen ario Contrib ution (Per Member Per Month) 1 6000 1900000 0 0 1900000 No 0 0 2 7550 1600000 0 0 1600000 No 0 0 3 6500 2200000 0 0 2200000 No 0 0 Total Contribution by Members Receipts other than Contribution Receipts (Exempted) Like Interest Income Receipts (Taxable) Like Rental for Advertisement Hoarding Total Receipts (Total Aggregate Turnover Per Year) Registration Needed (Yes/No) Taxable Income Tax @18% I. T. MIRROR (2023-24)

4 6500 1900000 600000 0 2500000 No 0 0 5 7599 1850000 700000 0 2550000 Yes 1850000 333000 6 7599 1850000 0 750000 2600000 Yes 2600000 468000 7 4000 1500000 0 600000 2100000 Yes 600000 108000 8 0 0 2700000 0 2700000 No 0 0 9 0 0 0 2200000 2200000 Yes 2200000 396000 10 7550 2200000 0 0 2200000 Yes 2200000 396000 11 4000 7501 1750000 100000 0 0 1850000 No 0 0 12 4000 7501 1750000 800000 0 0 2550000 Yes 800000 144000 13 4000 7501 1700000 150000 100000 100000 2050000 Yes 250000 45000 8. TREATMENT OF DIFFERENT KINDS OF RECEIPTS:- The different kind of receipts by a society can be categorised as under: a. Maintenance fees: These are the contributions by Members of the Society (for an equal amount or proportionately based on the built-up area) for common maintenance of the society such as paying for cleaning, security, admin, accounts audit etc. If the Aggregate turnover of the society is more than Rs. 20 Lac (without any other income) then this income shall be exempted subject to limit of Rs. 7500 per month per member. b. Other income: Any income not falling under the criteria of Maintenance fees is considered as other income. If the Aggregate turnover of the society is more than Rs. 20 Lac (which includes other income) and the Maintenance Fees collected is less than Rs. 7500 per month per member, then only other income will be taxable. c. Exempted receipt: Certain receipts of the society are non-taxable even if the aggregate turnover of the society is more than Rs. 20 Lakhs (with or without other income). In order to give more clarity, following are certain examples of receipts and their nature of taxability: Type of Receipt Description Maintenance fees Other income Maintenance and Service Charges Society may be paying for some security, admin, accounts audit etc. And hence it is taxable subject to limit of Rs. 7500. Included. Exempted if it is less than Rs. 7500 Sinking Fund Setting aside revenue over a period of time to fund a future capital expense. Included, Taxable 18 19 Type of Receipt Description Maintenance fees Other income Non Occupancy Charges These are typical charges for let out Property. These are not applicable commonly. Included. Taxable. Parking Charges Generally charged to members for using space on Parking. It's purely one to one basis and not for common use. Included. Taxable. Share Transfer Fees It is usually charged for share transfer especially in case of sale of Property. It is occasional and on one to one basis. Included. Taxable. Water Charges for common utilities. When Water charges are collected by Society from the Members on proportionate basis, deposits the same to the Government, it is acting only like a collection agent and it is not considered as Society's receipt. Chances are that these are already taxed by Government's Arms at source and hence society is not required to charge tax on it. Exempted When society is collecting a monthly/quarterly/yearly contribution of an approx. amount from the members towards water charges to be deposited to government. Included. Taxable. Water Charges – Individual use When society has allowed members to use certain limit of water (as in the case of boring facility) and charges for any excess use of water above the free limit, such receipts are taxable income. Included. Taxable. Common Services Service charge for using facilities like Club House, Swimming Pool, which are commonly charged to all members are covered under Maintenance fees Included. Taxable. Repairs Fund These are contribution from all Members, at the rate fixed at the General Body Meeting from time to time, (subject to the minimum of 0.75 percent per annum of the construction cost of each flat) for meeting expenses of normal recurring repairs. Included. Taxable. Interest on Default It is not for any common use but it is charged on case to case basis. Included. Taxable. I. T. MIRROR (2023-24) I. T. MIRROR (2023-24)

Charges for using common space Use of Common Space such as banquets and gyms by Member or Outsider may be charged by the society. And as it is on case to case basis, it is not covered under Maintenance fees. Included. Taxable. Non-Agricultural Tax It is to be paid on all lands annually that have been used for any purposes other than farming. As it is collected by society and deposited to Government, it is not taxable. Exempted Income on Renting Mobile Tower etc These are not common services and are mostly to be given to Business entities,therefor these are chargeable to Tax. In case the Society is not registered under GST, then the same shall be subject to RCM (after 1st April 2018) Included. Taxable. Property Tax on common area When society is paying property tax from the existing fund. Exempted When society is collecting the share of property tax from individual member on a proportionate basis and depositing that exact amount to Government, then the Society is only acting as agent. Exempted When society is collecting a monthly/quarterly/yearly contribution of an approx. amount from the members towards Property Tax. Included. Taxable. Type of Receipt Description Maintenance fees Other income Taxable Heads Maintenance and Service Charges Parking Charges Non -Occupancy Charges Sinking Fund Repair Fund Share Transfer Fees Tower or other Rent Interest or Penalty Exempted Heads Property tax Electricity Supply from MCGM only Water Supply from MCGM Only Non -Agricultural Tax 20 21 9. RATE OF TAX The society is liable to collect tax at the rate of 18% if the aggregate turnover exceeds Rs. 20 lakhs. 10. INPUT TAX CREDIT (ITC) ALLOWED: If the Society becomes liable to pay GST, it is allowed to take Input Tax Credit under Sec 16 (1) of CGSTAct subject to conditions for taking input tax credit. Housing Society is entitled to ITC in respect of taxes paid by them on capital goods (generators, water pumps, lawn furniture etc.), goods (taps, pipes, other sanitary / hardware fillings etc.) and input services such as repair and maintenance services – Lift AMC, Housekeeping, Security, Fire AMC, Repairs & Maintenance, Contract staff, Accounting & Auditing Services and other such services. 11. APPLICABILITY OF REVERSE CHARGE MECHANISM Tax liability under Reverse Charge as defined under Sec 2(98) of CGSTAct also applicable. That means tax shall be payable by the Housing Society when supplies are received which are notified Services as per Sec 9(3) of CGSTAct like services of Goods Transport Agency, Advocate Services etc. and supplies from Unregistered Person under Sec 9(4) of CGSTAct. The society can claim ITC on tax paid under RCM. 12. ELIGIBILITY FOR COMPOSITION SCHEME Housing Society is not eligible for Composition Scheme. 13. STATUTORY COMPLIANCES: · Returns: Society is also liable to file monthly returns i.e. GSTR-1, GSTR-2, GSTR-3, Annual returns etc. · Invoices: Society is required to change the invoice format of monthly/quarterly/yearly bills invoiced to the members. Society should mention the GSTIN No, the tax collected and so on in the invoice issued by it. · Books of Accounts: Society is liable to prepare and maintain proper books of accounts. It would also be liable to audit if the aggregate turnover exceeds the threshold limit of audit. Also to maintain proper Records of Supply & Expenses and preserve such Records for 72 Months. 14. CONCLUSION If the aggregate turnover exceeds Rs. 20 Lakhs co-operative society is compulsorily required to get registered, there is no other exemption for registration. Also in GST regime housing society is eligible to claim ITC on inward supply made by it, which was not allowed earlier, this would benefit the society in the form of reduction in cost. The society can transfer this benefit to its member is the form of reduction of maintenance charges collected from its member after due and detailed cost benefit analysis available to the society under GST. 7300 7300 7300 7300 7300 7300 7300 7300 7300 0 600 600 600 600 0 0 0 0 0 0 0 800 800 800 800 0 0 0 0 0 0 500 0 0 600 150 7300 7900 8600 9400 9900 8800 8100 7900 7450 7300 7300 0 0 0 0 0 0 0 0 600 600 600 600 0 7300 0 7450 Scenario Repairs and Maintenance Water Charges Agent Service Contribution to sinking fund Parking Charges Club house Total receipt Exemption Eligible Exemption Amount Non Taxable 1 7300 2 7300 3 8000 4 8000 5 8500 6 8000 7 7300 8 7300 9 0 0 700 700 700 700 0 0 0 7450 0 0 0 8000 8800 9300 8800 800 7900 Taxable Let’s understand the Implication of GST with different scenario for exemption and taxability I. T. MIRROR (2023-24) I. T. MIRROR (2023-24)

CA MIHIR MODI E-invoice regime, its benefits and common questions therein 1. Introduction: In last few years, we have seen that the world is adopting technological means at rapid pace. India is also seen a leading economy adopting digital means, be it UPI, DBT and many such unique initiatives. GST is also one of the game changer reform happened to Indian economy. GSTN was the technological backbone for success of GSTin India. Although many challenges were faced by stakeholders during initial 3- 4 years, the GSTN portal seems to have improved a bit in recent years. Yet, it has long way to go. Similarly, as part of further reform, Government came up with the idea of E-invoice, so that the buyers get the credit of invoice on real time basis and have reasonable assurance that the invoice eventually gets uploaded in GST returns and the credit does not fall into disputed territory. With this, we are going to discuss the important aspects of E-invoice in this article: 2. Stage wise applicability of E-invoice: Annual turnover (Amount in Rs.) Implementation date Exceeding 500 crore 1st October 2020 Exceeding 100 crore 1st January 2021 Exceeding 50 crore 1st April 2021 Exceeding 20 crore 1st April 2022 Exceeding 10 crore 1st October 2022 Exceeding 5 crore 1st August 2023 3. How to calculate aggregate annual turnover [AATO]? Consider • Taxable Supplies • Exempt supplies [i.e. NIL rated, nontaxable supply = Non-GST supply] • Export of goods / service • Inter-state supplies within PAN, but different GSTIN Do not consider • Taxable outward supplies on which tax is payable by recipient • Intra-state supplies within PAN, but different GSTIN 22 23 4. Which year to be considered for Aggregate Turnover? • Any preceding FYbeginning from FY2017-18 • Current year turnover not to be considered • Entity level turnover is to be considered [i.e. if applicable to 1 GSTIN, then applicable to all GSTIN under same PAN] • For FY17-18, whether July to March turnover to be considered or April to March? - For this query, GSTN has never clarified. However, reference can be taken from the fact that at the time of checking applicability of GSTR 9 / 9C for FY2017-18, CBIC clarified that the turnover of July 17 to March 18 has to be considered and not of April 17 to March 18. Therefore, by applying the same logic, one may consider only post-GSTregime turnover - On conservative basis, if one wants to consider the turnover of April 17 to March 18, then there is no harm in doing additional compliance 5. Time limit for generation of E-invoice • As per law – invoice is not valid if E-invoice not generated • E-invoice portal – allows back dated E-invoices • GSTN advisory – E-invoice to be generated within 7 days from the date of invoice - If the AATO is in excess of Rs. 100 cr. Here, once again CBIC has not clarified as to which FY turnover is to be considered for this Rs. 100 crore threshold. However, applying the ratio that for Einvoice applicability, one is required to check the turnover of “Any preceding Financial Year”, one may follow the same principle over here - Initially, this was going to be applicable from 1st May 2023. However, the implementation of the same has been deferred to the date to be notified later. 6. Which type of supplies is covered under E-invoice? Applicable • Taxable Supplies - B2B - Export - SEZ - Deemed - Credit Notes - Debit Notes Not applicable • Taxable Supplies - B2C • Exempt Supplies • NIL Rated Supplies • Financial Credit Notes / Debit Notes 7. Entities exempt from E-invoice • SEZ • Insurance • Banks • NBFC / FI • GTA • Passenger transportation service provider • Service of admission to exhibition of cinematograph films in multiplex screens • Input Service Distributer - It is to be noted that this exemption of non-applicability of E-invoice is “Entity wise” and not I. T. MIRROR (2023-24)

I. T. MIRROR (2023-24) I. T. MIRROR (2023-24) “Transaction wise”. Therefore, the above entities are not required to generate E-invoice irrespective of the type of Invoice they are generating. - For instance, a GTA is not required to generate E-invoice, not only for transportation related income, but also for any other income such as renting of immovable property or any other taxable income. 8. What is the time period for cancellation of E-invoice? • 24 hours from the time of generation 9. What if invoice could not be cancelled within 24 hours? • Do reversal of the document by way of - credit note; or - Debit note; or - Cancellation of invoice and issuance of fresh invoice with next available serial number 10. What if E-invoice is not generated? • Invoice will not be treated as valid • Consequences to the seller and the buyer Seller Penal consequences u/s 122 – Higher of following - Rs. 20,000 [CGST + SGST], or - Amount of tax evaded Buyer ITC will not be available to the buyer 11. Benefits of E-invoice • No need to issue physical invoice to the recipient • Auto-population of data in GSTR 1 • Auto-population of data in E-way bill portal • No need to issue Duplicate and Triplicate invoice • No need to carry physical invoice by the transporter 12. Some other points to be considered • Size of QR code should be such that it shall be clear enough to be readable by a QR Code reader • It is not mandatory to print following on the invoice - IRN - Acknowledgment Number - Acknowledgment date • Link to download E-invoice verification App - https://docs.ewaybillgst.gov.in/einvoice /android/QrCodeDownload.html 13. Modes of generating E-invoice: • Offline Excel utility provided by E-invoice portal • Integration with ASP/ GSP[such as Tally] • Integration of E-invoice add-on tool with existing accounting software • Specialized packages for E-invoice generation 24 25 14. E-invoice QR code vs B2C QR code: E-invoice Applicable if turnover exceeds Rs. 5 crores To be uploaded on E-invoice portal QR code to be kept on the invoice Unique number is generated B2C QR code Applicable if turnover exceeds Rs. 500 crores To be generated on own and kept on the invoice Sufficient compliance if not kept on invoice, but shown digitally to the buyer at the time of making payment Unique number is generated Disclaimer: • The Author is a member of the Institute of Chartered Accountants of India (ICAI) • The author does not represent that the said information is correct and complete in all regards. The views contained in this article are personal views of the author and may change depending upon underlying facts and circumstances. • No part of this article should be copied or used without the prior approval of the author. • Judicial and legal authorities may not subscribe to the views of author and can take different view. • This does not constitute the professional advice and the author is not liable for any loss occurred to anyone upon taking any action based on this write-up • This is not in the nature of violation of the guidelines of professional ethics made by the ICAI The author of this article, CAMihirModi, can be reached at Mail – [email protected] Twitter - https://twitter.com/CAMihirModi LinkedIn - https://www.linkedin.com/in/ca-mihir-modi

Blockchain technology is poised to revolutionize the finance and accounting sectors, bringing about significant transformations in traditional practices. This article aims to present blockchain concepts in a simplified manner, making it accessible to professionals unfamiliar with the technology. We will explore the practical applications of blockchain in finance and accounting, showcasing how it can enhance security, transparency, efficiency, and trust. Through real-world examples and use cases, we will demonstrate how blockchain streamlines processes, ensures data integrity, and unlocks new possibilities for financial transactions and asset management. We hope to inspire finance and accounting professionals to embrace this ground-breaking technology by demystifying blockchain. 1. INTRODUCTION 1.1 Understanding Blockchain Technology - Blockchain is a decentralized and distributed digital ledger technology that records transactions across multiple computers, creating a transparent and tamper-proof system. We explain the core concepts of blockchain and highlight its potential impact on finance and accounting. 1.2 Significance of Finance and Accounting - Finance and accounting play crucial roles in the global economy, ensuring financial transactions are accurately recorded and facilitating informed decisionmaking. Finance and accounting face challenges such as lack of transparency, complex cross-border transactions, manual processes, limited access to financing, and regulatory compliance. However, blockchain technology offers opportunities for improvement. It can enhance transparency, trust, and efficiency through decentralized and immutable records. Blockchain streamlines cross-border transactions, automates accounting processes, enables decentralized finance and tokenization, and facilitates regulatory compliance. Embracing blockchain in finance and accounting can lead to a more transparent, efficient, and inclusive financial ecosystem. 1.3 Motivation for Blockchain Adoption - The adoption of blockchain technology in finance and accounting is motivated by the desire for increased security, transparency, efficiency, and trust. Traditional systems often lack robust security measures, making them vulnerable to data breaches and fraud. By leveraging blockchain's decentralized and immutable nature, financial transactions can be securely recorded enhancing overall security. Additionally, blockchain offers transparency by providing real-time and auditable records that stakeholders can access, reducing the reliance on intermediaries. The automation and smart contract capabilities of blockchain improve efficiency by streamlining processes and reducing manual intervention. Ultimately, the adoption of blockchain in finance and accounting aims to foster trust among stakeholders, creating a more reliable and efficient financial ecosystem. 2. EXPLORING THE BASICS OF BLOCKCHAIN 2.1 Decentralized and Distributed Nature of Blockchain - Blockchain technology operates on a decentralized and distributed network, where transactions are stored across multiple nodes. This eliminates the need for a central authority, enhancing security and preventing single points of failure. Each node in the network maintains a copy of the entire blockchain, ensuring redundancy and resilience against malicious attacks or data loss. 2.2 Simplifying Blocks, Transactions, and Hashes - A blockchain is composed of blocks, which contain a collection of verified transactions. Each transaction represents a record of value transfer or other relevant Harnessing the Power of Blockchain: Revolutionizing Finance and Accounting CA JAYMIT MEHTA 26 27 data. To ensure data integrity, transactions are secured using cryptographic hashes, which are unique identifiers generated through mathematical algorithms. These hashes not only protect the data within each block but also create a link between blocks, forming a chain of transactions. 2.3 Ensuring Trust through Consensus Mechanisms - Consensus mechanisms, such as Proof-of-Work (PoW) and Proof-of-Stake (PoS), are integral to establishing trust and agreement within the blockchain network. PoW requires participants, known as miners, to solve complex mathematical puzzles to validate transactions and add blocks to the blockchain. This ensures that malicious actors cannot easily manipulate the network. PoS, on the other hand, determines block validators based on their stake in the network. Validators are selected to create new blocks based on their ownership of existing tokens. Consensus mechanisms prevent unauthorized changes to the blockchain, maintaining its integrity and trustworthiness. These fundamental aspects of blockchain technology provide a robust foundation for secure and transparent transactions. The decentralized and distributed nature ensures resilience and eliminates the need for a centralized authority. By simplifying the components of blocks, transactions, and hashes, blockchain enables efficient data organization and protection. Consensus mechanisms play a critical role in ensuring trust and agreement within the network, establishing a reliable and tamper-proof system for financial and accounting transactions. 3. ENHANCING SECURITY AND TRUST 3.1 Immutable Record-Keeping for Transparent Accounting - Blockchain's immutable nature ensures that once data is recorded, it cannot be altered or tampered with. 3.2 Eliminating Fraud and Errors in Accounting Processes - By removing intermediaries and automating processes through smart contracts, blockchain reduces the risk of fraud and errors in financial transactions. Blockchain technology improves the integrity of accounting processes through various use cases. It provides immutable transaction records, reducing the risk of fraud and unauthorized changes. Automated audit trails created through smart contracts enhance transparency and facilitate efficient auditing. Real-time financial reporting ensures timely and accurate information. Blockchain's ability to track and verify goods within the supply chain improves inventory management and reduces the risk of counterfeit products. The transparent nature of blockchain aids in fraud detection and prevention. Additionally, enhanced data security safeguards sensitive financial information. Overall, blockchain enhances the reliability and accuracy of accounting processes, promoting transparency and trust in financial transactions. 3.3 Strengthening Compliance with Anti-Money Laundering (AML) and Know Your Customer (KYC) - Blockchain can streamline compliance procedures by securely storing and verifying customer identities, reducing the risk of money laundering and ensuring regulatory compliance. 4. SIMPLIFYING FINANCIAL TRANSACTIONS 4.1 Facilitating Faster and Cost-Effective Cross-Border Payments- Blockchain technology streamlines cross-border payments by eliminating intermediaries and reducing fees, resulting in faster and more costeffective transactions. Through digital currencies and blockchain-based payment networks, financial institutions can achieve near-instantaneous settlement, improving efficiency and accessibility for individuals and businesses worldwide. 4.2 Embracing Decentralized Finance (DeFi) - Decentralized Finance (DeFi) platforms, built on blockchain, revolutionize traditional financial services by eliminating intermediaries and providing direct control over assets. With DeFi, users can engage in lending, borrowing, and trading without relying on traditional financial institutions. Smart contracts automate these processes, enabling faster, more transparent, and costeffective transactions while promoting financial inclusion. 4.3 Smart Contracts Revolutionizing Financial Agreements- Smart contracts, coded on the blockchain, automate and enforce financial agreements. These self-executing contracts contain predefined rules and I. T. MIRROR (2023-24)

conditions that are automatically executed when met. By eliminating intermediaries and manual processing, smart contracts enhance the efficiency, transparency, and accuracy of financial agreements, ranging from trade finance to insurance claims processing. 4.4 Enhancing Data Security and Privacy- Blockchain technology provides enhanced data security and privacy, making it suitable for sensitive financial information. The decentralized nature of blockchain ensures that data is distributed across multiple nodes, reducing the risk of single-point failures or unauthorized access. Additionally, cryptographic techniques protect the privacy of financial transactions, providing a secure environment for conducting financial and accounting activities. Overall, the adoption of blockchain technology in finance and accounting offers numerous benefits, including faster and cost-effective cross-border payments, decentralized financial services through DeFi platforms, automated and trustworthy financial agreements through smart contracts, and enhanced data security and privacy. These advancements contribute to a more efficient, transparent, and secure financial ecosystem. 5. UNLOCKING NEW POSSIBILITIES WITH TOKENIZATION 5.1 Fractional Ownership and Liquidity through Asset Tokenization – Asset Tokenization refers to the process of representing real-world assets, such as real estate, artwork, or securities, as digital tokens on the blockchain. These tokens can be divided into smaller units, enabling fractional ownership and liquidity for traditionally illiquid assets. By tokenizing assets, ownership can be easily transferred, and investors can access a broader range of investment opportunities. This has the potential to democratize access to high-value assets that were previously only available to a select few. Additionally, asset tokenization enables efficient and transparent trading, as ownership records are stored on the blockchain, reducing the need for intermediaries and costly administrative processes. 5.2 Blockchain's Role in Secure Digital Identity and Credentials - Blockchain technology offers a robust solution for secure digital identity management. Traditional identity systems are often vulnerable to data breaches and identity theft. Blockchain-based solutions provide enhanced security, privacy, and portability of digital identities. With blockchain, individuals can have more control over their personal data, granting permissions selectively and securely. Blockchain can also serve as a reliable platform for managing professional credentials, certifications, and licenses. By enabling instant verification of qualifications on the blockchain, employers can efficiently validate the authenticity of applicants' credentials, streamlining the hiring process and reducing the risk of fraud. 6. OVERCOMING CHALLENGES AND ADOPTION BARRIERS 6.1 Addressing Scalability and Performance Concerns-Blockchain technology faces scalability challenges, particularly in terms of transaction speed and throughput. However, ongoing research and development efforts are focused on addressing these concerns. Layer 2 solutions, such as off-chain protocols and side chains, aim to enhance scalability without compromising the security and decentralization of the underlying blockchain. Interoperability protocols also play a crucial role in connecting different blockchain networks, enabling the seamless transfer of assets and information. By improving scalability and interoperability, blockchain technology can achieve broader adoption in finance and accounting, accommodating the needs of a growing user base. 6.2 Navigating Regulatory and Legal Implications- The regulatory landscape surrounding blockchain technology is still evolving. Various jurisdictions are grappling with how to classify and regulate crypto currencies, smart contracts, and tokenized assets. However, regulatory clarity is emerging in many countries, and efforts are underway to harmonize regulations internationally. 28 29 To facilitate the adoption of blockchain in finance and accounting, industry collaboration and selfregulatory initiatives are crucial. By engaging with regulators and establishing best practices, blockchain stakeholders can help shape a favourable regulatory environment that balances innovation and consumer protection. 7. CONCLUSION In conclusion, blockchain technology has the potential to revolutionize finance and accounting by enhancing security, transparency, efficiency, and trust in financial processes. It offers benefits such as streamlined cross-border payments, decentralized financial services through DeFi, automated financial agreements through smart contracts, and improved data security and privacy. Embracing blockchain can reduce costs, mitigate risks, and improve operational efficiency for financial institutions and accounting firms. Collaboration and knowledge-sharing are essential for responsible and widespread blockchain adoption. Professionals in finance and accounting should stay informed, explore pilot projects, and actively engage in industry initiatives. By embracing blockchain, we can shape a more secure, efficient, and inclusive financial ecosystem. References: 1. Nakamoto, S. (2008). Bitcoin: APeer-to-Peer Electronic Cash System. 2. Tapscott, D., & Tapscott, A. (2016). Blockchain Revolution: How the Technology Behind Bitcoin Is Changing Money, Business, and the World. 3. Swan, M. (2015). Blockchain: Blueprint for a New Economy. 4. World Economic Forum. (2019). Central Banks and Distributed Ledger Technology: How Are Central Banks Exploring Blockchain Today? 5. Deloitte. (2021). Blockchain and the Future of Finance. I. T. MIRROR (2023-24) I. T. MIRROR (2023-24)

I. INTRODUCTION TO RERA , 2016 The Real Estate (Regulation and Development) Act, 2016 (RERA) has emerged as a game-changer in the real estate sector, revolutionizing the way the industry operates in India. This comprehensive legislation was enacted to address the concerns and protect the interests of homebuyers, while also promoting transparency and accountability in the real estate market. The RERA has opened up a new area of practice for professionals who specialize in navigating the intricacies of this legislation and providing valuable guidance to stakeholders involved in real estate transactions. A. Understanding the need forRERA The need for RERAarose due to the prevalent malpractices and lack of regulation in the real estate industry. Homebuyers often faced challenges such as delayed project deliveries, deviation from promised specifications, and non-transparent practices by developers. RERA was introduced to instill confidence among buyers, establish a fair and transparent process, and ensure timely completion of projects. B. Overview of the RERA The RERAintroduces a regulatory framework that governs the real estate sector, with an aim to protect the interests of buyers and promote efficient project development. It establishes Real Estate Regulatory Authorities in each state to oversee the implementation and enforcement of the Act. RERA also mandates the registration of real estate projects and imposes obligations on developers, buyers, and real estate agents. C. Impact of RERAon the real estate sector The impact of RERA on the real estate sector has been significant. It has brought about a paradigm shift by introducing transparency, accountability, and a structured legal framework. With the implementation of RERA, developers are compelled to adhere to strict guidelines and timelines, leading to increased consumer confidence. The Act has also facilitated the resolution of disputes and grievances, ensuring a more secure and regulated environment for homebuyers. II. KEY PROVISIONS OF THE RERA The RERA Act encompasses various provisions that govern different aspects of real estate projects, ensuring a fair and transparent transaction process. Understanding these key provisions is essential for professionals operating in the RERAdomain. A. Registration of real estate projects The RERA mandates the registration of all real estate projects with the respective state's Real Estate Regulatory Authority. This provision aims to ensure that developers provide accurate and reliable information to potential buyers. ADV (CS) LOKESH SHAH CA HARSH MEHTA RERA Act, 2016 - A New Area of Practice for Professionals 30 31 1. Eligibility criteria for registration To be eligible for registration, developers need to fulfill certain criteria, including having a valid title to the land, obtaining the necessary approvals, and submitting the required documents. 2. Documentation and procedure for registration Developers are required to submit detailed project plans, land title documents, financial statements, and other relevant information during the registration process. The registration procedure involves a thorough scrutiny of these documents by the regulatory authority. B. Obligations of the promoter Under the RERA, developers (promoters) have several obligations to fulfill to ensure transparency and protect buyers' interests. 1. Disclosure of project details Developers must provide comprehensive information about the project, including layout plans, project specifications, schedule of completion, and details of amenities and facilities. This ensures that buyers have complete visibility into the project they are investing in. 2. Adherence to timeline and quality standards RERAmandates strict adherence to project timelines, ensuring that developers complete projects within the stipulated time frame. Additionally, developers are required to adhere to the quality standards specified in the agreement and provide necessary warranties to homebuyers. C. Rights and obligations of the allottees The RERA safeguards the rights of homebuyers and provides them with certain remedies in case of noncompliance by the developer. 1. Protection of buyers' interests RERA ensures that buyers are protected from unfair practices and ensures that they receive the promised amenities, specifications, and quality. It prohibits developers from making any changes to the project without the consent of the allottees. 2. Remedies available to buyers in case of non-compliance Buyers have various remedies available under RERA in case of any violation or non-compliance by the developer, including seeking a refund, compensation, or appropriate legal action. D. Establishment of Real Estate Regulatory Authority (RERA) The establishment of the Real Estate Regulatory Authority is a crucial aspect of the RERA Act, ensuring effective regulation and oversight in the real estate sector. 1. Role and functions of RERA RERAacts as the regulatory body responsible for implementing and monitoring the provisions of the Act. It oversees project registrations, resolves disputes, and addresses grievances raised by homebuyers and other stakeholders. 2. Grievance redressal mechanism RERA provides a robust grievance redressal mechanism, allowing homebuyers to file complaints against developers for any violation of the Act. RERA authorities have the power to mediate and pass orders for resolution, thereby providing an effective dispute resolution platform. I. T. MIRROR (2023-24)

III. SCOPE OF PRACTICE FOR PROFESSIONALS The RERA has created numerous opportunities for professionals to contribute their expertise and play a crucial role in facilitating compliance and resolving disputes. A. Role of lawyers underRERA Lawyers have a significant role to play in the RERAdomain, providing legal advice to both developers and buyers. They assist in project registration, drafting agreements, resolving disputes, and ensuring compliance with RERAregulations. 1. Legal advisory forpromoters and buyers Lawyer's help developers understand and comply with the legal requirements of the RERA. They also provide guidance to buyers in understanding their rights, reviewing agreements, and seeking legal remedies in case of disputes. 2. Assisting in project registration and compliance Lawyers assist developers in navigating the registration process, ensuring that all necessary documents are submitted accurately and timely. They also help developers comply with ongoing reporting and disclosure obligations under RERA. B. Role of Tax Consultants and Chartered Accountants underRERA Tax consultants and chartered accountants play a crucial role in assisting developers, promoters, and homebuyers in navigating the intricacies of the Real Estate (Regulation and Development) Act, 2016 (RERA). Their expertise in taxation and financial matters is invaluable in ensuring compliance with RERA regulations and optimizing financial management in real estate projects. Let's explore the specific roles they fulfill under RERA: 1. Assisting in project planning and compliance Professionals can provide valuable insights to developers in the initial stages of project planning. They can assess the feasibility of projects, advise on legal and regulatory requirements, and assist in formulating strategies for successful project execution. 2. Risk assessment and mitigation strategies Professionals can help developers identify potential risks associated with a project and develop effective strategies to mitigate those risks. This includes assessing legal, financial, and market risks and providing recommendations for risk management. 3. Tax Planning and Compliance Tax consultants and chartered accountants provide essential guidance to developers and promoters regarding the tax implications of real estate transactions. They analyze the tax provisions applicable to various aspects of the project, such as capital gains, goods and services tax (GST), and other indirect taxes. By offering tax planning strategies, they help optimize tax efficiency and ensure compliance with tax laws. 4. Financial Reporting and Auditing RERA mandates the submission of financial statements and project audits by developers and promoters. Tax consultants and chartered accountants assist in preparing these financial reports in accordance with RERAguidelines. They conduct thorough audits to ensure accurate financial information and adherence to financial reporting standards. This helps instill confidence in stakeholders, including homebuyers, by providing transparent and reliable financial data. 5. Accounting and Bookkeeping Services Proper accounting and bookkeeping practices are vital for developers and promoters to maintain accurate financial records. Tax consultants and chartered accountants assist in setting up accounting systems and 32 33 processes that comply with RERA requirements. They ensure that financial transactions are recorded correctly, provide guidance on chart of accounts, and help implement robust internal controls to safeguard financial integrity. 6. GSTCompliance The implementation of GST has had a significant impact on the real estate sector. Tax consultants and chartered accountants play a crucial role in ensuring GST compliance for real estate transactions. They advise on GST registration requirements, assist in filing periodic GST returns, and guide developers and promoters on the correct classification of properties for GST purposes. Their expertise helps navigate the complexities of GSTand ensures adherence to applicable regulations. 7. Project Costing and Budgeting Tax consultants and chartered accountants assist developers and promoters in accurate project costing and budgeting. They analyze project expenses, assess cost allocations, and provide insights on financial feasibility. By establishing realistic budgets and cost controls, they help optimize financial resources and enhance project profitability. 8. Due Diligence and Financial Risk Assessment Before entering into real estate transactions, due diligence is crucial to evaluate the financial viability and risks associated with a project. Tax consultants and chartered accountants conduct thorough financial due diligence to identify potential risks and assess the financial health of developers and promoters. They review financial statements, analyze cash flows, assess debt obligations, and provide insights to help stakeholders make informed decisions. 9. Tax Advisory and Structuring Tax consultants and chartered accountants offer comprehensive tax advisory services tailored to the real estate sector. They provide guidance on tax-efficient structures for real estate transactions, such as joint development agreements, lease agreements, and sale transactions. By considering the applicable tax laws and regulations, they help stakeholders minimize tax liabilities and optimize financial outcomes. 10. RERA-related litigation and dispute resolution With the increased focus on transparency and accountability, the number of disputes and grievances under RERA has risen. Professionals, particularly Chartered Accountants have a significant role to play in handling these cases and facilitating timely resolution through negotiation, mediation, or legal proceedings. Professionals proficient in RERAlaw can assist clients in filing complaints, preparing legal documentation, representing them before the RERAauthorities, and seeking appropriate remedies. Tax consultants and chartered accountants with expertise in RERA-related matters are essential partners for developers, promoters, and homebuyers. Their guidance ensures compliance with RERA regulations, maximizes tax efficiency, and contributes to the overall financial success of real estate projects. C. Role of Architects and Engineers 1. Compliance with RERAguidelines Architects and engineers must ensure that the project plans and designs comply with the guidelines specified by RERA. They play a crucial role in ensuring that the project is executed as per the approved plans, thereby ensuring quality and adherence to regulations. 2. Certification of project plans and progress Architects and engineers are responsible for certifying the project plans, progress, and adherence to quality standards at various stages of construction. Their certification provides assurance to homebuyers regarding the progress and quality of the project. I. T. MIRROR (2023-24) I. T. MIRROR (2023-24)

IV. FUTURE PROSPECTS AND GROWTH IN THE RERA PRACTICE AREA The future prospects for professionals in the RERA practice area are promising. As the implementation of RERAcontinues to evolve, professionals with specialized knowledge and expertise will be in high demand. Here are some key factors contributing to the growth of the RERApractice area: 1. Increasing Awareness and Compliance With the growing awareness among developers, promoters, and homebuyers about the benefits of RERA, the demand for professionals with expertise in RERA law will continue to rise. Professionals who can provide guidance on compliance, dispute resolution, financial management, and taxation under RERAwill have significant opportunities to grow their practices. 2. Expanding Scope of Services The scope of services offered by professionals in the RERAdomain is expanding. Professionals can provide a range of services, including legal advisory, compliance audits, financial reporting, taxation, project planning, and dispute resolution. This diversified scope allows professionals to cater to various needs within the real estate sector, opening up new avenues for growth and specialization. 3. Emerging CareerOpportunities The implementation of RERAhas created a demand for professionals with specialized skills and knowledge in this field. This has led to the emergence of new career opportunities, such as RERA consultants, RERA compliance officers, and RERA dispute resolution experts. Professionals who can position themselves as experts in the RERAdomain will find abundant opportunities for career advancement and growth. 4. Continuous Updates and Learning Given the dynamic nature of RERA, professionals must stay updated with the latest amendments, notifications, and legal developments. Continuous learning and professional development will be crucial for professionals to remain competitive and provide high-quality services to their clients. This ongoing learning process will contribute to the growth and sustainability of the RERApractice area. V. CONCLUSION The implementation of the RERA has not only transformed the real estate sector but has also created a significant impact on the professional landscape. Professionals who can navigate the complexities of RERA, offer specialized services, and adapt to the changing regulatory landscape will be well-positioned for success. With its focus on consumer protection, transparency, and accountability, RERAoffers immense potential for professionals to contribute to the growth and development of the real estate industry in India and establish themselves as trusted advisors in the field. 34 35 Scheme Covered: Atmanirbhar Gujarat Scheme for assistance under MSMEs. Aim of the Policy: To boost MSME growth and strengthen the overall ecosystem in the state and help achieve the larger goal of an Atmanirbhar Gujarat for Atmanirbhar Bharat. Operative Period of the Policy: 05/10/2022 to 04/10/2027 Important Key Terms covered under the policy: 1. MICRO, SMALL AND MEDIUM ENTERPRISES (MSME): COMMON FOR MANUFACTURING & SERVICE SECTOR Category Fixed Capital Investment in Plant & Machinery (Amount in Rs.) Micro less than or equal to Rs. 1 Cr Small more than Rs. 1 Cr and less than or equal to Rs. 10 Cr Medium more than Rs. 10 Cr and less than or equal to Rs. 50 Cr Large more than Rs.50 crore 2. NEW ENTERPRISE: Means MSME, which has commenced commercial production / rendering of services during the operative period of the Scheme subject to obtaining registration and has separately identifiable fixed capital investment. Here the production shall be considered in the State of Gujarat only. 3. EXISTING ENTERPRISE: It means MSME which has commenced commercial production/ rendering services before the date of announcement of the scheme. It should be noted that New Enterprise set up during the operative period of this Scheme, will be termed as existing enterprise in reference to the expansion / diversification. Meaning thereby a New Unit can take the benefit of incentive as a New unit and also as an Existing Unit while going under expansion / diversification during the operative period of this Scheme. 4. EXPANSION: Where an Existing Enterprise increases its investment in Gross Fixed Investment by at least 50% of its existing project in same premises, of which at least 60% of investment made in plant & machinery, and also increases its installed capacity by at least 50% of existing product(s) subject to having utilized 75% of installed capacity in any one of the preceding three financial years. 5. DIVERSIFICATION: Where an Existing /New Enterprise engaged in manufacturing diversifies its production line with an increased investment in Gross Fixed Capital Investment by at least 25% of its existing project in case of Micro & Small enterprise and 50% in case of Medium Enterprise. Of which at least 60% of investment is made in plant & machinery. Only one expansion/ diversification will be eligible for assistance during the operative period of the scheme. Financial Incentives to MSMEs CS MUKESH PAMNANI I. T. MIRROR (2023-24)

6. GROSS FIXED CAPITAL INVESTMENT (GFCI): Investment made in required building, plant and machinery, utilities, tools and equipment and other assets (excluding land) required to manufacture end product / rendering of services. INCENTIVES: in this article, Capital and Interest Subsidy is covered. CAPITALSUBSIDYTO MICRO – MANUFACTURING ENTERPRISES Category of Taluka Quantum of Assistance Category I 25% of Term Loan amount uptoRs. 35 lakhs Category II 20% of Term Loan amount uptoRs. 30 lakhs Category III& Municipal Corporation Areas 10% of Term Loan amount uptoRs. 10 lakhs IMPORTANTPOINTS: Categories of talukas can be verified at the below weblink: https://ic.gujarat.gov.in/documents/commondoc/2020/I-branch_2297_02_Nov_2020_98_06112020.pdf WHERE TERM LOAN IN FORM OFREIMBURSMENT: Not eligible if term loan is sanctioned after one year from the date of commercial production. TIME LIMITFOR APPLICATION: Enterprise shall have to apply to concerned DIC either: · within one year from the date of first disbursement of loan or · one year from the date of commencement of commercial production or · one year from the date of issue of this GR whichever is later. CAPON TOTALQUANTUM OFCAPITALSUBSIDY: If an Enterprise is availing benefit under any other permissible incentive scheme of State or Central Government, then the total quantum of capital subsidy granted by both the Governments, shall not exceed the total loan amount disbursed by Bank / Financial institution. Subsidy will be disbursed only after commencement of production. ASSISTANCE FOR INTERESTSUBSIDY: Eligibility forManufacturing and Service Sector: 1. Enterprise Commencing Commercial Production during operative period of this scheme. 2. Enterprise availing any incentive under any other incentive scheme of the state shall not be eligible. 3. GFCI shall be considered at value of project cost or cost appraised by the bank whichever is lower. QUANTUM OFINTERESTSUBSIDYFOR MANUFACTURING SECTOR: Category of Taluka Quantum of Assistance Category I 7% on Term Loan, Max Rs. 35 Lakhs. For 7 years Category II 6% on Term Loan, Max Rs. 30 Lakhs. For 6 years Category III & Municipal Corporation Areas 5% on Term Loan, Max Rs. 25 Lakhs. For 5 years 36 37 ADDITIONAL1% INTERESTSUBSIDY: - Differently abled Entrepreneur - Woman Entrepreneur - Registered Start up in manufacturing sector ADDITIONAL1% INTERESTSUBSIDY: Entrepreneur below age of 35 years on date of sanction of Term Loan CAPON INTERESTSUBSIDY: Total quantum of interest subsidy (State + Central) in any case shall not exceed to the extent that an Enterprise shall have to bear at minimum 2% interest. INTERESTSUBSIDYON SOLAR PLANTOR ANYOTHER RENEWABLE POWER PLANT: WHO IS ELIGIBLE: - An existing manufacturing enterprise - Which installs new solar plant or any other renewable power plant - For captive consumption - In its premises SERVICE SECTOR: Eligibility: - NEW Enterprise installing new machinery, equipment and furniture / fixture (excluding land and building) - List as mentioned in Annexure Ato the Scheme - Specific List as mentioned in Annexure A (ii) shall employ at least 10 employees and obtain GST registration certificate QUANTUM OF INTEREST SUBSIDY FOR SERVICE SECTOR AND ADDITIONALINTEREST SUBSIDYIS SAME AS MANUFACTURING SECTOR AS MENTIONED ABOVE: OPTION TO AVAILDATE FOR THE INTERESTSUBSIDY: Same as mentioned for manufacturing sector as above CONSEQUENCES OFLATE SUBMISSION OFAPPLICATION: Late Submission is considered but subject to deduction of delayed period beyond the eligible period as defined above. WHEN INTERESTSUBSIDYWILLBE REIMBURSED: Only after commencing commercial production or rendering of services. IN CASE OFDEFAULTIN PAYMENTOFTERM LOAN: If the enterprise becomes defaulter in payment of interest or instalment of term loan to Bank/Financial institution as per guidelines of RBI, such default period will be deducted from the eligible period. NO PENALINTERESTSHALLBE COUNTED IN INTERESTCALCULATION: Interest subsidy will not be available for penal interest or any other charges. I. T. MIRROR (2023-24) I. T. MIRROR (2023-24)

OTHER CONDITIONS: 1. Enterprise shall have to furnish information regarding production, sales, turnover, and employment half yearly or yearly to the concerned DIC. 2. Enterprise will have to observe pollution Control measures as prescribed by GPCB or other competent authority 3. Enterprise has to obtain Gumasta Registration (Shop & Establishment) from concerned Municipality Authority if covered under Municipal Area. 4. Enterprise has to submit Document of Registration and Udyam Registration, legal document for possession, NApermission of land, sale deed or lease deed, term loan sanction letter of Bank or Financial Institution (Not NBFC). 5. Enterprise will have to employ at least 85% of the total employment and / 60% of supervisory and managerial staff from local persons 6. Enterprise has to give undertaking to confirm that it has paid all Government dues on its letter head signed by authorized signatory 7. Enterprise can avail benefit under such schemes of Government of India, if any. 8. Enterprise located in more than one geographical limit of more than one taluka, then the taluka in which the enterprise has the largest percentage of land area will be considered as the eligible category. Source: Resolution No. MIS – 102022 – 1271 (1) – I(Ch) notified by the Industries & Mines Department, Government of Gujarat 38 39 I. T. MIRROR (2023-24) C. Company Vs. LLP: Acompany is governed by the provisions of Companies Act whereas an LLPis governed by the terms of the agreement entered into between the partners. LLPis a more flexible business model as compared to a Company. There are lesser number of compliance requirements to an LLPas compared to a Company. A Charitable Institution or organization can be registered as a Company under section 8 of the Companies Act, 2013 whereas no such entity can be registered as an LLP. CA SUVRAT S. SHAH Decoding The LLP A. What is LLP? • An LLPis a corporate business entity model that gives benefits of limited liability like a company and also the benefits of flexibility like a partnership firm. • The LLP's existence continues irrespective of any changes in its partners. • LLPcan enter into contracts and hold property in its own name. • Unlike a traditional partnership firm, an LLPhas a separate legal entity. • It is liable to the full extent of its assets but liability of the partners is limited to their committed contribution to the capital of the LLP. No partner is liable on account of the independent/ un-authorized actions of other partners. Thus,the partners are shielded from joint liability incurred by other partner's misconduct or wrongful business decisions. B. Traditional Partnership Vs. LLP– Analysis: LLP Legal Entity Minimum 2 Partners. There is no Limit Liability of each partner is limited only to the extent of his contribution Registration is Compulsory Filing of annual financial statements is compulsory Audit is Compulsory under the LLP Act if the annual Turnover exceeds Rs.40 Lakhs or total contribution exceeds Rs.25 Lakhs LLP Name Must have been approved by the ROC. Name must contain the letters “LLP” as suffix Minor cannot become a Partner in an LLP Traditional Partnership Not a Legal Entity Minimum 2 Partners Maximum 20 Partners Partners are jointly liable for the entire liability of the partnership firm Registration is not compulsory Financial Statements need not be filed Audit is not Compulsory under the Partnership Act. A partnership can take any name of choice Minor can become Partner [only for profit sharing] Particulars Status Minimum Partners Maximum Partners Liability Registration Filing Audit Name of the Firm Minor as a Partner

D. Formation of LLP: Minimum two partners are must for formation of an LLP. However, there is no limit on the maximum number of partners in an LLPunlike the traditional partnership, where it is 20. E. LLP Partners/ Designated Partners: Any individual or a body corporate may become a partner in an LLP. However, an individual cannot become a partner of an LLP, if— (a) he has been found to be of unsound mind by a Court of competent jurisdiction; (b) he is an un discharged insolvent; or (c) he has applied to be adjudicated as an insolvent. Appointment of at least two “Designated Partners” shall be mandatory for all LLPs. “Designated Partners” shall be accountable for regulatory and legal compliances, besides their routine administrative and operating liability as partners. Every LLP must have at least two Designated Partners who shall be individuals and at least one of them should be resident of India. Every Designated Partner would be required to obtain a “Designated Partner Identification Number” (DPIN). In case an LLP has only bodies corporate as its partners or where one or more partners are individuals as well as bodies corporate, at least two individual partners or nominees of such bodies corporate shall act as designated partners. F. LLP Agreement: The rights and duties of LLPpartners are governed by the LLPAgreement. As per provisions of the LLPAct, if the LLPagreement is silent on any matter, it shall be decided as per Schedule I to the Act. LLPs need to get registered with the Registrar of Companies (ROC) after following the prescribed procedure. An LLP Agreement executed by at least two partners shall be filed with the ROC. G. LLP Name: Every limited liability partnership name shall entail the words “Limited Liability Partnership” or “LLP” as the last words. LLPs would not be given names, which, in the opinion of the Central Government, are undesirable. H. Registered Office: An LLPmust have its registered office as declared with the ROC. Any change in the Registered Office shall also be informed to the ROC in prescribed manner. An LLPhas option to declare any one address other than its registered office where the statutory notices/letters etc. shall be served by the ROC. I. Admission/ Resignation of Partners: New partners [other than the initial subscribers] can be admitted to an LLPas per terms and conditions of the LLPAgreement. A person may cease to be a partner in accordance with the agreement or in the absence of agreement, by giving 30 days' notice to the other partners. Aperson shall also cease to be a partner- (a) on his death or dissolution of the LLP; or (b) if he is declared to be of unsound mind by a competent court; or (c) if he has applied to be adjudged as an insolvent or declared as an insolvent. Notice is required to be given to ROC when a person becomes or ceases to be partner or for any change in partners of an LLP. Every partner needs to inform the LLP of any change in his name or address within a period of 15 days of such change. The LLP would file such details with the ROC within 30 days of such change in Form 4. J. Partner's Contribution and Liability: Partner's contribution may consist of cash as well non-cash deposit and both tangible and/or intangible property. Liability of partners shall be limited to their individual commitment except in case of unauthorized acts, fraud and negligence. But a partner shall not be personally liable for the wrongful acts or omission of any other partner. An obligation of the LLP whether arising in contract or otherwise, is solely the obligation of the LLP. The liabilities of LLP shall be met out of the property of the LLP and no partner shall be liable for the amount in excess of his commitment. 40 41 K. Unlimited Liability of Partner in certain cases: The LLPAct provides for minimum 2 partners to carry on the business and operations of an LLP. However, if at any time the number of partners of an LLP falls below two due to any reason and the LLP continues to carry on its business for more than six months, the person, who continues to remain the only partner of the LLP during such time and with the knowledge of the fact that the LLP is carrying on business with him alone, shall be personally liable for the obligations of the LLPincurred during that period. The provisions have also been made in the Act to provide that where after a partner's death the business is continued in the same LLP name, the continued use of that name or of the deceased partner's name as a part thereof shall not make his legal representative or his estate liable for any act of the LLPdone after his death. L. Financial Year: In case LLP has been incorporated on or after 1st October of any year, it can chose its first financial year either on the first or the next March-end i.e. LLPcan have first financial year of upto 18 months period. M. Accounts & Audit: An LLP is required to maintain proper books of accounts reflecting true and fair view of its state of affairs. Every LLP needs to file a “Statement of Accounts and Solvency” in prescribed form with the ROC every year. Rule 24 of LLP Rules 2009 prescribes the requirement of audit of the books of account of LLP. Accordingly, any LLP having turnover exceeding Rs. 40,00,000 in any financial year, or having contribution exceeding Rs. 25,00,000, shall get its books of accounts audited. Every LLPwould be required to file annual return in Form 11 with ROC within 60 days from the end of financial year. N. Filing of Documents: The provisions of the Act require LLPs to file certain documents like Statement of Account and Solvency and Annual Return, notices in respect of changes among partners etc. within specified time period. LLPs can file such documents even after their due dates on payment of additional fees. In case the documents are filed after their due dates with additional fees upto 300 days, no prosecution will be initiated. However, in case of further delay, over and above the fees [normal and additional], the LLPs will also be liable for prosecution. The Act also contains provisions for compounding of offences which are punishable with fine only. O. Power of Registrar to Call for information & Inspection: The ROC has powers to obtain such information which he may consider necessary for the purposes of carrying out the provisions of the Act, from any Designated Partner, Partner or employee of the LLP. He also has power to summon any Designated Partner, Partner or employee of any LLPfor any such purpose, in case the information is not furnished to him or he is not satisfied with the information furnished to him. Central Govt may appoint inspectors to investigate the affairs of an LLPin the manner specified in the Act. P. Documents/ information available for inspection by any person: There are some specified documents/ information of any LLPthat will be open for inspection by any person. They are - Incorporation document, Names of partners and changes, if any, made therein, Statement of Account and Solvency, Annual Return. The fees for such inspection of an LLP is Rs 50/- and fees for certified copy or extract of any document u/s 36 shall Rs. 5/- per page. Q. Taxation of LLP: LLPs are taxed on the lines similar to the traditional partnership firms, i.e. income is taxable in the hands of LLPand exempted in the hands of its partners. In case of liquidation of an LLP, every partner will be jointly and severally liable for liability towards payment of tax unless he proves that non-recovery cannot be attributed to any gross neglect, misfeasance or breach of duty on his part. The conversion from a general partnership firm to an LLP would not have any tax implications if the rights and obligations of the partners remain the same after conversion and if there is no transfer of any asset or I. T. MIRROR (2023-24) I. T. MIRROR (2023-24)

liability after conversion. If there is a violation of these conditions, the provisions of section 45 of Incometax Act shall apply. R. Remuneration To Partners: Just like the traditional partnerships, the remuneration paid to working partners of an LLP is deductible as expense in the hands of LLP within limits prescribed under section 40(b) of the Income Tax act subject to agreement. The same will be taxable as business income in the hands of the recipient partners. S. Interest To Partners: Interest on Capital balance paid to the partners is deductible in the hands of LLP within limits prescribed under section 40(b) of Income Tax Act. Interest paid/credited to partner will be allowable as deduction to LLP and it will be taxed at the hands of partner of LLP. Payment of interest should be as authorised by and should be in accordance with terms of the partnership deed. Rate of Interest should not exceed 12% p.a. T. Signing Of Income Tax Return: Income Tax return of an LLP needs to be signed by any Designated Partner of LLP. If for any unavoidable reasons, the Designated Partner is unable to sign and verify the return, or where there is no designated partner, any partner of LLPcan sign and verify income tax return. U. No Presumptive Taxation Scheme: LLPcannot avail presumptive taxation scheme under sections 44AC or 44AD of Income Tax Act. V. Dissolution of LLP: As per the terms of LLP agreement, LLP can be dissolved by executing a dissolution deed. The net assets as on the date of dissolution of the LLP shall be distributed amongst the partners in the manner specified in the LLPagreement. If LLPdistributes any other amount over & above the original capital and share of profit for the year till dissolution then the tax issues may arise depending upon the nature of the distribution and the character of amount being received by each partner. W. Winding up of LLP: th LLP can be wound up when a resolution is passed at the General Meeting of the partners with at least 3/4 of the total partners approving the decision to wind up the LLP. The competent Court has power to pass necessary orders based on the application made by LLP for winding up. The consent of the lenders and creditors will be necessary before the Court passes such an order. rd The creditors also have power to make an application for winding up of LLP if 2/3 in value of the creditors establish that LLPis not in a position to pay the debts to the creditors. X. Various Forms for LLP: Description Application for reservation or change of name Incorporation document and subscriber’s statement Details in respect of designated partners and partners of LLP Information regarding LLPagreement and changes made therein Notice of appointment, cessation, change in Particulars of a Partner or a Designated Partner and consent to become a Partner/ Designated Partner Notice of appointment, cessation, change in particulars of partners [Addendum to Form-4] e-Form Form-1 Form-2 Form-2A Form-3 Form-4 Form-4A 42 43 Description e-Form Notice for change of name Statement of Account & Solvency Annual Return of LLP Form for intimating other address for service of documents Notice for change of place of registered office Application and statement for conversion of a firm into LLP Application and Statement for conversion of a Private Co./ Unlisted Public Co. into LLP Notice of intimation of Order of Court/ Tribunal/CLB/ Central Government to the ROC Application for direction to LLPto change its name to the ROC Application to the Registrar for striking off name Application for reservation/ renewal of name by a Foreign LLP or Foreign Company Form for registration of particulars by Foreign LLP Return of alteration in the incorporation document or other instrument constituting or defining the constitution; or the registered or principal office; or the partner or designated partner of LLPincorporated or registered outside India. Notice of (A) alteration in the certificate of incorporation or registration; (B) alteration in names and addresses of any of the persons authorised to accept service on behalf of a foreign LLP (C) alteration in the principal place of business in India of Foreign LLP(D) cessation to have a place of business in India Application for compounding of an offence under the Act Form for filing addendum for rectification of defects or incompleteness Form-8 Form-5 Form-11 Form-12 Form-15 Form-17 Form-18 Form-22 Form-23 Form-24 Form-25 Form-27 Form-28 Form-29 Form-31 Form-32 I. T. MIRROR (2023-24) I. T. MIRROR (2023-24)

UMESH VYAS Exemptions from “Deposit” under the Companies (Acceptance of Deposits) Rules, 2014 – a critical analysis Definition of “Deposit” Section 2(31) of the Companies Act, 2013, defines the term Deposit. Accordingly, “Deposit” includes any receipt of money by way of deposit or loan or in any other form by a company, but does not include such categories of amount as may be prescribed in consultation with the Reserve Bank of India. There are three things to be treated as deposit: (1) Deposit, (2) Loan, (3) receipt of money in any other form. As against this, as per section 58A of the Companies Act, 1956 [Explanation to section 58A] “any deposit of money with, and includes any amount borrowed by, a Company but shall not include such categories or amount as may be prescribed in consultation with Reserve Bank of India.” This definition is in two parts (1) Deposit of money and (2) any amount borrowed. It is observed that except third category under the Companies Act, 2013 i.e. “receipt of money in other form”,definition of deposit under 2013 Act and 1956 Act are same. The purpose of the 'Act' for regulating deposit is to protect the interests of the public at large who park their valuable saving in the form of 'Unsecured deposit' with great amount of trust, and in turn, some mala fide Companies vanish with hard earned money of the common man. It was the era of such Companies especially Fin-Lease Companies in early 90's, and later, 'Satyam' episode put last nail in the coffin to shake trust of the common men who investtheir small savings in the corporate world. Consequently, the Companies Act,2013 became more stringent in many aspects especially for the provisions related to acceptance of deposit by companies. The negative effects of this new deposit provisions are harsh on the small Companies. However, rule 2(1)(c) of the Companies (Acceptance of Deposits) Rules, 2014, have specifically excluded from the definition of deposit,certain categories of receipt of money under the customary business practice that frequently take place in the ordinary course of business. Clause (i) to (xviii) of the rule 2(1)(c) enlists exempted categories of deposit. Here focus of discussion is on clause (c)(xii) of sub-rule 1(1) of rule 2 of the Companies (Acceptance of Deposits) Rules, 2014. This sub-clause (xii) specifically exempts some business transactions from purview of the term “Deposit” by stating that “any amount received in the course of, or for the purpose of, business of the Company-- (xii) (a) Excludes any advance received by the Company for supply of Goods or provision of services, which shall essentially be appropriated against supply or goods or provision of services within a period of 365 days from the date of acceptance of such advance. Further, if such advance is subject matter of any legal proceedings before any court of law, such time limit of 365 days shall not apply. (xii) (b) Advance received in connection of consideration of immovable property under an agreement or arrangement, and such advance is adjusted against such property in accordance with terms of an agreement or arrangement. For example: Advance received for sale of an immovable property under “Banakhat”, with a condition that such advance shall be adjusted only against consideration for sale of the specific immovable property at the time of execution of sale deed, it will not tantamount to be a deposit under the provisions of this rule. B.Com., LL.B., FCS 44 (c) as security deposit forperformance of contract for supply of goods orprovision of services. Accepting security deposit for performance of commercial contract between parties to the contract is normal business practice. The expression “Security Deposit” is not defined in the Companies Act,2013 or in the Companies (Acceptance of Deposits) Rules, 2014. th The Black's Law Dictionary, 10 edition, defines it as “Money placed with a person as earnest money or security for the performance of a contract. The money will be forfeited if the depositor fails to perform.” There is no law in this subject and it is solely governed by the prevailing business practices and the terms of agreement between the parties. The basic purpose of taking Security Deposit is to ensure performance of specific obligation under contract by the party. The amount received by the Company in the form of security deposit under Works Contract Agreement/ Agency Agreement/ franchisee agreement is in the nature of “Security Deposit”, as the sole purpose of such deposit is to secure performance of the contract entered into between the parties, which are eligible for exemption under this rule. (d) as advance received under long term projects for supply of capital goods except those covered under item (b) above. Advance amount received for development of large real estate projects under terms of contract or under contract for development of large-scale manufacturing plant under “Engineering Procurement Contract” ('EPC' Contract) is not considered as deposit as per this rule. (e) as an advance towards consideration for providing future services in the form of a warranty or maintenance contract as per written agreement or arrangement, if the period for providing such services does not exceed the period prevalent as per common business practice or five years, from the date of acceptance of such service whichever is less; This refers to advance received by the Company under agreement of warranty/ extended warranty, and or after sale services to be provided to the customer of the Company. Range of such contracts for warranty varies from home and office appliances to large scale machineries, or after sale services in case of sale of products like software. This includes advance received under a warranty contract as well as contract for maintenance of such products after a warranty period. This exemption from deposit is subject to the condition that money shall be received as per a written agreement or arrangement between the parties and the period for providing such services shall not exceed the period prevalent as per common business practice or five years, from the date of acceptance of such service whichever is less. (f) as an advance received and as allowed by any sectoral regulator or in accordance with directions of the Central orState Government. This exemption refers to advance received by Company which is mainly in the utility sectors like telecommunication, supply of gas or electricity, and companies dealing in securities e.g. share brokers under license from SEBI. (g) as an advance for subscription towards publication, whether in print or in electronic media to be adjusted against receipt of such publications. This refers to the advance received by print/ electronic media Companies which collects subscription money in advance, which shall be adjusted against receipt of such publication. Further it is provided that in case such advance amount received is refundable with or without interest in case of the company accepting the money, does not have necessary permission or approval, whenever required, to deal in the goods or properties or services for which money is taken, then the amount received shall not be entitled for the exemption and it shall be deemed to be deposit under this rule. For example: A Company is dealing in the goods like Gas or other petroleum products subject to regulatory permissions, and such permission or license gets cancelled or is not renewed, in the terms of contract, advance received from customers is subject to refund, such advance shall be deemed to be deposit on the expiry of fifteen days from the date they become due for refund. 45 I. T. MIRROR (2023-24)

CA BHAVIN SONI GIFT City : The Financial Hub Introduction The Government of Gujarat through its undertaking Gujarat Urban Development Company Limited (“GUDCL”) has established "Gujarat International Finance Tec-City Company Limited" (“GIFTCL”) to develop and implement GIFTCity. GIFT SEZ Limited, is a wholly owned subsidiary of GIFTCL and is responsible for development of Special Economic Zone with International Financial Services Centre (IFSC). GIFTSEZ in Gandhinagar, Gujarat has been designated IFSC. GIFT SEZ is India's first International Financial Services Centre (IFSC) under “SEZ Act 2005”. At present GIFT City is an integrated development on 886 acres of land. However, GIFT City is being expanded to 3387 acres as approved by Govt. w.e.f. 02-11-2022. The Union Budget 2016 provided competitive tax regime for the IFSC at GIFT SEZ. Government of India operationalized IFSC at GIFTSEZ in April 2015. Key Features of GIFT SEZ • Fast growing Business District • Talent availability • India's first operational Smart City • Low attrition • India's first IFSC • Skill Development & Training • Multi-Services SEZ • Integrated Development (Commercial, • GoG IT/ITeS Policy Incentives Residential & Social) • Unique infrastructure (first time in India) • Walk to work concept • Substantial Reduction in Operational costs • Quality of life • World Class Infrastructure • Single window clearance • Strategic location Area Bifurcation GIFT City Processing Area Non-Processing Area • International Financial Service Centre (IFSC) • International Techno Park & International Market Zone • Commodity Exchanges • Global Trading Exchanges • Insurance • Offshore Banking • IT / ITeS • KPO / BPO Services • Related Commercial and Office Buildings • Service Apartments & Residential Flats • Hostels, Restaurants and Food Court • Business Hotel, Shopping Centre, Retail Stores and Banks • Training Center for Financial Services • Medical Centre • Entertainment Centre / Theatre • Regulators Offices 46 I. T. MIRROR (2023-24) GIFT IFSC 10. Good living 9. Physical & Social Infrastructure 8. Walk to work concept 7. Proximity to National and International Airport 6. Supporting Ecosystem 5. High Quality Talent 4. Ease of Doing Business 3. Cost Advantage 2. Tax Regime 1. Unified Regulator Key Benefits of having office in GIFT City IFSC in India • An IFSC caters to the customers outside the jurisdiction of domestic economy. Such centers deal with the flow of finance, financial products and services across the borders. • IFSC as envisaged under the Indian context “is a jurisdiction that provides financial services to nonresidents and residents (Institutions), in any currency other than Indian Rupee (INR)”. • IFSC is set-up to undertake financial services transactions that are currently carried on outside India by overseas financial institutions and overseas branches / subsidiaries of Indian financial institutions. • In India, an IFSC is approved and regulated by the Government of India under the Special Economic Zones Act, 2005. • Government of India has approved GIFT City as a Multi Services Special Economic Zone ('GIFT SEZ') and has also notified this zone as India's IFSC. • The launch of the IFSC at GIFT City is the first step towards bringing financial services transactions relatable to India, back to Indian shores. • IFSC unit is treated as a non-resident under extant Foreign Exchange Management regulations. 47

International Financial Service Centre Authority (IFSCA) 1. IFSCA has been established as a unified financial regulator in April 2020 by the Government of India under the IFSCAAct, 2019 2. Authority is mandated to develop and regulate Financial Institutions, Financial Services and Financial Products in the International Financial Services Centre (IFSC) in India 3. To develop and regulate IFSC's in India, IFSCA has been vested with powers of four sectoral regulators namely- RBI, SEBI, IRDAI & PFRDAs 4. Powers of Four regulatory bodies are vested to International Financial Service Centre Authority. ISFCA Key Business Activities in IFSC Capital Markets Activities : • Listing and issuance of securities Entities : • Stock/Commodity Exchanges • Clearing Corporation • Depository • Broker Dealer • Trading Members • Segregated Nominee Account Providers • Clearing Corporations, Depositories, other intermediaries Offshore Banking Activities : • Corporate Banking • ECB Lending • Servicing JV/WOS of Indian companies registered abroad • Factoring / Forfaiting of export receivables Entities : • Indian banks • Foreign banks • Finance Cos and NBFCs Offshore Asset Management Activities : • Portfolio Management Services • Wealth Management Services • Custodial Services Entities : • Alternative Investment Funds • Mutual Funds • Investment Advisors • Portfolio Manager Offshore Insurance Activities : • General / Life Insurance • Co-Insurance • Reinsurance • Captive Insurance Entities : • Indian Insurer • Indian Reinsurer • Indian Broker • Foreign Insurer • Foreign Reinsurer 48 I. T. MIRROR (2023-24) I. T. MIRROR (2023-24) Emerging Activities • Global Fintech Hub • Global In-house Centres • International Bullion Exchange • Aircraft Leasing & Financing Offshore Insurance • Legal services, Compliance & Secretarial Services • Accounting, Auditing, Bookkeeping & Taxation Services • Professional and Management Consulting Services • Administration, Assets Management Support Services and Trusteeship Services Opportunities for Chartered Accountants in IFSC • Providing advice, consultancy, assistance or other related services, for fulfilling legal obligations/compliances under various laws for the time being in force; • Bookkeeping services consisting of classifying and recording business transactions in terms of money or some unit of measurement in the books of account. • Financial auditing services: Examination of the accounting records and other supporting evidence of an organization for the purpose of expressing an opinion on financial statements. • Accounting review services: Reviewing services of annual and interim financial statements and other accounting information. • Compilation of financial statements services: Compilation of financial statements from information provided by the client. This service shall also include the preparation services of business tax returns, when provided as a bundle with the preparation of financial statements for a single fee. • Other accounting services: Attestations, valuations, preparation services of pro forma statements, etc. • Advisory Services to companies/entities outside India in relation to their business, capital raising, merger & acquisition or capital restructuring or investment activity including in India, outside India or in IFSC. • Asset Management support services to Aircraft & Ship Leasing entities in terms of their leasing agreements, funding, structuring of SPVs. Competitive Tax Regime in IFSC Ø 100% tax exemption - for 10 years for Offshore Banking Unit (OBU) - for 10 years out of 15 years for other units Ø MAT / AMT @ 9% of book profits applies to Company / others setup as a unit in IFSC – MAT not applicable to companies in IFSC opting for new tax regime Ø Dividend paid to shareholders of company in IFSC: From 01 April 2020, dividend income distributed by Company in IFSC to be taxed in the hands of the shareholder. Ø Presently, interest income received by non-resident from specified bonds issued prior to 01.07.2023 and which are listed only on IFSC stock exchanges are taxed at the rate of 4%. Ø w.e.f. 01-07-2023, interest income received by nonresident on specified bonds issued on or after 1 July 2023 and listed only on IFSC exchange will be chargeable to tax at the rate of 9%. Units in IFSC Investors Income Tax 49

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