I.T. MIRROR VOL 23-24 VOL 11

Vol. 11 April 2024 Income Tax Bar Association 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

TWO DAY TAX CONCLAVE 2024 IN NEWS

2 Chairman's Message - CA (Dr.) Vishves Shah 3 President's Message - CA Ashish Tekwani 4 Hon. Secretary's Message -CA Jaykishan Pamnani 5 9 11 33 Impactful Decisions Under Income Tax Act - CA Parag Raval Salary Structuring, Payroll & it's impact on TDS! - CA Kankshil Parikh Succession Essentials - Unveiling tools for legacy planning in India - CA Sunil Maloo & CA Aayushi Shah Significance of Nomination - CA Parag Raval Understand your client beyond Balance sheet - CA Chaula Thakkar Guide to Moving to a Tax-Free Country: A Comprehensive Overview for Indian Citizens - CA Kapil Talreja Optimizing ChatGPT: How to Write Effective Prompts - CA Tushar Agarwal 18 28 31 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 Nisha Tekwani 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. 11 - APRIL 24 CONTENTS

Chairman’s Message CA (Dr.) VISHVES SHAH Chairman Dear Readers, It is with great pleasure that I extend my warmest greetings to you through the pages of the I.T. Mirror Magazine. As Chairman of the I.T. Mirror Committee, it is both an honor and a privilege to address such a distinguished audience of tax professionals, policymakers, and enthusiasts dedicated to advancing the discourse on income taxation in our great nation. Our collective efforts to understand, analyze, and shape the intricacies of income tax policy are integral to fostering economic growth, promoting social equity, and ensuring fiscal sustainability. India stands at a critical juncture in its journey towards economic prosperity, and the role of income taxation in this endeavor cannot be underestimated. As we navigate the complexities of a dynamic global economy, it is imperative that our tax policies remain responsive, adaptive, and equitable. At the heart of our discussion lies a commitment to empowering individuals, businesses, and communities to thrive and prosper. Income taxation, when designed and implemented effectively, has the power to redistribute wealth, incentivize investment, and drive innovation—ultimately contributing to the greater good of society. I extend my deepest appreciation to the contributors, editors, and readers who make the 11the Volume of the I.T. Mirror Magazine, a beacon of knowledge and insight in the field of taxation. Your dedication to excellence and your unwavering commitment to advancing the dialogue on income taxation are truly commendable, and I am confident that your contributions will continue to enrich the discourse for years to come. Together, let us embrace the challenges and opportunities that lie ahead, as we chart a path towards a more prosperous, equitable, and sustainable future for all. Warm regards, CA(Dr.) Vishves A. Shah Chairman, IT Mirror Committee Income Tax Bar Association 262

Dear Readers, As we embark upon a new Financial Year 2024 – 2025, I extend my warmest wishes to each and every one of you. May this Financial Yearbring forth prosperity, growth, and success in all your endeavors. The month of March 2024 has been landmark month for the Association. The Two Day Tax Conclave 2024 was held on 15th and 16th March 2024 and it was a grand success. More than 425 participants from all across Gujarat attended the program. The lectures delivered by the esteemed speaker was truly enlightening and captivating. Their depth of knowledge and expertise in the subject matter shone through, making complex concepts easily understandable. I am also delighted to extend my heartfelt congratulations to the dedicated team of Writers, Contributors and ITMirror Committee for the release of the 11th edition of our esteemed Tax Journal. Relentless efforts and commitment to excellence have once again resulted in a publication that sets the standard in our field. With each edition, we strive to provide valuable insights, analysis, and perspectives that aid in navigating the complexities of the tax landscape. As we venture into the new Financial Year, let us continue to push boundaries, innovate, and collaborate towards achieving our collective goals. Together, we can make a meaningful difference in shaping the future of taxation and our profession. As you all aware the festival of democracy begins, I will request you all to take participate in it and each one of us a responsible should vote and inspire others to vote. Voting is the moral duty of all citizens of the democratic country. Warm regards, CA Ashish Tekwani President Income Tax Bar Association President’s Message CA ASHISH TEKWANI President 3

Dear Esteemed Readers, It is with great pleasure and pride that I extend my warmest greetings to each of you as we celebrate the success of 11th edition of the I.T. Mirror. This volume stands as a testament to our collective dedication to excellence and our unwavering commitment to advancing the discourse on taxation. The success of the I.T. Mirror is a reflection of the tireless efforts and unwavering dedication of our contributors, editors, and readers. Your passion for exploring the nuances of tax policy, your commitment to fostering dialogue and debate, and your relentless pursuit of knowledge have made this volume an invaluable resource for practitioners, policymakers, and academics alike. As we reflect on the achievements of the I.T. Mirror's 11th edition, it is also an opportune moment to look forward to the opportunities and challenges that lie ahead. The field of taxation is constantly evolving, shaped by shifting economic landscapes, emerging technologies, and evolving societal norms. In the face of these changes, it is imperative that we remain vigilant, adaptable, and forwardthinking. Looking ahead, I am confident that the I.T. Mirror Magazine will continue to serve as a beacon of knowledge and innovation in the field of taxation. With each volume, we have the opportunity to push the boundaries of our understanding, to challenge conventional wisdom, and to explore new frontiers of possibility. I would like to extend my heartfelt gratitude to all those who have contributed to the success of the 11th edition. Your dedication, expertise, and passion have been instrumental in shaping this volume into the remarkable achievement that it is. I would also like to express my sincere appreciation to our readers for your continued support and engagement. As we turn the page of this Magazine and look towards the future, let us remain steadfast in our commitment to excellence, collaboration, and innovation. Together, we can continue to push the boundaries of knowledge, drive positive change, and shape a brighter future for the field of taxation. Thank you once again for your dedication and support. Warm regards, CA Jaykishan Pamnani Hon. Secretary Income Tax Bar Association Hon. Secretary’s Message CA JAYKISHAN PAMNANI Hon. Secretary 264

CASE NO 1 No Sec 54F exemption in case of a religious property: ITAT Hyderabad ACIT Vs Iqbal Ali Khan (ITA No.505 /Hyd/2020) Facts: 1. The assessee has sold two properties during the F.Y. 2012-13 at Hafeezpet, Serilingampally mandal for a consideration of Rs. 2,14,90,500/- (1953 sqyds) and Rs. 6,76,97,000/- (6154 sqyds). 2. The assessee has claimed exemption u/s. 54F of Income Tax Act against the cost of acquisition. The assessee has claimed exemption of Rs. 5,47,20,000 u/s. 54F of I-T Act. 3. The assessee is said to have constructed a building in Sultan Shahi, which is in the nature of a mosque in Moghalpura area of Hyderabad. The assessee had not taken any municipal permission but said to have constructed Ground plus three floors buildings in the above area before the due date for filing the return of income. ITAT Hyderabad held as below: 1. The sum and substances of the various inspections carried out by the officials of the Revenue leads to a conclusion that the property is predominantly being used for religious purposes namely Mosque, Orphanage School and Staff quarters. 2. Therefore, in our opinion, it does not fit within the definition of the residential house as contemplated u/s. 54F of the Income Tax Act. 3. Accordingly, the grounds of appeal of the Revenue are allowed and the order of the Assessing Officer is upheld. CASE NO 2 Sec 80G deduction on account of contribution to the Ram Mandir Trust: 1. The Shri Ram Janmabhoomi Teerth Kshetra (PAN: AAZTS6197B) has been notified under sub-clause (b) of Section 80G(2), thus enabling deduction U/S 80G for donations made to the Trust. 2. Starting from the fiscal year 2020-21 and onwards, contributions made during this period are deemed eligible for deductions under Section 80G. 3. Regardless of whether the donation is made before or after the pranpratishtha of Ram Lalla, deduction is available U/S 80G subject to conditions. 4. We need to note that only 50% deduction available. Also, if the aggregate donation surpasses 10% of the adjusted gross total income, any excess amount beyond this threshold will not be eligible for deduction under Section 80G. 5. For claiming donation as a deduction, we need the receipt from the Trust, which is a proof of payment of donation. 6. We also need the Form 10BE as an evidence to support the Section 80G deduction while filing ITR. Impactful Decisions Under Income Tax Act - CA PARAG RAVAL 5

I. T. MIRROR (2023-24) CASE NO 3 No Income Tax in India for salary earned by a Korean Resident outside India: ITAT Delhi Amit Laroya Vs ACIT (ITA No.1457/Del/2022) Facts: 1. Amit Laroya, the appellant, challenged the decision of the Commissioner of Income Tax (CIT) in an appeal dated 29/04/2022 against the order issued by the Dispute Resolution Panel (DRP) under Section 144C(5) of the Income Tax Act for the Assessment Year 2018-19. 2. The primary point of contention was whether Laroya's salary income of Rs.5,11,71,307/- earned in Korea, qualified for exemption under Article 15(1) of the India-Korea Double Taxation Avoidance Agreement (DTAA). 3. During the assessment year, the appellant, classified as a non-resident, filed an income return disclosing a total income of Rs.57,69,390/-. The Assessing Officer (AO), relying on Form 26AS, noted that Laroya received Rs.5,40,07,330/- as salary from an Indian resident company, 3M India Limited. Despite Laroya's brief stay of 31 days in India during the relevant year, he declared a sum of Rs.29,86,022/- as a salary proportionate to his Indian residency. 4. The pivotal argument centred around the interpretation of Article 15(1) of the India-Korea DTAA, which grants an exemption for employment income if the individual is a resident of Korea and the employment takes place outside India. Laroya fulfilled both criteria, making his salary earned in Korea not subject to taxation in India. 5. The revenue's argument, referencing Section 9 of the Income Tax Act, underscored the taxation of all incomes directly or indirectly linked to India. However, the tribunal clarified that Section 9 should be interpreted alongside the explanation, which considers income earned in India only when services are provided in India. ITAT Delhi held as under: 1. Concerning Laroya's voluntary offer of Rs.29,86,022/- the tribunal asserted that the revenue's authority to impose taxes is contingent upon the provisions outlined in the Act, and an incorrect submission by the taxpayer does not confer such authority. 2. Laroya's services were rendered outside India, and as a result, the income could not be considered as accruing or arising in India. Furthermore, Article 15(1) of the India-Korea DTAA explicitly exempted employment income that meets the specified conditions. 3. Laroya's services were rendered outside India, and as a result, the income could not be considered as accruing or arising in India. CASE NO 4 Signature on the assessment order is a mandatory requirement. Mere authentication is not sufficient: ITAT Mumbai Reuters Asia Pacific Ltd. (ITA NO.587/MUM/2021) Facts: 1. The assessee was served an unsigned assessment order through email. In the email, a note was given that a signed copy may be sent separately if it is not already digitally signed. 2. However, except for the assessment order received through email, no other assessment order was ever communicated to the assessee. 266

I. T. MIRROR (2023-24) 3. Draft assessment order was duly sent to the assessee, which was duly signed too. However final assessment order remained unsigned. 4. The AO maintained that Rule-127A read with Section 282(2) of the Income Tax Act pertains to the service of notice, summons, requisition order, and other communication, and pointed out that since the assessment order was communicated to the assessee originated from the designated email id of the AO, therefore, in terms of Rule 127A, the said document shall be deemed to be “authenticated”. 5. The AO has tried to take shelter under Section 292B of the Income Tax Act to cure the procedural defects or omissions. ITAT Mumbai held as under: 1. Sub-section (1) of Sec 282A makes it obligatory that where any notice or other document is required to be issued under the provisions of the Act, the same shall be signed and issued by the competent authority in accordance with the procedures prescribed. 2. The section is unambiguous and specifies the signing of notices or documents mandatory and manner of signing procedural. 3. Therefore, the board has issued instructions from time to time laying down the procedure, inter alia, for signing the notices and the assessment order. 4. Sub-section (2) of Section 282A of the Act explains the connotation of the expression "authentication." Thus, the signing of documents and the authentication of documents carry different meanings. Signing of a document denotes committing to the document, whereas authentication of documents is related to the genuineness of origin of document. 5. If signing and authentication would be meaning the same, there is no need for the Legislature to lay down the requirement of signing of documents viz notice, order etc. in sub-section (1) and explain the purpose of authentication in sub-section (2) of Section 282A of the Act. 6. Therefore, it is held that the requirement of the signature of the AO is a legal requirement. The omission to sign the order of assessment cannot be cured by relying on the provisions of Section 292B of the Act. CASE NO 5 AO cannot reassess any income that was the subject matter of an appeal: Bombay HC Shri Shanmukhananda Fine Arts Versus The Deputy Director of Income Tax (Exemptions) (Writ Petition No. 2689 Of 2015) Facts: 1. The petitioner has been granted registration under Section 12A of the Income Tax Act, 1961, by the Commissioner of Income-tax, which is still in force. 2. The petitioner filed its original return of income, claiming exemption under Section 11 of the Income Tax Act, but faced challenges from the Assessing Officer regarding denial of exemption, computation of taxable income, and disallowance of expenses. 3. The petitioner appealed these decisions before the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal (ITAT), which ultimately ruled in favor of the petitioner, restoring the exemption and dismissing the department's appeals. 4. Despite these rulings, the department issued a notice under Section 148 of the Income Tax Act, seeking to reopen the assessment, citing reasons related to alleged commercial activities and denial of exemption under Section 11. 5. The petitioner objected to the reopening of the assessment, arguing that the issues raised were already addressed in previous appeals and therefore cannot be reopened. 7

Hon Bombay HC Order: 1. The grant of benefit under Section 11 of the Act, was the subject matter of appeal and has been held in favour of the assessee, the matter cannot be reopened. 2. As per the third proviso to Section 147 of the Act, the Assessing Officer cannot reassess any income that was the subject matter of an appeal. 3. So the matter related to exemption U/S 11 cannot be reopened. CASE NO 6 ITR filed without Financials is a defective return but not necessarily an invalid return:SC Mangalam Publications Vs CIT (Civil Appeal Nos. 8580-8582 of 2011) Facts: 1. The assessing officer passed the re-assessment order on 21.03.2002 under Section 144/147 of the Act determining the total income of the assessee at Rs.25,06,660/-. Thereafter, allocation of income was made amongst the partners in the manner indicated in the order of re-assessment. 2. The AO took cognizance of the profit and loss account and the balance sheet filed by the assessee before the South Indian Bank on the basis of which assessment of income for the assessment years 1988 – 1989 and 1989 – 1990 were completed. 3. Objection of the assessee that the aforesaid balance sheet was prepared only for the purpose of obtaining loan from the South Indian Bank and therefore could not be relied upon for income tax assessment was brushed aside. The re-assessment was made on the basis of the accounts submitted to the South Indian Bank. 4. AO also held that in the absence of submission of books of accounts along with the ITR, the assessee had not furnished the documents and particulars required under Section 139(9). Hon SC held as below: 1. On the basis of the “balance sheet” submitted by the assessee before the South Indian Bank for obtaining credit which was discarded by the CIT(A) in an earlier appellate proceeding of the assessee itself, the assessing officer upon a comparison of the same with a subsequent balance sheet of the assessee for the assessment year 1993-94 which was filed by the assessee and was on record, erroneously concluded that there was escapement of income and initiated reassessment proceedings 2. Once the primary facts are disclosed by the assessee, the burden shifts onto the assessing officer. It is not the case of the revenue that the assessee had made a false declaration. 3. It is only when the defective return is not accepted by the AO, that it can be held as invalid and not otherwise and in the instant case when the return was accepted even without balance sheet, the return could not have been treated as invalid. 4. If he does not exercise the discretion, the return of income cannot be construed as a defective return. As a matter of fact, in none of the three assessment years, the assessing officer had issued any declaration that the returns were defective. 5. Once the primary facts are disclosed by the assessee, the burden shifts onto the assessing officer. It is not the case of the revenue that the assessee had made a false declaration. I. T. MIRROR (2023-24) 268

Payroll and salary structuring are crucial aspects of managing an organization's workforce, and they have a direct impact on TDS (Tax Deducted at Source) calculations. It involves a variety of tasks, including calculating gross salaries, deductions, and ensuring compliance with tax and labour regulations. It requires intricate calculations, careful attention to legal considerations, and meticulous attention to detail. Businesses in India have to follow the legal framework, which mainly comprises of the below components, but is not limited to, while disbursing salaries to employees. TDS (Tax Deducted at Source): TDS is a tax collection mechanism where the employer deducts a predetermined percentage of tax from the payments made to the employee, ensuring advance tax payment. PF (Provident Fund): PF is a mandatory savings scheme in which both employees and employers contribute a fixed percentage of the employee's salary towards a fund, providing financial security upon retirement. ESI (Employee State Insurance): ESI is a social security and health insurance scheme mandated for certain categories of employees, where both the employer and the employee contribute to a fund that covers medical and other benefits. PT (Professional Tax): PT is a state-level tax imposed on income earned by individuals. Employers deduct this tax at source from employees' salaries and remit it to the local municipality or labour department varying from state to state. While all of them are important, have separate applicability and fall under the purview of HR related activities, there is one which requires chartered accountants' attention and role – Tax Deducted at Source. Let's understand how salary structuring is key to employee satisfaction via TDS and the role of payroll team in investment proof collection and tax calculations. As per Section 192 of the Income Tax Act, 1961, Tax Deducted at Source (TDS) is subtracted from an employee's earnings. Employers apply TDS on salary based on the employee's net taxable income and remit it to the Income Tax Department. TDS is applied exclusively to the income salary when the amount is accrued and disbursed to the employee. Salary encompasses various components subject to taxation under the applicable income tax laws. So, it is crucial for employers and employees to understand these components, as accurate salary structuring and compliance with tax laws ensure precise TDS deductions, contributing to a transparent and legally compliant payroll system. Rate of TDS Under Section 192, TDS is computed based on the estimated income earned during the financial year at an average tax rate. There is no fixed rate of TDS under this section. To calculate the TDS rate, the total tax liability estimated on this income is divided by the employment period in months. Therefore, the TDS rate on salary is determined by the formula: Estimated Total Tax Liability divided by Employment Period. Salary Structuring, Payroll & it's impact on TDS! - CA KANKSHIL PARIKH 9

I. T. MIRROR (2023-24) Base of TDS Calculations To compute TDS, the employer must estimate the taxable net salary and deduct TDS from it. Tax-free exemptions and allowances are subtracted from the gross salary to determine the net salary income. Subsequently, if the employee declares any tax-saving investments or expenses covered by relevant sections of the I-T Act, they are deducted from the income. Additional income is also included in the salary if declared. Finally, TDS is deducted based on the applicable tax slab. In order to calculate and deduct TDS from employee salaries every month, the payroll team needs to collect proposed investment declarations from each employee, deduct the exemptions and deductions under the I-T Act and determine the net salary of each employee for the year. The provided proposed investment of employees are verified later with the proofs in the year, to make adjustments to the calculated TDS based on the proof of investments for the year. Tax Deductions & Exemptions Not all salary components are fully taxable; some may be partially or fully exempt from income tax. The taxability of salary components depends on the nature of the component and the provisions of the income tax laws. Taxable Components Example: 1. Basic Salary: Fully taxable. 2. Dearness Allowance (DA): Fully taxable. 3. House Rent Allowance (HRA): Taxable, but exemptions are available if the employee is living in a rented house and meets certain conditions. 4. Special Allowances: Generally taxable unless there are specific exemptions. Partially Taxable or Exempt Components Example: 1. Provident Fund (PF) Contributions: Employee's contribution to EPF is eligible for deduction under Section 80C, subject to certain limits. Employer's contribution and interest earned are taxable if withdrawn before a specified period. 2. Gratuity: Exempt up to a certain limit based on the provisions of the Income Tax Act. 3. Leave Travel Allowance (LTA): Exempt if the employee utilizes the allowance for actual travel expenses within India, subject to conditions. 4. Any Reimbursement: Exempt up to a certain limit if bills are submitted for actual expenses. 2610

Succession planning in India offers a variety of tools, each with its own set of characteristics, advantages, and limitations. This chapter provides a detailed analysis of these tools, namely Wills, Family Arrangements, Limited Liability Partnerships (LLPs), Hindu Undivided Families (HUFs), and Private Trusts. WILLS: ENSURING TESTAMENTARY AUTONOMY Overview and Definition A Will, as delineated in the Indian Succession Act of 1925, serves as a crucial testamentary instrument allowing individuals (testators) to dictate the posthumous distribution of their assets. This legal document embodies the testator's final wishes, offering a structured pathway for asset allocation to chosen beneficiaries. Its core attribute is the testamentary autonomy it grants, enabling testators to control the destiny of their estate beyond their lifetime. Key Features Flexibility: The Will's amendable nature allows testators to revise their estate plans in response to life's evolving circumstances, such as changes in family structure or asset acquisition. Clarity: By specifying asset distribution, Wills diminish ambiguity and potential conflicts among heirs, providing a clear roadmap for executors and courts to follow. Probate Requirement: The probate process, though sometimes viewed as a procedural hurdle, adds a layer of verification to the Will, affirming its authenticity and the testator's intentions. Limitations Activation Post-Death: The Will's directives only activate upon the testator's demise, meaning it does not address the management or protection of assets during the testator's lifetime. Vulnerability to Disputes: Despite the intent to minimize disputes, Wills can be contested, potentially leading to protracted legal battles among heirs, which may strain family relations and deplete estate resources. Real-Life Examples Estate Division Among Children: A common scenario involves a parent dividing their property equally among their children through a Will. This straightforward allocation can ensure fairness but might require updates if the family dynamics change, such as through the birth of additional children or significant changes in the testator's asset portfolio. Charitable Bequests: Individuals often use Wills to leave a legacy by bequeathing portions of their estate to charitable organizations. For instance, a philanthropist might designate a percentage of their estate to a favoured charity, ensuring their philanthropic goals continue posthumously. Family Business Succession: Consider a business owner intending to pass the leadership baton to a specific offspring while ensuring others are equitably compensated through different assets. A well-crafted Will can articulate these complex distributions, potentially coupled with shareholder agreements to prevent disputes. Succession Essentials - Unveiling tools for legacy planning in India 11 - CA SUNIL MALOO - CA AAYUSHI SHAH

I. T. MIRROR (2023-24) Usage Comparison While Wills offer a straightforward mechanism for declaring post-death asset distribution, they do not afford the control and protection mechanisms inherent in living trusts. For example, trusts can provide for minor children or manage assets for beneficiaries with special needs, offering benefits during the testator's lifetime. Conversely, family arrangements or LLP structures might better address business continuity or complex family asset distributions, where the immediate transfer of control or shared ownership is crucial. PRIVATE TRUSTS: CUSTOMIZED ASSET DISTRIBUTION Overview A private trust emerges as a sophisticated tool within the spectrum of succession planning, offering a structured legal framework for asset management and distribution. By transferring assets to a trust, a settlor can specify how and when the assets will be distributed to beneficiaries, ensuring that their wishes are fulfilled with precision and care. This legal arrangement allows for the customization of asset distribution based on the settlor's specific desires and the needs of the beneficiaries. Key Features Customizable Asset Distribution: Private trusts stand out for their ability to be tailored to the unique circumstances of each family or settlor. Whether it's distributing income to beneficiaries at certain life milestones or allocating assets to charitable causes, the trust's terms can be meticulously designed to meet the settlor's objectives. Protection from Creditors: Assets held within a trust are generally protected from creditors, making trusts an effective tool for safeguarding family wealth against potential legal claims and ensuring that assets are preserved for the intended beneficiaries. Continuity and Long-term Planning: Trusts are designed to provide a seamless transition of asset management and distribution across generations, offering continuity that is not dependent on the lifespan of any one individual. Limitations Complexity: Establishing a private trust involves navigating legal and administrative complexities, requiring expert guidance to ensure that the trust's structure and operation are in compliance with legal standards and effectively meet the settlor's goals. Maintenance Costs: The benefits of a private trust come with the responsibility of ongoing management, which may incur costs related to legal, accounting, and administrative services. Real-Life Examples Educational Trust for Children: A settlor establishes a private trust to manage and distribute funds for their children's education. The trust is structured to release funds for tuition fees and living expenses as each child reaches college age, ensuring that the settlor's wishes for their children's education are honored, regardless of future circumstances. Protecting Assets for a Child with Special Needs: Recognizing the need for lifelong support, a parent sets up a trust for a child with special needs. The trust is designed to provide for the child's care and maintenance without jeopardizing eligibility for government assistance programs, ensuring the child's well-being and financial security. Succession Planning for a Family Business: To ensure the smooth transition of a family business, a trust is established where shares of the business are transferred to the trust. The trust agreement specifies the terms 2612

I. T. MIRROR (2023-24) under which family members can be involved in the business, addressing both the management succession and the distribution of profits. Usage Comparison Compared to other succession planning tools, private trusts offer unparalleled flexibility and specificity in asset distribution, making them particularly suitable for scenarios that require tailored solutions, such as providing for minors, managing special needs trusts, or handling complex family dynamics. While HUFs and LLPs offer benefits in terms of taxation and operational structure, they lack the personalized asset distribution and protection mechanisms inherent in private trusts. Similarly, while wills are essential for declaring a person's final wishes, they do not offer the same level of control, protection, and continuity over the long term as trusts do. Conclusion Private trusts represent a powerful and versatile tool in succession planning, capable of addressing a wide array of family and financial circumstances with a level of detail and protection unmatched by other instruments. By leveraging the strategic advantages of trusts, individuals can ensure that their assets are managed and distributed according to their precise wishes, providing peace of mind and security for future generations. However, the decision to use a private trust must be weighed against its complexities and costs, often requiring the guidance of legal and financial professionals to navigate successfully. FAMILY ARRANGEMENT: NURTURING HARMONY IN SUCCESSION PLANNING Overview Family Arrangements represent a conciliatory approach to estate planning, prioritizing harmony and mutual agreement over formal legal procedures. This tool is rooted in the collective understanding and goodwill of family members, focusing on equitable asset distribution to prevent disputes and preserve familial relationships. Unlike the rigid structures of wills or trusts, Family Arrangements offer a flexible, consensusdriven method to manage and distribute property among heirs. Key Features Conflict Resolution: Family Arrangements excel in pre-emptively resolving potential disputes by fostering an environment of dialogue and compromise, thereby avoiding the emotional and financial costs associated with litigation. Customizable Solutions: Given their informal nature, these arrangements can be intricately tailored to address the unique circumstances and needs of a family, accounting for individual preferences and relationships. Recognition of Rights: Instead of transferring assets, Family Arrangements acknowledge and formalize the existing rights of family members, clarifying entitlements without the need for asset reallocation. Limitations Informal Nature: The lack of a formal legal framework may question the enforceability of Family Arrangements, potentially complicating resolution if disputes arise later. Future Uncertainties: While effective in the short term, these arrangements may not secure the continuity of asset retention within the family across generations, especially without clear guidelines or restrictions on future asset transfers. 13

I. T. MIRROR (2023-24) Real-Life Examples Equitable Asset Distribution: Consider a scenario where a family patriarch, owning multiple properties and a family business, seeks to distribute assets among four children with varying interests and capacities. A Family Arrangement allows for an equitable distribution, assigning the business to the child with management skills and properties to others, possibly including specific provisions for future income sharing. Preserving the Family Home: In another instance, siblings inherit the ancestral home, but not all wish to retain ownership. Through a Family Arrangement, they agree that those desiring to keep the home will compensate the others, ensuring everyone receives fair value without the need to sell the cherished family property. Addressing Marital Property Concerns: Upon the remarriage of a widow with adult children, a Family Arrangement can help clarify the distribution of her assets between her new spouse and her children from the first marriage, securing her children's inheritance while providing for her spouse. Usage Comparison Family Arrangements offer a uniquely personal approach to estate planning, emphasizing consensus and flexibility over the legal formalities of wills or the structured management of trusts. They are particularly suited to resolving immediate family disputes and can be instrumental in maintaining peace within large or complex families. However, for those seeking legally binding, long-term estate management and asset protection, combining Family Arrangements with formal tools like wills, trusts, or LLPs might provide a more comprehensive solution, ensuring both immediate harmony and future asset security. LIMITED LIABILITY PARTNERSHIPS (LLPS): MODERNIZING ASSET MANAGEMENT Overview Limited Liability Partnerships (LLPs) represent a fusion of partnership flexibility and corporate benefits, making them an increasingly popular choice for business-oriented succession planning. By holding assets at the LLP level rather than individually, they facilitate a streamlined and controlled approach to asset distribution, ensuring business continuity while safeguarding individual partners from personal liabilities. Key Features Control Over Assets: LLPs grant partners comprehensive control over the entity's assets, allowing for strategic business decisions and asset management without individual liability concerns. Operational Flexibility: The structure of an LLP is designed to adapt to changes, including the reconstitution of partnership terms to reflect evolving business needs or partner dynamics. Personal Liability Protection: One of the most significant advantages is the protection it offers partners from personal liability, ensuring that personal assets are safeguarded against business debts or liabilities. Limitations Challenges in Long-term Succession: While LLPs are effective for immediate succession planning, their structure may not inherently facilitate seamless transition across multiple generations, often requiring additional mechanisms or agreements. Estate Duty Implications: Upon a partner's demise, the transition of their interest in the LLP could be subject to estate duties, potentially complicating the succession process and financial planning. Real-Life Examples Family Business Transition: A family-owned manufacturing business opts for an LLP structure to ensure that operational control remains within the family while protecting each member's personal assets. The founding 2614

I. T. MIRROR (2023-24) members structure the LLP agreement to include their children as future partners, outlining specific roles and responsibilities, thereby ensuring a clear line of succession. Professional Services Firm: A group of legal professionals establishes an LLP to offer legal services. This structure not only provides a framework for sharing profits and managing the firm but also allows for the inclusion of junior partners over time, facilitating growth and succession planning within the firm. Real Estate Investment Group: An LLP composed of investors in real estate uses the partnership structure to pool resources for property investments. The LLP agreement specifies the distribution of assets upon a partner's exit or death, ensuring continuity and clarity in investment management and returns. Usage Comparison Compared to traditional partnership models, LLPs offer enhanced asset control and personal liability protection, making them preferable for business assets and professional practices. However, when it comes to personal or family asset planning, the flexibility and long-term vision offered by trusts may provide a more suitable solution, particularly in managing complex family dynamics or ensuring generational wealth transfer. Similarly, while HUFs offer tax advantages and a traditional framework for family businesses, they lack the legal clarity and protective mechanisms inherent in LLP structures. HINDU UNDIVIDED FAMILIES (HUFS): LEVERAGING TRADITIONAL STRUCTURES Overview The Hindu Undivided Family (HUF) is a distinctive legal concept recognized by Indian law, designed to manage and preserve family wealth under a collective entity. Comprising a common ancestor and his lineal descendants, including their wives and unmarried daughters, an HUF offers a traditional approach to succession planning, emphasizing unity and joint ownership. Key Features Tax Benefits: One of the most compelling advantages of an HUF is its recognition as a separate tax entity. This allows for potential tax savings, as income can be distributed among members, utilizing lower tax slabs and exemptions available to individual members. Equal Property Rights: The HUF structure ensures that all members have equal rights over the property held by the HUF, promoting fairness and collective welfare within the family unit. Limitations Complex Asset Management: The egalitarian nature of HUFs, while equitable, can complicate the management and distribution of assets. The requirement for consensus among members for significant decisions can lead to operational inefficiencies. Inflexibility in Asset Distribution: The rigid structure of an HUF makes it challenging to tailor the distribution of assets according to the specific needs or contributions of individual members, potentially leading to disputes or dissatisfaction. Real-Life Examples Family Business Expansion: A family looking to expand their ancestral agricultural business into agri-tech forms an HUF. This allows them to pool resources while enjoying tax benefits. However, as the business grows, decisions regarding reinvestment and profit distribution require unanimous agreement, highlighting the need for clear communication and shared vision among members. Property Inheritance: Upon inheriting a valuable urban property, a family opts to register it under an HUF. This ensures that the property is managed collectively, with income from rent distributed among members, 15

I. T. MIRROR (2023-24) offering tax-efficient savings. Yet, when some members wish to sell the property for individual ventures, the collective decision-making process poses challenges. Investment Portfolio: An HUF consisting of multiple generations invests in a diverse portfolio of stocks, mutual funds, and real estate. The structure allows for income from these investments to be taxed separately from individual members' income, optimizing tax liabilities. However, differing investment preferences among members necessitate a robust framework for decision-making and profit allocation. Usage Comparison While HUFs present significant tax advantages and promote a sense of unity, their operational complexities and lack of flexibility can be limiting compared to LLPs and trusts. LLPs, with their blend of partnership and corporate features, offer more control over assets and personal liability protection, making them preferable for business ventures. Trusts, on the other hand, provide a highly customizable structure for asset management and protection, catering to diverse family needs and ensuring long-term wealth preservation across generations. NOMINATION: A VITAL TOOL IN SUCCESSION PLANNING Overview Nomination is a critical component in the architecture of succession planning within the Indian legal framework. It allows an individual (the nominator) to designate one or more persons (nominees) who will receive the assets upon the nominator's demise. This tool is widely recognized across various asset classes, including bank accounts, insurance policies, mutual funds, and shares, under different regulatory statutes such as the Banking Regulation Act, 1949, and the Insurance Act, 1938. Key Features Legally Binding: Nominations create a legally binding directive for the transfer of assets, ensuring that the nominee receives the assets without the need for probate. Simplicity: Setting up a nomination is typically a straightforward process, involving minimal paperwork and formalities. Flexibility: Most nominations allow the nominator to change the nominee at any time, adapting to changing personal circumstances. Immediate Access: Nominees can gain access to assets quickly after the nominator's demise, which is crucial or immediate financial needs. Limitations Not an Absolute Transfer of Ownership: Nomination does not equate to a will. The nominee receives the asset as a trustee, and the ultimate ownership is determined by the succession laws or the will of the deceased. Limited Scope: The applicability and rules around nomination vary significantly across different asset types, leading to confusion and potential legal challenges. Potential for Disputes: Despite its intent to simplify asset transfer, nomination can sometimes lead to disputes among legal heirs if not aligned with the will or succession laws. Usage Comparison Nomination offers a direct and efficient pathway for asset transfer upon death, distinguishing itself from tools like wills, which may require probate, and trusts, which involve more complex setup and management. Unlike the collective ownership in HUFs or the business-focused structure of LLPs, nomination focuses solely on the seamless transition of specific assets to designated individuals. This tool is particularly effective for liquid 261

I. T. MIRROR (2023-24) assets and financial accounts where quick access by the nominee is essential. However, for a comprehensive estate plan that includes detailed instructions on asset distribution, a combination of nominations with wills or trusts is advisable. CONCLUSION: CHOOSING THE RIGHT SUCCESSION PLANNING TOOLS In the realm of succession planning, the selection of tools is as diverse as the needs they serve. Wills offer simplicity for posthumous asset distribution, while Family Arrangements address immediate family disputes with less formality. LLPs are optimal for business assets, providing control and liability protection, whereas HUFs capitalize on tax benefits despite their complexity. Private Trusts bring unparalleled flexibility for tailored asset management, though with higher complexity and costs. Nomination offers a simple mechanism to ensure assets are transferred to designated individuals, however, may give rise to potential legal challenges. Understanding the unique advantages and constraints of each tool is crucial for crafting an effective succession plan that aligns with the specific goals and dynamics of each family or business. A strategic blend of these tools, tailored to individual circumstances, can ensure a seamless transition of legacy, safeguarding assets across generations with clarity and precision. 17

Everyone should understand the importance of appointing a Nominee for their investments, may it be bank account, locker, mutual funds, or properties. While it is not a mandatory requirement to have a nominee, it is highly recommended. However, banks and mutual fund industries have intensified efforts to get nominee for investments with them. Their efforts are backed by RBI as well as other appropriate authorities under whom they are being governed. Their steps are certainly a right move in the interest of persons making investments, it protects interest of investors. A lot of myth also prevail about nomination. Let us understand it in a lucid language, which is the compilation by me from various sources. If a person dies, their investments can be transferred to their nominee. In case there is no nominee assigned, the family or legal heirs will have to go through a long and tedious process to receive the investments and assets of the demised person. Who can Be a Nominee for a Bank Account? • A nominee in a bank account means an individual who the holder of the account trusts and appoints as nominee. • If the nominee is not the legal heir, he or she will not be entitled to receive funds. • The nominee's duty becomes to act as the trustee and transfer funds to the legal heirs. • There can be different nominees appointed for different bank accounts What happens when there is no nomination? When the Account holder passes away without nomination, the legal heirs of the account holder need to approach court to prove that he or she is legal heir and then submit the documents at the bank for claiming the funds in the account. General Bank Nominee Rules Here are some general rules for applying nomination to the bank accounts. 1. Usually only single nomination for singly held bank accounts. 2. As per RBI, if a person decides to keep NRI Nominee then the repatriation of the sum will be only after the permission from RBI. 3. A person who is legally empowered to operate the account on behalf of the minor can also file nomination for the minor. 4. Every Applicant needs to make nomination with the form of the Banking Companies Rules 1985. 5. The account holder can make changes in the nomination by filling the same form as mentioned above. Important points as to Nomination • Include the nominee's entire name, age, address, and relationship with you. • Do not nominate “wife” and “children” as a group in your submission. Give their full names and any other information you have at the time. • If the nominee is a minor, appoint a major as an appointee and include his or her full name, age, address, and relationship to the nominee. Significance of Nomination - CA PARAG RAVAL 2618

I. T. MIRROR (2023-24) • It's a good idea to set aside some time to go over all your financial instruments, assets, bank accounts, and lockers for “nomination.” You will be of great assistance to them when they are most in need. Let us refer few sections of Master Circular on Maintenance of Deposit Accounts – UCBs issued by RBI dated 23/08/2006, bearing number RBI/2006-07/114 UBD.BPD(PCB) MC No. : 11/13.01.000/2006-07 : 4.3 Record of Nomination 4.3.1 The Rules 2(10), 3(9) and 4(10) require a bank to register in its books the nomination, cancellation and/or variation of the nomination. The banks should accordingly take action to register nominations or changes therein, if any, made by their depositor(s)hirer(s) of lockers. 4.3.2 The banks should ensure that the nomination facilities are made available to their customers. 4.4 Nomination Facility for Deposit Accounts 4.4.1 Legal Provisions The legal provisions for nomination and payment of depositor's money to the nominee and protection against notice of claims of the other persons are detailed in Sections 45ZA and 45ZB. 4.4.2 Nomination Rules in respect of Deposit Accounts The Nomination Rules in respect of Deposit Accounts provide as under: a. The nomination to be made by the depositor or, as the case may be, all the depositors together in respect of a deposit held by a co-operative bank to the credit of one or more individuals. b. The said nomination may be made only in respect of a deposit, which is held in the individual capacity of the depositor and not in any representative capacity as the holder of an office or otherwise. c. Where the nominee is a minor, the depositor or, as the case may be, all the depositors together, may, while making the nomination, appoint another individual not being a minor, to receive the amount of the deposit on behalf of the nominee in the event of the death of the depositor or, as the case may be, all the depositors during the minority of the nominee. d. In the case of a deposit made in the name of a minor, the nomination shall be made by a person-lawfully entitled to act on behalf of the minor. e. The cancellation of the said nomination to be made by the depositor or, as the case may be, all the depositors together. f. A variation of the said nomination to be made by the depositor or, as the case may be, all the depositors together. g. The said nomination shall be made in favour of only one individual. h. A nomination, cancellation of nomination or variation of nomination may be made as aforesaid at any time during which the deposit is held by a co-operative bank to the credit of the depositor or depositors, as the case may be. i. In the case of a deposit held to the credit of more than one depositor, the cancellation or variation of a nomination shall not be valid unless it is made by all the depositors surviving at the time of the cancellation or variation of the nomination. j. The co-operative bank shall acknowledge in writing, to the concerned depositor or depositors the filing of the relevant duly completed Form of nomination or cancellation of nomination or variation of nomination, as the case may be, in respect of a deposit. k. The relevant duly completed Form of Nomination or cancellation of nomination or variation of 19

I. T. MIRROR (2023-24) nomination filed with the co-operative bank shall be registered in the books of the co-operative bank. l. A nomination or cancellation of nomination or variation of nomination shall not cease to be in force merely by reason of the renewal of the deposit. 4.4.3 Operational Instructions i. Nomination facility should be made available to all types of deposit accounts irrespective of the nomenclature used by different banks. ii. Unless the customer prefers not to nominate, (this may be recorded, without giving scope for conjecture of non-compliance) nomination should be a rule, to cover all existing and new accounts. iii. Nomination facility is available for saving bank accounts opened for credit of pension. However, Cooperative Societies (Nomination) Rules, 1985, are distinct from the Arrears of Pension (Nomination) Rules, 1983, and the nomination exercised by the pensioner under the latter Rules for receipt of arrears of pension will not be valid for the purpose of deposit accounts held by the pensioners with banks for which a separate nomination is necessary in terms of Co-operative Societies (Nomination) Rules, 1985, in case a pensioner desires to avail of nomination facility. iv. In addition to obtaining nomination form, banks may provide for mentioning name and address of the nominee in the account opening form. Publicity about nomination facility is needed, including printing compatible message on chequebook, passbook and any other literature reaching the customer as well as launching periodical drives to popularise the facility. v. In case of joint deposits, after the death of one of the depositors, the banks may allow variation/cancellation of a subsisting nomination by other surviving depositor (s) acting together. This is also applicable to deposits having operating instructions "either or survivor". It may be noted that in the case of a joint deposit account, the nominee's right arises only after the death of all the depositors. vi. The banks may introduce a practice of recording on the face of the passbook the position regarding availment of nomination facility with the legend 'Nomination Registered'. This may be done in the case of term deposit receipts also. 4.5 Nomination Facility in respect of Articles in Safe Custody 4.5.1 Legal Provisions The legal provisions providing for nomination and return of articles kept in safe custody to the nominee and protection against notice of claims of other persons are detailed in Sections 45ZC and 45ZD. 4.5.2 Nomination Rules in respect of Articles in Safe Custody The Nomination Rules in respect of articles kept in safe custody provides as under: a) The nomination to be made by an individual (hereinafter referred to as the "depositor") in respect of articles left in safe custody with a co-operative bank. b) Where the nominee is minor, the depositor may, while making the nomination, appoint another individual not being a minor, to receive the said articles on behalf of the nominee in the event of the death of the depositor during the minority of the nominee. c) Where the articles are left in safe custody with a co-operative bank in the name of a minor, the nomination shall be made by a person lawfully entitled to act on behalf of the minor. d) The nomination should be made in favour of only one individual. e) A nomination, cancellation of nomination or variation of nomination may be made by the depositor at any time during which the articles so deposited are held in safe custody by the co-operative bank. 260

I. T. MIRROR (2023-24) f) The co-operative bank should acknowledge in writing, to the depositor, the filing of the relevant duly completed Form of nomination or cancellation of nomination or variation of nomination, as the case may be, in respect of the articles so deposited. g) The duly completed Form of nomination or cancellation of nomination or variation of nomination filed with the co-operative bank should be registered in the books of the co-operative bank. 4.5.3 Operational Instructions i) Nomination facilities are available only in the case of individual depositors and not in respect of persons jointly depositing articles for safe custody. ii) While returning articles kept in safe custody to the nominee or nominees and surviving hirers, banks are not required to open sealed/closed packets left with them for safe custody while releasing them. iii) In the matter of returning articles left in safe custody by the deceased depositor to the nominee, the Reserve Bank of India, in pursuance of sections 45ZC(3) and 45ZE(4), read with section 56, of the Banking Regulation Act, 1949, has specified the formats for the purpose. iv) In order to ensure that the articles left in safe custody are returned to the genuine nominee, as also to verify the proof of death, co-operative banks may devise their own claim formats or follow the procedure, if any, suggested for the purpose either by their own federation/association or by the Indian Banks' Association. As regards proof of death of depositor, the IBA has advised its member banks to follow the procedures as prevalent in banks viz. production of the death certificate or any other satisfactory mode of proof of death. 4.6 Nomination in respect of Safe Deposit Locker Accounts 4.6.1 Legal Provisions The legal provisions providing for nomination and release of contents of safety lockers to the nominee and protection against notice of claims of other persons are detailed in Sections 45ZE and 45ZF of the Act ibid. 4.6.2 The Nomination Rules in respect of Safety Locker The Nomination Rules in respect of Safety Lockers provide as under: Where the locker is hired from a co-operative bank by two or more individuals jointly, the nomination to be made by such hirers. a. In the case of a sole hirer of a locker, nomination shall be made in favour of only one individual. b. Where the locker is hired in the name of a minor, the nomination shall be made by a person lawfully entitled to act on behalf of the minor. c. The cancellation of the said nomination to be made by the sole hirer or, as the case may be, joint hirers of a locker. d. A variation of the said nomination to be made by the sole hirer of a locker. e. A variation of the said nomination to be made by the joint hirers of a locker. f. A nomination, cancellation of nomination or variation of nomination may be made as aforesaid at any time during which the locker is under hire. g. A co-operative bank shall acknowledge in writing to the sole hirer or joint hirers, the filling of the relevant duly completed Form of nomination or cancellation of nomination or variation of nomination, as the case may be, in respect of the locker so hired. 21

I. T. MIRROR (2023-24) h. The relevant duly completed Form of nomination or cancellation of nomination or variation of nomination filed with the co-operative bank shall be registered in the books of the co-operative bank. 4.6.3 Operational Instructions (i) In the matter of allowing the nominee(s) to have access to the locker and permitting him/them to remove the contents of the locker, the Reserve Bank of India, in pursuance of sections 45ZC(3) and 45ZE (4), read with section 56, of the Banking Regulation Act, 1949, has specified the Formats for Banking Regulation Act, 1949. (ii) In order to ensure that the amount of deposits, articles left in safe custody and contents of lockers are returned to the genuine nominee, banks may take action as indicated in para 4.5.3 (iv) above. (iii) While releasing contents of lockers to the nominee or nominees and surviving hirers, banks are not required to open sealed/closed packets found in locker. (iv) As regards locker hired jointly, on the death of any one of the joint hirers, the contents of the locker are only allowed to be removed (jointly by the nominee and the survivors) after an inventory is taken in the prescribed manner. In such a case, after such removal preceded by an inventory, the nominee and surviving hirer(s) may still keep the entire contents with the same bank, if they so desire by entering into a fresh contract of hiring a locker. (v) Section 45ZE, read with section 56, of the Banking Regulation Act, 1949, does not preclude a minor from being a nominee for obtaining delivery of the contents of a locker. However, the responsibility of the banks in such cases is to ensure that when the contents of a locker are sought to be removed on behalf of the minor nominee, the articles are handed over to a person who, in law, is competent to receive the articles on behalf of the minor. Adding a nominee helps investors secure their assets and pass them on to their legal heirs. Anywhere between Rs 50,000-80,000 crore of assets are stuck in demat accounts, lying idle, due to lack of nominations. Why adding a nominee is important and how does it help? Having a nominee in your house property can be helpful in many ways. Adding a nominee is important because it makes sure that the transfer of your assets to its rightful heir happens without any problem after your death. The same is applied to housing property. In the light of whatever discussed above, let us understand the concept of nomination through certain FAQs: Why do we need nomination? Nomination guarantees that in the event of the account holder's demise, the assets are protected and can be efficiently transferred to the legal heirs. It is important to update the nomination regularly, especially if there are changes in one's life or the nominee's circumstances. What is the advantage of nominee? In case of the account holder's unfortunate demise, the nominee receives the funds available in the account. Apart from bank accounts, you're also required to add a nominee to your Fixed Deposits, Recurring Deposits, and other Demat Accounts for the same reason. Key reasons why you need a Nominee for your bank account : While opening a Bank Account or applying for an investment like a Fixed Deposit, Recurring Deposit, or Mutual funds, you may notice a column in the form wherein you are required to enter the nominee details. While it is not a mandatory requirement to have a nominee, it is highly recommended. So, have you ever wondered what is the purpose of adding a nominee to your Bank Account? Let's explore the reasons for adding a nominee to your Bank Account. 262

I. T. MIRROR (2023-24) What is a Bank Account Nomination? Nomination in Bank Account means adding a family member as the account's beneficiary. In case of the account holder's unfortunate demise, the nominee receives the funds available in the account. Apart from bank accounts, you're also required to add a nominee to your Fixed Deposits, Recurring Deposits, and other Demat Accounts for the same reason. Why do you need to add a Bank Account nominee? A nominee can help you streamline your finances and ensure a smooth transition of assets to family members in case of your absence. Let's look at how it can help you through different stages of your life. If you're single with dependents : If you're single but have people who depend on you financially, it makes sense to add a nominee to your Bank Savings Account. You can consider adding either of your parents or siblings as an account nominee. If you're married and have children : Adding a nominee to the Bank Account ensures that the spouse or children of the account holders get access to the savings in case of their death. If you add a nominee to your Bank Account who is a minor child, you'll also have to assign an adult guardian who will be responsible for safeguarding the funds until your child becomes an adult. Bank Account Nomination Rules There are no mandatory bank account nomination rules. You can open a new account without adding a nominee. But if you are appointing someone as a nominee, here are some tips that you should remember: 1. You can only choose a single person as your account nominee. 2. When selecting a nominee, ensure that you choose a family member as a nominee. 3. Provide complete nominee details, including their full name, age, address, and relationship with the account holder. 4. After opening the account, you can modify or cancel the nominee as and when you want. 5. It is recommended to update nominee details after significant life events, like marriage, birth, divorce, remarriage, death of the nominee, etc. 6. Whether you have a Fixed or Recurring Deposit Account with us, you can add or update a nominee. Salient Features of Nomination Nomination can be made in favour of one person only. It can be made in existing or new accounts and can be cancelled or changed subsequently by the depositors. Nomination cannot be made in accounts where deposits are held in a representative capacity e.g. trust accounts etc. Is a nominee necessary? Adding nominee in your bank account and other financial assets saves a lot of money and time when money has to be claimed later when a person passes away. Though many courts in India have held that nominee is not the legal heir of a deceased person. However, not making a nomination has its own costs. Is nominee compulsory? The Securities and Exchange Board of India (SEBI) has made it mandatory for all Demat and Mutual Fund (MF) account holders to add a nominee or opt out. SEBI has also fixed the deadline of 30 June 2024 for this. Therefore, you should complete this important work on time. 23

I. T. MIRROR (2023-24) What is the power of nominee? The nominee can only claim the property in case of death of the property owner. He/ she will only be the trustee/ custodian for a temporary duration, until the establishment of the legal heir to the property/ estate, as per the Succession Act (or Will). What are the rules of nominee? According to the Indian law, the nominee will receive and hold the property of the deceased until the nominee is legally bound to transfer or distribute it to the legal heirs of the deceased. Who should be nominee? The nominee can be a family member. May be other than family member too. Is a nominee a legal owner? A nominee is declared as a custodian of the asset. People declare a nominee under their investment and assets. A legal heir is a person who gets the ownership right of the asset, and usually, it is mentioned under the will. However, sometimes the legal heir and nominee can be the same person. What is the legal value of nominee? Nominee holds the property in trust for the legal heirs. The role of a nominee in case of apartments / flats in housing society or a condominium is limited to that of a representative of the legal heirs of the deceased member and in no manner become the successor replacing the rightful legal heirs. Can a nominee be a beneficiary? A nominee and a beneficiary are two different terms which in some cases can be the same person. What happens if a person dies without nominee? Normally, the best way if there is no will or nominee is for the legal heirs to sit down and internally work out the solution and then approach the court with a registered copy of the family agreement. Each legal heir will have to give a legal affidavit in this case. What happens if you don't add a nominee? If investors don't nominate their holdings by the deadline, SEBI might freeze withdrawals from their accounts. This means they won't be able to take out funds from mutual funds or use their demat accounts for trading. Notably, investors who've already submitted their nomination details need not do so again. What happens if a nominee also dies? If the nominee dies while the policyholder is alive during the policy tenure, the nomination becomes null and void. Policyholder can change the nomination. However, if the nominee dies after the policyholder's death but before receiving the claim amount, the amount would then be paid to the legal heirs. Can nomination be made later on? The nomination can be made at a later stage by following the prescribed procedure. If the nomination process is not completed during the registration, it can usually be done at a subsequent date. Who is the nominee person? A nominee is a person or entity who is designated to act on behalf of the account holder in case of the account holder's death. Can a nominee be challenged? No! As per the Indian Court, the laws of succession take precedence over a nomination in India. 264

I. T. MIRROR (2023-24) How many persons can be nominee? Nomination for bank accounts can be done in favour of one person only. However, nomination in favour of more than one (up to two persons) is permissible in jointly operated locker accounts with common consent. Who is nominee for property after death? In case of the death of the owner, the housing society will transfer the house in the name of the nominee. This is the right of a custodian from a legal perspective. The nominee is not the owner of the house. The nominee is still a custodian who must transfer the house to the legal heirs. Is a nominee taxable? If assets are transferred without any modification and in the same form, there won't be any tax implication. However, if the nominee has liquidated the assets, he has to pay capital gains tax, as applicable, and transfer the rest of the money to legal heirs in the proportion that they are entitled to. What is nomination and its advantages? The benefit of nomination is that in the event of death of an account holder(s) or locker holder(s), the Bank can release the account proceeds or contents of the locker to the nominee(s) without insisting upon a Succession Certificate, Letter of Administration or Court Order. Can bank account be transferred to nominee after death? When a bank account has a registered nominee, the transfer process after the account holder's death is relatively straightforward. The nominee simply needs to provide identification documents and the deceased person's death certificate to claim the funds. What to do if there is no nominee in bank account? If a loved one passes away without nominating a nominee for their bank account, the legal heirs will inherit the account. The heir will need to submit legal documents such as a death certificate and proof of legal heirs to transfer the account. Can I withdraw money from my dead mother's account? It is illegal to continue to make payments, withdraw money, or use the bank account of an individual who has died without following the correct legal process. To withdraw money from the deceased's account, the administrator will need to obtain letters of administration. What are the rules of nominee? Typically, you can appoint a single nominee to each bank account. If you have multiple bank accounts, you can appoint different nominees. If the nominees are not the legal heirs, they cannot use the funds. They can only act as trustees and must transfer the funds to the legal heirs. What are the rights of nominee? Legal heirs are the rightful economic owner of the assets of the deceased. A nominee's right will be on a lower pedestal vis-à-vis the rights of a beneficiary under a will and a will would prevail over nomination. Fixed deposits and bank accounts can be held singly or jointly. Can nominee access my bank account? Transfer of the person's assets to their nominee is much easier in the event of death. When the account holder's lawful heirs have not been appointed as the nominee, it is a longer procedure to claim the account's funds from the bank. Is a nominee a legal heir? People declare a nominee under their investment and assets. A legal heir is a person who gets the ownership right of the asset, and usually, it is mentioned under the will. However, sometimes the legal heir and nominee 25

I. T. MIRROR (2023-24) can be the same person. The nominee is called the custodian of assets in case of the death of the owner. Can a nominee sell shares after death? The assignment of a nominee is sufficient to facilitate transactions in mutual funds and shares, as the same will be transferred to the nominee's name following the demise of the investor. However, it is advisable to make a will as well since the rightful ownership will be established through a will. Can a nominee claim property? In the legal context, nomination is only a provision for the claiming of property by the nominee as 'custodian', in case of the death/ demise of the owner of the property. However, there are some key aspects to note in this scenario : The nominee can only claim the property in case of death of the property owner. What is the role of nominee in property? "In simple words, a nominee just represents the legal owner of the property as a caretaker, and so does not hold the ownership of that property. Being the nominee, he or she will be legally bound to transfer the property as per the applicable laws of succession. Can a nominee take all the money? Yes. A nominee is entitled to withdraw the fixed deposit amount after the account holder's death. However, they do not have legal rights over the deposit and are responsible for distributing the funds to the legal heirs as per the inheritance laws. Can a nominee become owner? Does a will or testament supersede the nomination in such a case? It is settled law that a nominee does not become the owner of the property. What is the difference between a beneficiary and a nominee? The beneficiary is the person or entity who will receive the funds or benefits in case of an event, such as the account holder's demise. A nominee, on the other hand, is a person designated by the account holder to receive the assets or funds in the event of their death. What is the difference between a will and a nomination? The primary distinction between a nomination and a will lies in their legal implications and the assets they encompass. A nomination solely applies to specific financial instruments, such as insurance policies and bank accounts, whereas a will encompasses the individual's entire estate. Can a nominee be anyone? Anyone can be appointed as a Nominee. But your spouse, parents or children are considered beneficial nominees. Anyone other than these may be rejected by the insurance company as a beneficial nominee. The beneficial nominees can receive and own the money. Can a nominee give power of attorney? The act of nomination can't be delegated in favour of any person including through power of attorney. Nomination has some similar features of 'Will'. Is a nominee a trustee or owner? A nominee is a person who will hold an owner's assets in trust after the latter's death. They will be the custodian of the asset till it is transferred to the legal heirs. They are not the owners of the asset and are duty bound to make sure the asset goes to the rightful beneficiary. Why nomination for investments is important? Nomination ensures that the investments are transmitted to the nominee without much hassle. It is important to register nomination at the time of making an investment, especially if it is held in a single name. It becomes very cumbersome for legal heirs to access the investment otherwise. 26

I. T. MIRROR (2023-24) Can nominee be appointed later on? Nomination can be indicated at the time of investment. Alternatively, the investor can fill up and submit the nomination form later. Most investments allow for multiple nominations, wherein the investor can indicate the percentage of the investment for each nominee. Can HUF appoint Nominee? Only individual investors can make a nomination for their investment. A karta of an HUF or a power of attorney holder cannot nominate. An individual—family member, relative, friend—can be appointed as a nominee. In case of insurance policies, if the nominee is not a relative, the policyholder needs to prove insurable interest of the nominee. Can Minor be appointed as nominee? A minor can be nominated after providing his/her date of birth, and name and address of his/her legal guardian. Can nominee be changed? Investors need to review their nominations periodically and register the change of nomination via: • Indemnity letter supported by guarantee of an independent surety. • Affidavit made on stamp paper • NOC from all legal heirs. Points to be noted 1 Sebi has made it compulsory for mutual fund unitholders to either register nominations or opt out of nomination with effect from 1 August 2022. 2 Nominees hold the investment proceeds in trust if the investment is disputed by legal heirs, pending final decision by the courts. 3 Non-resident Indians can be made nominees subject to exchange control rules. CONCLUSION Thus, appointment of Nominee ensures that there is an interim agreement to take care of the legal and financial matters of the deceased till the time his wealth can be divided among his legal heirs. There can be different nominees to different bank accounts with the same names. One can also have separate nominees for different accounts like, Fixed Deposit (FD), savings and Recurring Deposit (RD) accounts, held with the same bank. A minor can also be the nominee of an account, but the minor must be designated by a guardian, and the funds must be given to the guardian by the bank. 27

A balance sheet is an essential financial report that provides a picture of a company's financial position of that relevant year. However, to gain a complete understanding of a company's financial health, investors and stakeholders need to look beyond the balance sheet. Information on the state of the economy, the industry outlook, competitiveness, market forces, technological change, the quality of management and human resources are not directly reflected in a company's financial statements. Many qualitative and quantitative factors that influence a company may not be obvious from its financial statements, which only shows how the company performed in the past. Many factors must be reviewed to gain a comprehensive understanding of the strength of a company. Therefore, it is necessary to look beyond the financial figures to value the company. The financial statements include the balance sheet, profit and loss accounts, cash flow statement and notes to accounts. i) The Balance Sheet reflects the historical value of assets, liability and net worth of the company at particular point of time. ii) An income statement, also known as a profit and loss statement, is a financial report that shows a company's revenues, expenses, and net income over a period of time, usually a quarter or a year. The income statement provides valuable information about a company's profitability and revenue trends. By examining revenue streams and expenses, investors can identify trends and determine if the company is generating sustainable profits. iii) The Cash Flow Statement shows the cash, which is generated from the operating activities, investment activities and from f inancing activities under various heads. iv) Notes to the accounts which forms part of the Balance Sheet and Profit &Loss Accounts reveal the accounting policies, accounting standards and accounting practices adopted by the company. Understanding the intrinsic value of the company shall be of utmost importance for the investors, mutual funds, private equity, venture capital, merchant bankers and high net worth individuals who take long term investment decisions. Here, intrinsic value means the ability of the company to remain viable, earn profits and continue to achieve growth in the future. Many factors must be reviewed to gain a comprehensive understanding of the strength of a company. Therefore, it is necessary to look beyond the financial figures to value the company. There is no single yardstick to understand the company beyond its financial statements. There are many factors which are important to achieve this objective and it may be classified in two parts: (A) External Factors (B) Internal Factors EXTERNAL FACTORS 1. Brand Value A business' brand values help to shape their overall business goals and strategy. The terms not only Understand your client beyond Balance sheet - CA CHAULA THAKKAR 268

I. T. MIRROR (2023-24) provide value to the business itself but they also help to guide every element of the business. Many times brands enjoy more independent value than the name of the company manufacturing the branded products. 2. External Credit Rating The credit rating assigned by the external rating agencies like CRISIL, CARE, ICRA, FITCH, etc. is important to understand safety of the investment. The higher the rating, the safer is the investment and such companies can obtain loans at lower interest rates. Especially regarding the debt instruments, rating plays a vital role for the investors' safety. 3. Risk analysis Understanding the nature of a company's business and the inherent risks is important when analysing financial position. The nature of a company's business depends on many factors, including the size of the company, where the company is in its life cycle, the geographic areas it operates in, and the competitive landscape in which it operates. Risks are inherent in the business. The risk may be market risk, credit risk, environment risk, Forex risk, etc. Management Discussion Analysis make a special mention about risk management policy and should be read carefully. 4. Control over the Raw Materials Uninterrupted availability of raw material is vital for the running of units of the company. Companies having in-house supply of raw materials will be more valuable than the company sourcing from outside. 5. Product approvals There are products which require prior approval from the competent authority before its commercial production. The process may take a long time to get the required approvals. For example, for making supply for defence use, products are to go through the stringent safety and quality norms of the Defence Procurement Policy of Ministry of Defence, Government of India. INTERNAL FACTORS 1. Installed Capacity and UtilisationThe installed capacity and understanding at what capacity utilisation the company functioning is important to understand the growth prospect. No company would like to keep its production capacity idle if it has good business operations. It is always considered good to work with full capacity. However, the company which is utilising its full capacity, offer little or no scope for growth at its present capacity. Any spurt in the demand of the products, the company which is utilising its full capacity will not be able to participate in additional business, where the company which is having surplus capacity, will benefit from the spurt in demand. 2. Human Relation Human capital is now one of the most invisible assets of any company and difficult to be assessed. It is very difficult to understand human behaviour and their competency. However, studies on employee training, reward and recognition policy, performance appraisal methodology, employee turnover and attrition rate, Stock Option Scheme, etc. may be helpful to understand the HR Policy of the company. These are very important for the valuation of the companies engaged specially in IT Sector as they are assessed and valued based on employee strength and their quality. 3. Reading notes to accounts The Notes to accounts forms part of the balance sheet and profit and loss accounts. Apart from the statutory disclosure as required under the schedule II of the Companies Act 2013, the Notes to accounts 29

I. T. MIRROR (2023-24) makes many disclaimers and disclosures, which may be necessary to understand the company performance and position. Pending court cases and litigations, huge demands from revenue authority, any legal proceeding taken under the Insolvency and Bankruptcy Code, etc, as disclosed in the note to the accounts, may affect the working or survival of many companies as going concern. 4. Management Discussion and Analysis (MD&A) The management discussion and analysis (MD&A) is a report that accompanies the financial statements and provides management's perspective on the company's financial performance. This report includes insights into the company's strategic initiatives, risks, and opportunities. By examining the MD&A, investors can gain a better understanding of the company's goals, challenges, and outlook. 5. Events occuring after Balance Sheet date Contingencies are situations or conditions, the eventual outcome of which, profit or loss, would be determined or known only on happening, or non- happening, of an uncertain future event(s). Events that occur between balance sheet date and date on which these are approved, might suggest the requirement for an adjustment(s) to the assets and the liabilities as at balance sheet date or might need disclosure. 6. Inhouse Power Plants Power is one of important inputs to operate the industry. It is observed that if the power is produced in house for captive consumption, it is much cheaper than purchasing the power from outside. Solar power is much cheaper now and many companies are installing solar power and opting net metering arrangement to reduce the power cost. Also they are selling surplus power to stakeholders outside. 7. Family/ Professionally managed Company/ Firm In our country, family managed company influence vision and mission of company. So need to analyse whether the company is family managed or professionally governed. For listed companies, the appointment of independent directors are mandatory and the composition of Board of these companies also affect the market perception. Hence corporate governance is becoming prominent in the corporate world. 8. Collaborations The nature and type of collaborations, the company have entered also decide their superiority in terms of technology, finance, marketing, etc. Look at these collaborations shall help in understanding the strength of the company. 9. R & D Research and development is a continuous process which keeps the company ahead of competitors in terms of technology and innovation. The company which has in house R & D facility has advantage, since it ensures confidentiality and continuity. 10. Merger / Amalgamation / Acquisition The value of the company changes with the change in the management. These changes may have occurred due to merger, amalgamation or acquisition Such developments should also be kept in mind. It helps companies gain access to a larger market and customer base, reduce competition, and achieve economies of scale in a shorter time. Thus, one has to move and look beyond the balance sheet. The evaluation and analysis of the performance are carried out taking into consideration the above points which is an illustrative way to understand and evaluate the company. Each criteria has its own comparative advantage and limitation. Depending upon the object of the study, these parameters can be used to obtain a clearer understanding of the financial position and strength of any company. 2630

In recent years, the allure of tax-free countries has captured the attention of many individuals, particularly entrepreneurs and high-net-worth individuals seeking to optimize their financial landscapes. For Indian citizens, considering a move to a tax-free jurisdiction offers both opportunities and challenges. This article aims to provide a comprehensive guide on the requirements, advantages, disadvantages, and legal aspects associated with relocating to a tax-free country. Advantages for Indian Businessmen: 1. Tax Savings: One of the primary advantages is significant tax savings, allowing businesses and individuals to retain more of their income and wealth. 2. Asset Protection: Tax-free jurisdictions often offer robust asset protection measures, safeguarding assets from potential risks, liabilities, or legal disputes. 3. Global Mobility: Establishing residency or citizenship in a tax-free country provides greater flexibility for international travel, business opportunities, and global mobility. Disadvantages for Indian Businessmen: 1. Regulatory Compliance: Moving to a tax-free country requires adherence to local regulations, compliance requirements, and potential changes in business operations. 2. Cultural and Social Differences: Adapting to a new culture, social environment, and business practices may present challenges for Indian businessmen accustomed to the local market dynamics. 3. Reputation and Perception: Depending on the chosen jurisdiction, concerns about reputational risks, perceived legitimacy, or transparency may arise, impacting business relationships and stakeholder perceptions. Legal and Regulatory Considerations: 1. Residency and Citizenship Requirements: Most tax-free countries require individuals to obtain residency or citizenship to benefit from tax exemptions. This often involves meeting specific criteria, such as investment thresholds, property ownership, or employment. Investment Thresholds: Many tax-free countries require individuals to make significant investments in the local economy to qualify for residency or citizenship. Understand these financial thresholds and the types of eligible investments. Property Ownership: Some jurisdictions may grant residency based on property ownership. Explore the requirements related to real estate, ensuring that Indian citizens are well-informed about the implications. 2. Understanding Local Tax Laws: Income Tax Regulations: Comprehensive knowledge of the tax laws in the chosen tax-free country is essential. Understand how income is taxed, including any exemptions or deductions available. Wealth and Inheritance Taxes: Explore whether the jurisdiction imposes wealth or inheritance taxes and understand the implications for your financial planning. Guide to Moving to a Tax-Free Country: A Comprehensive Overview for Indian Citizens - CA KAPIL TALREJA 31

I. T. MIRROR (2023-24) 3. Business Operations and Compliance: For Indian businessmen, moving operations or establishing a business in a tax-free jurisdiction requires careful consideration of business operations, legal structures, and compliance with local regulations. Legal Structures: Consider the legal structures available for businesses in the tax-free country. Evaluate which structure aligns with your business goals and ensures compliance with local regulations. Regulatory Compliance: Be aware of the regulatory landscape. Ensure that your business operations comply with local laws, and understand the reporting and compliance obligations. 4. Tax Residency and Double Taxation: Adequate financial planning is essential, including understanding the tax implications in India upon becoming a non-resident. Consultation with financial advisors and legal experts familiar with international tax laws is advisable. Understanding Tax Residency: Comprehend the concept of tax residency, especially considering India's taxation laws. Determine the criteria that define tax residency in both India and the chosen tax-free country. Double Taxation Avoidance Agreements (DTAA): Investigate the existence of DTAA between India and the chosen jurisdiction. Understand how these agreements prevent double taxation and ensure that you comply with international tax obligations. 5. Legal Framework of the Chosen Jurisdiction: Legal Expertise: Engage legal experts who specialize in international tax laws and have a deep understanding of the legal framework of the chosen tax-free jurisdiction. Treaties and Regulations: Ensure a thorough examination of treaties, regulations, and legal precedents governing taxation in the chosen jurisdiction. This step is crucial to navigating potential legal complexities and ensuring compliance. 6. Legal Compliance and Changes: Dynamic Regulatory Environment: Acknowledge that tax laws and regulations can change. Indian citizens must stay informed about any modifications in the legal landscape of the chosen tax-free country and ensure ongoing compliance. Impact on Business Operations: Consider potential changes in business operations due to shifts in local regulations. This may include alterations to reporting requirements, tax filing procedures, or industryspecific regulations. Conclusion: In conclusion, while relocating to a tax-free country offers compelling advantages, it is essential for Indian citizens, particularly businessmen, to conduct thorough due diligence, seek expert guidance, and evaluate both the opportunities and challenges. By understanding the requirements, advantages, disadvantages, and legal considerations, Indian citizens can make informed decisions aligned with their financial goals, business objectives, and long-term aspirations. 2632

I. Introduction In recent years, ChatGPT has emerged as a trailblazer in the realm of conversational AI, offering users a powerful tool for a myriad of applications. OpenAI's text generation models like GPT-4 and GPT-3.5, have been trained to understand natural and formal language. ChatGPT can be used across a great variety of tasks including content or code generation, summarization, conversation, creative writing, and more. The inputs to these models are also referred to as "prompts". Designing a prompt is essentially how you "program" a model, usually by providing instructions or some examples of how to successfully complete a task. This Article covers a guide to optimizing ChatGPT and prompt writing. It is relevant for GPT-3.5 (free version) but can be used for GPT-4 or other AI tools as well. II. How ChatGPT works? There are 6 broad steps in which ChatGPT generates a typical response. These are as follows: - 1. Input Processing: ChatGPT understands what you say by breaking it into small parts. 2. Context Understanding: It thinks about what you said before to know what you mean. 3. Generating Tokens: It predicts and picks the next words based on what it learned from its pre-training. 4. Sampling or Beam Search: It decides how to pick the best words for a good response. 5. Repeating the Process: It keeps doing steps 2-4 to write a full response. 6. Temperature Parameter: It can be more creative or focused based on a setting that makes it choose words in different ways. Based on above steps, we can conclude that ChatGPT breaks our response into small parts, try to understand context and selects the best words from whatever he knows. This same process is repeating until the output is generated. III. The Prompt Formula Writing a good prompt for AI is not a catwalk. There are separate prompt engineers in the market to create a perfect prompt. But in general, we can outline the following building blocks for a good prompt: - Task + Context + Persona + Tone = A Good Prompt 1. Task This refers to the specific goal or request you have in mind for ChatGPT. It is the main job or question you want the model to help with. For example, if you want a diet plan, then your task will be “Give me a diet plan” or “Prepare a diet plan” 2. Context Context provides the background or setting for your request. It helps ChatGPT understand the situation or information relevant to your task. Providing the right context will help constrain the endless possibilities and results that may refer to your task. Optimizing ChatGPT: How to Write Effective Prompts - CA TUSHAR AGARWAL 33

I. T. MIRROR (2023-24) Continuing the example of diet plan, the new prompt with context would be “Give me a diet plan to lose 5 kg in next 3 months”. Looks better right. 3. Persona Persona involves specifying the role or character you want ChatGPT to take on in its response. This helps in tailoring the answer to a certain perspective or style. The persona generally refers to your own personality but it can refer to a real-life expert or even a fictional character. In continuation to our example, our final prompt with persona added would be “I am 21 years old Indian male with weight of 75 kg. I want to lose 5 kg in next 3 months. Provide a diet plan for it.” Try this and you will see the difference. 4. Tone Tone sets the mood or attitude of the response. It can be formal, casual, informative, humorous, etc. Specifying the tone helps in getting a response that aligns with your expectations. Adding a Tone is optional but it can impact your output in some circumstances. For example, if you ever find that ChatGPT is using words or phrases that seem too hard to understand, just say 'generate response for a fifth grader.' ChatGPT will then simplify the language and make the output easier to grasp. IV. Tips to Optimize Your Prompt Utilizing the prompt formula enhances the generation of superior and more personalized prompts. Nevertheless, achieving prompt perfection involves incorporating additional strategies. The following tips are essential for optimizing your prompts: - 1. Build up your final output Getting the exact desired response from ChatGPT in one attempt is challenging. Refine your prompts based on initial results, gradually enhancing them to achieve desired outcomes. 2. Provide examples or reference Giving examples is the best practice for prompt writing, for example if you want to write an email then, it is always better to write a draft on your own and then asking ChatGPT to redraft it. 3. Write clear instructions These models cannot read your mind. If outputs are too long, ask for brief replies. If outputs are too simple, ask for expert-level writing. If you dislike the format, demonstrate the format you would like to see. The less the model has to guess at what you want, the more likely you'll get it. 4. Split complex tasks into simpler subtasks Complex tasks tend to have higher error rates than simpler tasks. Furthermore, complex tasks can often be re-defined as a workflow of simpler tasks in which the outputs of earlier tasks are used to construct the inputs to later tasks. 5. Ask ChatGPT if it wants to add something GPT models make more reasoning errors when trying to answer right away, rather than taking time to work out an answer. Asking for a "chain of thought" before an answer can help the model reason its way toward correct answers more reliably. 6. Ask for specific inclusion or exclusion If you want your response to focus more on a particular point, you can add that in your prompt. Similarly, you can also exclude any specific area as per your requirement. For example, if you want an article on work life balance but focusing more on tier-1 cities and less on tier3 cities, you can create your prompt accordingly. 2634

I. T. MIRROR (2023-24) 7. The longer the better It's crucial to recognize that the length of your prompt can significantly impact the quality and accuracy of the generated results. While it may be tempting to keep prompts brief for simplicity, investing the time and effort into crafting more detailed prompts often yields more precise outcomes. 8. Use The GPT Store The GPT Store is a marketplace for personalized, user-created AI bots. It lets users create, sell, and purchase based on OpenAI's large language models, essentially offering a wide range of AI applications tailored to specific needs. Some popular GPTs: DALL-E (turn your imagination into a image), Canva GPT (design anything), Consensus (write research papers effortlessly). V. Personalize your ChatGPT Most of the people do not know that they can personalize their ChatGPT account. Personalizing ChatGPT involves tailoring its responses to better align with your preferences, needs, or specific use cases. While you cannot directly modify the model itself, you can interact with it in a way that guides its behavior. Step - 1 : First click on your profile, there you will see an option for “Custom Instructions” 35

I. T. MIRROR (2023-24) VI. Conclusion In conclusion, mastering ChatGPT involves a nuanced understanding of its capabilities and the art of crafting effective prompts. By incorporating the provided tips, users can navigate the intricacies of prompt construction to achieve optimal results. This comprehensive guide empowers users to unlock the full potential of ChatGPT, making it an asset for various applications in the realm of conversational AI. Step – 2 : After clicking on custom instructions, you will see a data table where you can input your personal information (examples in image below). And then click on save. 263

TWO DAY TAX CONCLAVE 2024 SPEAKERS Dr. (CA) Girish Ahuja Sr. Adv. TusharHemani Sr. Adv. V. Raghuraman CA A. Jatin Christopher Adv. (CA) Dhinal Shah Adv. K. Vaitheeswaran Adv. Mehul Patel CA Mehul Thakker CA Aseem Thakkar CA Mitish Modi Adv. (CA) Abhay Desai Adv. Jigar Shah CA Punit Prajapati CA Rashmin Vaja

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