Editorial Note

  It is with great pleasure and honor that DMC Global has issued its newsletter, Analysis on Section 194Q and more. CBDT issued guidelines to clarify provisions related to TDS u/s 194Q on purchase of goods vide Circular 13 of 2021, dated 30-06-2021. This newsletter seeks to provide analysis on the same. During the development of our newsletter, the team endeavored to provide all the relevant information required to keep oneself up to date with the changing scenario of the Indian economy. The focus has been made to serve the latest information gathered, interpreted & analyzed from the reliable sources some of which includes the official websites of Government Authorities.

The matters focused upon in this newsletter include analysis on section 194Q inserted in Finance Act, 2021 with effect from 01-07-2021 and Amendment to the Tribunal, Appellate Tribunal and other Authorities Rules, 2020 made by CG .

Providing our readers crisp and concise content is the first & foremost priority of this newsletter established by DMC Global and its team. By this newsletter we look forward to provide you with apt information and requirements of readers.

What’s Inside

       Major amendments in Income Tax Act

       through Finance Act, 2021

             Section 194Q of Income Tax Act, 1961……………………1-3

             Section 206AB & 206CCA of Income Tax Act, 1961……….4-5

             Section 50B of Income Tax Act, 1961……………………..6-8

Section 194Q of Income Tax Act, 1961

In the Budget 2021, a new section 194Q of the Income-Tax Act has been inserted which shall be effected from 1^st day of July 2021 and reads as under-

194Q. Deduction of tax at source on payment of certain sum for purchase of goods.

(1) Any person, being a buyer who is responsible for paying any sum to any resident (hereafter in this section referred to as the seller) for purchase of any goods of the value or aggregate of such value exceeding fifty lakh rupees in any previous year, shall, at the time of credit of such sum to the account of the seller or at the time of payment thereof by any mode, whichever is earlier, deduct an amount equal to 0.1 per cent of such sum exceeding fifty lakh rupees as income-tax.

Explanation– For the purposes of this sub-section, “buyer” means a person whose total sales, gross receipts or turnover from the business carried on by him exceed ten crore rupees during the financial year immediately preceding the financial year in which the purchase of goods is carried out, not being a person, as the Central Government may, by notification in the Official Gazette, specify for this purpose, subject to such conditions as may be specified therein.

(2) Where any sum referred to in sub-section (1) is credited to any account, whether called “suspense account” or by any other name, in the books of account of the person liable to pay such income, such credit of income shall be deemed to be the credit of such income to the account of the payee and the provisions of this section shall apply accordingly.

(3) If any difficulty arises in giving effect to the provisions of this section, the Board may, with the previous approval of the Central Government, issue guidelines for the purpose of removing the difficulty.

(4) Every guideline issued by the Board under sub-section (3) shall, as soon as may be after it is issued, be laid before

each House of Parliament, and shall be binding on the income-tax authorities and the person liable to deduct tax.

(5) The provisions of this section shall not apply to a transaction on which—

 (a) tax is deductible under any of the provisions of this Act; and

 (b) tax is collectible under the provisions of section 206C other than a transaction to which sub-section (1H) of section 206C applies.

Analysis of this section-

• Date of applicability of the provisions of Section 194Q

The provisions of Section 194Q are made applicable with effect from 1^st day of July, 2021.

• Time Limit for deduction of TDS under section 194Q

Tax to be deducted at the earliest of the following dates:

(i) time of credit of such sum to the account of the seller, or

(ii) time of payment

• Rate of TDS under section 194Q

(i) Buyer of all goods will be liable to deduct tax at source

• @ 0.1% of sale consideration
• exceeding INR 50 Lakhs in a Financial Year

(ii) Tax to be deducted @ 5%

• if the seller does not provide PAN/Aadhar (as per Memorandum explaining the provisions in the Finance Bill, 2021).

• How to ensure compliance of section 194Q:

In any business, purchase is an ongoing process and it is difficult to keep tab to identify as and when purchase from any vendor is exceeded Rs.50 lakhs especially in a big organization. Hence, atomization is the only solution for compliance of section 194Q.

Hence, following steps are required to atomization:

• On the basis of previous year, identify the vendors from whom purchases for more than Rs.50 lakhs have been made in previous year and arrange alteration in the master of these vendor with activation of TDS deduction option in your accounting software.

• Arrange changes in your accounting software so that software can automatically identify and deduct TDS or provide you alert to deduct TDS as and when purchase of any vendor exceed from Rs.50 lakhs during the current accounting year.

• Conditions for applicability of section 194Q

• TDS obligation will arise

• if the payment is made to a resident seller
• No requirement of TDS u/s 194Q on a transaction:

• if TDS is deductible under any other provision, or
• TCS is collectible under section 206C [excluding 206C(1H)]

• On a given transaction

• either TDS u/s 194Q will apply, or

• TCS u/s 206C(1H) will apply

Both TDS u/s 194Q and TCS u/s 206C (1H) will not apply on the same transaction

• In case of potential overlap between the two provisions-

• TDS u/s 194Q will apply, and

• TCS u/s 206C(1H) will not apply

• Comparison of Sec 194Q and 206C(1H) of Income Tax Act, 1961

Section 194Q is similar to Section 206C (1H) which is applicable for collection of tax at source.

Both these provisions are distinguished in the below table:

Section 206AB & 206CCA of Income Tax Act, 1961

In the Budget 2021, new sections 206AB & 206CCA of the Income-Tax Act has been proposed which shall be effected from 1^st day of July 2021 and reads as under-

206AB. Special provision for deduction of tax at source for non-filers of income-tax return.

(1) Notwithstanding anything contained in any other provisions of this Act, where tax is required to be deducted at source under the provisions of Chapter XVIIB, other than section 192, 192A, 194B, 194BB, 194LBC or 194N on any sum or income or amount paid, or payable or credited, by a person (hereafter referred to as deductee) to a specified person, the tax shall be deducted at the higher of the following rates, namely:—

• at twice the rate specified in the relevant provision of the Act; or
• at twice the rate or rates in force; or
• at the rate of five per cent.

(2) If the provisions of section 206AA is applicable to a specified person, in addition to the provision of this section, the tax shall be deducted at higher of the two rates provided in this section and in section 206AA.

(3) For the purposes of this section “specified person” means a person who has not filed the returns of income for both of the two assessment years relevant to the two previous years immediately prior to the previous year in which tax is required to be deducted, for which the time limit of filing return of income under sub-section (1) of section 139 has expired; and the aggregate of tax deducted at source and tax collected at source in his case is rupees fifty thousand or more in each of these two previous years:

Provided that the specified person shall not include a non-resident who does not have a permanent establishment in India.

Explanation- For the purposes of this sub-section, the expression “permanent establishment” includes a fixed place of business through which the business of the enterprise is wholly or partly carried on.

206CCA. Special provision for collection of tax at source for non-filers of income-tax return.

(1) Notwithstanding anything contained in any other provisions of this Act, where tax is required to be collected at source under the provisions of Chapter XVII-BB, on any sum or amount received by a person (hereafter referred to as collectee) from a specified person, the tax shall be collected at the higher of the following two rates, namely:—

• at twice the rate specified in the relevant provision of the Act; or
• at the rate of five per cent.

(2) If the provisions of section 206CC is applicable to a specified person, in addition to the provisions of this section, the tax shall be collected at higher of the two rates provided in this section and in section 206CC.

(3) For the purposes of this section “specified person” means a person who has not filed the returns of income for both of the two assessment years relevant to the two previous years immediately prior to the previous year in which tax is required to be collected, for which the time limit of filing return of income under sub-section (1) of section 139 has expired; and the aggregate of tax deducted at source and tax collected at source in his case is rupees fifty thousand or more in each of these two previous years:

Provided that the specified person shall not include a non-resident who does not have a permanent establishment in India.

Explanation- For the purposes of this sub-section, the expression “permanent establishment” includes a fixed place of business through which the business of the enterprise is wholly or partly carried on.

Analysis of above sections-

The Government at the time of presentation of Budget 2021 has also proposed to insert new section 206AB and section 206CCA in the Income Tax Act, 1961 as a special provision providing for higher rate for TDS and TCS for the non-filers of income-tax return.

Proposed section 206AB of the Act would apply on any sum or income or amount paid or payable or credited, by a person (herein referred to as deductor) to a specified person. The proposed TDS rate in this section is higher of the followings rates:-

• twice the rate specified in the relevant provision of the Act; or
• twice the rate or rates in force; or
• the rate of five per cent

However, provisions of Section 206AB do not apply to the following tabulated TDS sections of Income Tax Act-

If the provision of section 206AA of the Act is applicable to a specified person, in addition to the provision of this section, the tax shall be deducted at higher of the two rates provided in this section and in section 206AA of the Act.

Proposed section 206CCA of the Act would apply on any sum or amount received by a person (herein referred to as collectee) from a specified person. The proposed TCS rate in this section is higher of the following rates:-

• twice the rate specified in the relevant provision of the Act; or
• the rate of five percent

If the provision of section 206CC of the Act is applicable to a specified person, in addition to the provision of this section, the tax shall be collected at higher of the two rates provided in this section and in section 206CC of the Act.

The specified person is a person who has not filed the returns of income for both of the two assessment years relevant to the two previous years which are immediately before the previous year in which tax is required to be deducted or collected, as the case may be. Further the time limit for filing tax return under sub-section (1) of section 139 of the Act has expired for both these assessment years. There is another condition that aggregate of tax deducted at source and tax collected at source in his case is rupees fifty thousand or more in each of these two previous years. Specified person shall not include a non-resident who does not have a permanent establishment in India.

Consequential amendment is proposed in sub-section (4) of section 194-IB of the Act.

This amendment will take effect from 1st July, 2021.

Section 50B of Income Tax Act, 1961

50B. Special provision for computation of capital gains in case of slump sale.

 (1) Any profits or gains arising from the slump sale effected in the previous year shall be chargeable to income-tax as capital gains arising from the transfer of long-term capital assets and shall be deemed to be the income of the previous year in which the transfer took place:

Provided that any profits or gains arising from the transfer under the slump sale of any capital asset being one or more undertakings owned and held by an assessee for not more than thirty-six months immediately preceding the date of its transfer shall be deemed to be the capital gains arising from the transfer of short-term capital assets.

(2) In relation to capital assets being an undertaking or division transferred by way of such sale, the “net worth” of the undertaking or the division, as the case may be, shall be deemed to be the cost of acquisition and the cost of improvement for the purposes of sections 48 and 49 and no regard shall be given to the provisions contained in the second proviso to section 48.

(3) Every assessee, in the case of slump sale, shall furnish in the prescribed form 49 along with the return of income, a report of an accountant as defined in the Explanation below sub-section (2) of section 288, indicating the computation of the net worth of the undertaking or division, as the case may be, and certifying that the net worth of the undertaking or division, as the case may be, has been correctly arrived at in accordance with the provisions of this section.

Explanation 1- For the purposes of this section, “net worth” shall be the aggregate value of total assets of the undertaking or division as reduced by the value of liabilities of such undertaking or division as appearing in its books of account:

Provided that any change in the value of assets on account of revaluation of assets shall be ignored for the purposes of computing the net worth.

Explanation 2- For computing the net worth, the aggregate value of total assets shall be, —

• in the case of depreciable assets, the written down value of the block of assets determined in accordance with the provisions contained in sub-item (C) of item (i) of sub-clause (c) of clause (6) of section 43;
• in the case of capital assets in respect of which the whole of the expenditure has been allowed or is allowable as a deduction under section 35AD, nil; and
• in the case of other assets, the book value of such assets.

Analysis of above section-

• Meaning of Slump Sale-

In simple words, ‘slump sale’ is nothing but transfer of a whole or part of business concern as a going concern; lock, stock and barrel. As per section 2(42C) of Income -tax Act 1961, ‘slump sale’ means the transfer of one or more undertakings as a result of the sale for a lump sum consideration without values being assigned to the individual assets and liabilities in such sales.

Where-

• ‘Undertaking’ has the same meaning as in Explanation 1 to section 2(19AA) defining ‘demerger’. As per Explanation 1 to section 2(19AA), ‘undertaking’ shall include any part of an undertaking or a unit or division of an undertaking or a business activity taken as a whole but does not include individual assets or liabilities or any combination thereof not constituting a business activity.

• Slump Sale means sale of any undertaking as a going concern, where consideration is considered in lump sum and individual values are not taken into account. But, when individual values of assets are taken for calculating the amount of stamp duty, registration charges, taxes etc. then it won’t violate slump sale.

• For the purposes of Slump Sale a Chartered Accountant’s report in form No. 3CEA will be required.

• Only transfer of assets or liabilities is not a slump sale

• On slump sale, no indexation benefit will be allowed.

• Court approval is not required for carrying out such transactions.

• Tax Effect in a Slump Sale-

The gain or loss resulting out of a slump sale shall be a Capital Gain/Loss under the Income Tax Act. Capital gain in case of slump sale u/s 50B shall be calculated as below-

 **Computation of Net Worth

 **If net worth comes negative, then cost of acquisition shall be NIL.

• Key Terms under Section 50B-

• How to determine the nature of capital assets?

The capital gain or loss as computed above will be either long term or short-term depending upon the period for which the undertaking is held.

If the undertaking is held for more than 36 months, the resulting capital gain or loss shall be long-term and if it is held for less than 36 months, the resulting capital gain or loss shall be short term.

• Whether indexation benefit is available u/s 50B?

While calculating capital gain in case of slump sale, no indexation benefit shall be available in case of long-term capital asset.

• What is the reporting requirement under section 50B?

Certificate by a chartered accountant- In case of slump sale, every assessee shall furnish in the

prescribed form along with the return of income,  report of a CA along with computation of net worth.

• In which year, capital gain arise out of the slump sale shall be taxable?

The capital gains arising out of a slump sale shall be taxable in the year of transfer.

• What is the treatment of transfer of stock in case of slump sale u/s 50B?

No profit under the head profit from business & profession shall arise even if stock is transferred in case of slump sale.

• Treatment of accumulated business losses and depreciation-

Accumulated business losses and depreciation shall be carried forward by the transferor in case of slump sale.

• Taxation under GST-

The basis of taxation under the Goods and Services Tax Act revolves around ‘supply’. A slump sale would also be a supply and hence fall under the purview of GST. The supply would be in the nature of ‘transfer as a going concern’ and such a transfer attracts nil rate of GST.

Transfer as a going concern would roughly mean that the current business as a whole will be carried on by a different person or that there is a change in the ownership of the business.

• What are the tax rates in case of slump sale?

The rates of tax applicable to the capital gain in a slump sale are as follows:

• 20% in case of Long-Term Capital Gain (LTCG) and
•  
• Normal rates of tax in case of Short-Term Capital Gain (STCG)

• Slump sale vs Itemized Sale

Slump Sale refers to sale of business as a going concern without assigning the assets and liabilities any individual values. Whereas itemized sale means the sale of one or more business assets not essentially resulting in sale of business. It was witnessed particularly in the case of loss-making undertakings, transactions of slump sale was window dressed as itemized sale to stop the same various rulings came out.

The difference amongst slump sale and itemized sale can be summarized as under-

Dated-20^th July, 2021

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes (CBDT) grants further relaxation in electronic filing of Income Tax Forms 15CA/15CB

As per Rule 37BB, a payer responsible for making payment to any non-resident person is required to furnish information about such payment to the Income-tax Dept. in Form 15CA. Assessee is also required to obtain a certificate in Form 15CB from a Chartered Accountant if the aggregate amount of payment exceeds Rs. 5 lakhs.

Presently, taxpayers upload the Form 15CA, along with the Chartered Accountant Certificate in Form 15CB on the e-filing portal, before submitting the copy to the authorized dealer for any foreign remittance.

In view of difficulties faced by taxpayers in electronic filing of Income Tax Forms 15CA/15CB on the new e-filing portal www.incometax.gov.in. The Central Board of Direct Taxes (CBDT) vide press release, dated 14-06-2021 had decided that taxpayers can submit the aforesaid Forms in manual format to the authorized dealers till June 30, 2021. This date was further extended to July 15, 2021, vide press release, dated 05-07-2021.

Now, the board has decided to further extend the due date to 15-08-2021. In view thereof, taxpayers can now submit the said Forms in manual format to the authorized dealers till 15^th August, 2021. Authorized dealers are advised to accept Forms 15CA/15CB till 15-08-2021 for the purpose of foreign remittances. A facility will be provided on the new e-filing portal to upload these forms at a later date for the purpose of generation of the Document Identification Number.

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NOTIFICATION

Waiver of Late Fees for non-compliance of QR Code

 Notification no. 28/2021 dt. 30th June 2021

The Central Government has issued a notification no. 28/2021 – Central Tax date. 30th June 2021.

The notification has amended the notification no. 14/2020 dt 21st March 2020 issued earlier.

The notification has waived the levy of late fees under Section 125 of the CGST Act 2017 amounting to Rs 50,000 for non-compliance of QR code on all B2C invoices issued by the business enterprise having aggregate turnover exceeding Rs 500 crore in any of the financial years from 2017-18 onwards.

The notification has mandated that the compliance of QR code by such business enterprise on B2C invoice must be done from 1st Oct 2021.

GST Annual Return for 2020-21

Notification no. 29/2021 dt. 30th July 2021

The Central Government has issued a notification no. 29/2021 – Central        Tax dt. 30th July 2021.The notification has amended Section 35 and Section 44 of the CGST Act 2021.

The notification has allowed the business enterprise to file GST Annual return without getting the books of accounts audited by Chartered Accountants / Cost Accountants

Notification no. 30/2021 dt. 30th July 2021

The Central Government has issued a notification no. 30/2021 – Central Tax dt. 30th July 2021.

The notification has amended Rule 80 of CGST Rules 2017 and has mandated that business enterprises should file the GST Annual Return in GSTR 9 by 31st December.

The notification has notified the GST Annual return form GSTR 9 for the financial year 2020-21.

It has also notified GSTR 9A as an annual return to be filed by a  business enterprise that has opted for composition scheme under Section 10 of CGST Act 2017. The notification has also notified GSTR 9B

9B as the annual return to be filed by the electronic commerce operator who is required to deduct tax under section 52 of CGST Act 2017.

The notification has mandated that the business enterprise having aggregate annual turnover exceeding Rs 5 crore must file self-certified GSTR 9C. Earlier, they were required to file GSTR 9C duly certified by a Chartered Accountant or a Cost Accountant. However, the certification from a Chartered Accountant or Cost Accountant has now been dispensed with.

Notification no. 31/2021 dt. 30th July 2021

The Central Government has issued a notification no. 31/2021 – Central Tax dt. 30th July 2021.

The notification has exempted business enterprises having aggregate annual turnover upto Rs 2 crore from filing GST Annual Return.

Notification no. 32/2021 dt. 29th August 2021

Government has extended the time-limit upto which amnesty for reduced late fee 

in respect of GSTR 3B (not in respect of GSTR 1 & GSTR 4) can be availed. The last date to avail the late fee Amnesty Scheme is now extended to 30^th November 2021 instead of 31^st August 2021.

Notification No. 33/2021 – dt. 29^th August 2021

In the said notification, in the ninth and tenth provisos, for the figures, letters and words ―31st day of August 2021, wherever they occur, the figures, letters and words ―30th day of November 2021 shall be substituted.

Notification No. 34/2021 – dt. 29^th August 2021

The Government, on the recommendations of the Council, hereby notifies that where a registration has been cancelled under clause (b) or (c) of sub-section (2) of section 29 of the said Act and the time limit for making an application of revocation of cancellation of registration under sub-section (1) of section 30 of the said Act falls during the period from the 1st day of March, 2020 to 31st day of August, 2021, the time limit for making such application shall be extended upto the 30th day of September, 2021.

CIRCULAR

Circular no. 157/13/2021 dt. 20th July 2021

The government has issued a circular no. 157/13/2021 dt. 20th July 2021 pursuant to the order given by the Hon’ble Supreme Court on 27th April 2021.

The circular has extended the time limit for filing of appeals by the business enterprises till further order by the Hon’ble Supreme Court whose time limit has expired after 15th March 2020.

GSTN Advisory dated. 26/08/2021:

Implementation of Rule-59(6) on GST Portal

1. a registered person shall not be allowed to furnish the details of outward supplies of goods or services or both under section 37 in FORM GSTR-1 if he has not furnished the return in FORM GSTR-3Bfor preceding two months.

1. a registered person, required to furnish return for every quarter under the proviso to sub-section (1) of section 39, shall not be allowed to furnish the details of outward supplies of goods or services or both under section 37 in FORM GSTR-1or using the invoice furnishing facility if he has not furnished the return in FORM GSTR-3B for preceding tax period.

2. This Rule will be implemented on GST Portal from 01/09/2021. On implementation of the said Rule, the system will check that whether before the filing of GSTR-1/ IFF of a tax-period, the following has been filed or not:
3. a) GSTR-3B for the previous two monthly tax-periods (for monthly filers), OR

1. b) GSTR-3B for the previous quarterly tax period (for quarterly filers), as the case may be. The system will restrict filing of GSTR-1/ IFF till Rule 59(6) is complied with.
2. This check will operate on clicking the SUBMIT button of GSTR-1 and the system will give an error message if the condition of Rule 59(6) is not met. It may be noted that records which have been saved in GSTR-1 will remain saved and filing of such records will be permitted after Rule-59(6) is complied with.
3. Implementation of Rule 59(6) on the GST Portal will be completely automated, similar to the blocking & un-blocking of e-way bill as per Rule-138E and facility for filing of GSTR-1 will be restored immediately after filing of relevant GSTR-3B. No separate approval would be needed from the tax-officer to restore the facility for filing of GSTR-1.
4. To ensure no disruption in filing GSTR-1/ IFF, taxpayers who have not filed their pending GSTR-3B, especially from period November 2020 and afterwards may do so at the earliest.

JUDGEMENTS

R J Trading Co Vs Commissioner of CGST Delhi (Delhi High Court)

Union of India Vs Merchem India Pvt Ltd (Kerela High Court)

Authority for Advance Ruling, Karnataka (M/s Aadhya Gold Pvt Ltd)

          Issue

1. Whether GST is to be paid only on the difference between the selling price
2. And purchase price as stipulated under Rule 32(5) of CGST Rules, 2017, if applicant purchases used/secondhand gold jewelry from individuals who are not dealers under the GST and at the time of sale there is no change in the form/nature of goods?

Ruling

  In case applicant dealing in secondhand goods and invoicing his supplies as “secondhand goods”, the valuation of supply of secondhand gold jewelry which are purchased from, individuals who are not registered under GST and there is no change in the form and nature of such goods, can be made as prescribed under sub-rule (5) of rule 32 of the Central Goods and Service Tax Rules.

Thus, the seller was allowed to pay GST only on its margin i.e., Sale price – Purchase Price as mandated in Rule 32 (5) of CGST Rules 2017.

Greenwood Owners Association Vs Union of India (Madras High Court)

Issue

Levy of GST on contribution to RWA exceeding Rs 7500. Whether GST is payable by RWA on the whole amount or an amount exceeding Rs 7500 received as monthly contribution from its members

Order

The Hon’ble High Court overruled the ruling given by Hon’ble AAR which ruled that GST is to be paid on the whole amount if the   monthly contribution exceeds Rs 7500 from a member of the RWA.

The Hon’ble HC ruled that GST is payable only on amount exceeding Rs 7500.

Judicial case update on section 14A read with Rule 8D of Income Tax Act, 1961 and Explanation regarding Calculation of Taxable/Non-Taxable Portion of interest on PF contribution

Editorial Note

 It is with great pleasure and honor that DMC Global has issued its newsletter, Judicial case update on section 14A read with Rule 8D of Income Tax Act, 1961 (“the Act’’) and Explanation regarding Calculation of Taxable/Non Taxable Portion of interest on PF contribution. This newsletter seeks to provide analysis on the same. During the development of our newsletter, the team endeavored to provide all the relevant information required to keep oneself up to date with the changing scenario of the Indian economy. The focus has been made to serve the latest information gathered, interpreted & analyzed from the reliable sources some of which includes the official websites of Government Authorities.

Providing our readers crisp and concise content is the first & foremost priority of this newsletter established by DMC Global and its team. By this newsletter we look forward to provide you with apt information and requirements of readers.

What’s Inside

       1. DT Important Case law

Decision : In assessee’s favour

Disallowance under section 14A-Expenditure against exempt income-Interest expenses under rule 8D(2)(ii)-Assessee having sufficient own funds

Facts: Assessee earned tax free dividend income on investments in shares. AO invoked section 14A read with rule 8D(1)(ii) and disallowed interest expenses. Assessee pleaded to have sufficient own funds.

Held: The interest-free funds of its own available with the assessee in the form of share capital and free reserves were substantially more than the corresponding investments made to earn interest free income and, therefore presumption could be drawn that investment in tax-free securities were made out of sufficient interest-free funds available with assessee and, therefore, interest disallowance under section 14A read with rule 8D(2)(ii) was not called for.

2.    How to Calculate taxable/non taxable portion of interest on PF contribution?

1. About Provident funds
2. Types of Provident fund
3. Taxability of Provident fund
4. Amendment by the Finance Act, 2021
5. Method of computation of Taxable interest
6. Illustration

1. Analysis of Section 14A read with Rule 8D

IN THE ITAT, KOLKATA BENCH

P.M. JAGTAP, V.P. (KZ) & A.T. VARKEY, J.M.

DCIT v. Century Plyboards (I) Ltd.

ITA No. 2149/Kol/2019 and C.O. No. 22/Kol/2020 (in ITA No. 2149/Kol/2019)

4 November, 2020

Income Tax Act, 1961, Section 14A

Income Tax Rules, 1962, Rule 8D(2)(ii)

Disallowance under section 14A–Expenditure against exempt income–Interest expenses under rule 8D(2)(ii) Assessee having sufficient own funds

Conclusion: As investment in tax-free securities were made out of sufficient interest-free funds available with assessee, therefore, interest disallowance under section 14A read with rule 8D(2)(ii) was not called for.

Assessee earned tax free dividend income on investments in shares. AO invoked section 14A read with rule 8D(1)(ii) and disallowed interest expenses. Assessee pleaded to have sufficient own funds. Held: The interest-free funds of its own available with the assessee in the form of share capital and free reserves were substantially more than the corresponding investments made to earn interest free income and, therefore presumption could be drawn that investment in tax-free securities were made out of sufficient interest-free funds available with assessee and, therefore, interest disallowance under section 14A read with rule 8D(2)(ii) was not called for.

          Decision: In assessee s favour.

Income Tax Act, 1961, Section 14A

Income Tax Rules, 1962, Rule 8D(2)(iii)

Disallowance under section 14A–Expenditure against exempt income–Administrative expenses under rule 8D(2)(iii)–AO made disallowance in excess of tax free income earned by assessee

Conclusion: Disallowance under section 14A read with rule 8D could not exceed tax free income earned by assessee. Therefore, AO was directed to restrict disallowance made on account of the common administrative expenses to the amount of exempt dividend income actually earned by the assessee during the year under consideration.

Assessee earned tax free dividend income on investments in shares. AO invoked section 14A read with rule 8D(2)(iii) and worked out disallowance in excess of tax free income earned by assessee. Held: Disallowance under section 14A read with rule 8D could not exceed tax free income earned by assessee. Therefore, AO was directed to restrict disallowance made on account of the common administrative expenses to the amount of exempt dividend income actually earned by the assessee during the year under consideration.

Decision: Partly in assessee s favour.

2. How to Calculate taxable portion of interest on PF contribution?

1. About Provident Funds

Provident Fund is a retirement saving plan in which both employee and employer contrib- ute a fixed sum every month. The amount ac- cumulated in the funds and interest earned thereon is paid to the employee on his re- tirement. However, an employee, in certain circumstances, is allowed to withdraw a sum from his provident fund account even before his retirement.

2. Types of Provident Fund

The provident funds can be categorized into the following types:

       2.1 Statutory Provident Fund

This Fund is set up under the Provident Fund Act, 1925, which is meant only for employees working in Government or Semi-Government organizations, local authorities, universities, recognized educational institutions or railways.

        2.2 Recognized Provident Fund

It is a provident fund which has been and continues to be recognized by the CIT in accordance with the rules contained in Part A of the Fourth Schedule to the Income-tax Act. It also includes a fund established un- der the Employees’ Provident Fund Act, 1952. Such a fund is maintained in banks, insurance companies, factories and business houses in the private sector.

        2.3 Unrecognized Provident Fund

These funds are those funds which have not been recognized by the CIT in accordance with the rules contained in Part A of the Fourth Schedule to the Income-tax Act. It can be maintained by any institution in private sector.

         2.4 Public Provident Fund

Any resident individual can contribute in Public Provident Fund. Unlike EPF, contribution in PPF is voluntarily and it is only individual himself who can contribute to PPF.

3. Taxability of provident Fund

The tax implications in case of provident fund arise at the time of contribution, accrual of interest and withdrawal. The tax- ability can be explained with the help of the following table:

4. Amendment by the Finance Act, 2021

As interest on the contribution made to statutory provident fund, recognised provident fund and the public provident fund is exempt from tax at the time of accrual as well as withdrawal, the Government noticed that some employees are contributing a huge amount to these funds. Thus, to curb this practice, the Finance Act, 2021 has amended Section 10(11) and Section 10(12) to provide that exemption shall not be available for the interest income accrued during the previous year on the recognised and statutory provident fund in the account of the person to the extent it relates to the contribution made by the employees in excess of Rs. 2,50,000 in a previous year. However, if such person has contributed in a fund in which there is no contribution by the employer, limit of Rs. 2,50,000 shall be increased to Rs. 5,00,000. The amount of such interest income shall be computed as per the prescribed rules.

5. Method of computation of taxable interest

The CBDT has notified2 Rule 9D for calculation of the taxable portion of interest pertaining to the contribution made to a statutory or a recognized provident fund in excess of threshold limit of Rs. 2.5 lakh or 5 lakhs as the case may be.

It provides that separate accounts within the provident fund account shall be maintained during the previous year 2021-22 and onwards for the taxable and non-taxable contribution made by the person.

5.1 Computation of Non-Taxable person

The non-taxable contribution to the provident fund account shall be computed in the following manner:

The interest accrued in the non-taxable contribution account shall continue to be exempt under Section 10(11) or Section 10(12).

         5.2 Computation of Taxable person

         The taxable contribution to the provident fund account shall be computed in the following manner-

The interest accrued in the taxable contribution account shall be taxable under the head ‘Income from other sources’.

6. Illustration

Mr. A is working in a software consultancy firm. He maintains an EPF account and his opening balance is Rs.

5,50,000. His annual CTC is Rs. 30 lakhs with break-up as under:

(This Space has been intentionally left blank)

Computation of taxable and non-taxable contribution to PF:

The excess contribution shall be taxable only if the aggregate amount of contribution made by the employer to the account of employee in a Recognised Provident Fund, National Pension Scheme and Superannuation Fund exceeds Rs. 7,50,000. In this situation, the excess amount so contributed is taxable as perquisite in the hands of employee.

(This Space has been intentionally left blank)

Meet the DMC Global

        Editorial Team

CA Leena Goswami 

DMC Global

Bhawna Khanduja

DMC Global

Surbhi Gupta

DMC Global

Gunika

DMC Global

     Disclaimer

This newsletter is based on the completeness & accuracy of the facts stated therein & assumptions, which if not entirely complete or accurate, should be communicated to us, as the inaccuracy or incompleteness could have a material impact on our conclusions. The information contained in this newsletter is based on our understanding of the law & regulations prevailing as of the date of this note as well as our past experience with the tax and / or regulatory authorities. However, there can be no assurance that the tax authorities or regulators will concur with our views.

The information contained herein is of general nature and does not serve as a professional advice to address the circumstances of any particular individual or entity. It is advised to not act on such information without appropriate professional advice after a thorough examination of the particular situation.

Without prior permission of DMCGLOBAL SERVICES LLP, the contents of this newsletter may not be quoted in whole or in part or otherwise referred to in any documents. This document is for the specific purpose and we accept no responsibility or liability to any party.

Analysis of Important Amendments for the Companies in India

Applicable from 01^st April, 2021

(For the financial year ending on 31^st March, 2022)

Schedule III to the Companies Act, 2013, CARO, 2020, Companies (Audit and Auditors) Rules, 2014 and others have been amended/introduced to improve the quality and reliability of financial statements. The amendments are applicable from 1^st April 2021.

On analyzing the amendments in Schedule III and CARO 2020, it can be stated that the majority of the modifications made in Schedule III and CARO 2020 are to match the two reporting frameworks and improve transparency between the company and the users of financial statements. It further enabled to reduce the risk of fraud and other unethical behaviour on part of the companies.

1. Shareholding of Promoters:

As compared to earlier, the entities shall now disclose the shares held by the promoters at the end of the financial year and % change during the year in notes to accounts in tabular format as mentioned below:

2. Rounding Off:

Earlier companies had to round off the figures appearing in the financial statements based on “turnover”; however, based on the latest amendment rounding off will be based on the “total income” of the company.

3. Trade Payable ageing Schedule:

Ageing schedule shall be prepared for trade payables which are due for payment, in a tabular form, whether or not, due date of payment is specified on bill. However, unbilled dues shall be separately disclosed. The format is produced below:

4. Debtors ageing Schedule:

Ageing schedule shall be prepared for trade receivables in a tabular form, whether or not, due date of payment is specified on bill. However, unbilled dues shall be separately disclosed.

5. Details of Benami Property (if any):

Where any proceedings have been initiated or pending against the company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and the rules made thereunder, the company shall disclose the following:-

(a) Details of such property, including year of acquisition,

(b) Amount thereof,

(c) Details of Beneficiaries,

(d) If property is in the books, then reference to the item in the Balance Sheet,

(e) If property is not in the books, then the fact shall be stated with reasons,

(f) Where there are proceedings against the company under this law as an abettor of the transaction or as the transferor then the details shall be provided,

(g) Nature of proceedings, status of same and company’s view on the same.

6. Disclosure for Tangible and Intangible Asset:

At the beginning and end of the reporting period, a reconciliation of the gross and net carrying amounts of each class of assets showing additions, disposals, acquisitions through business combinations, amount of change due to revaluation and other adjustments and the related depreciation and impairment losses or reversals shall be disclosed separately, if the change is 10% or more in each class of asset.

7. Title deeds of Immovable Property: 

The companies have to give the details of all those immovable properties whose title deeds are not in the name of the company, except those immovable properties in which the company is a lessee and lease agreement are executed.

8. Following ratios are to be disclosed

(a) Current Ratio,

(b) Debt-Equity Ratio,

(c) Debt Service Coverage Ratio,

(d) Return on Equity Ratio,

(e) Inventory turnover ratio,

(f) Trade Receivables turnover ratio,

(g) Trade payables turnover ratio,

(h) Net capital turnover ratio,

(i) Net profit ratio,

(j) Return on Capital employed,

(k) Return on investment.

Moreover, if any change in the ratio is more than 25% as compared to the preceding year then explanation for the same shall be provided.

9. Borrowings from Banks & Financial Institutions:

(a) Where the company has borrowed funds from banks/FI (being current assets as collateral security), the company needs to disclose whether quarterly returns or statements of current assets filed by the Company with banks or financial institutions are in agreement with the books of accounts and if not, summary of reconciliation and reasons of material discrepancies, if any to be adequately disclosed

(b) Where the company has not used the borrowings from banks and financial institutions for the specific purpose for which it was taken at the balance sheet date, the company shall disclose the details of where they have been used.

10. Undisclosed Income:

The Company shall give details of any transaction not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961), unless there is immunity for disclosure under any scheme and also shall state whether the previously unrecorded income and related assets have been properly recorded in the books of account during the year.

11. Wilful Defaulter: 

If any company is declared as wilful defaulter by the bank or financial institution or any other lender then disclosures shall be made by the company.

12. Loan Granted to Promoters, Directors, KMPs and the Related Parties: 

The company shall disclose all the loans and advances in the nature of loan granted to promoter director and KMPs and related parties, severally or jointly with any other person either repayable on demand, without specifying any terms or period of repayment.

13. Crypto Currency or Virtual Currency:

If any company has traded or invested in Crypto Currency or Virtual Currency then following disclosures shall be made in the financial statements:-

• Profit and loss made from crypto currencies.
• Amount of currency held at reporting date.
• Deposit or advance taken from any person for trading or investment in crypto.

14. Relationship with Struck off Companies:

Where the company has any transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956, the Company shall disclose the following details:-

15. Registration of charges or satisfaction with Registrar of Companies:

Where any charges or satisfaction yet to be registered with Registrar of Companies beyond the statutory period, details and reasons thereof shall be disclosed.

16. Compliance with number of layers of companies:

Where the company has not complied with the number of layers prescribed under clause (87) of section 2 of the Act read with Companies (Restriction on number of Layers) Rules, 2017, the name and CIN of the companies beyond the specified layers and the relationship/extent of holding of the company in such downstream companies shall be disclosed.

17. CSR Disclosure:

Where the company covered under section 135 of the Companies Act, the following shall be disclosed with regard to CSR activities:

(a) amount required to be spent by the company during the year,

(b) amount of expenditure incurred,

(c) shortfall at the end of the year,

(d) total of previous year’s shortfall,

(e) reason for shortfall,

(f) nature of CSR activities,

(g) details of related party transactions, e.g., contribution to a trust controlled by the company in relation to CSR expenditure as per relevant Accounting Standard,

(h) where a provision is made with respect to a liability incurred by entering into a contractual obligation, the movements in the provision during the year should be shown separately.

These amendments are applicable from 01st April, 2021. Hence, these are applicable for the financial statements for the year ending 31st March, 2022.

• Notification dated 24^th March 2021

Primarily under the older version of reporting i.e. CARO, 2016 contain 16 clauses, now under the new CARO, 2020 amendments have been made by way of modification in the existing clauses, additions of new sub-clauses, insertion of 4 new clauses, and deletion of one clause.

1. Property, Plant & Equipment and Intangible Assets |Paragraph 3(i)|

• An additional comment has to be made for intangible assets for its maintenance of proper records;

• Declaration whether all the immovable properties disclosed in the financial statements are held in the name of the reporting entity, if not, provide the details thereof in the format below:-

• Special reporting for revaluation for 10% or more (upward & downward both) and whether revaluation is done by Registered valuer;
• Revaluation (for reporting purpose) shall not include:- Fair Valuation of PPE upon first time adoption of Ind AS; Remeasurements ; Changes to ROU assets due to lease modifications.
• Disclosures for benami properties and proceedings initiated or pending against the company.

2. Inventory |Paragraph 3(ii)|

(a) The term ‘Materiality’ has been defined in CARO 2020 i.e. 10% or more, which was left to the auditors judgement in CARO 2016;

(b) Also, the auditor is required to opine on the appropriateness of coverage and procedure of verification of inventory adopted by the management and where the discrepancies of 10% or more in aggregate of each class of inventory were noticed, whether it has been properly dealt with in books of accounts; Checking for deviations in quarterly statements filed by the company with banks and FIs w.r.t Working capital loan if the company has been sanctioned limit in excess of 5 Crores at any point in time.

3. Loans, Advances, Investments, Guarantee… given by the company |Paragraph 3(iii)|

(a) The ambit of financial transactions has been widened enough to include loans given to any party which was limited to parties covered under Section 189 register;

(b) Renewal, extension or granting of fresh loans to settle the overdues of existing loans are to be reported; loans or advances in the nature of loans either repayable on demand or without specifying any terms or period of repayment granted to related parties are to be disclosed along with the aggregate amount and percentage.

4. Payment of Statutory Dues |Paragraph 3(vii)|
   • The Goods and Service tax has been added;
   • The auditor is required to report on regularity on payment of statutory dues also, even if the same is not Outstanding for period of more than six months on balance sheet date; The non-payment of advance tax would also constitute default ;

5. Recording of Unrecorded Income |Paragraph 3(viii)|
   • The respective paragraph is newly added to CARO, 2020;
   • Reporting under this clause shall be applicable only when the transactions not recorded in the books of account have been surrendered or disclosed as income during the year in the income tax assessments. If yes, then the auditor shall also report on proper recording of the same in the books of account during the year. Evaluate the applicability of AS 5 and Ind AS 8 as applicable w.r.t. prior period items for proper accounting of unrecorded income;
   • The nature of disclosure shall depend on the nature of undisclosed income and the treatment thereof if the same was duly disclosed and reported in the books of account in the year to which the undisclosed income relates to.
   • The auditor should appropriately modify the audit procedures based on increased risk assessment in accordance with the requirements of SA 315, Identifying and assessing the risk of material misstatement through understanding the entity and its environment.

6. Default in repayment of Loans |Paragraph 3(ix)|
   • The details of period and amount of default in respect of repayment of loans or borrowings to banks, financial institutions, Government or debenture holders, format specified for showing lender-wise details of default :-

• Declaration of Wilful Defaulters by any lender. If the company has not been declared a wilful defaulter but has received a show-cause notice in accordance with the RBI Circular, the auditor may consider disclosing this fact in his report under this clause;
• Case of Utilisation of Short term funds for long term to be reported;
• Case of loan taken for meeting obligations of Subsidiaries/Associate entities/Joint Ventures is covered;
• Cases of funds obtained on the pledge of securities of Subsidiaries/Associate entities/Joint Ventures.

7. Reporting of Fraud |Clause 3 (xi)|
   • Consideration of Form ADT-4 and Complaints raised by the whistle blower have been newly added;
   • Section 177(9) of the Act requires the following class of companies to establish a vigil mechanism for their directors and employees to report their genuine concerns or grievances:

• Every listed company.
• Companies which accept deposits from the public.
• Companies which have borrowed money from banks and public financial institutions in excess of fifty crore rupees.

8. Comment on Internal Audit |Clause 3 (xiv)|

This is newly inserted paragraph. Auditor need to assess the applicability of Internal Audit, its quality and comment upon the consideration of the internal audit reports.

9. Cash Losses |Clause 3 (xvii)|
   • This is newly added paragraph;
   • Cash Losses is calculated by adjusting non-cash items from Profit/Loss after Tax (after restatements under Ind AS 8). It includes depreciation, amortization, Impairment etc.

• Reporting for both current and preceding year is required.

10. Resignation of Auditors |Clause 3 (xviii)|
    • This is newly inserted paragraph;
    • The point is a normal practice covered under SA 210 and professional ethics but from now, it will be disclosed in Auditor report also which requires reporting as to whether there has been any resignation of the statutory auditors during the year, if so, whether the auditor has taken into consideration the issues, objections or concerns raised by the outgoing auditors;

11. Material Uncertainty |Clause 3 (xix)|
    • This is newly inserted paragraph;
    • The liabilities to be examined for payment should exist at the date of balance sheet which fall due within a period of one year from the balance sheet date;

• It should be noted that “liabilities falling due within a period of one year” and “current liabilities” should not be construed as same.

12. Corporate Social Reporting |Clause 3 (xx)|
    • This is newly inserted paragraph which requires reporting for transfer of unspent amount as per required provisions.

13. Related to CFS |Clause 3 (xxi)|
    • Reporting under this clause is only required for those entities included in the consolidated financial statements to whom CARO 2020 is applicable.
    • The term qualification/adverse remark used in this clause refers to those relating to the negative remarks related to CARO 2020 clauses and should not be confused with qualified and adverse opinion as per SA 705. In case the component is not yet audited, the principal auditor has to report the name of such component along with the fact that the audit report has not been issued yet.
    • the auditor is not required to revaluate the materiality from a consolidation perspective;
    • every qualification/adverse remark made by every individual component including the parent should be included while reporting under clause 3(xxi).

• Order dated 25th February 2021

The Ministry of Corporate Affairs, Government of India, issued notifications dated 24th March, 2021 to amend Companies (Audit and Auditors) Rules, 2014 to enhance the disclosures required to be made by the Company in its Audit Report.

Amendment in Rule 11 i.e. Other Matters to be Included in Auditors Report.

In Rule 11.

• Existing clause (d) shall be omitted.
• New Clause (e), (f) & (g) inserted.

Rule 11(d) whether the company had provided requisite disclosures in its financial statements as to holdings as well as dealings in Specified Bank Notes during the period from 8th November, 2016 to 30th December, 2016 and if so, whether these are in accordance with the books of accounts maintained by the company.]

New Clause:

(e) (i) Whether the management has represented that, to the best of it’s knowledge and belief, other than as disclosed in the notes to the accounts, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the company to or in any other person(s) or entity(ies), including foreign entities (“Intermediaries”), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

Note: Auditor have to check the details in notes to account and take a representation from director about such clause and check all the transaction of Company in respect of loan, advance, investment & their respective documents.

(ii) Whether the management has represented, that, to the best of it’s knowledge and belief, other than as disclosed in the notes to the accounts, no funds have been received by the company from any person(s) or entity(ies), including foreign entities (“Funding Parties”), with the understanding, whether recorded in writing or otherwise, that the company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and

Note: Auditor have to check the details in notes to account and take a representation from director about such clause and check all the transaction of Company in respect of loan and advance received by company & their respective documents.

(iii) Based on such audit procedures that the auditor has considered reasonable and appropriate in the circumstances, nothing has come to their notice that has caused them to believe that the representations under sub-clause (i) and (ii) contain any material mis-statement.

(f) Whether the dividend declared or paid during the year by the company is in compliance with section 123 of the Companies Act, 2013.

(g) Whether the company has used such accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has been operated throughout the year for all transactions recorded in the software and the audit trail feature has not been tampered with and the audit trail has been preserved by the company as per the statutory requirements for record retention.

• Notification dated 24th March, 2021

The Ministry of Corporate Affairs, Government of India, issued notifications dated 24th March 2021 to amend Companies (Accounts) Rules, 2014 to enhance the disclosures required to be made by the Company in Board Report. These rules may be called the Companies (Accounts) Amendment Rules 2021.

Amendment in Rule 8 i.e. Matters to be included in Board’s Report. In rule 8, sub-rule 5 after clause x, two new clauses added.

New Clauses:

(xi) The details of an application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 during the year along with their status as at the end of the financial year.

(xii) The details of the difference between the amount of the valuation done at the time of one-time settlement and the valuation done while taking a loan from the Banks or Financial Institutions along with the reasons thereof.

Disclosure on above mentioned two clauses are required to be given in the Director’s Report of Companies along with other disclosures.

Amendment in Rule 3 i.e. Manner of Books of Account to be Kept in Electronic Mode. in Rule 3, in sub-rule (1) the proviso shall be inserted:

New Proviso:

Provided that for the financial year commencing on or after the 1st day of April, 2022, every company which uses accounting software for maintaining its books of account, shall use only such accounting software which has a feature of:

• Recording audit trail of each and every transaction,
• Creating an edit log of each change made in books of account along with,
• The date when such changes were made and
• Ensuring that the audit trail cannot be disabled

• Notification dated 18th June 2021

The Ministry of Corporate Affairs (MCA) vide Notification dated 18 June 2021 has issued new Companies (Indian Accounting Standard) Amendment Rules, 2021 in consultation with the National Financial Reporting Authority (NFRA). The amendments are intended to keep the Ind ASs aligned with the amendments made in IFRS.

The amendments are effective for the financial year ended 31 March 2022 onwards and also for interim financial periods i.e. quarters ending 30 June 2021, 30 September 2021, 31 December 2021.

Major amendments are as follows:

(a) Ind AS 116  (Leases) – The amendments extend the benefits of the COVID 19 related rent concession that were introduced last year (which allowed lessees to recognize COVID 19 related rent concessions as income rather than as lease modification) from 30 June 2021 to 30 June 2022.

(b) Ind AS 109 (Financial Instruments) – The amendment provides a practical expedient for assessment of contractual cash flow test, which is one of the criteria for being eligible to measure a financial asset at amortized cost, for the changes in the financial assets that may arise as a result of Interest Rate Benchmark Reform along. An additional temporary exception from applying hedge accounting is also added for Interest Rate Benchmark Reform.

(c) Ind AS 101 (Presentation of Financial Statements) – The amendment substitutes the item (d) mentioned in paragraph BI as ‘Classification and measurement of financial instruments’. The term ‘financial asset’ has been replaced with ‘financial instruments’.

(d) Ind AS 102 (Share-Based Payment) – The amendments to this standard are made in reference to the Conceptual Framework of Financial Reporting under Ind AS in terms of defining the term ‘Equity Instrument’ which shall be applicable for the annual reporting periods beginning on or after 1 April 2021.

(e) Ind AS 103 (Business Combinations) – The amendment substitutes the definition of ‘assets’ and ‘liabilities’ in accordance with the definition given in the framework for the Preparation and Presentation of Financial Statements in accordance with Ind AS for qualifying the recognition criteria as per acquisition method.

(f) Ind AS 104 (Insurance Contracts) – The amendment covers the insertion of certain paragraphs in the standard in order to maintain consistency with IFRS 4 and also incorporates the guidance on accounting treatment for amendments due to Interest Rate Benchmark Reform.

(g) Ind AS 105 (Non-current assets held for sale and discontinued operations) – The amendment substitutes the definition of ― “fair value less costs to sell” with “fair value less costs of disposal”

(h) Ind AS 106 (Exploration for and evaluation of mineral resources) – The amendment has been made in reference to the Conceptual Framework for Financial Reporting under Indian Accounting Standards in respect of expenditures that shall not be recognized as exploration and evaluation assets.

(i) Ind AS 107 (Financial Instruments: Recognition, Presentation and Disclosure) – The amendment clarifies the certain additional disclosures to be made on account of Interest Rate Benchmark Reform like

• the nature and extent of risks to which the entity is exposed arising from financial instruments subject to interest rate benchmark reform;
• the entity‘s progress in completing the transition to alternative benchmark rates, and how the entity is managing the transition.

(j) Ind AS (111 Joint Arrangements) – In order to maintain consistency with the amendments made in Ind AS 103, respective changes have been made in Ind AS 111.

(k) Ind AS 114 (Regulatory Deferral Accounts) – The amendment clarifies that an entity may only change its accounting policies for the recognition, measurement, and impairment & derecognition of regulatory deferral account balances if the change makes the financial statements more relevant to the economic decision-making needs of users and no less reliable.

(l) Ind AS 115 (Revenue from Contracts with Customers) – Certain amendments have been made in order to maintain consistency with number of paragraphs of IFRS 15.

(m) Ind AS 8 (Accounting Policies, Changes in Accounting Estimates and Errors) – In order to maintain consistency with the amendments made in Ind AS 114 and to substitute the word ‘Framework’ with the ‘Conceptual Framework of Financial Reporting in Ind AS’, respective changes have been made in the standard.

(n) Ind AS 16 (Property, Plant and Equipment) –The amendment has been made by substituting the words “Recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use” with “Recoverable amount is the higher of an asset’s fair value less costs of disposal and its value in use”.

(o) Ind AS 34 (Interim Financial Reporting) –The amendments to this standard are made in reference to the conceptual framework of Financial Reporting in Ind AS.

(p) Ind AS 37 (Provisions, Contingent Liabilities and Contingent Assets) – The amendment substitutes the definition of the term ‘Liability’ as provided in the Conceptual Framework for Financial Reporting under Indian Accounting Standards.

(q) Ind AS 38 (Intangible Assets) – The amendment substitutes the definition of the term ‘Asset’ as provided in the Conceptual Framework for Financial Reporting under Indian Accounting Standards.

• Notification dated 18th June 2021

Meet the DMC Global

        Editorial Team

Dheeraj Mehta

DMC Global

Principal Consultant

Mahima Gupta

DMC Global

Accounts Executive

Surbhi Gupta

DMC Global

Senior Consultant

Gunika

DMC Global

Senior Consultant

     Disclaimer

This newsletter is based on the completeness & accuracy of the facts stated therein & assumptions, which if not entirely complete or accurate, should be communicated to us, as the inaccuracy or incompleteness could have a material impact on our conclusions. The information contained in this newsletter is based on our understanding of the law & regulations prevailing as of the date of this note as well as our past experience with the tax and / or regulatory authorities. However, there can be no assurance that the tax authorities or regulators will concur with our views.

The information contained herein is of general nature and does not serve as a professional advice to address the circumstances of any particular individual or entity. It is advised to not act on such information without appropriate professional advice after a thorough examination of the particular situation.

Without prior permission of DMCGLOBAL SERVICES LLP, the contents of this newsletter may not be quoted in whole or in part or otherwise referred to in any documents. This document is for the specific purpose and we accept no responsibility or liability to any party.

                                               Contact us

Follow us on:                                                                        Give your valuable Feedback/Comments/Queries by

                                                                                                   sending mail to us at dheeraj.mehta@dmcglobal.co.in

DMC Global Services LLP                                             

Unit No 45, Ground floor, JMD Megapolis, Sohna  

Road, Sector-48, Gurgaon, HR-122018 IN

www.dmcglobal.co.in

Ph. 0124-495 2727, 9818214570                                                                                 

CBDT extends due date for filing of Income Tax Returns and various Reports of audit for the Assessment Year 2021-22

Circular No. 17, dated September 9, 2021

Subject: Extension of time lines for filing of Income-tax returns and various reports of audit for the Assessment Year 2021-22- reg.

On consideration of difficulties reported by the taxpayers and other stakeholders in electronic filing of Income-tax returns and various reports of audit under the provisions of Income-tax Act,1961 (Act), the Central Board of Direct Taxes (CBDT), in exercise of its powers under Section 119 of the Act, provides relaxation in respect of the following compliances:

     Disclaimer

This newsletter is based on the completeness & accuracy of the facts stated therein & assumptions, which if not entirely complete or accurate, should be communicated to us, as the inaccuracy or incompleteness could have a material impact on our conclusions. The information contained in this newsletter is based on our understanding of the law & regulations prevailing as of the date of this note as well as our past experience with the tax and / or regulatory authorities. However, there can be no assurance that the tax authorities or regulators will concur with our views.

The information contained herein is of general nature and does not serve as a professional advice to address the circumstances of any particular individual or entity. It is advised to not act on such information without appropriate professional advice after a thorough examination of the particular situation.

Without prior permission of DMCGLOBAL SERVICES LLP, the contents of this newsletter may not be quoted in whole or in part or otherwise referred to in any documents. This document is for the specific purpose and we accept no responsibility or liability to any party.

                                                   Contact us

Follow us on:                                                                               Give your valuable Feedback/Comments/Queries by

                                                                                                          sending mail to us at dheeraj.mehta@dmcglobal.co.in

DMC Global Services LLP                                             

Unit No 45, Ground floor, JMD Megapolis, Sohna  

Road, Sector-48, Gurgaon, HR-122018 IN

www.dmcglobal.co.in

Ph. 0124-495 2727, 9818214570