The words you are searching are inside this book. To get more targeted content, please make full-text search by clicking here.

Home Explore I.T. MIRROR 23-24 VOL 2

View in Fullscreen

23-24 Vol II

Like this book? You can publish your book online for free in a few minutes!

Related Publications

Discover the best professional documents and content resources in AnyFlip Document Base.

Published by INCOME TAX BAR ASSOCIATION AHMEDABAD, 2023-07-09 01:09:35

I.T. MIRROR 23-24 VOL 2

Pages:

1 - 50
51 - 56

23-24 Vol II

KARGIL VIJAY DIWAS th 26 July Saluting the brave hearts of Kargil War Heroes 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 Vol.2

2 Chairman's Message - CA (Dr.) Vishves Shah 3 President's Message - CA Ashish Tekwani 4 Hon. Secretary's Message - CA Jaykishan Pamnani 5 Message of Chairman of Gujarat Sahitya Academy - Shri Bhagyesh Jha, IAS (Retd.) 6 51 FAQs on Income Tax Return - CA Nisha Tekwani and CA Shridhar Shah 14 Cash Transactions – Restrictions under Income Tax - CA Parag Raval 25 Significance of Standard Operating Procedure (SOP) dtd. 03–08–2022 issued by National Faceless Assessment Center – CA Mitesh Modi 27 GST on Liquidated Damages Paid under Contract - CA Jaykishan Vidhwani 30 Implication Of Notification No. S.O. 2036(E) Dated 03.05.2023 On Practicing Chartered Accountants, Company Secretaries And Cost Accountants – Adv. (CA) Mohit Balani 33 MS Excel in Day-To-Day practice: Few Functions to make your work easy - CA Shridhar Shah 38 Corporate Frauds and Forensic: Safeguarding Against Financial Misconduct – CA Samir Chaudhary 41 Social Stock Exchange: A New Era of Practice – CS Chintan Bhatt 48 How technology will transform the Real Estate Sector - CA Harsh Mehta and Adv. (CS) Lokesh Shah 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.2 Glimpses of YOGA DAY and TALLY WORKSHOP I & II CONTENTS 51 EPF v/s NPS v/s PPF - Dhruvin Mehta

Chairman’s Message CA (Dr.) VISHVES SHAH Chairman 2 3 Dear Readers, I am delighted to present to you the latest issue of ITMirror within a short span of 15 days. The current issue covers various aspects of Income Tax, Goods and Service Tax and Other Allied Laws in an informative and engaging way. This issue is a result of the hard work and dedication of IT Mirror committee members and writers / contributors, who have contributed their expert insights on various topics. I would like to thank each of them for their valuable contribution for making this issue a success. As tax consultants, we understand the value of practical knowledge and staying updated in our field. IT Mirror is a platform for sharing knowledge and insights on tax matters, and for fostering dialogue and collaboration among tax professionals, academicians, policymakers, and stakeholders. We aim to provide high-quality and relevant content that informs, educates, and inspires our readers. IT Mirror aims to provide you with relevant and timely information on the latest developments and trends in the field of Income Tax, Goods and Service Tax and Other Allied Laws, as well as practical tips and advice on how to manage your practice effectively. As professionals, we have an essential role in upholding integrity and compliance. Staying updated on the PMLA provisions and their implications is of paramount importance. We must prioritize compliance requirements, training needs, and potential legal consequences in our professional duties. It brings additional responsibilities, such as reporting suspicious transactions and maintaining accurate records to protect our clients. It is incumbent upon us to familiarize ourselves with these notifications, adapt our practices, and strictly adhere to the PMLAprovisions. By doing so, we preserve our professional integrity and shield ourselves from penalties. In the current issue we are covering such aspects also for the benefits of the readers. Thank you for your continued support and interest in IT Mirror. We hope you enjoy reading this issue and find it informative and useful. Whether you are a taxpayer, a tax professional, or a tax enthusiast, you will find something of interest and value in this edition. We also welcome your feedback and suggestions on how to improve our magazine and make it more useful and appealing to you. If you have any comments or queries, please feel free to contact us at [email protected]. We would love to hear from you. Sincerely, CA Ashish Tekwani President Income Tax Bar Association President’s Message CA ASHISH TEKWANI President Dear Readers, It is a matter of pride for us as a team that in such a short span of less than one month, we are publishing the second volume of IT Mirror, mouthpiece of Income Tax Bar Association for the Activity Year 2023-24. I must congratulate the members of entire IT Mirror Committee and President CA Ashish Tekwani for such accomplishment. We published the first volume in physical & digital mode, and we are now publishing the second volume in Digital mode only. I express my sincere gratitude to all the authors who have contributed articles on a variety of subjects to enrich this publication and giving them in a very short time. It is our constant endeavor to cover various subjects affecting businesses and the profession in this ever-changing and ever evolving world of tax practice. As we all know, India's compliance and regulatory environment is changing rapidly, with new laws, rules, notifications, circulars, and judgments being issued daily. These changes affect the way we practice our profession, and we need to be updated and aware of them to serve our clients effectively and efficiently. Reading is one of the best ways to keep ourselves informed and updated about the latest developments in our field. It also helps us to enhance our knowledge, skills, and expertise, and to learn from the experiences and insights of other professionals. Reading also stimulates our creativity, critical thinking, and enables us to communicate better with our clients and peers. That is why I urge you to read ITMirror regularly, and to share your articles with us. Your articles can be on any topic related to Direct Taxes, Indirect Taxes, Allied Business Laws, or Information Technology that is relevant for tax professionals. Your articles can be informative, analytical, practical, or even inspirational. Your articles can help us to enrich our publication and benefit the readers. If you are interested in contributing your articles for IT Mirror, please send them to us at [email protected]. We will review your articles and publish them in our magazine after the due editorial process. We will also acknowledge your contribution. It was indeed a great feeling to see positive responses flowing for the last volume of ITMirror from across India through social media. It is indeed a moment of pride for us as an association that we have reached beyond our members in our main object – spreading knowledge, and I look forward to having a maximum audience which can benefit from the articles published in this publication. Sincerely, CA(Dr.) Vishves A. Shah Chairman - ITMirror

Dear Members, It is my privilege to address you as the Secretary of the Income Tax Bar Association, Ahmedabad. I am honored to have been given this opportunity to serve the association and its members and contribute to its growth and development. I hope this message finds you and your loved ones in good health and high spirits. “Success is a sum of small efforts, repeated day-in and day-out.” On this note, it gives me immense gratification as the Secretary of the IT Bar Association and as a member myself that our own IT Bar Association is issuing its 2nd edition of IT Mirror within a month of issuing its 1st edition for the activity year 2023-24. I trust that every member of the Association must have found the 1st edition useful and worth reading. Issuing the 2nd edition in a very short time shows the efforts and dedication of all the Committee Members of the Association, the members who have contributed by writing an article on topics which are valuable to the readers. Without their efforts, the publication of 2nd edition of the magazine would not have been possible. I hope the readers will like the articles of this magazine and will be helpful in their professional assignments. The IT Mirror magazine is by our members, of our members and for our members to remain updated w.r.t. tax regulations and other allied laws. Day-in and day-out, lots of changes are happening in Tax Laws and other Allied Laws and hence every member is required to keep oneself updated 24*7. I hope that this magazine will provide you sufficient knowledge on tax and related topics. We, at the Association are committed to providing you with the latest updates, resources and information to support your need and hunger for knowledge. In June 2023, we have successfully conducted 1st Study Circle Meeting on 17th June regarding latest changes in Tax Audit and Income Tax Returns by eminent speaker CA Harit Dhariwal. We celebrated International Yoga Day on 21st June with our members for living a healthy, peaceful and stress free life. We also successfully conducted Workshops on Tally on 23rd June and 30th June for making the members aware about its new features. I hope the same will be helpful to the members and thier staff at the right time of Income Tax Filing and Audit season going to start soon. I would like to thank the Sports Committee of the Association for wonderfully conducting the Box Cricket League Night Series on 24th June. I trust that every member who had played must have enjoyed a lot. We would try our best to bring more such programs which would be beneficial to our members and the Association. I urge all the members to participate in each program at large and take the most benefit out of it. In conclusion, I would like to thank all the members of the Association for their support and encouragement. I look forward to working with you all and taking our Association to new heights of success and achievement. I wish you all prosperity and success in your personal and professional endeavors. Happy reading!!! Warm Regards. Yours Sincerely, CA Jaykishan Pamnani Hon. Secretary Income Tax Bar Association Hon. Secretary’s Message CA JAYKISHAN PAMNANI Hon. Secretary 4 5 Message of Chairman of Gujarat Sahitya Academy

Q1 What are the due dates of filing ITR ? A1 30/11/2023 If assessee is required to furnish a report of Transfer Pricing Audit in Form No. 3CEB or partner in such Firm on which audit is applicable 31/10/2023 Company assessee not required to furnish Transfer Pricing Audit report in Form No. 3CEB. If the assessee is required to get its accounts Audited under Income-Tax Act or any other law or Partner in such Firm on which Audit is applicable. 31/07/2023 In any other case i.e. Non Audited Firms or Partners in Non Audited Firms or Salaried Persons Q2 There is a loss in Future and Options (F & O) Trading. Is it compulsory to file the ITR even if the income is below taxable limit? A2 Filing an ITR is mandatory for Individuals / Hindu Undivided Families (HUF) only if their income, before allowing capital gain exemption and deductions under Chapter VI-A exceeds the maximum exemption limit. If there is a loss during the year, ITR is not required to be submitted under routine circumstances. However, if the F & O losses are to be carried forward then it is compulsory to file the ITR. Therefore, it is advisable to file return of income on or before the due date to carry forward the losses. Q3 What is the due date for filing ITR for those having F& O gain / losses during the year? A3 The Gains or Losses arising from Trading in F&O are taxable under the head of 'Profits and Gains from Business or Profession'. Income or losses from F&O shall be deemed as normal business income (nonspeculative business) even though delivery is not affected in such transactions. Since income from F&O falls under business head, it is important to calculate turnover to determine whether accounts are to be audited or not. If turnover exceeds the specified limit, accounts must be audited, and in that case, the due date for filing ITR will be 31st October. If turnover is below the specified limit, the due date to file the ITR will be 31st July. Q4 How is turnover calculated in the business of F&O? A4 There is no prescribed section / formula under the Income Tax Act for calculation of turnover of F & O. The 'Guidance Note on Tax Audit' issued by the ICAI prescribes the method of determining turnover, which shall be as under: (a) The total of favourable and unfavourable differences is taken as turnover. (b) Premium received on the sale of options is also included in turnover. However, where the premium received is included for determining net profit for transactions, the same should not be included separately. CA NISHA TEKWANI CA SHRIDHAR SHAH 51 Answers to Frequently Asked Questions (FAQs) in relation to Income Tax Return (ITR) I. T. MIRROR (2023-24) (c) In respect of any reverse trades, the difference thereon should also form part of the turnover. All the favourable or unfavourable differences are aggregated to calculate the turnover. Q5 Which ITR is to be used for showing income from crypto currencies? A5 Income from transferring crypto currencies (Virtual Digital Assets) should be reported in 'Schedule VDA' in ITR-2 or ITR-3. It is important to note that ITR-1 or ITR-4 cannot be used to report this income. Q6 While furnishing return of income, how to report income earned from crypto currencies during the financial year 2022-23? A6 Income from transferring crypto currencies (Virtual Digital Assets) should be reported in Schedule VDAin ITR 2 or ITR 3. The income generated from such transfer will be taxed at 30% + applicable surcharge + cess. Only the cost of acquisition, if any, will be deductible from such income. Such Income will be taxed either under business head or capital gains head. Schedule VDArequires details such as acquisition date, transfer date, acquisition cost, consideration received and category of income for taxation. Q7 What will be the due date of filing ITR if there is only income from crypto currencies? A7 The due date for filing ITR depends on the head under which Income is to be reported. When reporting income from the transfer of virtual digital assets in 'Schedule VDA', the category under which such income falls – business or capital gains - is to be selected. Capital Gains:If the income is reported as capital gains, due date for filing the ITR will be 31st July. Business Income: If the income is reported as business income, the turnover needs to be computed to determine whether accounts must be audited or not. If turnover exceeds specified limit, accounts must be audited, and in that case, the due date for filing ITR will be 31st October. However, if turnover is below the specified limit, the due date for filing ITR will be 31st July. Q8 Is a senior citizen liable to file return who has only Interest Income, which is below the maximum exempted amount? What is the answer if the Bank has already deducted TDS? A8 Filing an ITR is not mandatory in the first case since the interest income is below the exemption limit. However, in the second case, it is advisable to file ITR in order to claim refund of tax deducted by Bank. Q9 What is the time limit to file updated return? A9 The concept of Updated Return was introduced by Finance Act 2022. It allows a longer duration to the Assessee to file the revised return of income which is 24 months from the end of the relevant assessment year (subject to certain conditions). In the financial year 2023-24, a person can file an updated return for the assessment years 2021-22 and 2022-23. Q10 What are the conditions subject to which updated return can be filed? A10 All taxpayers are eligible to file Updated Return ONCE. However if the Assessee/Return falls under any of the following conditions, he cannot file updated return: • If updated return is a return of loss • If updated return results in lower tax liability/higher tax refund • In case of search initiated / survey conducted against the Assessee • Where books of accounts or assets are requisitioned in case of the Assessee • Where documents or assets seized/requisitioned in case of any other person belong to the Assessee • In case an assessment is pending or completed • In case AO has information about the Assessee under the Specified Acts/DTAA/TIEA • In case any prosecution proceeding is initiated • In case of a person as notified by CBDT 6 7

I. T. MIRROR (2023-24) I. T. MIRROR (2023-24) 8 9 Q17 What if the assessee fails to verify the return of income within 30 days? A17 The assessee can request for condonation of delay by providing an appropriate explanation for the delay. If the Department approves the condonation request, the return can be verified even after 30 days. However, if the assessee fails to verify the return within 30 days or fails to request for condonation of delay or if the department disapproves the request for condonation, then the return will be considered as invalid. All the consequences of non-filing of return will be applicable to such assessee. Q18 When is it compulsory for a non-resident to file a return of income? A18 If a non-resident person has income, which is taxable in India, the return of income shall be filed in accordance with the provisions applicable to the corresponding resident assessee. However, if a firm is deemed a fiscally transparent entity according to the provisions of DTAA signed between India and a foreign country (in which such firm is a resident). In that case, the return shall be filed in accordance with the status of the partner in that firm. Q19 What detail is to be furnished in case a Taxpayer Identification Number (TIN) is not allotted by the resident country of a Non-resident Assessee? A19 The CBDT has clarified that where TIN has not been allotted to a non-resident person by his resident country, the non-resident can mention his passport number in place of TIN. Q20 Is it mandatory for an individual to file return of income if his income is below the exemption limit after claiming deductions? A26 Yes. If an assessee has income which is more than the exemption limit, before claiming any deductions, then he is liable to file return of income, irrespective of the fact that after claiming deductions, his income goes below the maximum amount not chargeable to tax. Q21 Is Indian mobile numbermandatory for registering on the e-filing portal? A21 No. Department will send an OTPto the mobile number of a foreign country and email id, which can then be used to create an account on the portal. Q22 Does “change in method of accounting” amount to omission or wrong statement and a valid reason for filing revised return? A22 After filing the return, if the assessee discovers any omission or wrong statement and finds it necessary to correct it, he can file a revised return. A change in the method of accounting is not an omission or wrong statement. Thus, the method of accounting cannot be changed by filing a revised return. Q23 Can ITR form be changed while filing revised return of income? A23 Yes. The Income Tax Act does not prohibit the filing of revised return in a new form. For eg, if at the time of filing return, the assessee has only salary income and subsequently he realises that he also has lottery income, then he can revise the originally filed ITR 1 to ITR 2. Q24 Can rectification request u/s 154 be filed more than once? A24 Yes. However, the assessee has to wait for the department to process the previous rectification request before filing a new rectification request. Q25 Is it mandatory to file return of income if a financial transaction entered into by a person is reported in the Statement of financial transaction (SFT)? A25 No. Return filing is governed by section 139. Section 139 nowhere prescribes mandatory filing of return if a person has entered into a financial transaction reported in SFT. Q26 Is there any option to correct invalid return? A26 If the return is declared invalid, all the consequences of non-filing of return will be applicable to such Q11 Which form is notified forUpdated return? A11 The Assessee is required to file updated return in the same ITR form in which original Return for the relevant Assessment Year was filed, along with the newly notified form ITR-U. ITR-U is divided in 2 parts: Part A General Information It seeks general information as to eligibility of filing updated return, ITR form applicable, reason for updation, time limit for updation, etc. Part B Income and Tax Details It seeks computation of updated income (along with relevant head of income) and tax thereon, TDS, advance tax, self assessment tax, regular assessment tax, etc. Q12 What will be the tax and reporting implications of deposit exceeding Rs.2,50,000 in Provident Fund A/c? A12 The Finance Act 2021 has been amended so as to provide that interest income accrued during the previous year in recognised and statutory provident fund to the extent that it relates to the contribution made by the employee exceeding Rs. 2,50,000 in any previous year on or after 01.04.2021 shall be taxable under the head “Income from Other Sources”. However, the said limit of Rs. 250000 shall be increased to Rs. 500000 if there is no contribution by the employer in the said fund. There is separate reporting requirement for interest accrued on PF to which no exemption is available. Q13 Can standard deduction of Rs. 50,000 allowed to a salaried employee be claimed multiple times in case of job change? A13 No. Standard deduction of Rs. 50,000 is an absolute and unconditional deduction, which is allowed to an employee only once in a year, irrespective of the number of job changes in a year. Q14 How to login on www.incometax.gov.in using Aadhaarnumber? A14 It is mandatory for every person who has been allotted PAN and is eligible to obtain an Aadhaar number to intimate his Aadhaar number to the Income Tax Department. If PAN and Aadhaar have been linked, then Aadhaar number can be used as “User-ID” instead of PAN to get a log in on the e-filing portal. Q15 Explain the various ways to file return of income. A15 Return of income can be filed in paper mode or e-filing mode. If the Return of income is filed through electronic mode, then the assessee has the following options: - Using digital signature - Without using digital signature o Through Aadhaar OTP o Under Electronic Verification Code. - If the return is filed without using digital signature or e-verification, then the assessee has to send the signed copy of the ITR V, through ordinary post or speed post, to Bengaluru CPC. Q16 What is the time limit for sending a signed copy of ITR V to CPC or verifying the return furnished online? A16 30 days from the date of filing of return of income electronically.

I. T. MIRROR (2023-24) I. T. MIRROR (2023-24) 10 11 Q33 While filing ITR, do I need to enter scrip-wise details for all shares in which long term capital gain is made? A33 No, it is mandatory to provide scrip-wise details for only those shares for which grandfathering is applicable (shares acquired before 31/01/2018) in ITR. For the rest of the shares, consolidated details can be provided. Q34 Does the transaction of property situated outside India sold to a non-resident attract capital gain? What care needs to be taken for filing such ITR? A34. Yes, In case of resident assessees, when property situated outside India is sold to a non-resident, the transaction will attract Capital Gain. While filing ITR, one needs to provide all details such as address, sale consideration, cost of acquisition, cost of improvement and buyer's details including address with ZIPcode. Quoting PAN is not mandatory in such cases, if the buyer (non-resident) is not having PAN. Q35 One deductor has deducted TDS on Advance paid / provision made and the same is showing in 26AS of the deductee in current year. However, the assessee has not booked that income in the current year but will book in the subsequent year. In which year the deductee shall take credit for such TDS? A35 TDS is deducted at the time of payment or credit, whichever is earlier. So deductor has righty deducted TDS in the year of payment or credit. However, the deductee shall not claim TDS of Income which does not form part of total income of the current year. In ITR, the deductee shall carry forward such TDS to subsequent year and then can claim the credit in the subsequent year in which the relevant income is offered for taxation. Q36 What are the common causes of TDS (26AS) mismatch and how it is treated? A36 There are multiple common causes like TDS deducted but not paid or TDS return not filed by the deductor, wrong PAN reported in TDS return, etc. Same way, if ITR contains wrong TAN or wrong TDS information, there could be TDS (26AS) mismatch. In case of fault by deductor, the deductor needs to rectify the same by payment of tax / revision of TDS return. In case where assessee has proof that deductor has deducted TDS but not paid, he can approach the AO and AO can remove the demand / issue refund if proper details are available. If AO cannot provide any relief, the assessee has only option to go through litigation to claim the TDS credit, the amount for which deductor has not paid tax / filed return. In the case of assessee making mistake in filing particulars in ITR, such cases will be processed by CPC with demand / low refund. Assessee shall go to tax credit mismatch correction menu on the portal and rectify errors to enable CPC to process ITR correctly. Q37 What are form 15G / 15H? A37 From 15G & 15H are forms to be submitted to the deductor by the assessee in cases where the income of the assessee is below taxable limits and he / she does not want to get tax deducted on interest income. Senior citizen assessee needs to submit the application form 15H and rest of the assessee (except company or firm) needs to submit the application in form 15G. The deductor is required to file the particulars of such form 15G / 15H received with Income Tax department online. Q38 What is fee u/s 234F? A38 Afee u/s 234F is levied if the assessee does not file ITR within due date prescribed u/s 139(1) (i.e., 31 July or 31 October in general cases). The details of the fees payable is under: - In cases where total income does not exceed Rs. 5 lakhs, the fees levied would be Rs. 1,000 - In cases where total income exceeds Rs. 5 lakhs, the fees levied would be Rs. 5,000. - In cases where ITR filing is voluntary (not mandatory), late filing fees under Section 234F shall not apply. assessee. It will be deemed as if no return has been filed. Hence, if the time limit for furnishing the original / updated return has not yet expired, a new return can be filed. If the time limit has expired, then the assessee cannot file return and the AO can make best judgement assessment u/s 144. Q27 What is AIS – Annual Information Statement? A27 The government has enlarged the scope of Form No. 26AS to cover information regarding various transactions made by a person during the year. The sum total of these transactions is called AIS. AIS will consist of information relating to: - TDS and TCS - Specified Financial Transactions - Payment of taxes - Demand and refund - Pending proceedings - Completed proceedings - Information received from any officer, authority or body performing any functions under any law or information received under an agreement referred under section 90 or 90A or from any other person to the extent it may be deemed fit in the interest of the revenue. It should be noted that all such relevant information available in AIS shall be automatically pre-filled in the relevant ITR Form. Q28 Can a taxpayer access the information available in the AIS? A28 An assessee can access AIS information by logging into his income tax e-filing account. There is also step by step easy process to submit the feedback on AIS if the assessee feels that the information furnished in AIS is incorrect, duplicate or relates to any other person, etc. Assessee can do so either online from the income tax e-filing portal or using an offline utility. Q29 What should be the treatment of shares of foreign company listed on foreign stock exchange when sold? A29. Income Tax on Trading in shares of foreign countries is similar to the tax treatment of other capital assets. LTCG on sale of foreign shares is (listed or unlisted) is taxable at 20% under Section 112 with the benefit of indexation. STCG on sale of foreign shares is (listed or unlisted) is taxable at slab rates. Dividend Income on Foreign Shares is taxable at slab rates under the head 'Income from Other Sources'. Foreign Shares received by employees as ESOPshall have same tax treatment. Q30 How to differentiate between Capital Gain & Business Profit in case of share of listed companies held formore than 12 months? What if the shares are of unlisted companies? A30 As per CBDT Circular No. 6/2016, if assessee opts to treat shares of listed company as stock-in-trade, the income arising from transfer of shares will be considered as business income, irrespective of period of holding. In case the assessee opts to choose to report transfer of shares under capital gain, the same shall be accepted by AO. In both the cases, the assessee shall show such transactions under the same heads in subsequent years. In the case of transfer of shares of unlisted companies, the assessee shall show it under the head of capital gain. Q31 How to treat profit / loss from intra-day trading of shares? A31 Intra-day trading of shares is considered speculative activity and the same shall be taxed at normal rates as speculative profit or loss under the head Business & Profession only. Q32 Can I claim deduction u/s 80C from income from Capital Gain u/s 112A? A32 No, deduction under Chapter VI-Ais not available in case of capital gain u/s 112A.

I. T. MIRROR (2023-24) I. T. MIRROR (2023-24) 12 13 Q47 What is the “relevant accounting period” for reporting foreign assets in Schedule FA? A47 The ITR Forms notified for Assessment Year 2023-24 have replaced the expression “accounting period” with “calendar year ending as on 31st December, 2022”. Hence, the details of all the foreign assets held during the period 01.01.2022 to 31.12.2022 are to be reported in Schedule FA for the A.Y. 2023-24. The fiscal / calendar / taxation year followed by the foreign country in which foreign asset is held is irrelevant. Q48 Are the details of Foreign Assets required to be reported in Schedule ALalong with Schedule FA? A48 Yes is the answer if the assessee holds the foreign assets as at the end of the financial year. Schedule ALand Schedule FAboth require reporting, however they serve different purpose. - Schedule FA seeks details of Foreign Assets held even if for a single day for the relevant calendar year, whereas Schedule AL seeks details of assets and liabilities of the Assessee as the end of the financial year. - Schedule AL is mandatory for Individual/HUF if their total income exceeds Rs. 50 Lakhs, irrespective of their residential status. Schedule FAis mandatory only for “resident” category of Assessee Q49 How to claim credit of taxes paid in foreign country? A49 Form 67 is the answer. A statement of income offered to tax and the foreign tax deducted or paid on such income is required to be furnished in Form No. 67. Following are to be noted: - The credit for taxes paid shall be allowed in the year in which the income is offered to tax - The details of tax paid outside India shall be furnished in Schedule TR of ITR Form - Form no 67 is to filed electronically. - Form no 67 is to filed within the due dates as under: o Original Return on/before the end of AY o Belated Return on/before the end of AY o Updated Return on/before the date of filing of return Q50 Who is beneficial owner / beneficiary for reporting in Schedule FA? A50 Beneficial owner means an Individual who has provided, directly or indirectly, consideration for the Foreign Asset. Further, if such an asset is held for the immediate or future benefit of the individual providing the consideration or any other person, then he is also considered beneficial owner / beneficiary. Q51 Whether details to be reported in Schedule ALif they are already reported in Balance Sheet Schedule of ITR? A51 The assets and liabilities reported in the Balance Sheet Schedule of the business in Part A-BS of ITR are not required to be reported in Schedule AL. Q39 Can a non-resident get refund in a bank account outside of India or need to open a bank account in India? A39 The Income Tax Department allows payment of refund in foreign bank account. For this, the assessee shall provide proper details like SWIFT, Name of Bank & Bank Account. There is no need to open a bank account in India. Q40 What is the taxability of arrears of salary received? A40 Section 89 allows to claim relief in taxability of arrears of salary received due to difference in tax for multiple assessments years for which salary is received. To claim the relief u/s section 89, filing of form 10E online before filing the ITR is mandatory. Relief u/s 89 cannot be claimed if form 10E is not filed before filing the ITR. Q41 An assessee did not submit proof to the company to claim HRA exemption u/s 10(13A) or deduction under chapterVI-Aor interest on house property in form 16. Can he claim it while filing ITR? A41 Yes, the assessee can claim deductions and house property loss in ITR, even though proof has not submitted to the employer. Now the ITR are annexure less, there are no provision to provide documentary proof, but the assessee shall maintain the proof as due to difference between details uploaded by employer and details filed in ITR by employee, the department may issue notice. Q42 How to ensure to get 80G deduction? A42 Now having a receipt of donation is not enough to claim 80G deduction. The organization which received donations must file the statement online with the income tax department and issue a system generated ARN containing donation certificate. In the ITR, the assessee shall provide the required details including ARN to claim 80G deduction. Q43 What are the losses, which can be set-off against Income from Salary? A43 Only loss from House Property (interest on loan for house property) can be set-off against Income from Salary up to a maximum of Rs. 200000 in a year. If the amount of loss from House Property is more than Rs. 200000, remaining amount of loss will be carried forward for subsequent years. Q44 How to deal with income of minors? A44 Any income of minor child is added (clubbed) to the income of parents / guardian, except the income which is earned by the minor by applying his / her skill or talent or specialized knowledge and expertise. In case minor is receiving such income, the payer of the amount might deduct TDS and for such cases, obtaining PAN of minor is required. ITR has to be filed by the minor in such case and parent / guardian shall validate such ITR as a representative assessee. Q45 How to deal with income of a deceased person? A45 The legal heir is required to file return of a deceased person by registering as a legal heir on income tax portal for the deceased person for the income earned by the deceased person when he / she was alive. Any income generated out of estate of such deceased person after death shall be considered income of the legal heir / beneficiary of such estate. Q46 Who is required by law to furnish details of Foreign Assets in Schedule FA? A46 Reporting in Schedule FA (Foreign Assets) is not mandatory for Assessee who is Non-resident or Not Ordinarily resident. For Resident Assessee, who holds Foreign Asset even for a single day in the “relevant accounting period”, reporting is mandatory in Schedule FA. Possessing foreign asset by Resident means: • Resident holds any asset outside India or • Resident has signing authority in any account located outside India or • Resident has income from any source outside India

INTRODUCTION : - People indulge into cash transactions (receipts & payments) without giving due heed to its consequences which may, at times, be more, severe than expected. - In the Indian economy, cash transactions have always played a major role and served as a consistent reason for the accumulation of black money. - The Government has initiated various measures to curb cash transactions and boost digital payments. - One should look at the cash transaction limit under the Income Tax Act along with the penalty for transacting in cash over and above the specified threshold. - Government wants people to use banking system and in the same direction measures have been introduced to curb the menace of black money. To curb transactions in cash, the government has introduced various measures. The purpose is to curb the menace of dealing in cash. So far as tax law is concerned, where certain sections of the I-TAct deal with disallowance of expenditure made in cash, certain levy penalty and certain curtail the allowance or benefits.As these sections are scattered in the Act, an attempt has been made to list all such sections and provision at one place for better understanding in the following: A. Section - 269SS : Provision :Acceptance of Cash deposit Threshold : Rs. 20,000/- or more It provides that no person shall take or accept any loan, deposit and specified sum herein after referred to as “L/D/S” & from any other person in cash, if : a) the amount of such L/D/S or the aggregate amount of such L/D/S is Rs.20,000/- or more. b) on the date of taking or accepting such L/D/S, any L/D/S is taken or accepted earlier by such person from the depositor is remaining unpaid (whether repayment has fallen due or not), the amount or the aggregate amount remaining unpaid is Rs. 20,000/- or more. c) the amount or the aggregate amount referred to in clause (a) together with the amount or the aggregate amount referred to in clause (b) is Rs. 20,000/- or more. Provision : • In case of default, the tax officer can levy a penalty equal to the amount of L/D/S taken or accepted. • No person can accept any loan or deposit of Rs. 20,000/- or more otherwise than by way of an account payee cheque or an account payee draft. • The limit of Rs. 20,000/- will also apply to a case even if on the date of taking or accepting such loan or deposit, any loan or deposit taken or accepted earlier by such person from such depositor is remaining unpaid and such unpaid amount along with the loan or deposit to be accepted, exceeds the aforesaid limit. Cash Transactions – Restrictions under Income Tax CA PARAG RAVAL I. T. MIRROR (2023-24) Example : 1. If Mr. X has a credit balance of a loan of Rs. 19,000/- from Mr. Y. Now Mr. X cannot take more loan in cash in excess of Rs. 999/- from Mr. Y. - except with an account payee cheque or account payee bank Draft. 2. Mr. Santa has taken loan of Rs. 1,00,000/- in cash for the wedding of his daughter from Mr. Banta. Yes, the provisions of Section 269SS are applicable to every person taking or accepting any loan or deposit exceeding Rs. 20,000/- whether it's individual or otherwise. Exemptions: This section shall not apply to any L/D/S taken or accepted from, or any L/D/S taken or accepted by : 1. the Government & any Government company 2. any Banking Company, Post Office savings bank or Co-op. Bank 3. Any corporation established by a Central, State or Provincial Act 4. An institution, association or body or class of institutions, associations or bodies notified by Central Govt. in the official gazette. 5. where the person from whom the L/D/S is taken or accepted and the person by whom the L/D/S is taken or accepted, are both having agricultural income and neither of them has any income chargeable to tax under this Act. 14 15

I. T. MIRROR (2023-24) B. Section – 269T : Threshold : Rs. 20,000/- or more Provision : Repayment of deposit in cash a) No branch of a bank or Co-op. Bank, Co-op. Soc., Firm, Company or person shall repay any loan, or deposit with it or any specified advance, in cash, if : i) the amount of the L/D/S* together with the interest, if any, payable thereon, is Rs. 20,000/- or more; or ii) any amount in relation to transfer of immoveable property (even if transfer does not take place) together with the interest, if any, is Rs. 20,000/- or more;to any person who has made L/D or paid the sum for transfer of immoveable property. b) the aggregate amount of the L/D* held by such person on the date of such repayment together with the interest, if any, payable on such L/D*, is Rs. 20,000/- or more or c) the aggregate amount of the specified advances* received by such person either in his own name or jointly with any other person on the date of such repayment together with the interest, if any, is Rs. 20,000/- or more. * Specified advance means any sum of money in the nature of advance, by whatever name called, in relation to transfer of an immovable property, whether or not the transfer takes place. Exemptions : This section shall not apply to repayment of any loan or deposit or specified advance taken or accepted from: – • the Government & any Government company • any banking company, post office savings bank or co-operative bank • any corporation • such other institution, association or body or class of institutions, associations or bodies which the Central Government may, notify in this behalf in the Official Gazette. Penalty : • Sum equal to the amount of such loan or deposit or specified sum so repaid shall be liable to be paid by the payor as the penalty under Section 271E of I-TAct. • The penalty is imposed on the payor, not on the receiver. 16 17 I. T. MIRROR (2023-24) Example : Case Study. Loan from Mr. X Date Particulars Amount Date Particulars Amount Debit Credit 30/04/20 To Bank A/c 21,000 01/04/20 Opening Balance 19,000 20/04/20 By Cash A/c 2,000 21,000 21,000 15/05/20 To Cash A/c 19,000 01/05/20 By Cash A/c 19,000 19,000 19,000 03/06/20 To Cash A/c 25,000 01/06/20 By Bank A/c 25,000 25,000 25,000 1. In the first case, there was an opening credit balance as on 1-4-2020 of Rs. 19,000/-. Further Rs. 2,000/- cash loan has been taken during the year. And the entire loan of Rs. 21,000/- has been repaid by cheque. Hence, provisions of section 269SS & Sec. 269Tare not attracted. 2. In the second case, there was no opening balance. Rs. 19,000/- in cash has been taken as loan and is also repaid in cash during the year. Loan taken and loan repaid both are below the threshold of Rs. 20,000/- and hence, provisions of section 269SS & Sec. 269Tare not attracted. 3. In the third case, there was no opening balance. Rs. 25,000/- was taken as loan by way of cheque. However, the entire sum has been repaid in cash. Certainly, the repayment has violated the provisions of Sec. 269Tattracting penalty @ 100%. Special Audit considerations: While reporting the details of loans and deposits in Tax Audit report, following points need to be considered: (a) Details as per following format to be taken and verify the same: (b) Squared –Up means Loans taken and repaid in the same assessment year. (c) All Loans or Deposits are to be reported even if they are grouped under Debtors or creditors. (d) Even if the loans are taken free of interest the information will still have to be given. (e) Loans and deposits taken or accepted by means of transfer entries constitute acceptance of deposits or loans otherwise than by account payee cheques. (f) Scrutinize Cash book to find out Loans or deposits taken or repaid in cash. Name & Address and PAN Opening Balance Amount Received Amount Paid Interest Credited TDS Deduction Closing Balance Maximum Outstanding

I. T. MIRROR (2023-24) C. Section - 269ST : Threshold : Rs. 20,000/- or more No person shall receive an amount of Rs. 2 lakhs ormore in cash…… a. in aggregate from a person in a day; or b. in respect of a single transaction; or c. in respect of transactions relating to one event or occasion from a person, Otherwise than by : - an account payee cheque or - an account payee bank draft or - use of electronic clearing system through a bank account. The restriction is applicable even if the different receipts are in relation to distinct transactions entered into on same day or different days. This section will be violated if following four pre-requisites are fulfilled: 1. There is single payer. 2. There is a single receiver. 3. The payment is in single day. 4. The amount received by the person in cash is Rs. 2 Lakhs or above. The payment may be towards two separate invoices of different dates and each invoice below Rs. 2 Lakh, but the person cannot receive Rs. 2,00,000/- or more in cash from a person in aggregate in a single day. Exemptions : • Receipt by Government; • Receipt by any banking company, post office savings bank or co-operative bank • Transactions of the nature referred to in section 269SS i.e. acceptance of loans/ deposits/ specified advance. • Persons/ receipts notified by government: • Receipts (cash withdrawals) by any person from bank, cooperative bank or post office savings bank. • Receipt by business correspondent on behalf of banking company or cooperative bank as per RBI guidelines. • Receipt by white label ATM operator from retail outlet sources on behalf of banking company or cooperative bank. • Receipt from an agent by an issuer of prepaid payment instruments. • Receipt by company/ institution issuing credit cards against bills raised in respect of one or more credit cards. • Receipt exempt u/s 10(17A) i.e. any award from state/central government. 18 19 I. T. MIRROR (2023-24) Penalty : Penalty is under Sec 271DAfor the violation of 269ST. If a person receives any sum in contravention of the provisions of section 269ST, he shall be liable to pay, by way of penalty, a sum equal to the amount of such receipt : Provided that no penalty shall be imposable if such person proves that there were good and sufficient reasons for the contravention. • Any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner. • If any person violates sec 269ST, then penalty shall be levied @ 100% of such receipt. Example : 1. M/s. Lotus Chemicals issued invoice of Rs. 7,50,000/- to its customer on 19/12/2021. The customer intends to make payment in cash in 10 weekly installments of Rs. 75,000 each. Whether M/s Lotus Chemicals can accept the above proposal? • M/s. Lotus Chemicals cannot accept the above proposal as the cash receipts (though on different dates) are towards a single transaction and exceeds Rs. 2 Lakh. 2. If for a marriage there are 3 different bills of Rs. 1 lakhs each (total Rs. 3 lakhs), and all the three bills are in the name of three different persons: Say: (i) garden on rent for marriage reception of Rs. 1 lakhs is in the name of Mr. X who is being married, (ii) Tent house services is in the name of Mr. X's father for Rs. 1 lakhs and (iii) decoration is in the name of the Mr. X's mother for Rs. 1 lakhs. Then in such a situation entire Rs. 3 lakhs can be paid in cash etc. mode i.e., Rs. 1 lakh by Mr. X, Rs. 1 lakh by his father and Rs. 1 lakh by his mother. Even if all the bills are in the joint names of three persons, then also the payment can be made in the above manner. 3. ABC & Co. issued following invoices and received following payments: 4. X sells goods on credit to Y on 14-8-21, for Rs. 10,42,000/-, Invoice No. 40. Payment made by Y as follows : i. Rs. 1,45,000/- in cash on 16-8-21. ii. Rs. 8,00,000/- by RTGS on 20-8-21 iii. Rs. 97,000/- in cash on 22-8-21 Total payment received by X in cash is Rs. 2,42,000/-. Section 269STgets attracted. The AO can impose 100% of Rs. 2,42,000/- as penalty u/s. 271DA.

I. T. MIRROR (2023-24) D. Section – 40A(3) : • Restriction on Expenditure in Cash • Threshold : Amount exceeding Rs. 10,000/- • Where the assessee incurs any expenditure in respect of which a payment or aggregate of payments made to a person in a day, • otherwise than by an account payee cheque drawn on a bank or account payee bank draft, or • use of electronic clearing system through a bank account [or through such other electronic mode as may be prescribed], • exceeds Rs. 10,000/-, no deduction shall be allowed in respect of such expenditure. • Simply put, this section covers those payments over Rs. 10,000/-made by bearer cheque or cash. • Therefore, if X makes a payment to Y, of Rs. 10,000/-,Rs. 15,000/-, and Rs.18,000/- in cash in one single day, then the aggregate amount of Rs. 43,000/- will be disallowed. • Even the purchase of goods falls under the term expenditure. • This section shall not apply to expenses which is not to be claimed as deduction u/s 30 to 37. • However, if the payments are made for hiring or leasing carriages for goods such as lorries, trucks etc. then the limit is extended to Rs 35,000/-. • Non- Compliance: Deduction Not allowed • If an assessee makes payment of two different bills to Y (none of them exceeds Rs. 10,000/-) at the same time in cash, Sec. 40A(3) is not applicable even if the aggregate payment is more than Rs. 10,000/-. • This is because of the fact that Sec. 40A(3) is applicable only in respect of an expenditure which is in excess of Rs. 10,000/-. • If Mr. X makes payment over Rs. 10,000/- at a time, partly by an a/c. payee cheque & partly in cash to some parties, but payment in cash alone at one time does not exceed Rs. 10,000, Sec. 40A(3) is not attracted. Exceptions – Rule 6DD : 1. Where the Payment is made to:- • Reserve Bank of India or any banking company; • State Bank of India or any subsidiary bank; • Any co-operative Bank or Land Mortgage Bank; • Any primary agricultural credit society or any primary credit society; • Life Insurance Corporation of India; 2. Where the payment is made to the Govt and, under the rules framed by it, such payment is required to be made in legal tender; 3. Where the payment is made by : • Any Letter of Credit Arrangements through a Bank • AMail or telegraphic transfer through a Bank • ABook adjustment from any account in a bank to any other account in that or any other bank • ABill of exchange made only payable to a Bank • The use of electronic clearing system through a Bank Account • ACredit Card • ADebit Card 20 21 I. T. MIRROR (2023-24) 4. Where the payment is made by way of adjustment against the amount of any liability incurred by the payee for any goods supplied or services rendered by the assessee to such payee. 5. Where the payment is made to the cultivator, grower or producer for the purchase of the following: • Agricultural or Forest produce; or • Produce of Animal Husbandry (including livestock, meat, hides and skins) • Fish or Fish Products; or • Products of Horticulture of Apiculture 6. Where the payment is made for the purchase of the products manufactured or processed without the aid of power in a cottage industry, to the producer of such products; 7. Where the payment is made in a village or town, which on the date of such payment is not served by any bank, to any person who ordinarily resides or is carrying on any business, profession or vocation in any such village or town 8. Where any payment is made to an employee of the assessee or the heir of any such employee, on or in connection with the retirement, retrenchment, resignation, discharge or death of such employee, on account of gratuity, retrenchment compensation or similar terminal benefit and the aggregate of such sums payable to the employee or his heir does not exceed Rs 50,000/-. 9. Where the payment is made by an assessee by way of salary to his employee after deducting Income tax from salary in accordance with the provisions of the Income Tax Act, and when such employee:- i. Is temporarily posted for a continuous period of 15 days or more in a place other than his normal place of duty or on a ship; and ii. Does not maintain any account in any bank at such place or ship. 10. Where the payment is made by any person to his agent who is required to make payments in cash for goods or services on behalf of such person. 11. Where the payment was required to be made on a day on which the banks were closed either on account of holiday or strike. It is pertinent to note here that such payment would be allowed as an expense only when it has been proved that the payment was required to be made on the day on which the bank was closed and the payment could not have been made on a working day. 12. Where the payment is made by an authorized dealer or a money changer against purchase of foreign currency or travellers cheque in the normal course of business. E. Section – 43(1) – Capital Expenditure in Cash : • Disallowance of Depreciation section 43(1) • Disallowance of Depreciation where cash payment exceeding Rs. 10,000/- is made for purchase of asset. Example : Assessee purchases plant and machinery of Rs. 3,50,000/- on 1.04.2021 and pays the entire amount in cash. • Since payment of Rs. 3,50,000/- is made by cash, it shall not be considered as part of actual cost of plant and machinery. The actual cost of plant and machinery shall be taken to be NILand NILshall be added to WDVof Block of assets. • Note: As per section 269ST, the seller of machinery is liable to pay penalty of Rs. 3,50,000/- for accepting cash of Rs.2,00,000 or more. The Penalty shall be under section 271DA.

I. T. MIRROR (2023-24) F. Section – 80D : • Payment of Premium forMedical Insurance in Cash • Every individual or HUF can claim a deduction from their total income for medical insurance premium paid in any given year under section 80D. This deduction is also available for top-up health plans and critical illness plans. • Deductions for medical insurance premiums can be claimed exclusively if the supposed amount of payment to the service was remitted by means of online banking, cheque, draft, debit/credit cards, or any other online mediums. • However, installments remitted for any preventive health check-ups can be remitted through cash. G. Section – 80G : • Restriction on Donation in Cash • Threshold : Amount exceeding Rs. 2,000/- • Provision :It provides that no person shall give donation in cash for an amount exceeding Rs. 2,000/- to certain funds, charitable institutions, etc. Non- Compliance: Deduction Not allowed. H. Section – 80GGA : • Threshold : Rs. 10,000/- • Provision : Payment of donation in Cash for research and rural development • Deduction under section 80GGA of the I-T Act, 1961 is available to all the taxpayers in respect of donations made for specific scientific, social or statistical research or rural development. • a donation can be made through any manner i.e. cash or cheque or draft etc. However, in case of donation through cash, the maximum amount of INR 10,000/- would be allowed as deduction. • No deduction shall be allowed under this section in respect of any sum exceeding Rs. 10,000/- unless such sum is paid by any mode other than cash. I. Section – 80GGB : • Threshold : NIL • Provision : Payment of donation to Political parties orElectoral Trust. • This Section specifies the rules and conditions related to donations being made to political parties in India by any Indian company or enterprise: • Cash contributions are not allowed under Section 80 GGB. • Therefore, the respective contributions to political parties must be made through other modes of payments, i.e. 1. Cheque, 2. Demand Draft or 3. Electronic Transfer. J. Section – 80GGC : • Threshold : NIL • Provision : Payment of donation to Political parties. • This Section specifies the rules and conditions related to donations being made to political parties or an electoral trust in India by any person, except local authorities, every artificial juridical person which is either wholly or partly funded by the Government and companies. 22 23 I. T. MIRROR (2023-24) • Cash contributions are not allowed under Section 80 GGC. • Therefore, the respective contributions to political parties must be made through other modes of payments, i.e. 1. Cheque, 2. Demand Draft or 3. Electronic Transfer. K. Section – 194N : • Provision : Deductor : Bank, Co-op. Bank or a Post Office • Threshold : If aggregate withdrawals in cash from one or more accounts during a previous year any an account holder exceeds the limit given below, TDS will be made : Exemptions : When payment is made to certain recipients such as : 1. the Government 2. any banking company, post office savings bank or co-op. bank 3. Co-op. Society carrying on banking business 4. Banking correspondents 5. White label ATM operators who are involved in the handling of substantial amounts of cash as a part of their business operations. PAN orAadharmandatory : The government has made quoting of PAN or Aadhaar number mandatory if the cash deposits or withdrawals in a financial year exceeds Rs. 20 lakh in any bank or post office. It is also mandatory in case of opening of current account or cash credit account with a bank. The CBDThas issued a notification on May 10, 2022 for the same. The new rules are effective from May 26, 2022. These rules may be seen as a step by the Govt. towards spreading its arms in tracking the cash deposits/withdrawals to combat the circulation of cash in the economy. With Annual Information Statement (AIS) and TDS under section 194 N already in place, it will be easier for government to bring all information regarding cash deposits/withdrawals by a person in one place and track such transactions irrespective of whether if TDS is applicable or not. Time of payment During September 1, 2019 and June 30, 2020 Threshold for payment in cash Exceeding Rs. 1 crore Rate of TDS 2% 2% On or after July 1, 2020 Case 1 - It covers a defaulter who has not submitted return in past [see Note]. In this case, threshold limit is as follows - a. exceeding Rs. 20 lakh but not exceeding Rs. 1 crore b. exceeding Rs. 1 crore 5% Case 2 - It covers any case other than Case 1. Threshold limit 2% is exceeding Rs. 1 crore. Note - The recipient has not filed the returns of income for all the three assessment years relevant to the three previous years, for which the time-limit to file return of income under section 139(1) has expired, immediately preceding the previous year in which the payment is made in cash.

I. T. MIRROR (2023-24) As per the notification, every person to obtain and quote PAN, wherein he enters into any of the following transactions: 1. Cash deposits aggregating to Rs 20 lakhs or more in the financial year in one or more accounts with a bank or a post office. 2. Cash withdrawal or withdrawal aggregating to Rs 20 lakhs or more in the financial year in one or more accounts with a bank or a post office. 3. Opening of current account or cash credit account. Earlier, as per Rule 114B, PAN was mandatorily required to be quoted in case of cash deposit exceeding Rs 50,000 in a single day. However, no annual aggregate limit for cash deposition was prescribed. Also, no limit was prescribed for cash withdrawal, which has also been prescribed now. Hence every person who intends to undertake afore-stated transactions should obtain the PAN, otherwise, such person would not be able to perform afore-stated transactions. SAY NO TO CASH TRANSACTIONS 24 25 The Faceless Assessment Scheme has been introduced under the Income Tax Act, 1961. Taxation and Other Laws (Relaxation and Amendment of certain provisions) Act, 2020 as passed by the Parliament has inserted Section 144B w.e.f. 01–04–2021. Before that, the Faceless Assessment Scheme, 2019 was inserted and implemented by way of delegated legislation in the form of CBDT Notification dtd. 13–08–2020 bearing F.No. S.O.2745(E) and Notification dtd. 12–09–2020 bearing F.No. S.O. 3264(E). The Ministry of Finance, with the prime object to make this revolutionary and innovative initiative of the “Faceless Assessments” taxpayer friendly, more transparent, effective and with accountability, notified faceless schemes under sections 92CA, 130, 135A, 144C, 151A, 245D, 245MA, 245R, 250, 253, 255, 264A, 274 and 279 of the Income Tax Act, 1961. The modified procedure of conduct of Faceless Assessment under the provisions of Section 144B of the Act has been substituted by the Finance Act, 2022. The new procedure of conduct of Faceless Assessments in substituted section 144B of the Act has been made effective from 01–04–2022 whereby the old Sub Sections (1) to (8) of Section 144B of the Act have been substituted. Thus, the earlier prescribed procedure for conduct of Faceless Assessments was applicable for Faceless Assessments conducted upto 31–03–2022. The opening line of Sub Section (1) of Section 144B of the Act, starts with “notwithstanding anything to the contrary contained in any other provisions of this Act,……..”. In other words, Sub Section (1) of Section 144B of the Act starts with a “non obstante” clause and thus, the procedure laid down in the provisions of Section 144B of the Act is mandatory and shall be adhered to by the income tax authorities. As provided under Sub Section (1) (read with Sub Section (2)) of Section 144B of the Act, the assessment, reassessment, re-computation u/s 143(3) or u/s 144 or u/s 147 of the Act falls within its ambit and accordingly w.e.f. 01–04–2022, all the cases covered under 143(3) or u/s 144 or u/s 147 of the Act will be governed by the Faceless Assessment Scheme as provided under the newly substituted provisions of Section 144B of the Act. The newly substituted provisions of Section 144B of the Act provide for the scope, jurisdiction and functions of National Faceless Assessment Centre through its Four Units, namely Assessment Unit (AU), Verification Unit (VU), Technical Unit (TU) and Review Unit (RU). The summary of substantial changes made in the substituted provisions of Section 144B of the Act are as under: i) The role of ReFAC has now been done away with ii) Concept of Draft Assessment Order to be served on assessee is done away with (except in the cases of eligible assessee covered u/s 144C(1)). However, the Assessment Unit (AU) shall prepare “Income or Loss Determination Proposal (ILDP)” and after considering the response to SCN, if any by the assessee, the AU shall prepare Draft Assessment Order and send it to the NFC iii) Every order and notice shall be signed and authenticated by the NFAC and the AO iv) Section 144B(9) has been omitted with retrospective effect from 01–04–2021 v) Personal hearing through Video Conferencing or Video Telephony at the request of the assessee made mandatory vi) The procedure of Review Unit (RU) has been changed vii) AU/VU/TU/RU is now defined as the Assessing Officer viii) The enabling provisions to refer the proceedings for Special Audit u/s 142(2A) have been inserted Significance of Standard Operating Procedure (SOP) Dtd. 03–08–2022 issued by National Faceless Assessment Center CA MITISH S. MODI

I. T. MIRROR (2023-24) Apart from the other changes or modifications made in the substituted provisions of Section 144B of the Act, one has to read the Clause (xi) of Sub Section (6) of Section 144B of the Act, which reads as under: (xi) the Principal Chief Commissioner or the Principal Director General, as the case may be, in-charge of the National Faceless Assessment Centre shall, with the prior approval of the Board, lay down the standards, procedures and processes for effective functioning of the National Faceless Assessment Centre and the units set up, in an automated and mechanised environment. After the newly substituted provisions of Section 144B of the Act, the NFAC came out with Standard Operating Procedure (SOP) for Assessment Unit (AU), Verification Unit (VU), Technical Unit (TU) and Review Unit (RU) under the Faceless Assessment under Section 144B of the Act, vide F.NO. NaFAC/Delhi/CIT-I/2022-23/112 /92 dtd. 03–08–2022. It is categorically stated that the said SOP is issued u/s 144B(6)(xi) of the Act for all the four units under the NFAC. NFAC has thus issued the separate SOP for all the four units functioning under it so as to provide guidance to the Units and outline the process for facilitating assessments as envisaged under the provisions of Section 144B of the Act. It is categorically stated that “these SOPs are strictly for departmental use only”. However, in my humble opinion, as provided under Clause (xi) of Sub Section (6) of Section 144B of the Act, the Pri.Chief CIT or the Pri.DGIT, as the case may be in-charge of NFAC is empowered to lay down such SOPs for effective functioning of the NFAC and the units set up, in an automated and mechanised environment. To be more precise, even though it is stated that the said SOPs are strictly for departmental use only, it is issued under the statutory provisions of Section 144B(6)(xi) of the Act and therefore, the taxpayers/assessees can refer during the Faceless Assessment / Reassessment proceedings. Needless to say, the said SOP is binding upon the Assessing Officer of AU/VU/TU/RU of NFAC, if any deviation or violation of the SOP on the part of the Assessing Officer of any unit, will certainly be termed as patently in contravention to the provisions of the law and such order is liable to be set aside. In my opinion, every tax consultant or tax professionals should study the said SOPs, more particularly, the SOPs for the following issues: i) The scope, powers and functioning of different units under NFAC ii) Initial questionnaire and process for issuance of notice u/s 142(1) and the analysis of information subsequent thereto. iii) Issue of SCN u/s 144 as per Section 144B(1)(ix) iv) Guidelines for the cases where the assessee is nonresponsive v) Reference to the Verification Unit or Technical Unit by the AU vi) Reference to VU where assessee seeks cross-examination of witness not having digital footprints vii) Reference to NFAC for Special Audit u/s 142(2A) viii) Personal hearing against SCN through Video Conferencing or Video Telephony ix) Preparation of Income or Loss Determination Proposal (ILDP) and Draft Assessment Order x) Passing of Final Assessment Order xi) About case history noting xii) Handling PAN marked as fraud PAN by ITBA xiii) Handling clarification sought by VU / TU For providing guidance to various Units, the said SOPs prescribe very important formats in annexure thereto. The annexure inter alia contains the format of SCN, ILDP and Final Assessment Order with the other formats. Any deviation made arbitrarily by the Assessing Officer from the formats given in this SOPs during the Faceless Assessment may render the assessment proceedings in violation of the principles of natural justice, without jurisdiction and bad in law, in view of the non obstante clause (notwithstanding anything to the contrary contained in any other provisions of this Act) in Section 144B of the Act. 26 27 GST on Liquidated Damages Paid under Contract - CA JAYKISHAN VIDHWANI INTRODUCTION At the time of formation of a contract, all the important stipulations and terms and conditions relating to the obligations to be undertaken by both parties are made part of it.One of the important considerations is to ensure that the contract is discharged through the performance of the contract i.e., fulfilment of the respective obligations by both the parties, which is also an essence of the contract. Due to this reason, the expectations of the parties are generally incorporated in the contract in the form of damages, mutually agreed upon between both the parties. Such damages, which are made part of the contract and may be awarded as a result of the breach of contract, or upon certain agreed terms and conditions to the aggrieved party are known as liquidated damages. For instance, forfeiting the earnest money deposit (EMD) of a bidder if he fails to act after winning the bid, or a stipulation in the contract stating a payment of 1% of the value of the contract per week till the delay continues, etc. The very idea behind awarding liquidated damages is to put the aggrieved party in the same position as it would have been if the breach of contract would not have occurred. During the COVID-19, it was noticed that many businesses could not fulfil their contractual obligations as a result of which claims for liquidated damages further arose in India, which either resulted in non-performance of the contract or delayed performance. This was a situation even before the COVID-19 pandemic. So, due to the increasing claims for liquidated damages, their taxability has remained a topic for debate among the legal scholars, judiciary, etc. under the service tax regime as well as under the goods and service tax regime (hereinafter referred to as 'GST') due to the very reason that there is no specific legislation or any specific mention of liquidated damages in any of the legislation governing taxation in India for governing their taxability. However, through various judicial pronouncements and precedents, different views have been given concerning their taxability, ie. if they could be considered as a consideration or supply on which service tax, or central goods and service tax could be impose respectively. MEANING OF LIQUIDATED DAMAGES Broadly, there are two types of damages, i. unliquidated damages, which are awarded as a result of a breach of a contract upon assessment by the courts and are not fixed beforehand, ii. liquidated damages, the amount which the parties designate during the formation of a contract. In simple words, liquidated damages would mean an amount that is payable by the party at default to the other party as per the terms of the contract in case of any breach and is a commonly found terminology used in business agreements and contracts. Such clauses are also made part of employment contracts. Since the term has nowhere been defined under the CGSTAct its meaning has to be drawn from other Acts in force and judgments delivered therein. The Concept of damages have been discussed elaborately under Indian Contract Act, 1872 (hereinafter referred to as 'the Contract Act'). Section 73 and Section 74 of the Contract Act, deal with liquidated damages and provide that the aggrieved party must be compensated for the loss suffered by it due to breach of contract upon proof of such a loss, or damage caused.

I. T. MIRROR (2023-24) The grant of these damages essentially serves two purposes. Firstly, it acts as a deterrent against non-performance of agreement and secondly, it acts as a compensation for the aggrieved party who has suffered a loss or damage due to non-performance. Therefore, for a sum payable to be liquidated damage, it must be a “genuine pre-estimate” of the probable damage likely to result due to breach of the contract. Having understood the meaning of liquidated damages, the following section shall cover the legal provisions applicable under the service tax as well the GST regime for assessing the taxability of liquidated damages. HISTORICAL PERSPECTIVE ON TAXES ON LIQUIDATED DAMAGES During the pre-GST regime, the taxability of liquidated damages was governed through the provisions of Chapter Vof the Finance Act, 1994. The said provisions defined the term "service" as an activity undertaken by a person for certain consideration for another person subject to certain exclusions like actionable claims transactions, etc. but shall contain declared service. There was no express provision under the Act, which deals with the taxability of liquidated damages. However, an agreement to "refrain from an act, tolerate an act or a situation, or to do an act" was also treated as a Service. Further, through the Service Tax Notification, it has been clarified that if any governmental or local authority provides service through tolerating non-performance of the contract, then any fine, or liquidated damage received by the authority shall not be subject to tax.!! With regard to the applicability of service tax on liquidated damages, department has recently issued Circular No. 214/1/2023-Service Tax dated 28.02.2023 which clarifies taxability of the consideration received for toleration of act. RELEVANT PROVISIONS UNDER GST REGIME Under the GST regime, the taxable event of "supply" is defined as any transfer, sale, licence, barter, disposal, exchange, or lease which is made in furtherance of business for consideration by one person to another and shall also include import of services, activities mentioned in Schedule I& Schedule II. Further, similar to erstwhile Service Tax provisions, CGST Act, clearly provides that supply of services shall constitute an activityThe said provision is extracted below for ease of reference - "(e) agreeing to the obligation to refrain from an act, or to tolerate an act or situation, or to do an act". Moreover, Central Tax Notification exempts the governmental and local authorities (Centre, State, Local) from paying tax on fine or liquidated damages received by them for tolerating an act which also seems to be drawn from the service tax regime. As noted earlier, there is no direct mention of liquidated damages under the CGST Act. Accordingly, the taxability of the liquidated damages under CGSTAct remains a grey area. It is also important to note that activities contained in Schedule I are not ipso facto considered as supply. Section 7(1) of the CGSTAct was amended to insert Section 7(1A), which mandates that activities under Schedule II must constitute a supply under Section 7(1) of the CGSTAct. EXISTING DISPUTES IN RELATION TO LIQUIDATED DAMAGES UNDER GST The taxability of liquidated damages has remained a disputed question even under GST regime and a topic for debate among the Indian Judiciary as well. In the landmark case of Maharashtra State Power Generation Company Ltd(2018-VIL-33-AAR), the Hon'ble Authority for Advance Ruling, Maharashtra ruled in the favour of the revenue department and held that liquidated damages shall be subject to a tax rate of 18% as it can be seen as a consideration for tolerating the act of non-performance of the contractual obligation under Schedule Il of Section 7(1)(d) of CGST Act, 2017, The said Ruling was later affirmed by the Hon'ble Appellate Authority for Advance Ruling. Similar view is taken by a number of other Advance Ruling Authority. However, the Hon'ble Bombay High Court gave an opposing judgment in the case of BAI MAMUBAI TRUST VS SUCHITRA WD/O. SADHU KORAGA SHETTY (2019-VIL-454-BOM) Wherein a dispute between landlord and an occupant of the premises arose which resulted in the appointment of a Court Receiver by the 28 I. T. MIRROR (2023-24) Hon'ble High Court, and it was held that any compensation or damages paid for any legal injury shall not be subject to GST as the court believed that the reciprocity quality embedded in 'supply' under the CGSTAct could not be discovered in such payment. The Court declared that in circumstances of violation of a legal right, and the compensation paid to make right for such violation of a legal right would not constitute a 'supply' under Section 7 of the CGST Act.Such payment made in the nature of damages and the doctrine of 'supply did not encompass wrongful unilateral acts that resulted in the payment of damages. This decision was pronounced after the 2018 amendment to Section 7 of the CGST Act and the Hon'ble High Court highlighted in the judgment that as per section 7(1A) of CGSTAct, 2017, no activity under Schedule. I shall be considered a supply if it does not meet the requirements as stated under section 7(1). Recent judgments delivered under the Service Tax Regime like Steel Authority of India Limited are also in line with the Bombay High Court's judgment. This implies that if the required elements of supply as per Section 7(1) of CGSTAct, 2017 could not be established, then such damages cannot be taxed under GST and this principle shall help to determine whether the liquidated damages shall be taxable or not wherein the 'supply' is unclear for a quite long period of time. Having said that, the issues relating to taxability of Liquidated damages remain a contentious issue and a number of such disputes are pending before the Court. CONCLUDING REMARKS It can be concluded that liquidated damages are those which are pre-assessed and pre-agreed between the parties to the contract and a clause with respect to the same has already been made part of the contract. Such damages are awarded to ensure that both the parties perform their part of the contract and in case of any default, the aggrieved party is put in the same position if the default would not have occurred. There are various laws, both under the service tax regime as well as the GST regime, which govern the taxability of liquidated damages in India. However, there is no express provision relating to taxability of liquidated damages under either of the regime which has always made the taxability of liquidated damages a topic of debate. Further, there is a genuine case that such liquidated damage must be not taxed under the GSTregime as they are merely a payment made by the party at default to the aggrieved party and does not involve any reciprocity, which is a must for any transaction to be considered as a supply. Also, establishing test of supply as stated under section 7 shall become difficult as payment of liquidated damages can only be considered as fulfilment of a condition stated in the contract and not a consideration for tolerating the act, or forbearance of the party at default. Similarly, recovery of notice pay from the employee by the employer as per the terms of the employment contract who did not serve the notice period must be subject to neither service tax, nor central goods and service tax as the employee has merely acted as per the terms of the contract due to which an issue with respect to tolerating or forbearing the act of the employee does not come into picture. Further, according to the understanding based on the above-mentioned discussion. The employee's resignation is not dependent upon any acknowledgement or endorsement and thus, an employee can freely tender his resignation and pay the amount of notice period compensation to leave his current job. Subsequently, there is no existence of any passive role of the employee nor an activity on his part. Therefore, there is a need for government to lay focus on this area. So, in order to bring legislative clarity to the taxability issue revolving around liquidated damages, be it under an employment contract in the form of notice pay recovery, or under any other contract, the GSTCouncil must step forward and bring an appropriate amendment to the CGSTAct. 2017 so as to include an express provision dealing with the taxability of the liquidated damages. 29

Implication of Notification No. S.O. 2036(E) Dated 03.05.2023 on Practicing Chartered Accountants, Company Secretaries and Cost Accountants -ADV. (CA.) MOHIT R. BALANI The term money-laundering finds its initial definition in article 3.1(b)(i)(ii) and 3.1(c)(i) of the Vienna Convention. Building upon the definition contained in the Vienna Convention and the Palermo Convention, the FATF and its member countries have expanded the offences to include serious crimes. Prevention of Money Laundering Act, 2002 (hereinafter referred to as PMLA) is an Act enacted in 2005 to prevent money-laundering and to provide for confiscation of property derived from money-laundering. It may also be noted that under PMLA, the offences of money-laundering has to be read in terms of section 3, which relates to “proceeds of crime” which has been defined in section 2(1)(u) which inter alia means “any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence”. The scheduled offence for the purpose of the Act has been stated in Part Aand C to Schedule of the PMLA. Under the provisions of PMLA, reporting entities have been casted special responsibilities, which helps the Authorities to enforce the law. The term “Reporting Entities” has been defined in S.2(wa) of the Act, which reads as under: (wa) “reporting entity” means a banking company, financial institution, intermediary or a person carrying on a designated business or profession; The said definition was inserted w.e.f 15.02.2013 and it had a reference to the “persons carrying out designated business orprofession”. Definition of the said term was also inserted w.e.f 15.02.2013 in clause (sa) to section 2, which reads as under : (sa) “person carrying on designated business or profession” means, — (i) (ii) (iii) (iv) (v) XXX; (vi) person carrying on such other activities as the Central Government may, by notification, so designate, from time to time; Upon reading sub clause (vi) to clause (sa) to section 2, it can be seen that the parliament empowered the central government to notify person carrying on such other activities to be a reporting entity. In exercise of the said power, the Ministry of Finance vide notification no. S.O. 2036(E) dated 03.05.2023 has included the following professionals (hereinafter referred to as the “notified professionals”) within the ambit of reporting entity : (i) An individual who obtained a certificate of practice under section 6 of the Chartered Accountants Act, 1949 (38 of 1949) and practicing individually or through a firm, in whatever manner it has been constituted; (ii) an individual who obtained a certificate of practice under section 6 of the Company Secretaries Act, 1980 (56 of 1980) and practicing individually or through a firm, in whatever manner it has been constituted; (iii) an individual who has obtained a certificate of practice under section 6 of the Cost and Works Accountants Act, 1959 (23 of 1959) and practicing individually or through a firm, in whatever manner it has been constituted. However, it shall be noted that the above professional are covered under the purview of reporting entity, only if they carry out the following financial transaction on behalf of their client, that too in the course of their profession, the details of which are as under: (i) Buying and Selling of any immovable property; (ii) Managing of client money, securities or other assets; 30 I. T. MIRROR (2023-24) (iii) Management of bank, savings or securities accounts; (iv) Organisation of contributions for the creation, operation or management of companies; (v) Creation, Operation or Management of Companies, Limited Liability Partnerships or Trusts, and Buying and Selling of Business Entities. Thus the notified professionals, carrying out any or all of the above said five activities shall now be covered under the definition of reporting entities. Moreover PMLAfurther defines the term client in subclause (ha) to sub-section 1 to section 2, which reads as under: (ha) “client” means a person who is engaged in a financial transaction or activity with a reporting entity and includes a person on whose behalf the person who engaged in the transaction or activity, is acting; Thus the client means the person, who is engaged in a financial transaction with a reporting entity and it includes such other person on whose behalf the first person is acting. Let us now, understand the provisions that get attracted because of the notification and as to how such inclusion casts responsibilities on such notified professionals: 1. Section 11 A :Verification of Identity by Reporting Entity : Every Reporting Entity shall verify the identity of its clients and the beneficial owner, by offline verification under the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016 (18 of 2016); or use of passport issued under section 4 of the Passports Act, 1967 (15 of 1967); or use of any other officially valid document or modes of identification as may be notified by the Central Government in this behalf. Clause (4) to Section 11A, further provides that the reporting entity shall not store the core biometric information or Aadhaar number of his client or the beneficial owner. 2. Section 12 - Reporting entity to maintain records : Every reporting entity must record all transactions and maintain all records pertaining to the transactions, as well as identity records of its clients and its beneficial owners, including any specific information relating to such transactions as may be prescribed under Section12(2) of the PMLA. 3. Maintenance of Records : Section 12 provides that the reporting entity must maintain record of transaction for a period of five years from the date of transaction. Whereas identity records must be maintained for a period of 5 years after the business relationship between a client and the reporting entity has ended or the account has been closed, whichever is later. 4. 12AA. Enhanced due diligence : Every reporting entity shall do the following before the commencement of each specified transaction : • Verification of identity of the clients by authentication under the Aadhar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016 • Take additional steps to examine the ownership and financial position including sources of funds of the client • Take additional steps to record the purpose behind conducting the specified transaction and the intended nature of relationship between the transacting parties • When the client fails to fulfil the above conditions, the reporting entity should not allow the specified transaction to be carried out • Abovesaid information is to be maintained for a period of five years from the date of transaction between a client and the reporting entity In this connection, the term “specified transaction” means a) any withdrawal or deposit of cash, exceeding such amount b) any transaction in foreign exchange, exceeding such amount 31

I. T. MIRROR (2023-24) c) any transaction in any high-value imports or remittances d) such other transaction or class of transactions, in the interest of revenue or where there is a high risk of money laundering or terrorist financing as may be prescribed. Note :Please note that the scope in my opinion shall be limited to the transaction between the notified professionals and its clients. The above provisions lays down the scope of responsibilities that the PMLA casts upon the reporting entity. Exercising the powers under the PMLA, the government has notified rules, with regards to the maintenance of records namely “PMLA Maintenance of Records Rules, 2005” which apply to the banking company, financial institutions and the intermediaries. As the same does not apply to the persons engaged in the specified professionals or to the businesses, the said rules do not apply to the notified professionals. It shall be further pertinent to note that it is highly probable that the government may notify rules, governing the maintenance of records for a notified professional or it may include the notified professionals within the scope of already framed rules. Having gone through the responsibilities, it shall now be germane as to how the authorities can call for such details from the notified professionals as well as the implication of any failure to fulfil the responsibilities casted upon the notified professionals. S. 12 of the PMLAempowers a Director (and not any other authority) to call for information as referred to S.11A, 12(1) and S.12AA(1) and any additional information as the director may deem fit, which shall be necessary for the purpose of the Act. The reporting entity must provide such information within such time and manner as the director may specify in its notice u/s 12Aof the PMLA. S.12A(3) further provides that every information called for by the Director under S.12A shall be confidential and S.14 of the PMLA, protects the reporting entity from any civil or criminal liability for furnishing the information to the Director. Power of Director to Impose Fine : Section 13 of the PMLA deals with the powers of Director to impose fine under PMLA wherein an inquiry regarding the obligations of the reporting entity can be carried out suo moto by the Director or after receiving an application from any person, officer or authority requesting to conduct the same. Section 13 further provides that if the director during any inquiry, discovers the failure of reporting entity or its designated director (not applicable for notified professional) or any of its employees with regards to the compliance with the obligatons, he may take the following actions : • Issuance of warning in writing or • Direct the reporting entity or its employees or designated director to comply with specific instructions or • Direct the reporting entity or designated director or employee(s) of the reporting entity to provide reports in the prescribed intervals • Pass an order imposing Fine on the reporting entity or designated director or any employee(s), which shall not be less than Rs.10,000/- but may extend to Rs.1,00,000/- for each failure. 5. Section 13 further provides that if the director during any inquiry or any other proceedings, may direct audit of records maintained by the reporting entity, if he is of the opinion that it is necessary to do so having regard to the nature and complexity of the case. 32 MS Excel in Day-To-Day Practice: Few Functions to make your work easy - CA SHRIDHAR SHAH MS Excel is one of the most used software in the offices of tax professionals. It is such a powerful tool that if we can explore even a small part of it and implement it in daily work and train staff about it, it can reduce the work to a great extent. Right formula or combination of formulas at the right place, and eureka! You have just saved so many hours in the future. With ever increasing requirements of data analysis and matching in our day-to-day life, having a little bit of understanding of excel can help a lot. I have tried to cover a few formulas and excel tips (which you may be knowing or already using) which can reduce your workload. Note: This article contains the tabs / path as per MS Excel version used in Office 365 and it might be a bit different in different versions of MS Excel being used by you. 1. PIVOT TABLE We all use the pivot table, and it is almost a known tool for everyone. However, for starters, Pivot table is a tool to summarize data from a table, which can be used for multiple tasks. Practical example: if you want to find out total purchase amount, GST value, quantity purchased etc. from a specific party, you can fetch the same in a few seconds by using pivot table. This register is kind of a standard report as we generate from our accounting software. to make pivot table: Insert > PivotTable > New or Existing Worksheet > OK Arrange fields in various areas by drag & drop. These areas are self-explanatory: 1. Filters: Here you put the data which you want to apply to any type of filter. (e.g., in GSTR 2B file generated online, if you wish to filter the RCM Yes only, put that header in this filter) 2. Columns: It is the header of the data in the values part. (e.g., In our case, it is saying “Sum of” i.e., we have chosen to make a sum of the values in the selected column.) 3. Rows: Here we drop the headers for which we require a report. (e.g., In our case, we wanted GSTIN wise Party Name wise data, so we selected those two column headers) 4. Values: This field provides flexibility of what you want to derive. Various calculations like sum, count, average can be done here. By selecting the dropdown arrow in each field, the same can be selected as per need. 33

I. T. MIRROR (2023-24) From PivotTable ribbon, select Design > Report Layout > Show in TabularForm Select Subtotals > Do Not Show Subtotals & you get the precise report You get this Pivot Table Generate a similar GSTIN wise report from 2B file downloaded from portal and compare side by side or using lookup function. Practical use cases: Though there are so many practical use cases, few of them relevant for tax professionals are – - GSTIN wise ITC reconciliation (compare two pivots side by side or lookup), - TDS of a specific TAN from 26AS (total TDS under a section by a deductor), - total of TDS payable under a section from TDS excel working (to make challan) etc. - Putting a calculated field in the table which can give sum, multiplication etc. of two or more cells in the original table. Another user advantage of pivot table is extracting lines pertaining to specific subject, e.g., for a purchase register pivot as shown above, double click on the name of party in pivot table will give a new sheet with a table containing all the line items related to that party in the specific column. Also, in the PivotTable ribbon, try to explore various functions and you will be amazed to see the capacity of such an amazing tool. 34 I. T. MIRROR (2023-24) 2. PASTE SPECIAL Acell in excel sheet has multiple properties like font size, font type, font colour, cell colour, formula, merge, wrap, borders, references, comments etc. When we copy (Ctrl + C) a cell and paste (Ctrl + V) it somewhere else, it carries all the properties together and this creates issues when you paste the data as it is. The normally faced issues are - - Formatting related issues (different fonts, cell colours, uneven borders etc.) - Formula getting copied and giving incorrect results. - Error in cells. - Increased file size. - At times not getting desired results. To avoid such things, excel provides a “paste special” (Ctrl + Alt + V) which is an excellent tool. Paste special ensures that you carry and paste only those properties of the cell which you intend to. Also, it provides some added functionality too. When you copy a cell or set of cells, and choose to paste special, this dialogue box opens. 1. In the Paste part, one can choose the desired paste properties. (e.g., selection of Values will paste only value from a cell and not any other property. So, for a cell containing sum of multiple cell values, paste special will give actual figure and not sum formula in the cell where paste special is done as value) 2. In the Operation part, one can do addition, subtractions, multiplication & division of multiple cell values without using any formula. 3. Skip blanks will skip the blank cells. 4. Transpose can convert rows of a table into columns and columns of the table in rows. Practical Example: When we export columnar data from tally, there are few fields which are having negative value. e.g., TDS in Sales Register. Now with paste special, we can convert it into positive values in a moment. 35

I. T. MIRROR (2023-24) Just write “-1” in any cell, copy it (Ctrl + C), select entire TDS column with values and select paste special (Ctrl + Alt + V) and select “Multiply” button in operations & “Value” button in Paste and press OK. And see the result! Practical use cases: - The main use, carry only those cell properties which are needed. - Transpose table where readymade data (e.g., report from a software) available in tabular format where we need to convert the rows in headers. - As shown in example above, convert negative values into positive values or same way converting a normal amount to amount in lakhs or thousands by just writing 100000 or 1000 in a cell and select divide while performing paste special. 3. THREE USEFUL FUNCTIONS 3.1. TEXT The Excel TEXTfunction returns a number in a given number format, as text. This function has multiple uses, and one should understand the syntax (how formula is written) for the same. The syntax for using TEXTfunction is =TEXT(value, format_text) One of the practical uses of this function is while importing dates to software through excel templates, the issue arises with dates. Most of them need date in specific type like “dd/mm/yyyy” or “dd-mmm-yyyy”. Adate can be easily converted to this format from any format using TEXTfunction. 36 I. T. MIRROR (2023-24) 3.2. ABS The Excel ABS function returns the absolute value of a number. ABS converts negative numbers to positive numbers, and positive numbers are unaffected. The syntax for using TEXTfunction is=ABS(number) One of the practical uses of this function is for calculation of turnover of Derivatives, Future & Options transactions for Income Tax purpose. As per guidelines, first point is –“The total of favorable and unfavorable differences shall be taken as turnover.” Now, from a broker statement, this can be easily done using ABS function. 3.3. COUNTIFS The Excel COUNTIFS function returns the count of cells that meet one or more criteria. The syntax for using COUNTIFS function is =COUNTIFS(range1, criteria1, [range2], [criteria2], ...) This function can give output as count of the rows fulfilling one or more conditions. One of the practical uses of this function is for finding a duplicate or multiple times occurring value from a table, which can be used to check duplicate mobile numbers, e-mail addresses, PAN numbers etc. from a set of data. Filtering any value other than one is multiple time occurring data. The count suggests the number of time same data is repeated. 37

Corporate Frauds and Forensic: Safeguarding Against Financial Misconduct - CA SAMIR CHAUDHARY Introduction: Fraud is a worldwide problem and a prime issue of concern. It has spread all over the world and has affected all types of organizations irrespective of their size, portability or industry. Corporate fraud can be a fraudulent offence either conducted by a company or committed against a company.Acorporation can conduct fraud through various means to protect itself against audits and to enhance its reputation in the industry. Alternatively, a corporation can fall victim to the fraudulent activity of its employees in the form of asset misappropriation, corruption and financial statement frauds. In recent years, corporate fraud has become a major concern for businesses, governments, and the public at large. These fraudulent activities not only undermine the integrity of financial systems but also lead to significant financial losses, erode investor confidence, and tarnish the reputation of organizations. In the last two decades, we have faced a huge amount of fraud which shook the world and which has brought the concept of Forensic Accounting into today's arena. In this article, we will explore the growing importance of forensic techniques in preventing and detecting corporate fraud. UNDERSTANDING CORPORATE FRAUDS: Corporate fraud has increased in recent years due to the expanding size of corporations and the increased opportunities which allow corporations to push the boundaries. It encompasses a wide range of illicit activities committed within organizations. They can involve manipulation of financial statements, insider trading, embezzlement, bribery, kickbacks, money laundering, and various other forms of financial misconduct. There are several types of corporate fraud which can be committed by various means. However, the most common types amongst them are: Financial Fraud Financial fraud happens when someone deprives you of your money, or capital, or otherwise harms your financial health through deceptive, misleading, or other illegal practices. This can be done through a variety of methods such as identity theft or investment fraud. Misappropriation of Assets Asset misappropriation refers to the fraudulent or unauthorized use or theft of an organization's assets by an individual or a group of individuals. It can be done through various ways: Cash Theft Happens where cash that is kept in a secure place, such as a bank vault. Employees who have access to this stored cash have the ability to misappropriate or steal these funds. such as stealing from cash registers, manipulating accounting records to conceal theft, or diverting customer payments for personal use. FRAUDULENT DISBURSEMENT An employee makes a distribution of company funds for a dishonest purpose. Examples of fraudulent disbursements includes forging company cheques, submission of false invoices, altering timecards, and so forth. Inventory Theft Asset misappropriation in inventory involves stealing or diverting company products for personal use or 38 39 I. T. MIRROR (2023-24) unauthorized sale. This can be done by physically acquiring items, manipulating inventory records to hide theft, or redirecting inventory to unauthorized locations. These actions result in financial losses for the organization and requires effective controls to prevent and detect such fraud. Employee Fraud When any employee does any misleading or any dishonest activity for their own personal gains. Employee fraud can involve activities such as theft, embezzlement, manipulation of records, false expense claims, or unauthorized use of company resources. Preventing and detecting employee fraud requires strong internal controls, regular monitoring, and a culture of ethical behavior within the organization. VendorFraud Vendor fraud is when a vendor or supplier deceives an organization to gain financial benefits or advantages through fraudulent means. This includes overcharging for goods or services, providing fake invoices, or even stealing from the organization. Essentially, it is a type of fraud where a vendor or supplier takes advantage of their relationship with an organization to commit fraudulent acts. CustomerFraud Customer fraud refers to a range of deceptive practices related to buying and selling of goods and services. This can include false advertising, overcharging for products or services, and concealing fees. It can also occur when a company pressurizes a customer to agree to unfair terms or sells a product that is not safe. Essentially, customer fraud involves any type of misleading or dishonest behavior by a company or seller that harms the customer. Investment Scams Ascam where fraudulent schemes deceive investors into investing in fake or nonexistent investments, or ones that are at risk and less profitable than advertised. These scams often promise high returns with little or no risk and use tactics such as putting pressure to invest quickly and promises of exclusivity to lure in victims. Examples of investment scams include Ponzi schemes, Advance fee fraud, and Binary options fraud. THE ROLE OF FORENSIC TECHNIQUES: Forensic accounting and investigation techniques are used to uncover financial fraud and misconduct within an organization. These techniques involve analyzing financial records, identifying irregularities or inconsistencies, and tracing the flow of money to uncover any fraudulent activity. By using forensic accounting and investigation techniques, organizations can identify and prevent corporate fraud before it causes significant financial harm. This can help to protect the organization's reputation, financial stability, and interests of the stakeholders. Forensic accounting and investigation techniques are essential tools for any organization looking to prevent and detect corporate fraud. PREVENTING CORPORATE FRAUDS: Preventing corporate fraud is essential to protect an organization's financial stability and reputation. To prevent corporate fraud, organizations should implement strong rules and regulations: 1. Implementing Effective Internal Controls: It is critical for preventing corporate fraud. Internal controls should be designed to segregate duties, regular audit conducted both internally and externally, and independently review financial records. Organizations must establish a robust control environment that encourages ethical behaviour and transparency. This includes creating policies and procedures that ensure compliance with legal and regulatory requirements, and implementing monitoring and reporting mechanisms to detect and prevent fraudulent activity. By establishing a strong control environment, companies can reduce the risk of fraud and protect their financial stability and reputation. 2. Conducting Risk Assessments: It is crucial for organizations to identify vulnerabilities and potential fraud risks. Comprehensive risk assessments enable companies to develop targeted strategies and implement preventive measures to mitigate the identified risks. By identifying and addressing potential fraud risks, organizations can reduce their exposure to financial losses and reputational damage.

I. T. MIRROR (2023-24) 3. Employee Training and Awareness: Educating employees about the risks of corporate fraud and the importance of ethical conduct is essential. Training programs should focus on promoting a culture of integrity, emphasizing the consequences of fraudulent activities, and encouraging whistleblowing. 4. Whistleblower Hotlines: Establishing whistleblower hotlines is an effective way to encourage employees to report suspicions of fraud without fear of retaliation. By providing confidential and anonymous reporting mechanisms, employees feel safe to report any fraudulent activities within the organization. These channels play a critical role in detecting and preventing fraudulent activities by allowing organizations to identify and address any issues before they escalate. DETECTING CORPORATE FRAUDS: Detecting corporate fraud is crucial to preventing it from happening and mitigating its impact. Here are some ways to detect corporate fraud: 1. Data Analytics and Monitoring: Advanced data analytics tools can be employed to identify unusual patterns or anomalies in financial data. By continuously monitoring financial transactions, organizations can detect potential red flags and initiate timely investigations. 2. Forensic Audits: Conducting forensic audits on a regular basis can help uncover hidden financial irregularities and fraudulent activities. Forensic auditors employ specialized techniques to analyze financial records, identify fraudulent transactions, and provide expert opinions in legal proceedings. 3. Digital Forensics: With the increasing digitization of business operations, digital forensics has become crucial in detecting and investigating corporate frauds. Forensic experts analyze digital evidence, including emails, electronic documents, and computer logs, to reconstruct events and establish a trail of fraudulent activities. 4. Independent reviews: Conducting independent reviews of financial records and transactions can help identify fraudulent activities and provide an objective evaluation of the organization's financial health. CONCLUSION: Corporate fraud is a persistent and costly issue that continues to plague organizations worldwide. Despite efforts to combat fraud, a significant proportion of fraud cases go undetected, resulting in significant financial losses and reputational damage. To address this challenge, organizations must establish a robust control environment that includes regular risk assessments, internal audits, and independent reviews of financial records. Furthermore, companies must establish confidential and anonymous reporting mechanisms, such as whistleblower hotlines, to encourage employees to report suspicions of fraud without fear of retaliation. By implementing these and other detection methods, organizations can reduce their risk of falling victim to corporate fraud and protect their financial stability and reputation. It is critical for organizations to take a proactive approach to detecting and preventing corporate fraud and foster a culture of transparency and accountability within the organization. 40 41 Social Stock Exchange: A New Era of Practice - CS CHINTAN BHATT INTRODUCTION: In the rapidly growing Indian market, where investments in securities are on the rise, the credibility of stock exchanges is gaining significant traction among the people. Stock exchanges are no longer considered a taboo subject. With continuous changes in disclosure requirements and regulations by the Securities Market Regulator, the Securities and Exchange Board of India (SEBI), stock exchanges have become safer for investors than ever before. This has led to an increase in investor confidence in the economy and private players. The role played by stock exchanges in this journey cannot be ignored, as more and more companies are getting listed on the exchanges to raise finance and gain flexibility, showcasing their success story. While funding requirements are essential for sustaining any organization, whether it is for-profit or not-for-profit, the avenues for raising funds differ significantly. For-profit organizations like companies can access stock exchanges to raise funds from the public, but not-for-profit organizations such as NGOs, trusts, and Section 8 companies lack such options. To provide not-for-profit organizations with an additional and transparent means of raising donations, the Indian government proposed the establishment of a Social Stock Exchange. During the presentation of the Union Budget 2019-20, the Hon'ble Finance Minister rightly emphasized the need to bring capital markets closer to the masses and meet social welfare objectives related to inclusive growth and financial inclusion. The proposal aimed to initiate steps towards creating an electronic fundraising platform—a social stock exchange—under the regulatory ambit of SEBI. This platform would allow social enterprises and voluntary organizations working towards social welfare objectives to raise capital through equity, debt, or units similar to a mutual fund. In this article, we delve into the concept of a social stock exchange and explore the available information to the best of our knowledge and resources. The compilation of this information aims to benefit all stakeholders interested in understanding and leveraging the potential of a social stock exchange. By bridging the gap between capital markets and social welfare objectives, the social stock exchange holds promise for driving inclusive growth and empowering organizations focused on making a positive social impact. WHAT IS SOCIAL STOCK EXCHANGE? The concept of a Social Stock Exchange (SSE) entails the establishment of a dedicated segment within an existing stock exchange, such as the BSE or NSE in India. Similar to the cash market or derivative market, the SSE serves as a platform that enables both not-for-profit and for-profit social enterprises to raise funds from the public using the mechanisms of the stock exchange. The SSE acts as an intermediary between social enterprises, which include organizations such as NGOs, trusts, and Section 8 companies, and fund providers, including donors and investors. Its primary function is to facilitate the selection of entities that are creating a positive social impact in society by providing them with opportunities to connect with potential fund providers. By operating within the framework of a stock exchange, the SSE introduces transparency, accountability, and standardization to the process of funding social enterprises. It allows fund providers to make informed decisions about which organizations align with their social objectives and enables them to contribute to meaningful social change.

I. T. MIRROR (2023-24) In summary, a SSE serves as a dedicated platform that brings together social enterprises and fund providers, providing a regulated and transparent mechanism for raising funds and supporting organizations that generate positive social impact. How Social Stock Exchange will be beneficial forFund providers and Social Enterprises? The establishment of a SSE offers several benefits for both fund providers and social enterprises. Let's explore how these stakeholders can leverage the SSE to their advantage. For fund providers, the SSE provides a unique opportunity to contribute to social causes and make a positive impact. By accessing the SSE, fund providers gain access to a curated pool of social enterprises that have undergone rigorous evaluation based on their measurable social impact. This enables fund providers to align their investments with their social objectives and support organizations that are creating tangible social change. Furthermore, the SSE introduces reporting standards specifically designed to measure and track the social impact of listed entities. These reporting standards ensure transparency and accountability, enabling fund providers to evaluate the effectiveness of the social enterprises they support. This empowers fund providers to make informed investment decisions and monitor the progress of their investments in terms of the intended social outcomes. On the other hand, social enterprises also benefit from the presence of a dedicated SSE. The SSE offers them a platform to access a broader investor base, which includes both traditional investors and impact-focused fund providers. By listing on the SSE, social enterprises can gain visibility and attract investment from individuals and organizations specifically interested in supporting initiatives that drive social change. The SSE also helps social enterprises enhance their credibility and reputation. The rigorous evaluation processes and reporting standards imposed by the SSE demonstrate their commitment to transparency, impact measurement, and accountability. This can build trust among fund providers and enhance the overall perception of the social enterprise. Additionally, the SSE facilitates networking and collaboration among social enterprises, allowing them to share best practices, learn from each other's experiences, and form partnerships. This fosters an ecosystem of support and collaboration, contributing to the growth and sustainability of social enterprises. In summary, the SSE benefits fund providers by providing a curated selection of social enterprises and robust reporting standards for measuring social impact. For social enterprises, the SSE offers access to a wider investor base, increased credibility, and opportunities for collaboration. Overall, the SSE acts as a catalyst for bridging the gap between fund providers and social enterprises, driving positive social change and fostering sustainable development. REPORTING STANDARDS: i. Section 1- Strategic Intent and Goal Setting (Identification of Social Problem) (a) The social problem to be solved: (b) The target segment to be served: (c) The approach to solve the problem ii. Section 2- Social Impact Scorecard (Measurement of Impact) (a) Extent of target segment served (b) Intensity of impact on median individual (c) Dimensions of income, social equity and diversity iii. Section 3- General information (Details of Enterprise) (a) Members of governing body (b) Demonstration of prior funding history (c) Financials, Registrations or licenses 42 43 I. T. MIRROR (2023-24) REGULATED BY SEBI: The functioning of entities registered on the SSE is regulated by the SEBI. Just like listed companies, these entities are required to comply with the disclosure requirements outlined by SEBI regulations. SEBI exercises its authority over the SSE to ensure compliance with the provisions and guidelines. In the event of non-compliance, SEBI possesses the power to initiate enforcement actions. These actions can range from issuing administrative warnings to imposing penalties under Chapter VIAof the SEBI Act, which deals with manipulative and deceptive devices, insider trading, and substantial acquisition of securities or control. Additionally, SEBI has the authority to take action under Section 11 of the SEBI Act. This section grants SEBI the power to impose penalties and even debar entities from participating in the securities market. These measures demonstrate the control and oversight that SEBI exercises over the functioning of entities registered on the SSE. SEBI's regulatory role ensures that the operations of social enterprises on the SSE adhere to the prescribed guidelines, promoting transparency, accountability, and investor protection. By subjecting the entities on the SSE to SEBI regulations, the SSE establishes a robust framework for governance and regulatory compliance. This framework helps foster investor confidence, ensures fair practices, and strengthens the credibility of social enterprises operating within the SSE ecosystem. SOCIAL AUDIT: Social Audit is a process that involves evaluating the social impact of projects or programs undertaken by Social Enterprises through an independent assessment conducted by a certified professional known as a Social Auditor. The Social Auditor is an individual who is registered with a self-regulatory organization under the Institute of Chartered Accountants of India, or any other agency specified by SEBI. To qualify as a Social Auditor, one must successfully complete a certification program administered by the National Institute of Securities Market and hold a valid certificate. The purpose of a Social Audit is to ensure transparency, accountability, and credibility in assessing the social performance of Social Enterprises. It involves a comprehensive examination of the project/program's execution, impact on stakeholders, and adherence to social objectives. By employing standardized methodologies and ethical practices, Social Auditors provide an impartial evaluation of the social outcomes achieved by the Social Enterprise. Social Audit plays a vital role in evaluating and verifying the social impact of projects or programs implemented by Social Enterprises. Through the involvement of certified Social Auditors, this process guarantees transparency, accountability, and credibility, fostering greater trust in the social sector and facilitating the achievement of sustainable social outcomes. ACCOUNTABILITY BY SOCIAL ENTERPRISE: The establishment of the SSE represents a significant step towards promoting accountability in the philanthropic sector. By monitoring the performance of Social Enterprises and facilitating transparency, this platform not only enhances stakeholder confidence but also cultivates a culture of accountability in philanthropy.Through continuous monitoring, evaluation, and learning, Social Enterprises can strive for greater social impact and contribute to building a more just and equitable society. • Who can invest in Securities issued by Social Enterprise? Institutional, non-institutional and Retail investors can Invest. But Retail investors are permitted to invest only in securities offered by For-profit social enterprise under the Main Board. In all other cases, only institutional investors and non-institutional investors can invest. As per SEBI (Issue of capital and disclosure requirements) Regulations, 2018, a retail individual investor is one who applies or bids for specified securities for a value of not more than two lakhs rupees (< 200000) and non-institutional investor is separately defined as an investor other than a retail individual investor and qualified institutional buyer.

I. T. MIRROR (2023-24) Further Foreign Investors like Foreign Institutional Investors, Foreign Portfolio Investors or NRI investors are currently not allowed to invest through the Social Stock Exchange. • Which Enterprises can be registered as Social Enterprises? Important question is who can be registered as Social Enterprise. There is following eligibility criteria specified to be registered on Social Stock Exchange: 01. Enterprises that are engaging in the activity of creating positive social impact i. Not for Profit Organisation · Charitable trust registered under the public trust statute of the relevant state; · Charitable society registered under the Societies Registration Act, 1860 (21 of 1860); · Company incorporated under section 8 of the Companies Act, 2013 (18 of 2013); · Any other entity as may be specified by SEBI; ii. For Profit social enterprise · A company under the Companies Act, 2013, operating for profit and does not include a company incorporated under section 8 of the Companies Act, 2013 (18 of 2013); · Body corporate operating for profit 02. Social intent: Enterprise should have a social intent to get registered as Social Enterprise. To establish Social Intent of Social Enterprise, enterprise should indulge in to following activities: (i) Eradicating hunger, poverty, malnutrition and inequality; (ii) Promoting health care including mental healthcare, sanitation and making available safe drinking water; (iii) Promoting education, employability and livelihoods; (iv) Promoting gender equality, empowerment of women and LGBTQIA+ communities; (v) Ensuring environmental sustainability, addressing climate change including mitigation and adaptation, forest and wildlife conservation; (vi) Protection of national heritage, art and culture; (vii) Training to promote rural sports, nationally recognised sports, Paralympic sports and Olympic sports; (viii) Supporting incubators of Social Enterprises; (ix) Supporting other platforms that strengthen the non-profit ecosystem in fundraising and capacity building; (x) Promoting livelihoods for rural and urban poor including enhancing income of small and marginal farmers and workers in the non-farm sector; (xi) Slum area development, affordable housing and other interventions to build sustainable and resilient cities; (xii) Disaster management, including relief, rehabilitation and reconstruction activities; (xiii) Promotion of financial inclusion; (xiv) Facilitating access to land and property assets for disadvantaged communities; 44 45 I. T. MIRROR (2023-24) (xv) Bridging the digital divide in internet and mobile phone access, addressing issues of misinformation and data protection; (xvi) Promoting welfare of migrants and displaced persons; (xvii) Any other area as identified by the Board or Government of India from time to time 03. Income/ Expenditure in Service: Enterprise should target underserved or less privileged populations and At least 67% of its revenue of the immediately preceding 3-year average of revenues comes from providing eligible activities to members of the target population. or at least 67% of the immediately preceding 3-year average of expenditure has been incurred for providing eligible activities to members of the target population. or members of the target population to whom the eligible activities have been provided constitute at least 67% of the immediately preceding 3-year average of the total customer base and/or total number of beneficiaries. • Who cannot be registered as Social Enterprise? There are certain organisations/enterprises which can not be part of Social Stock exchange which are as follows: Corporate foundations, political or religious organizations or activities, professional or trade associations, infrastructure, and housing companies, except affordable housing cannot be registered as a Social Enterprise. If majority (>50%) of the funding for the Not for Profit Organisation is coming from the corporate or it has a controlling interest in the Not for Profit Organisation, then it is not allowed. • Ways to Raise funds through Social Stock Exchange: In a Listed Company, there are multiple methods or ways to raise fund. For Example, Public Offer for Equity or Debt. For Social Enterprises following methods are prescribed: FOR NOT FOR PROFIT ORGANISATION: 1. Issue Zero Coupon Zero Principal Instrument: Zero-coupon zero-principal structure resembles a debt security like a bond. When an entity takes a loan by issuing regular debt security like a bond, it has to make interest payments and the principal when the bond matures. Here it is not a loan but a donation. So, the borrowing entity does neither have to pay interest nor principal. The minimum issue size for issue of Zero Coupon Zero Principal Instruments shall be Rs. 1 Crore and minimum application size shall be Rs. 2 Lakhs. 2. Donation through Mutual Fund Scheme If anyone wants to donate part of their earning to charity, this is the right instrument for them. With utmost transparency you can donate your income at right place. There are various mutual funds working over this concept. For Example, HDFC Charity Fund for Cancer Cure. It will invest your money in underlying instrument and generate dividend which will go towards charity. 3. SEBI may specify any othermeans to raise funds Further it is required to note that Not for Profit Organisation is required to comply with all the applicable SEBI (LODR) Regulations, 2015 and circular thereof.

I. T. MIRROR (2023-24) FOR PROFIT ORGANISATION: i. Issue of Equity Shares (On Main Board, SME Platform or innovators growth platform of stock exchange as the case may be) ii. Issue of Equity Shares to an Alternative Investment Fund including Social Impact Fund iii. Issue of Debt Instruments iv. Any other means that SEBI may specify in future Further for every For-Profit organisation it is mandatory to comply with SEBI (ICDR) Regulation or other SEBI regulation as and when applicable. • Social Stock Exchanges Around the World: If we look in to the history of Social Stock Exchanges around the world, Brazil took the lead in establishing the first social stock exchange, called "Bolsa de ValoresSocioambientais (BVSA)," back in 2003. This pioneering initiative was followed by South Africa's "Social Investment Exchange (SASIX)" in 2006 and Portugal's "Bolsa de ValoresSociais (BVS)" in 2009. Singapore launched the "Impact Exchange (IX)" in 2013, while Canada introduced the "Social Venture Connexion (SVX)." The United Kingdom also joined the movement with its own social stock exchange. Finally, in 2019, Jamaica introduced its own social stock exchange. However, despite these noteworthy developments, it is important to note that as of today, only three social stock exchanges remain operational: Canada, Jamaica, and Singapore. The limited number of operational exchanges raises concerns about the sustainability of these platforms. Question may arise why among 7 Social Stock Exchanges only three Social Stock Exchanges are in operation. There can be multiple reasons of failures some of them are as follows: 01. SSEs focus on social impact rather than financial returns. Investors might prioritize financial gains over social impact and may be hesitant to invest in companies solely based on their social or environmental objectives. 02. Establishing and operating a SSE involves creating new regulatory frameworks and standards to ensure transparency and accountability in assessing social and environmental performance. Developing these frameworks and navigating complex regulatory environments can be challenging and time-consuming. 03. Determining the financial value of social and environmental impact is complex. Companies listed on SSEs need to quantify and report their impact, which can be difficult to measure and compare consistently. 04. SSEs are a relatively new concept, and many investors, companies, and regulators may not have a clear understanding of how they operate and the potential benefits they can bring. Limited awareness and understanding can impede the growth and adoption of SSEs. 05. Social stock exchanges need to generate revenue to cover their operational costs. However, if the exchange has limited investor participation or a small number of listed companies, it may struggle to achieve financial viability. Without sustainable funding, the exchange may face difficulties in maintaining operations and attracting new listings. CONCLUSION: In conclusion, the establishment of a Social Stock Exchange holds great potential for the development and empowerment of the social sector, which is a pressing need in our current times. By introducing transparency and effectiveness in the funding process through disclosure requirements, reporting, and social audits, these exchanges can play a pivotal role in channelling resources towards impactful social initiatives. 46 47 I. T. MIRROR (2023-24) However, it is crucial for governments to carefully consider the reasons behind the failures of social stock exchanges in other countries when formulating provisions and policies. Understanding the challenges faced by these exchanges can help shape a regulatory framework that addresses those issues and creates an environment conducive to their success. As a nation with a history of being a welfare state and with an ideology centred around the well-being of all citizens, we have the opportunity to learn from operational and inoperative social stock exchanges worldwide. By analysing these examples, we can establish benchmark standards in the sector of social service, ensuring that social stock exchanges in our country are equipped with the necessary tools for long-term viability and impact. Embracing the concept of social stock exchanges and leveraging our values of collective happiness, good health, and prosperity, we can unlock the full potential of social impact investing. It is through these innovative mechanisms that we can build a stronger, more inclusive society where the objectives of financial growth and social progress go hand in hand. By embracing this opportunity, we can create a meaningful and sustainable impact on the lives of individuals and communities, ushering in a new era of social development and empowerment.

How Technology will Transform The Real Estate Sector INTRODUCTION: In today's rapidly evolving world, technology has become a driving force in transforming various industries. The real estate sector is no exception. With advancements in technology, the way we buy, sell, and manage properties has undergone a significant transformation. In this article, we will explore the impact of technology on the real estate sector and how it is revolutionizing the industry. THE CHANGING LANDSCAPE OF REAL ESTATE The real estate sector has traditionally relied on conventional methods for property transactions. However, with the advent of technology, the landscape of the industry is rapidly changing. From online property listings to virtual property tours, technology has provided innovative solutions that have made the process more efficient and convenient for both buyers and sellers. ONLINE PROPERTY LISTINGS: A GAME CHANGER Gone are the days when potential buyers had to rely solely on newspaper ads or physical property visits. With the rise of online property listings, buyers now have a vast database of properties at their fingertips. Websites and platforms dedicated to real estate have made it easier for buyers to search for properties based on their preferences, such as location, price range, and amenities. VIRTUAL PROPERTY TOURS: BRINGING PROPERTIES TO LIFE One of the most significant advancements in the real estate sector is the introduction of virtual property tours. With the help of 3D technology, potential buyers can now explore properties from the comfort of their homes. These virtual tours provide an immersive experience, allowing buyers to visualize the property layout and get a realistic sense of the space. Virtual tours have not only made the property viewing process more convenient but have also expanded the reach of real estate agents and sellers to a global audience. SMART HOME TECHNOLOGY: REVOLUTIONIZING LIVING SPACES The integration of technology with real estate goes beyond property transactions. Smart home technology has emerged as a game-changer in transforming living spaces. From automated lighting and temperature control to security systems and voice-activated assistants, smart homes offer a seamless and connected living experience. With the increasing demand for convenience and sustainability, smart home technology is reshaping the way we interact with our living spaces. HOW TECHNOLOGY IS STREAMLINING REAL ESTATE PROCESSES Apart from changing the way properties are bought and sold, technology is also streamlining various processes within the real estate sector. Let's explore some of these advancements: ADV (CS) LOKESH SHAH CA HARSH MEHTA 48 49 I. T. MIRROR (2023-24) Real Estate Management Software: Enhancing Efficiency Managing properties efficiently is crucial for real estate agents and property owners. Real estate management software has simplified the process by providing a centralized platform to handle tasks such as property maintenance, rent collection, and tenant communication. These software solutions automate repetitive tasks, allowing real estate professionals to focus on more strategic aspects of their business. Blockchain: Secure and Transparent Transactions Blockchain technology has gained significant attention in recent years due to its potential to revolutionize transactions across various industries. In real estate, blockchain offers a secure and transparent way to handle property transactions. By recording property ownership and transaction history on a decentralized ledger, blockchain reduces the risk of fraud and ensures transparency in the process. Big Data and Predictive Analytics: Informed Decision-Making The availability of vast amounts of data in the real estate sector has opened up new opportunities for informed decision-making. Big data and predictive analytics enable real estate professionals to analyze market trends, assess property values, and identify investment opportunities. By harnessing the power of data, industry players can make data-driven decisions that yield better outcomes. Augmented Reality (AR): Enhancing Property Visualization Augmented Reality (AR) is another technology that is transforming the real estate sector. AR applications allow potential buyers to visualize properties in a real-world context. By overlaying virtual elements on physical spaces, AR enables buyers to see how a property could look after renovations or modifications. This technology provides a unique and interactive way for buyers to envision the potential of a property. FAQS ABOUT HOW TECHNOLOGY WILL TRANSFORM THE REAL ESTATE SECTOR Q: How can technology benefit real estate agents? A: Technology offers several benefits to real estate agents. It simplifies property search and listing processes, expands their reach to a wider audience, and automates time-consuming tasks, allowing agents to focus on building relationships with clients. Q: Will technology replace real estate agents? A: While technology has automated certain aspects of the real estate process, the role of real estate agents remains essential. Agents provide personalized guidance, negotiate deals, and offer expertise that technology cannot replicate. Q: Is virtual reality the same as augmented reality? A: No, virtual reality (VR) and augmented reality (AR) are different technologies. VR creates a completely immersive virtual environment, while AR overlays virtual elements onto the real world. In real estate, AR is commonly used for property visualization. Q: How can blockchain improve property transactions? A: Blockchain technology enhances property transactions by providing a secure and transparent system. It reduces the risk of fraud, simplifies the verification of property ownership, and ensures the integrity of transaction records.

Pages:

1 - 50
51 - 56

Click to View FlipBook Version