MindPower Financial Consultants

29/06/2018

Mandatory Annual KYC Of All Directors Of All Companies By 31.08.2018

As part of updating its registry, MCA would be conducting KYC of all Directors of all companies annually through a new e-form viz. DIR-3 KYC to be notified and deployed shortly.

Accordingly, every Director who has been allotted DIN on or before 31st March, 2018 and whose DIN is in ‘Approved’ status, would be mandatorily required to file form DIR-3 KYC on or before 31st August,2018.

While filing the form, the Unique Personal Mobile Number and Personal Email ID would have to be mandatorily indicated and would be duly verified by One Time Password(OTP).

The form should be filed by every Director using his own DSC and should be duly certified by a practicing professional (CA/CS/CMA). Filing of DIR-3 KYC would be mandatory for Disqualified Directors also.

After expiry of the due date by which the KYC form is to be filed, the MCA21 system will mark all approved DINs (allotted on or before 31st March 2018) against which DIR-3 KYC form has not been filed as ‘Deactivated’ with reason as ‘Non-filing of DIR-3 KYC’.

After the due date filing of DIR-3 KYC in respect of such deactivated DINs shall be allowed upon payment of a specified fee only, without prejudice to any other action that may be taken. (Source -- MCA Website)


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29/06/2018

Delhi Raises GST E-Way Bill Threshold Limit

After West Bengal and Tamil Nadu, Delhi has become the third state to double the threshold for electronic-way (e-way) bill for intra-state movement of goods to Rs 1 lakh of the cargo value. Experts said the move poses a threat to seamless implementation of a unified, pan-India GST.

States are legally allowed to amend these rules and also give item-wise exemptions from e-way bill requirements, subject to ceilings. However, tax practitioners said the move could create confusion among taxpayers and make compliance more complex for businesses having consumer bases in multiple states.

FMCG companies, white-goods manufacturers and auto companies will bear the brunt if more states follow suit and digress from the e-way bill norms approved by the GST Council. The tacit understanding at the council is that such digressions are best be avoided. Sources said Tamil Nadu and West Bengal have notified state-specific exemptions.

The E-way bill mechanism mandates that supplier or recipient of good worth over Rs 50,000 inform the GST Network about details of movement of such merchandise. The system would allow the government to detect under-reporting of sales in business-to-consumer transactions, and is estimated to shore up monthly GST revenue by as much as Rs 10,000 crore.

E-way bill rules came into effect on April 1 for inter-state movement of merchandise, (Source - Financial Express)


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29/06/2018

GST Increased Illegal Activities 4-5 Times In Terms Of Billing

The goods and services tax (GST) introduced to track the trail of transaction has in fact increased illegal activities in terms of billing by multiple times. ‘Bill selling’, a practice common in the construction sector among those who inflate cost of projects, has gone up four-five times after the launch of GST.

In case of ‘bill selling’ a dealer or a distributor would buy the goods from a construction material manufacturer paying taxes and would get a proper bill. This bill alone is then sold to a private builder or a government contractor who wants to inflate the cost of his projects.

The builder would have bought the products from some other manufacturer for a lesser price or without a bill. He would pay four-five per cent of the amount to distributor for the bill.

Now, the distributor can sell goods to the retailer without a bill and without charging tax. By selling the goods upfront for cash to the retailer and buying them from the manufacturer for credit, the distributor can also earn some additional margin by giving the cash for short-term lending purposes in the unorganised credit market. “This practice was there in the earlier tax regime too. But it has increased four-five times after introduction of GST,” said an electrical goods manufacturer.

“Earlier, bills were che­cked at the state check-posts and hence such practices were contained within the state. Now bill selling happens inter-state and inter-city. While introducing the new tax regime, the government removed the existing checks and balances. But they have not introduced new checks that can curb such practices,” he said.

As per GST, the taxman can trace the entire trail or transactions. But the government has not started or put in place the infrastructure to crosscheck input and output tax and hence the malpractice is continuing unabated.

“Earlier this used to happen largely with the local manufacturers and now such dealers and distributors are using our bills in a big way as well. As a consequence, our products are available at different markets across the country at different price points,” said a manufacturer of a well-known brand of construction goods. “Some of the retailers, who were getting goods from us after paying GST, are now getting them from such dealers for a better price. Such goods are also freely moving across the states,” he added. (Source - AsianAge)


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29/06/2018

Income Tax Dept Detects Rs.10, 767 Crore Undisclosed Income During Fiscal 2017-18

The Income Tax Department has detected undisclosed income of over Rs. 10,000 crore in fiscal 2017-18, thus recording a 20 percent surge over the previous fiscal.

A senior department official told ANI on the condition of anonymity that the Directorate General of Income Tax (Intelligence and Criminal Investigation) unearthed Rs 10,767 crore undisclosed income, up from that of Rs 9051crore detected in FY 2016-17.

The income was detected during the verification of cases of Non Pan Data, Foreign Account Tax Compliance Act (FATCA), Automotive Exchange of Info (AEOI), and Common reporting standard (CRS) data.

As per an IT Department source, FATCA cases shot up three times. In the previous fiscal, more than 3500 cases were verified, compared to 827 cases in FY 2016-17, thus seeing a three-fold growth. Furthermore, undisclosed income under FATCA also shot up to double during the year, the department said.

In terms of actionable reports, the department said 1000 reports were sent to the field, recording a 1.5 time increase compared to the FY 2016-17 figures of 66. Post the November 2016 demonetisation drive, the source said AEOI/CRS cases had also shot up three times, from 650 cases in FY 2016-17 to 2300 cases in FY 2017-18. (Source - Financial Express)


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29/06/2018

Taxpayer Can File Revised Return After Notice Issued By I-T Dept – ITAT

A tax benefit claimed by a taxpayer in his revised income-tax return cannot be denied outright by an income-tax (I-T) officer merely because the revised return has been filed after issue of notice, income-tax appellate tribunal (ITAT) has said.

However, the revised return needs to be filed within the time limits set out in the I-T Act. This order of the Mumbai bench of the ITAT, passed on June 20, will provide relief to several taxpayers. When a mistake is made in the original I-T return, such as not disclosing an income correctly or not claiming a tax deduction, section 139 (5) the I-T Act permits a revised return to be filed to correct the errors. Currently, the time limit for filing a revised return is before the expiry of twelve months from the last day of the financial year or before the completion of I-T assessment, whichever is earlier.

In this case before the ITAT, Mahesh Hinduja had declared a total income of Rs 4.91 lakh in his original return for the financial year 2010-11. He later filed a revised return declaring a total income of Rs 6.24 lakh. In this revised return he also disclosed long-term capital gains (LTCG) of nearly Rs 50 lakh. However, as he had invested 1.15 crore in a new residential house, he claimed a deduction under Section 54 of the I-T Act. Thus, capital gains were not offered for tax.

Under the Act, if an investment is made in another house in India, within the stipulated period of time, then the 'cost of the new house' is deducted and only the balance component of the LTCG is taxable. Thus, if the amount of capital gains is equal to or less than the cost of the new house, the entire sum of LTCG is not taxable. To ensure that the taxpayer has not underreported his income or paid less tax, the I-T Act empowers I-T officials to issue a notice asking for further evidence. As the revised return was filed by Hinduja after he had received a notice under section 143(2), the I-T official rejected his claim for deduction. The litigation finally reached the level of the ITAT.

The ITAT noted that the I-T official had rejected the revised return of income as invalid but at the same time had accepted the higher income offered in the revised return, including the LTCGs. Only the claim of deduction under Section 54 had been rejected. "The I-T official has adopted a very selective approach in respect of the revised return of income filed by the taxpayer," remarked the ITAT.

The ITAT held that the I-T Act does not bar a taxpayer from filing a revised I-T return after issue of notice under Section 143 (2). Hinduja's case was sent back to the I-T official for examining and allowing the deduction, subject to the fulfilment of conditions prescribed for such claim. (Source - Times of India)


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29/06/2018

GSTN Designing Tools For Taxmen To Analyse Data To Check Evasion

Almost a year into providing platform for tax collection, GST Network is now developing applications and tools for tax officers to help analyse data of their assessees and check possible evasion, a senior official said.

GST Network (GSTN), the company handling the technology backbone for Goods and Services Tax, has over the last 11 months provided a platform for businesses to file their returns and pay taxes every month.

GSTN Chief Executive Prakash Kumar said the next focus of the company will be on providing data analytics and improving user interface on the GSTN portal, besides developing backend system for assessment, audit, appeal and advance ruling for 27 states.

"'We are working on the analytics part. We have already started sharing with tax officers simple analytics on differences between GSTR-3B and GSTR-1, GSTR-3B and GSTR-2A. This is a broad state-wise data generated by GSTN, based on which the officers can look into the returns filed by taxpayers in his jurisdiction and spot mismatches," Kumar told PTI in an interview.

GSTN currently only provides support to tax officers (on data analysis). And gradually we are providing them tools so that they can do it themselves... We are in the process of developing an application for Commissioners to generate data without any external help, he added.

He said the tools would enable tax officers to do the analysis themselves. "We have started work on it, We had even showed the functionality to state officers. We will be slowly releasing the tools over the next few months," Kumar added.

GSTN is also working to improve its user interface by providing systematised error messages with 'error numbers'. Once a taxpayers sees a particular error number pop up on the screen, he can call the GSTN help desk for solutions.

"Now the error message also says what has gone wrong and what you need to do to correct that. It will show a particular error number, which helps the GSTN helpdesk person to quickly identify the error that the taxpayer is committing and can guide him accordingly," Kumar said.

Since the roll out of the GST from July 1, 2017, GSTN has handled 11.5 crore returns and processed 376 crore invoices.

Currently, over 1.11 crore businesses are registered under the GST regime, of which 63.76 lakh have migrated from the erstwhile service tax and VAT regime, and 47.72 lakh are new registrants. As many as 17.61 lakh businesses have opted for composition scheme under GST.

Kumar further said that GSTN has been sending Management Information System (MIS) reports to tax officers 27 states which are categorised as model 2 states for better understanding of taxpayers in their jurisdiction.

"We have provided 27 different MIS report for model 2 states. The tax officers get to see their own jurisdiction data, who their assessees are, return filed, taxes paid. The report has daily, monthly revenue collection list in the jurisdiction, ward-wise collection list, registration details, taxpayers with outstanding liability, disposal of cases, among other things," he said.

Based on the broad data mining by GSTN, tax officers have started analysing cases where there are instances of mismatch and have been sending scrutiny notices to taxpayers whose summary sales returns GSTR-3B did not match with final returns GSTR-1 or with system generated purchase returns GSTR-2A.

Besides, many tax payers have got notices for utilising input tax credit (ITC) for payment of most of the GST liability and have been asked to explain reasons within a stipulated time. Also some notices have been sent for claiming less IGST input tax credit while filing sales returns as against the credit claims auto-generated by the GSTN. (Source - PTI)


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29/06/2018

SEBI Set To Revamp IPO Norms

The Securities and Exchange Board of India (Sebi) is set to revamp initial public offering (IPO) norms to make them less onerous for legitimate sellers while clamping down on possible misuse.

These include recognising a wider set of institutional investors such as alternative investment funds (AIFs) as counting toward promoters’ contribution in startups, requiring financial disclosures for three years rather than five and reducing disclosure of the price band to two days before the issue opens from five now.

The board will meet on June 21 to discuss proposed changes in the Issue of Capital and Disclosure Requirements (ICDR), said a person aware of the matter. Regulations have also been rewritten to make them consistent and easier to follow.
“There are cases of good companies where the promoter capital is not adequate for lock-in in an IPO,” said Prime Database managing director Prithvi Haldea. “Sometimes, alternative investment funds are willing to subscribe to the shortfall in the capital and prepared for a lock-in. Hence, it’s important to recognise a wider set of institutional investors to contribute towards promoters’ contribution.”

Haldea headed the ICDR committee that was constituted last year by Sebi. The committee has proposed several changes on financial disclosures and related party transactions. This is aimed at rationalising disclosures for group companies based on them being material to such transactions.

Also proposed is an ‘offer document summary’ that will contain key information about the company upfront.

Companies will be required to provide full details on related party transactions in consolidated financial statements so that investors have clear information about these.

Sebi is set to take a big leap in the right direction, said senior chartered accountant Dolphy D’Souza, making IPOs easy and convenient for bonafide issuers, while at the same time keeping an eye out for egregious related party transactions.

“Related party transactions are required to be disclosed on an uneliminated basis, so that investors understand the full scale of” such deals, he said. “The requirement to provide standalone financial statements on the website is aligned to the requirements of company law and do not create any additional burden on companies.”

The committee wants the price band to be announced only two working days before the IPO starts to minimise the effect of market volatility. It has also proposed restricting the subscription of high net worth individuals (HNIs) to the maximum non-qualified institutional buyer portion. The rules currently allow HNIs to make an application for the full book size and some recent IPOs saw over-subscription by this investor segment. In an IPO, 50% of the book size is reserved for qualified institutional buyers, 15% for non-institutional investors and 35% for retail investors.

“Given the huge applications in the past in the NII (non-institutional investor) category primarily for listing day gains, application size has now been restricted to the size of the offer that is available to allocation to NII category and not the full offer size,” Haldea said.

The proposed ICDR regulations have comprehensive chapters dedicated to issuance types. Within each chapter, the regulations are aligned to the process flow to make following them easier.

Obsolete regulations have been scrapped while several have been amended to bring them in line with the current market structure. Besides, all circulars, informal guidance and FAQs (frequently asked questions) have been suitably incorporated.

Over the past few years, the capital market has seen many changes not only on the regulatory front but also in the structure and size of the Indian capital market. This meant that the regulations had become unwieldy, said a member of the committee. (Source - ET)


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29/06/2018

Rs 2,000 Crore GST Evasion Unearthed In 2 Months

The GST investigation wing has detected tax evasion of over Rs 2,000 crore in two months, and data analysis reveals that only 1 per cent of over 1.11 crore registered businesses pay 80 per cent of the taxes, a senior official said today.

CBIC member John Joseph said alike small businesses who are making mistakes while filing GST returns, multinationals and big corporates too have slip-ups.

"If you look at the way tax revenues are paid, it gives an alarming picture. We have registration of more than 1 crore businesses.

"But if you look at where the tax is coming from, it is less than 1 lakh people paying 80 per cent of the tax, one does not know what is happening in the system, it is an important thing to study," Joseph said at an Assocham event here.

Joseph, who is also the Director General of Goods and Services Tax Intelligence (DG GSTI), said the analysis of composition dealers data shows that most of them have an annual turnover of Rs 5 lakh. "This shows that a lot of compliance is required."

Under the composition scheme, traders and manufacturers are allowed to pay taxes at a reduced rate of 1 per cent, while restaurant owners have to pay at 5 per cent rate. The scheme is open for manufacturers, restaurateurs and traders whose turnover does not exceed Rs 1.5 crore.

Joseph said investigation has revealed that a modus operandi is being followed whereby fake invoices are being generated for goods which have not been supplied at all.

Based on these invoices, some entities are claiming input tax credit. Besides, without actually exporting goods, some entities are claiming GST refunds based on fake invoices.

"Government revenue is being taken away. We in a short period of 1-2 months have detected over Rs 2,000 crore evasion which could be only the tip of the ice berg," Joseph said, adding the GST Intelligence wing will step up efforts in the days ahead. (Source - PTI, Economic Times)


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29/06/2018

GSTN To Go In For Third-Party Audit Of Its Software – CEO

GST Network has decided to go in for third-party audit of its software developed by Infosys to ensure that all changes in law are adequately captured and its performance is not lagging on any count, a senior official said.

GSTN operates the IT backbone for collection of Goods and Services Tax (GST) data of over 1.11 crore registered business entities. A third-party audit will ensure that data filed with GSTN is adequately secured and there are no glitches.

GST Network Chief Executive Prakash Kumar said third-party audit is a standard practice which is followed by banking and financial institutions.

"Whenever the law is changed or any circular is issued, we have to change the software. We need to have a third party to audit whatever software changes have been made by Infosys. So this is third-party expert audit," Kumar told in an interview.

He said currently the GSTN team audits the software changes which are brought about after any change in law.

"But we want a third-party auditor to certify that whatever changes has been brought about in the law, similarly the software has been changed, not more, not less," Kumar said.

Last year, the Standardisation Testing and Quality Certification (STQC) Directorate, which is under the Department of Electronics and Information Technology, had audited GSTN to check the security of the system.

The audit also encompassed other aspects like mechanism to enhance the resilience of the critical and sensitive GST IT network.

"Entire product which has been developed by Infosys it has been audited once by STQC. STQC will not audit every time. But, for all the changes that have been made I need a third-party to certify.

"This will be a continuous audit of what changes have been made, as per ISO requirement. Not only functional audit, but also performance audit. These would be technological auditors," Kumar said.

Since the rollout of the GST from July 1, 2017, GSTN has handled 11.5 crore returns and processed 376 crore invoices.

Currently, over 1.11 crore businesses are registered under the GST regime, of which 63.76 lakh have migrated from the erstwhile service tax and VAT regime, and 47.72 lakh are new registrants. As many as 17.61 lakh businesses have opted for composition scheme under GST. (Source - PTI, MoneyControl)


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22/06/2018

Assessment Of CA Students After Completion Of 1st And 2nd Year Of Practical Training

The Council has decided to assess students after completion of the first and second year of practical training with online MCQ based tests. These tests would examine the knowledge gained by the student during the course of practical training and his ability to apply his subject-specific skills while undergoing his training In that particular area.

The brief details about these tests are as below:

1. The test would be of 75 marks (Duration: 2 hours) for 1st-year students and of 100 marks (Duration: 3 hours) for 2nd-year students.

2. The students completing their 1st/2nd year of practical training in a particular quarter of a year would be eligible to register for the said test in the subsequent quarter.

3. Students will be assigned grades based on their performance in the assessments as below:

a. 80% and above — A grade

b. 60% and above but below 80%— B grade

c. 40% and above but below 60% — C grade

d. Below 40%— D grade

4. The grades would appear on the final marksheet of the student. A student can appear in the particular test at a maximum of two more times to improve his/ her grade by paying a nominal fee. The best grade out of all the grades scored would be taken for inclusion in the marksheet.

5, In the test, Accounting and Auditing (including Corporate Laws) of 50 marks will be mandatory and students would be selecting one optional module at 1st level test and two optional modules at 2nd level test, related to their practical training specialisation area. The optional modules (each comprising 25 marks) would be:

S.No - First Year - Second Year
1. - Direct Tax - Direct Tax including international Taxation
2. - Indirect Tax - Indirect Tax
3. - Internal Audit - Internal Audit

The first test for both the category of students will be on August 26, 2018. The students who would be completing their 1st/ 2nd year of practical training during the second quarter of 2018, i.e. April-June, 2018 would be eligible to appear in these assessments during August-December, 2018. Similarly, the students completing their 1st/2nd year during July-September, 2018 would be required to appear in October-December, 2018 quarter and so on. Concerned students are advised to practice the sample questions uploaded in BoS Knowledge Portal on the Institute website at the link: https://www.icai.org/new_post.html?post id=14834.

Further details would be hosted through an announcement on the Institute website only. For further clarifications, if any, you may write to [email protected].

Director, Board of Studies.


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ICAI - The Institute of Chartered Accountants of India set up by an act of parliament. ICAI is established under the Chartered Accountants Act, 1949 (Act No. ###VIII of 1949)

22/06/2018

6 More State-Run Banks May Come Under PCA

Six more state-run banks are at risk of entering the Reserve Bank of India’s prompt corrective action (PCA) framework, officials said. These include Punjab National Bank, Union Bank of India and Syndicate Bank, they said, adding that this may reduce the chances of the finance ministry’s plans to sell the good loans of weak banks to stronger lenders coming to fruition.

If the Reserve Bank of India imposes restrictions on these lenders in the next one month, it will bring the number of state-run banks under the PCA framework to 17. The central bank imposed PCA restrictions on Allahabad Bank in May, including a directive to reduce exposure to unrated and high-risk advances. Dena Bank was also asked to avoid taking fresh exposures.

A senior finance ministry official, however, said the banking regulator may give some relief given these lenders are not falling behind on all indicators. If the lenders don’t come under PCA, there is a chance the plan to sell healthy loans may work, he said.

“The banks in various discussions with the government and also the Reserve Bank have said that they will be able to recover in the next one or two quarters. If the RBI imposes restrictions under PCA, it will be difficult for them to turn around quickly,” he said, adding that RBI may be inclined to give them some leeway. “Some talks have been held.”

Another official said that if even three banks are put under PCA, the idea to set up a consortium of banks that will take over good loans of banks under PCA will not work out. “It also does not make sense for these banks to take over these loans if there are lending restrictions,” he added.

PCA involves imposition of various curbs such as stopping branch expansion, halting dividend payments, limiting loan limits, audits and restructuring if warranted. State-owned banks currently under PCA are Allahabad Bank, United Bank of India, Corporation Bank, IDBI Bank, UCO Bank, Bank of India, Central Bank of India, Indian Overseas Bank, Oriental Bank of Commerce, Dena Bank and Bank of Maharashtra.

“It is a bad idea to take performing loans out of the books of already struggling banks and saddle them with bad loans,” said MP Shorawala, a former independent director with Central Bank of India. “This could have worked if the government had consolidation plans.”

Last week, acting finance minister Piyush Goyal held a meeting with heads of public sector banks based in the west and south. After the meeting, Goyal had said that Bank of Baroda chief PS Jayakumar will formulate a strategy regarding state-owned banks taking over good loans of banks under PCA. Goyal has charge of the finance portfolio pending Arun Jaitley’s return from medical leave.

The government has also set up a committee under the chairmanship of Sunil Mehta, non-executive chairman of Punjab National Bank, to examine the setting up of an asset reconstruction company and/or asset management company for faster resolution of stressed assets involving multiple state-owned lenders. (Source - Economic Times)


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22/06/2018

Change Of Email And Mobile Number Of The Authorized Signatory Under GST System

Complaints are being received from taxpayers that the intermediaries who were authorized by them to apply for registration on their behalf had used their own email and mobile number during the process. They are now not sharing the user credentials with the taxpayer on whose behalf they had done the registration in the first place and the taxpayer is at their mercy.


With a view to addressing this difficulty of the taxpayer, a functionality to update email and mobile number of the authorized signatory is available in the GST System. The email and mobile number can be updated by the concerned Jurisdictional tax authority of the taxpayer as per the following procedure:



Steps to be followed:-



•Taxpayer is required to approach the concerned jurisdictional Tax Officer to get the password for the GSTIN allotted to the business.
•. Allotted jurisdiction is displayed in red text>
•Taxpayer would be required to provide valid documents to the tax office as proof of his/her identity and to validate the business details related to his GSTIN.
•Tax officer will check if the said person is added as a Stakeholder or Authorized Signatory for that GSTIN in the system.
•Tax officer will upload necessary proof on the GST Portal in support to authenticate the activity.
•Tax officer will enter the new email address and mobile phone number provided by the Taxpayer.
•After upload of the document, Tax officer will reset the password for the GSTIN in the system.
•Username and Temporary password reset will be communicated to the email address as entered by the Tax Officer.
•Taxpayer needs to login on GST Portal https://www.gst.gov.in/ using the First time login link.
•After first time login with the Username and Temporary password that was emailed to him, the system would prompt the taxpayer to change username and password. The said username and password can now be used by the taxpayer.


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