Ansh

AUGUST 2017

AHMEDABAD BRANCH
OF WICASA OF ICAI

The Institute of Chartered Accountants of India

(Setup by ACT of Parliament)
 From Chairman’s Ink…

Dear Student Friends,

21st century- the time of new invention, development, growth etc.

Ahmedabad- turning into metro city, growing at a tremendous pace. We would be traveling through
Metro within short period, we already have the BRTS service etc.

People say youth are the assets for a country, the CA students have proved us right, they calculate
the assets and liabilities and turn out to be an asset for country. This is proved by the wonderful
IPCC as well as Final CA results of Ahmedabad branch- ICAI. This year we have welcomed more den
430 newly qualified CAs from students’ bunch to Members basket. Kudos to the team.

We should definitely not forget to congratulate our new WONDERFUL WICASA team for the efforts
they Putin every event and activity. After being elected they have impressed the students by
handling a bunch of successful event. Their attitude and dedication towards the institute,
profession, their work and people is much appreciated.

I hope with this very issue of August E-Newsletter will help you in many practical and academic way
and provide you with satisfaction.

CA Purushottam Khandelwal
Chairman,
Ahmedabad Branch of WICASA
of WIRC Of ICAI.

-2-|Page
 From Vice-Chairman’s Ink

Dear colleagues,

SEPTEMBER, Being a CA student we know this month as Month of Workload, Pressure, Deadlines
and so on. With the Great Joy and support of our Office bearers of Ahmedabad Branch, I feel
honoured to present you this issue of AHMEDABAD BRANCH OF WICASA E-NEWSLETTER for August
month.

As a part of our duty to Provide all students a great ease as far as practical as well as academics are
concern we have covered such matters in this issue which will be helpful in each step towards Tax
Audit season.

Efforts of Ours as Representative of Students remained successful due to all the love and support of
our beloved students as well as members who provided us continuous guidance and motivation. I
hope this E-newsletter provide you the same kind of support and motivation while performing your
duties as Article Assistants as well as Students.

Akshay Amitbhai Sedani

Vice- chairman & Co-Editor,
Ahmedabad Branch of WICASA
of WIRC of ICAI.

-3-|Page
 From Editor’s Ink…

I can accept failure, everyone fails at something.. But I can’t accept not trying.."
-Michael Jordan

I wish you all a very Happy Teacher's Day well in advance. This coming up month of September
belongs to our teachers and as articles our guru is our Principal.

As you all must be knowing, newly elected WICASA committee took charge as office bearers from
10th of July, 2017. Since than we are working towards some critical grievances that students from
our branch are facing regarding the implementation of new scheme of curriculum by ICAI. As well
we are working in the path were students from our branch will get more and more exposure so that
they can explore there hidden skills and can march towards a wonderful career.

I hope all of you are geared up for the upcoming month where we will have numerous
opportunities to learn. With applicability of Income Computation and Disclosure Standards (ICDS),
we have to be more vigilant and robust in performing our duties as article trainee.

This month our newsletter covers few of the current debatable topics. We have got immense
response for the same and we thank each one of you for participating in huge mass.

Mr. Maulin Amitbhai Shah

Treasurer & Co-Editor,
Ahmedabad Branch of
WICASA of WIRC of ICAI.

-4-|Page
 Route To Read
Sr. No Content Page no.
1 From Chairman’s Ink……………………………………………. 2
2 From Vice-Chairman’s Ink……………………………………. 3
3 From Editor’s Ink…………………………………….…………… 4
4 Route To Read…………….…………….…………….………….. 5
5 Students’ Section…………….…………….…………….……… 6-27
6 Rewinding August…………….…………….…………….…….. 28-30

WICASA MANAGING COMMITTEE

CA Purushottam Khandelwal CA Fenil Shah

Chairman, WICASA Chairman, Student Committee

Mr. Akshay Sedani

Vice-Chairman,WICASA.

Miss. Kartiki Kalbhor Miss. Samridhhi Mandawat Mr. Maulin Shah

Joint Secretary Joint Secretary Treasurer

Mr. Akshay Munganiya Mr. Kemil Shah

Managing Committee Member Managing Committee member

-5-|Page
 Students’ Section

Name :Sapan B. Shah

Reg. No. : WRO052231
Talati And Talati Chartered Accountants.

(A) Provisions of Composition Scheme (Section 10 of CGST Act,

2017 to be read with CGST Rules, 2017):
1.1 Registration Process:

Any registered person who opts to pay tax under Composition Scheme shall electronically file an intimation in
FORM GST CMP-02 prior to the commencement of the financial year for which the option to pay tax under the
aforesaid section is exercised and shall furnish the statement in FORM GST ITC-03 in accordance with the
provisions of sub-rule (4) of rule 44 (Statement showing reversal of Input tax Credit of stock) within a period of
sixty days from the commencement of the relevant financial year.

Any person who files an intimation to pay tax under Composition Scheme shall furnish the details of stock,
including the inward supply of goods received from unregistered persons, held by him on the day preceding the
date from which he opts to pay tax under the said section, electronically, in FORM GST CMP-03, within a
period of sixty days from the date on which the option for composition levy is exercised.
The option to pay tax under Composition Scheme shall be effective from the beginning of the financial year,
where the intimation is filed.
1.2 Rate:
A registered person, whose aggregate turnover in the preceding financial year did not exceed
Rs.75 lakh (Rs.50 lakh in case of North-Eastern States), may opt to pay the amount of tax as under:

1. Every Manufacturer (Other than notified by Government 1% 1% 2%

i.e., manufacturer of Ice cream and other edible ice,

whether or not containing cocoa, Pan Masala & Tobacco

and manufactured tobacco substitutes)

2. Restaurant Service Provider (Other than providing 2.5% 2.5% 5%

-6-|Page
 alcoholic liquor for human consumption)

[As per Schedule II]

3. Other eligible Traders or Suppliers 0.5% 0.5% 1%

 As per Sec. 2(6), aggregate turnover means the aggregate value of all taxable supplies (excluding the value
of inward supplies on which tax is payable by a person on reverse charge basis), exempt supplies, exports of
goods or services or both and inter-State supplies of persons having the same Permanent Account Number, to
be computed on all India basis but excludes central tax, State tax, Union territory tax, integrated tax and cess.
 The above limit shall be considered for aggregate turnover of the persons registered under the same PAN. i.e.,
if an individual has different business segment, then he must register all the segments collectively under the
scheme.

1.1 Eligibility:
 The registered person shall not be eligible to opt for composition levy if:—
(a) He is engaged in making any supply of goods which are not leviable to tax under this Act;
(b) He is engaged in making any inter-State outward supplies of goods;
(c) He is engaged in making any supply of goods through an electronic commerce operator who is required to
collect TCS under section 52; and
(d) He is a manufacturer of such goods as may be notified by the Government on the recommendations of the
Council.

The option of composition scheme availed of by a registered person shall lapse with effect from the day on
which his aggregate turnover during a financial year exceeds the limit specified.

1.2 No Credit:
Composition dealer shall not be entitled to any input tax credit as well as the person purchasing from
Composition Dealer shall not be entitled to input tax Credit due to the following definition:

Input tax in relation to a registered person, means the central tax, State tax, integrated tax or
Union territory tax charged on any supply of goods or services or both made to him but does not
include the tax paid under the composition levy. [Section 2(62)] & Section 17(5)(e).

1.3 Special Points for composition levy:

(a) A registered person paying tax under the Composition scheme shall issue a bill of supply instead
of a tax invoice. (No bill of issue if value of supply is less than Rs.200)
-7-|Page
 (a) The goods held in stock by him on the appointed day have not been purchased in the course of inter-State
trade or commerce or imported from a place outside India & also, he shall not carry out any inter-state
transaction.
However, there is no restriction on procuring goods from inter-state suppliers.
(b) The goods held in stock by him have not been purchased from an unregistered supplier and where
purchased, he pays the tax under sub-section (4) of section 9;
(c) He shall pay tax under reverse charge under sub-section (3) or sub-section (4) of section 9 on inward supply
of goods or services or both;
(d) He was not engaged in the manufacture of goods as notified during the preceding financial year;
(e) He shall mention the words ͞composition taxable person, not eligible to collect tax on supplies͟ at the top
of the bill of supply issued by him; and
(f) He shall mention the words ͞composition taxable person͟ on every notice or signboard displayed at a
prominent place at his principal place of business and at every additional place or places of business.
(g) He is neither a casual taxable person nor a non-resident taxable person;
(h) The main benefit of the scheme is that Composition dealer needs to file only 1 Return per Quarter in Form
GSTR-4 instead of 3 returns each month. Thus, it results into lesser Compliance.

1.1 Validity:
The option exercised by a registered person to pay tax under Composition scheme shall remain valid so long
as he satisfies all the conditions mentioned in the said section and under the rules.

The registered person who intends to withdraw from the composition scheme shall, before the date of such
withdrawal, file an application in FORM GST CMP-04 along with a statement in FORM GST ITC-01 containing
details of the stock of inputs and inputs contained in semi-finished or finished goods held in stock by him on
the date on which the option is withdrawn or denied, within a period of thirty day & avail input tax credit
on it.

(A) Provisions of Reverse Charge Mechanism [Section 9(3) &

9(4) of CGST Act, 2017 / Section 5(3) & 5(4) of IGST Act, 2017]:

2.1 Section 9(3):

The Government may, by notification, specify categories of supply of goods or services or both, the tax on
which shall be paid on reverse charge basis by the recipient of such goods or services or both. The following
Goods & Services are notified till Date

-8-|Page
 Goods: (Not existed in any earlier law)

1 0801 Cashew nuts, not Agriculturist Any registered

shelled or peeled person

2 1404 90 10 Bidi wrapper leaves Agriculturist Any registered

(Tendu) person

3 2401 Tobacco leaves Agriculturist Any registered

person

4 5004 to Silk yarn Any person Any registered

5006 who person
manufactures
silk yarn

5 - Supply of lottery State Lottery

Government, distributor or
Union selling agent.
Territory or
any local
authority

Services:

Sr Category of Service Supply of Service Recipient of Service

No.

1 Goods Transport (a) Any registered factory

Agency (GTA) (b) Any registered society
(c) Any registered co-operative
society
(d) Any registered person under any
GSTAct
(e) Any body corporate
(f) Any registered/unregistered
partnership firm
(g) Any casual taxable person;
Supply of Services in located in the taxable territory.
Respect of (Note: Unregistered
transportation of Individual/AOP/BOI are not
goods by road covered above.)

-9-|Page
 2 An individual advocate Any business entity
including a senior located in the taxable
advocate or firm of Territory
advocates.
Legal Services provided (Note: Limit of threshold
directly or indirectly Turnover is removed)

3 An arbitral tribunal Any business entity

located in the taxable
Services supplied by an Territory
arbitral tribunal to a business
entity (Note: ”Any Services”)

4 Any person Any body corporate or

Services provided by way of partnership firm located in
sponsorship the taxable territory.

5 Any Services Central Government, Any business entity

State Government, located in the taxable
(Refer Note 2) Union territory or local Territory
authority

6 Services supplied by a director A director of a The company or a body

of a company or a body company or a body corporate located in the
corporate. Corporate taxable territory.

7 Services supplied by an An insurance agent Any person carrying on

insurance agent. insurance business,
located in the taxable
territory

8 Services supplied by a A recovery agent A banking company or a

recovery agent. financial institution or a
non-banking financial
company, located in the
taxable territory.

9 Supply of services by way of Author or music Publisher, music company,

transfer or permitting the use composer, producer or the like,
or enjoyment of a registered photographer, artist, located in the taxable
copyright relating to original or the like territory
literary, dramatic, musical or
artistic works.

- 10 - | P a g e
 Notes:

1) Legal Services includes services by way of representational services before any court, tribunal or authority.
2) All Services excludes : (Means RCM Not applicable in following cases)

(1) renting of immovable property,

(2) services by the Department of Posts by way of speed post, express parcel post, life insurance, and
agency services provided to a person other than Central Government, State Government or Union
territory or local authority; services in relation to aircraft or vessel, inside or outside the precincts of a
port or airport;
(3) Transport of goods or passengers.
3) The person who pays or is liable to pay freight for the transportation of goods by road in goods carriage,located
in the taxable territory shall be treated as the person who receives the service.
4) Now, Tax on Manpower Supply, Vehicle Hire Charges, Works Contract services are required to be paid on
Forward Charge Basis.

2.2 Section 9(4):

The tax in respect of the supply of taxable goods or services or both by an unregistered supplier to a registered
person shall be paid by the registered person on reverse charge basis as the recipient.

Further, As per Notification No.8/2017-Central Tax (Rate) dated 28.June.2017, Central Government exempts intra-
State supplies of goods or services or both received by a registered person from any unregistered supplier from the
whole of the central tax where the aggregate value of such supplies received by a registered person from any or all
the suppliers, who is or are not registered, does not exceeds Rs.5,000 in a day.

As per Notification No.5/2017-Central Tax dated 19.June.2017, the persons who are only engaged in making
supplies of taxable goods or services or both, the total tax on which is liable to be paid on reverse charge basis by the
recipient of such goods or services or both under section 9(3) of the Act are the category of persons exempted from
obtaining registration.
(Note: Sec. 9(4) is not covered by above Exemption notification.)

2.3 Section 31(3)(f) & 31(3)(g) of CGST Act:

A registered person who is liable to pay tax under RCM shall issue an invoice in respect of goods or services or both
received by him from the unregistered supplier on the date of receipt & he shall issue a payment voucher at the time
of making payment to the supplier.

However, a registered person may issue a consolidated invoice at the end of a month for supplies covered under
section 9(4) if the aggregate value of such supplies exceeds Rs.5,000 in a day from any or all the suppliers:

The tax payable as above shall be entitled to Input Tax Credit under section 2(62) referred above.
However, the tax payable under RCM has to be paid in cash.
========================================THANK YOU===============================================

- 11 - | P a g e
 Name : Hitesh Kishor Agiwal
Reg no: WRO0498083
Chhaged & doshi & co.

INCOME COMPUTATION AND DISCLOSURE

STANDARDS ICDS
- With its implications in Tax Audit Report (TAR)
Overview:

The Ministry of Finance has issued 10 Income Computation and Disclosure Standards (ICDS),
operationalising a new framework for computation of taxable income by all Assessees in relation to
their income under the heads Profit and gains of business or profession and Income from Other
Sources and not for the purpose of maintenance of books or preparing financial statements.

The Central Board of Direct Taxes (CBDT) notified these standards u/s. 145(2) of the Income-tax Act,
1961 (the Act) vide Notification No. 33/2015/SO 892(E) dated 31 March 2015 . This notification comes
as a follow up to the announcement made by the Finance Minister in his maiden budget speech in July
2014 of the intent to notify standards for computation of tax. Subsequently, Notification No. 87/2016,
dated 29-9-2016 came into force with effect from 1-4-2016 and became applicable with effect from
Assessment Year 2017-18 and clarification in form of FAQ s issued on 23-03-2017 vide Circular
10/2017.

Applicability:

All Assesses following Mercantile System of accounting (including the non-corporate assessee s who
are covered by Presumptive Scheme of taxation) except Individual and Hindu Undivided Family (HUF)
who

- 12 - | P a g e
 is not required to get his accounts audited u/s. 44AB of the Act. Thus in case Assessee is Individual or
HUF and is carrying on Business with sales turnover less than Rs 2Crores or carrying on profession with

Gross receipts less than Rs 50 Lacs during AY 2017-18 (financial year 2016-17) then ICDS are not
applicable on such Individual or HUF.

In the case of conflict between the provisions of The Income Tax Act, 1961 and ICDS’s then the
provisions of The Act shall prevail to that extent. Also, in case of inconsistency with judicial precedents,
ICDS would prevail to the transactional issues dealt therein from AY 2017-18.

ICDS No ICDS Corresponding AS

I ACCOUNTING POLICIES AS-
II VALUATION OF INVENTORIES AS-
III CONSTRUCTION CONTRACTS AS-
IV REVENUE RECOGNITION AS-9
V TANGIBLE FIXED ASSETS AS-
VI EFFECTS OF CHANGE IN FOREIGN EXCHANGE RATES AS-
VII GOVERNMENT GRANTS AS-
VIII SECURITIES AS-
IX BORROWING COSTS AS-
X PROVISIONS, CONTINGENT LIABILITIES & CONTINGENT ASSETS AS- 9

The impact of ICDS is required to be reported in Tax Audit Report(TAR) in Form 3CD and ITR. As a result,
in Form 3CD, in Part B, in Clause 13, sub-clause (d) is amended to include ICDS. Further, sub-clause (e)
and (f) were added. Sub-clause (e) requires reporting of adjustments required to Profit & Loss in
following format:

- 13 - | P a g e
 Disclosures required under ICDS are required to be disclosed under sub-clause (f).
However, there shall not be any separate disclosure requirements for persons who are not liable to tax
audit other than in ITR in relevant return form 3, 5 & 6 as follows:

- 14 - | P a g e
 ICDS – I: Accounting Policies

 This ICDS deals with the Significant Accounting Policies (SAP).

 It recognizes the Fundamental Accounting Assumptions of Going concern, Consistency and
Accrual while it does not consider the concepts of Prudence and Materiality .
 Treatment and presentation have to be governed by on the basis of Substance over form .
 Marked to market (MTM) loss or an expected loss is not to be recognized unless recognition of
such loss is in accordance with the provisions of any other ICDS. Same principle shall apply
mutatis mutandis to MTM gains or expected profit i.e. MTM gain is not taxable as clarified by
Circular 10/2017.
 SAP shall not be changed without reasonable cause.
 Apply to derivatives not within the scope of ICDS – VI.
 Disclosure in TAR:
The SAP adopted (as stated in Notes forming part of Financial Statements, if in compliance with
applicable ICDS) and Change in SAP having material effect along with the amount of change
shall be disclosed. In case of no material effect in current year but the disclosure should also be
made in the year in which such change has material effect for first time. Disclosure of
accounting policies or of changes cannot remedy a wrong or inappropriate treatment of the
item.

ICDS – II: Valuation of Inventory

 Inventories has been defined to mean assets held for –
o Sale in the normal course of business
o In the process of production of such sale
o In the form of materials or supplies to be consumed in the production process or in the
rendering of services.
 This ICDS is not applicable to WIP- Construction & Service Contracts covered under ICDS –III,
Shares/Debentures and other financial instruments held as Stock in Trade covered under ICDS –
VIII, Producers inventories such as livestock, agriculture/forest products, minerals oils, ores &
gases to the extent they are measured at Net Realizable value and Machinery Spare used for
tangible fixed assets covered under ICDS –V.
 This ICDS requires Inventory to be valued at Cost (determined using FIFO or Weighted Average
Cost methods) or Net Realizable Value(NRV) whichever is lower.
 Further, Standard Costing and Retail Method have also been permitted for measurement of cost
inventories.
- 15 - | P a g e
  Cost of Inventories = Cost of Purchases + Cost of Services (available to all Assessees whether Service
Provider or not) + Cost of Conversions + any other cost directly attributable – NRV of Scrap/waste
 In case of dissolution of Firm/ AOP/ BOI, notwithstanding whether business is discontinued or not, the
inventory on the date of dissolution shall be valued at the NRV.
 Disclosure in TAR:
 The accounting policies adopted in measuring inventories including the cost formulae used and
the total carrying amount of inventories and its classification appropriate to a person.

ICDS – III: Construction Contracts

 This ICDS is required to be applied in determination of income of a contractor from construction

contract. It is not applicable to Real Estate Developers as Draft ICDS in respect of same is
released in May 2017.
 Applicable separately to each construction contracts and also includes contracts for the
rendering of services which are directly related to the construction of asset.
 It only recognizes Percentage of Completion Method (POCM) for recognizing contract revenue
and contract costs associated with a construction contract. Profit recognition has to start once
25% stage is completed.
 The revised ICDS provides that in relation to construction contracts under progress as on 31.3.2016, the
method of accounting being regularly followed by an entity in respect of the same, even if different from
POCM, may continue to be followed.
 Retention money shall be recognized as revenue subject to reasonable certainty of its ultimate
collection condition.
 Disclosure in TAR:
The amount of contract, revenue recognized as revenue for the current period. The methods
used to determine the stage of completion of contracts in progress, etc. For progressive
contracts/ service transactions – amount of cost incurred and recognized profits less recognized
losses upto reporting date, the amount of advances and amount of retentions.

ICDS – IV: Revenue Recognition

 This ICDS deals with the bases for the recognition of revenue arising in the course of the
ordinary activities of a person from –
o Sale of goods
o The rendering of services
o From the resources yielding Interest, Royalties or Dividends

It does not deal with the aspects of revenue recognition which are dealt with by other ICDS’s.

- 16 - | P a g e
  Revenue is the gross inflow of cash, receivables or other consideration arising in the ordinary
business activities of a person from the sale of goods, from the rendering of services or from the
various resources yielding interest, royalties or dividends. In an agency relationship, the revenue
is the amount of commission and not the gross inflow of the cash, receivables or other
consideration.
 This ICDS also contains a provision wherein the revenue from sale of goods could be recognized
when there is reasonable certainty of its ultimate collection.
 The revised ICDS now additionally provides that revenue is required to be recognized on a straight line
basis over the specific period where the services are provided by an indeterminate number of acts over a
specific period of time
 However, revenue from service contracts with duration of not more than 90 days may be recognized
when the rendering of services under that contract is completed or substantially completed.
 The interest on refund of any tax, duty or cess shall be recognized as income on receipt basis.
 As a principle, Interest accrues on time basis and Royalty accrues on the basis of contractual terms.
Subsequent non recovery can be claimed as deduction in view of amended section 36(1)(vii) of the Act.
 Applicable to revenues that are liable to tax on gross basis for non-residents u/s. 115A of the Act.
 Disclosure in TAR:
In case of Sale of Goods – Revenue not recognized due to uncertainty in collection during the
year.
In case of Services – Method to compute stage of completion and revenue recognized
In case of Service Transactions in progress – The amount of costs incurred and recognized profits
(less recognized losses), amount of advances and retentions.

ICDS – V: Tangible Fixed Assets

 This ICDS provides the definition of the tangible fixed asset which also provides criteria for
determining whether an item is to be classified as a tangible fixed asset,
 Tangible Fixed Asset is an asset being land, building, plant and machinery, furniture, etc held
with the intension of being used for the purpose of producing or providing goods or services and
is not held for sale in normal course of business,
 This ICDS provides the components of actual cost of such assets and valuation of such assets in
special cases.
 The fair value of the tangible fixed asset acquired in exchange for shares or other securities or
another asset shall be its actual cost.
 The ICDS also provides that the depreciation on such assets and income arising on transfer of
such assets shall be computed in accordance with the provisions of The Income Tax Act, 1961.
The expenditure incurred till the plant has begun commercial production i.e. production intended
for Sale or Captive Consumption shall be capitalized.
- 17 - | P a g e
  The requirement of maintaining the details of jointly owned fixed assets in the fixed asset register
separately has been done away with.
 Disclosure in TAR: (Similar to Clause 18 of Form 3CD)
The description of the assets or block of assets, rate of depreciation, actual cost or written down
value, as the case may be, additions(date of put to use) or deductions during the year with dates,
CENVAT credit, Change in rate of exchange of currency and depreciation allowable.

ICDS – VI: The Effects of changes in Foreign Exchange Rates

 This ICDS deals with treatment of transactions in foreign currencies, translating the financial
statements of foreign operations and treatment of foreign currency transactions in the nature of
forward exchange contracts.
 This ICDS requires exchange differences arising on settlement of monetary items or conversion
thereof at last day of the previous year to be recognized as income or as expense in that previous
year.
 Foreign Currency Translation Reserve as on 1st April 2016, pertaining to monetary items for non-
integral operations, shall be recognized in the AY 2017-18 to the extent not recognized in the past
computation.
 In respect of non-monetary items, exchange differences arising on conversion thereof as at the
last day of the previous year shall not be recognized as income or as expense in that previous year.
 The ICDS contains provisions for initial recognition, conversion at the last date of the previous year
and recognition of exchange differences. These provisions shall be subject to the provisions of
section 43A of the Act and Rule 115 of The Income Tax Rules, 1962.
 The ICDS requires classification of a foreign operations or a non-integral foreign operation.
 No disclosures as not covered in Clause 13(f) in Form 3CD.

ICDS – VII: Government Grants

 This ICDS deals with the treatment of government grants received on or after 1 st April 2016
(grants received prior to the 1st April 2016 shall continue to be recognized as per the prevailing
law). It recognizes that the government grants are sometimes called by other names such as
subsidies, cash incentives, duty drawbacks, etc.
 This ICDS does not deal with the Government Assistance other than in the form of Government
grants and Government participation in the ownership of the enterprise. It requires government
grants relatable to the depreciable assets to be reduced from actual cost/WDV (No option to
recognize as deferred revenue). It further provides that where the government grant is not directly
relatable to the asset acquired, then a pro-rata reduction of the
- 18 - | P a g e
  amount of grant should be made in the same proportion of such asset bears to all assets with
reference to which the government grant is so received.
 It requires recognition of government grants when there is a reasonable assurance that the
person shall comply with the conditions attached to them and the grants shall be received.
However, it also states that recognition of government grants shall not be postponed beyond the
date of actual receipt.
 The standard requires government grants relating to the non-depreciable assets to be recognized
as income over the same period over which the cost of meeting such obligations is charges to
income.
 The standard also requires government grants receivable as compensation for expenses or losses
incurred in a previous financial year or for the purpose of giving immediate financial support to
the person will no further related costs to be recognized as income of the period in which it is
receivable.
 All other government grants have to be recognized as income over the periods necessary to
match them with the related costs which they are intended to compensate.
 Disclosure in TAR:
Nature and extent of Government grants recognized during the previous year as income or by
way of deduction from actual cost or WDV of the assets and nature and extent of government
grants not recognized during the previous year as income and reasons thereof.

ICDS – VIII: Securities

 This ICDS has been bifurcated into two parts – Part A: Securities held as Stock in Trade and Part B:
Securities held by a Scheduled Bank or Public Financial Institutions formed under a Central or a State Act or
so declared under the Companies Act, 1956 or the Companies Act, 2013.
 It requires securities to be recognized at actual cost of acquisition, which shall comprise of its
purchase price and include acquisition charges like brokerage, fees, tax, duty or cess etc.
 The actual cost of a security acquired in exchange for other securities or another asset shall be the
fair value of the security acquired.
 For the measurement of securities held as stock in trade, the securities are to be first aggregated
category wise. The aggregate cost and NRV of each category of security is compared and the lower
of the two is to be taken as carrying value.
 It goes on to provide that such comparison of actual cost initially recognized and net realizable
value has to be done category wise and not for each individual security.
 The Assessee shall be permitted to claim deduction of interest on security offered to tax on accrual
basis but not received while computing capital gains.

- 19 - | P a g e
  No disclosures as not covered in Clause 13(f) in Form 3CD.

ICDS – IX: Borrowing Cost

 This ICDS deals with the treatment of borrowing costs. It does not deal with the actual or imputed
cost of owners’ equity and preference share capital.
 It requires borrowing costs which are directly attributable to the acquisition, construction or
production of a qualifying asset to be capitalized as part of the cost of that asset; other borrowing
costs have to be recognized in accordance with the provisions of the Act.
 Borrowing costs shall exclude those borrowing costs that are otherwise not allowable under the
specific provisions of the Act.
 Qualifying asset has been defined to mean –
o Land, building, pant, machinery or furniture being tangible assets
o Know-how, patents, copyrights, trademarks, licenses, franchises or any other business or
commercial rights of similar nature being intangible assets.
o Inventories that require a period of 12 months or more to bring them to a saleable
condition.
 This ICDS requires capitalization of specific borrowing costs and general borrowing costs.
 The capitalization of general borrowing costs, used for the purpose of acquisition, construction or
production of a qualifying asset, shall be done on by asset by asset basis.
 It also provides as to when capitalization of borrowing costs would commence and cease.
 Disclosure in TAR:
The accounting policy adopted for borrowing costs and the amount of borrowing costs capitalized
during the year.

ICDS X: Provisions, Contingent Liabilities and Contingent Assets:

 This ICDS deals with Provisions, Contingent Liabilities and Contingent Assets, however, it does not
deal with the Provisions, Contingent Liabilities and Contingent Assets –
o Resulting from financial instruments,
o Resulting from executory contract,
o Arising in insurance business from contracts with policyholders,
o Covered by another ICDS
It also does not deal with the recognition of revenue dealt with ICDS on Revenue recognition.
 ICDS specifies the conditions for recognition of a provision, namely, existence of a present obligation
as a result of a past event; reasonable certainty that outflow of resources embodying economic

- 20 - | P a g e
 benefits will be required to settle the obligations and making a reliable estimate of the amount of
obligation.
 When it becomes reasonably certain that inflow of economic benefit will arise, the asset and related
income have to be recognized in the previous year in which the change occurs.
 To avoid ͚double taxation͛ and ͚escapement of income͛ transitional provision is provided that
provisions or assets and related income shall be recognized for the year commencing on or after 01
April, 2016 in accordance with this ICDS after taking into account amount recognized, if any, for the
same in any previous year ending on or before March 2016.
 Disclosure in TAR:
In respect of each class of provision, asset and related income recognized - a brief description of the
nature, opening amount, effect of amount during the year and closing balance.

Inference:
The rationale behind issuing ICDS is to lessen the uncertainty of alternative accounting treatment
due to flexibility offered by AS & also to reduce litigation that crops up when the stand taken by I.T.
Authorities is not in alignment with the AS. Also, ICDS shall apply irrespective of Accounting
Standards adopted by companies i.e. either AS or Ind-AS.

It shall not be applicable to computation of book profit u/s 115JB of the Act. But, the provisions of
ICDS shall apply for computation of AMT u/s. 115JC of the Act.

In case of any queries or clarifications or guidance, please feel free to drop an e-mail to
͞hiteshagiwal30@gmail.com͟.

Thanking you readers!!

- 21 - | P a g e
 Name : Jain Nidhi Barishbhai
Reg. No : WRO0528257
Ashok Dhariwal & Co.

COMPOSITION SCHEME
 The composition levy is an alternative method of levy of tax designed for small taxpayers whose turnover is
up to Rs. 75 lakhs & (Rs. 50 lakhs in case of few States).
 The objective of composition scheme is to bring simplicity and to reduce the compliance cost for the small
taxpayers.
 Moreover, it is optional and the eligible person opting to pay tax under this scheme can pay tax at a
prescribed percentage of his turnover every quarter, instead of paying tax at normal rate.
 Following persons are not allowed to opt for the composition scheme:
o casual taxable person or a non-resident taxable person;
o suppliers whose aggregate turnover in the preceding financial year crossed Rs. 75 lakhs;
o supplier who has purchased any goods or services from unregistered supplier unless he has paid GST
on such goods or services on reverse charge basis;
o supplier of services, other than restaurant service;
o persons supplying goods which are not taxable under GST law;
o persons making any inter-State outward supplies of goods;
o suppliers making any supply of goods through an electronic commerce
o operator who is required to collect tax at source under section 52; and a manufacturer of Ice cream
and other edible ice, whether or not containing cocoa, Pan Masala, Tobacco and manufactured
tobacco substitutes.
 Aggregate turnover will be computed on the basis of turnover on an all India basis and will include value of all
taxable supplies, exempt supplies and exports made by all persons with same PAN, but would exclude inward
supplies under reverse charge.
 Tax Rate Applicable on composition tax dealer
Serial No Category of registered person Rate of Rate of Total Tax
CGST IGST Rate

1. Manufactures (Other than manufacturers of 1% 1% 2%

notified Goods i.e. (Ice-cream, Pan Masala,
Tobaccos prodcuts etc.)

- 22 - | P a g e
 2. Suppliers of foods or any other article for 2.5% 2.5% 5%
human consumption or any drink other than
Alcoholic liquor for human consumption
3. Other supplies* 0.5% 0.5% 1%

* Businesses dealing only in goods can only opt for composition scheme. Services providers have been kept
outside the scope of this scheme other than Restaurant Services (See in exclusion).

 Forms required to file under this scheme:

 Form GSTR-4: Quarterly returns on 18th of the month succeeding the quarter
 Form GST CMP-01: Intimation to pay tax under section 10 (composition levy)
 (Only for persons registered under the existing law migrating on the appointed day)
 Form GST CMP-02: Intimation to pay tax under section 10 (composition levy) (For persons registered
under the Act)
 Form GST CMP-03: Intimation of details of stock on date of opting for composition levy (Only for
persons registered under the existing law migrating on the appointed day)
 Form GST CMP-04: Intimation/Application for withdrawal from composition Levy

 Compliance for ITC reversal while opting for Composition levy

The registered person opting to pay tax under composition scheme is required to pay an amount equal to the
input tax credit in respect of inputs held in stock and inputs contained in semi-finished or finished goods held
in stock on the day immediately preceding the date of exercise of option. The ITC on inputs shall be
calculated proportionately on the basis of corresponding invoices on which credit had been availed by the
registered taxable person on such inputs.

In respect of capital goods held in stock on the day immediately preceding the date of exercise of option, the
input tax credit involved in the remaining useful life in months shall be computed on pro-rata basis, taking
the useful life as 5 years.

Assume capital goods have been in use for 4 years, 6 months and 15 days. The useful remaining life in months
will be 5 months ignoring the part of the month. If ITC on such capital goods is taken as C, ITC attributable to
the remaining useful life will be C multiplied by 5/60. This would be the amount payable on capital goods.

The ITC amount shall be determined separately for integrated tax, central tax and state tax/Union territory
tax.

The payment can be made by debiting electronic credit ledger, if there is sufficient balance in the said ledger,
or by debiting electronic cash ledger. The balance, if any in the electronic credit ledger would lapse.

FORM GST ITC-03 which is a declaration for intimation of ITC reversal/payment of tax should be filed within a
period of sixty days from the commencement of the relevant financial year.

- 23 - | P a g e
  Action can be taken by the proper officer for contravention of any provisions of composition levy
Where any contravention is observed by the proper officer wherein the registered person was not eligible to
pay tax under the composition scheme or has contravened the provisions of the CGST Act, 2017 or provisions
of Chapter II of the CGST Rules, 2017, he may issue a notice to such person in FORM GST CMP-05 to show
cause.
Upon receipt of the reply within fifteen days of the receipt of such notice, to the said show cause notice in
FORM GST CMP-06, the proper officer shall issue an order in FORM GST CMP-07 within a period of thirty
days of the receipt of such reply, either accepting the reply, or denying the option to pay tax under the
composition scheme from the date of the option or from the date of the event concerning such
contravention, as the case may be.
REVERSE CHARGE
 Reverse charge is a mechanism where the recipient of the goods and/or services is liable to pay GST instead
of the supplier, i.e. the chargeability gets reversed.
 GST payment in case of Reverse charge

Goods/Service GST
Suppliers of Receiver of Government
goods/services PRICE goods/services

 Reverse Charge under Section 9(3) Goods& Services notified by Government for levy of Reverse Charge
Mechanism
Sr. No Description of Supply of Goods Suppliers of Goods Recipient of Goods

1. Cashew nuts, not shelled or peeled Agriculturist Any registered

person

2. Bidi wrapper leaves Agriculturist Any registered

person

3. Tobacco Leaves Agriculturist Any registered

person

4. Silk Yarn Any person who Any registered

manufactures silk yarn person

from raw silk worm

cocoons for supply of

silk yarn

- 24 - | P a g e
 5. Supply of Lottery State Govt., Union Territory or Lottery Distributer or
Local Authority Selling Agent

Sr. Description of Supply of Services Suppliers of Goods Recipient of Goods

No

1. Any service supplied by any person Any person located in Any person located in
who is located in a non-taxable Non-taxable territory. taxable territory other
territory. than non-taxable online
recipient (OIDAR)

2. Supply of Services by a Goods Transport Agency See note 1 below the

(GTA) table*
Goods Transport Agency

(GTA)

3. Services provided by way of Any Individual Advocate Any Business entity

Representational Services before any including a Senior located in the taxable
Court, Tribunal or Authority by way of Advocate or firm of territory.
Legal Services, to a Business Entity Advocates

4. Services provided by an Any Arbitral Tribunal Any Business entity

located in the taxable
Arbitral Tribunal to a territory.
Business Entity

5. Sponsorship Service Any Person A Body Corporate or

Partnership Firm

located in the taxable

territory

6. Services provided by the Govt. ,or Central Govt., State Govt., Any Business entity
Local Authority excluding*(See note 2 Union Territory or Local located in the taxable
below table) Authority territory

- 25 - | P a g e
 7. Services provided or agreed to be A Director of a Company A Company or a Body
provided by a Director of a Company or a Body Corporate Corporate
or a Body Corporate to the said
Company or the Body Corporate

8. Services provided or agreed to be An Insurance Agent Any Person carrying on

provided by an Insurance Agent the Insurance Business

9. Services provided or agreed to be A Recovery Agent A Banking Company or a

provided by a Recovery Agent Financial Institution or a
NBFC

10. Services supplied by a person located A person located in non- Importer, as Clause 26 of
in non-taxable territory by way of taxable territory. Section 2 of the Customs
transportation of goods by a vessel Act, 1962
from a place outside India up to
customs station of clearance in India

11 Supply of services by an author, music Author or Music Publisher, Music

composer, photographer, artist or the Composer, Photographer, Company, Producer
like by way of transfer or permitting Artist etc
the use of a copyright covered under
Section 13(1)(a) of the Copyright Act
1957

12 Radio Taxi Service Taxi driver E commerce Company

*Note 1:- Any factory registered under or governed by the Factories Act 1948, or Any society registered
under the Societies Registration Act, 1860 or under any other law for the time being in force in any part of
India, or Any co –operative society established by or under any law, or Any person registered under CGST Act
or SGST Act or IGST Act or UTGST Act, or Any body co-operate established, by or under any law, or Any
partnership firm whether registered or not under any law including association of persons, or Any Casual
taxable person Located in the taxable territory.

Note 2:- Renting of Immovable Property, Services by the Department of Posts by way of Speed Post, express
parcel post, life insurance, agency services provided to a person other than Central Govt., State Govt., or
Union Territory or Local Authority Services in relation to an aircraft or a vessel, inside or outside the precincts
of an airport or a port and Transport of Goods or Passenger
o Reverse Charge under Section 9(4) – Supply from Unregistered to Registered Person
If a person not registered under GST supplies Goods or Services to a person who is registered under GST, then
in such cases – Reverse Charge Mechanism would get applicable i.e. the GST would be required to be paid by
the Registered Person directly to the Government on behalf of the supplier.
- 26 - | P a g e
 However, in case of supply of exempt goods or services, GST under Reverse Charge Mechanism shall
not be applicable.

o Time of Supply in case of supply of goods

In case of Reverse Charge, the time of supply would be the earliest of the following
1. The date of receipt of goods, or
2. The date of payment, or
3. The date immediately after 30 days from the date of issue of invoice by the supplier.
If it is not possible to determine the time of supply under (a), (b) or (c) above, the time of supply shall be the
date of entry in the books of accounts of the recipient.

 Time of Supply in case of supply of goods

In case of Reverse Charge, the time of supply would be the earliest of the following
1. The date of payment, or
2. The date immediately after 60 days from the date of issue of invoice by the supplier.

If it is not possible to determine the time of supply under (a) or (b) above, the time of supply shall be the date of
entry in the books of accounts of the recipient.

 Other Relevant Points Regarding Levy Of Reverse Charge Mechanism (RCM)

1. All persons procuring goods or services notified under Section 9(3) or Section 9(4) are mandatorily
required to obtain GST Registration.
2. GST levied under the Reverse Charge mechanism should be deposited with the Government by the
20th of the next month.
3. GST paid under the Reverse Charge mechanism would be available for Input Tax Credit if such goods
and/or services are used in the furtherance of business. The service recipient (i.e. who pays reverse
charge) can avail input tax credit.
4. The details of GST paid under Reverse Charge Mechanism (RCM) would not be auto-populated in the
GSTR 2 and these details would be required to be manually furnished.
5. In cases where RCM is levied, the recipient shall raise an Invoice on self-Invoice shall be issued on a
daily basis for all consolidated purchases made during the day on which GST is levied under Reverse
Charge.
6. At the time of payment to the supplier, the recipient shall also issue a payment voucher for the
payment made.
7. Input Tax Credit with the recipient cannot be used for payment of Reverse Charge to the Govt.
8. A registered person will not lose input tax credit of GST paid under Reverse Charge even if the payment
is not made within 180 days.
9. Reverse Charge is also applicable to recipients registered under the Composition Scheme. No Credit of
RCM is available in such cases.
10. RCM is levied on advance payments as well.

===================================================================================

THANK YOU

- 27 - | P a g e
 REWINDING AUGUST
Visit at BALAJI WAFERS,Rajkot Plant.

Visit to Marwadi Stock Broker, Rajkot (H.O.)

- 28 - | P a g e
 Visit to Rajkot Branch of ICAI.

- 29 - | P a g e
 Celebration of Independence Day

- 30 - | P a g e
 Thank You, WICASA Committee Members

- 30 - | P a g e