Friday 21 June 2019

Assessment of Firms - CBDT directions to Assessing Officers

Central Board of Direct Taxes (CBDT) has preferred that Assessing Officers (AO) should suitably take into consideration the following issues while conducting assessments of firms, including limited scrutiny:
  • Interest on capital & remuneration paid to partners shall be cross-verified from the ROI of the partners;
  • Interest on capital & remuneration shall be allowed as per Section 40(b)(iv);
  • ‘Book Profit’ shall be computed for the payment of remuneration to the working partners and shall be the net profit for the relevant previous year which shall be increased by the remuneration paid to partners;
  • Non-compliance with provisions of section 184 may result in dis-allowance of expenses claimed by firm such as remuneration, interest, etc, payable to partners which are otherwise allowable under this provision;
  • AO should verify the claim of firm regarding carry forward & set off of losses as per Sec 78 and shall disallow the claim in case of change of constitution of firm or on succession; and
  • Instruction No.9/2008, dated 31.7.2008, of CBDT should be followed scrupulously, with respect to issues concerning possible action against Tax Auditor.

Instruction No.09/2008, dated 31/07/2008

Source: CBDT & Taxmann

Tuesday 14 May 2019

Recent development in the scope of basic wages under EPF & MP Act, 1952.

'Allowances', paid by employer to its employees, will be included in the scope of 'basic wages' and hence subject to Provident Fund contributions.

A Bench of Hon'ble Justices Arun Mishra and Navin Sinha of the Hon'ble Supreme Court vide judgement dated 28th February, 2019 in the case of The Regional Provident Fund Commissioner (II) West Bengal Vs Vivekananda Vidyamandir & Ors. has reiterated the principle that the crucial test to be applied for inclusion of allowances as part of "Basic Wages" is that of universality i.e. all allowances which are universally, uniformly, necessarily and ordinarily paid to all employees would form part of "Basic Wages" for the purpose of computing provident fund contributions under the Employees' Provident Fund and Miscellaneous Provision Act, 1952 (Act)
Supreme Court ruling expanding the scope of 'basic wages' for calculation of employee provident fund contributions is likely to result in gains for those employees whose basic salary was below Rs.15,000 or Rs.6,500 (as applicable in earlier years) because their employers may have to make good the short contribution in those years. Whereas the ruling will have retrospective impact, presently there's lack of clarity on the precise date back that it'll apply. 

The Supreme Court has processed that solely allowances of the subsequent nature can be excluded from 'basic wages' for calculation of Provident Fund contributions:
a) Allowances which are not paid across the board to all employees in a particular category; or 
b) Allowances which are variable in nature; or 
c) Allowances which are linked to any incentive for production resulting in greater output by an employee; or 
d) Allowance which are paid especially to those who avail the opportunity.

What categories of employees does it impact? 
For employees with basic salary exceeding Rs.15,000 per month - there could be no impact of this ruling as for such employees, Provident Fund contributions are already made on monthly pay exceeding the ceiling limit as prescribed under the law. 

Will the above impact be retrospective or prospective? 
Three points to consider: 
1. The Supreme Court ruling is an interpretation of existing law 
2. The Supreme Court has reiterated the principles laid down earlier in its 1962 ruling within the case       of Bridge & Roof 
3. There is no statute of limitation within Provident Fund 
Given the above, yes - the ruling may have retrospective impact. The major impact will be for the period after 1 September 2014 for employees with basic salary less than Rs.15,000. Where companies have employees prior to 1st September, 2014 with basic salary less than Rs.6,500 - there could be impact for them as well. 

If retrospective, who will bear the cost for past compliance and problems related to the same? 
For the past, employer may need to bear the cost of past compliance. Provident Fund rules do not allow employer to recover past contributions from the current salary of the employees. On the question how far the authorities can go back, the law is silent. The PF office has issued a circular No. 7(l)2012/RCs Review Meeting/345, earlier on 30th November, 2012 stating under para 10 that 7A enquiry period cannot go beyond preceding 7 financial years. However, this circular was kept in abeyance vide another circular No. 7(1)2012/RCs Review Meeting/21224, dated 18th December, 2012. 

Friday 19 April 2019

Changes in form 16 and 24Q

The Central Board of Direct Taxes [CBDT] has vide NOTIFICATION NO. GSR 304(E) [NO.36/2019(F.NO.370142/4/2019-TPL)], DATED 12-4-2019, notified changes in Form 16 (TDS Certificate for Salary Income) and Form 24Q (TDS return in respect of salary). The changes have been made to bring TDS certificate in sync with new ITR forms issued for AY 2019-20.


Monday 25 February 2019

FAQ on Form INC-22A (ACTIVE)

Ministry of Corporate Affairs has come up with another stern step by inserting a new Rule 25A under the Companies (Incorporation) Rules, 2014 and introduced a new Form INC-22A (ACTIVE).

Saturday 23 February 2019


It is crucial to your business - Learn Why! 

If the amounts received in the course of, or for the purpose of, business and bearing a genuine connection to your business become refundable, and not repaid within 15 days from the date on which they become due for refund will leave you in big trouble.

Read full article

Tuesday 19 February 2019

Form DPT - 3

The Companies (Acceptance of Deposits) Amendment Rules 2019, as notified by the MCA on 22 Jan 2019, has introduced a new form DPT - 3. 

Form DPT-3 shall be used for filing return of deposit or particulars of transaction not considered as deposit or both by every company other than Government company.



Thursday 14 February 2019

Life Insurance - Taxability and tax exemptions

Life Insurance is a compulsion for anyone who has financial responsibilities. In addition to the basic life insurance amount, one needs to add cover as and when liabilities increase. Riders are additional benefits in a life insurance policy and are optional. Premiums paid towards insurance plan qualify for a tax benefit under the Income tax Act, 1961. In this article taxability and tax benefits are discussed with respect to life insurance policies only.
Read more:https://

Monday 11 February 2019

UDIN- A unique hegemony

The Institute of Chartered Accountants of India (ICAI) is a statutory body established by an Act of Parliament, viz. The Chartered Accountants Act, 1949 (Act No.XXXVIII of 1949) for regulating the profession of Chartered Accountancy in the country. The Institute, functions under the administrative control of the Ministry of Corporate Affairs, Government of India. The affairs of the ICAI are managed by a Council in accordance with the provisions of the Chartered Accountants Act, 1949 and the Chartered Accountants Regulations, 1988.

Chartered Accountant is an important pillar in economic growth of nation. His role is important in  preventing corruption, malfunctioning, window dressing, detecting frauds in companies etc.


To restrain the malpractice of third persons misrepresenting themselves as Chartered Accountants and thereby misleading the authorities and stakeholders Professional Development Committed of The Institute of Chartered Accountants of India has implemented in phased manner inimitable concept of UDIN (Unique Document Identification Number). This concept secures the certificates attested/certified by practicing CAs as well as this also enables the Regulators/Banks/ Third parties to check the authenticity of the documents.


From 1st of February, 2019 as per Council decision. It is mandatory to obtain UDIN for all the Certificates issued where the Financial Information/related contents is certified as True and Fair / True and Correct. Certificates includes Reports issued in lieu of a Certificate in terms of Guidance Note on Reports or Certificates for Special Purposes (Revised 2016).

Who can generate UDIN?

UDIN is a unique number, which will be generated for every document certified/ attested by Practising Chartered Accountants and registered with the UDIN portal- .

Chartered Accountants having full-time Certificate of Practice can register on UDIN Portal and generate UDIN by registering the certificates attested/certified by them. This portal ameliorates in tracing of forged/wrong documents prepared by any third person in the name of Chartered Accountant. As a person other than Chartered Accountant will not be able to upload the documents on the said portal.

Reference of 18 Digits of UDIN

UDIN is 18-Digits system generated unique number for every document certified/attested by Practicing Chartered Accountants.

The 18- digits UDIN (YY MMMMMM AANNNAANNN) will be like; 19112677AKTSBN2002,
  • First 2 Digits are YY - Last 2 digits of the Current Year (19 in this case)
  • Next 6 Digits are MMMMMM – ICAI’s Membership No. (112677 in this case)
  • Next 10 Digits are AANNNAANNN –Alpha-numeric generated randomly by the system (AKTSBN2002).


Non-applicability of UDIN can be listed out but the list is not exhaustive. Like in the 1st phase, requirement of obtaining UDIN is Not Applicable for:

  • Auditor's Opinion/Reports issued by the Practicing Chartered Accountant under any Statute w.r.t. any entity or any person (e.g.: Tax Audit, Transfer Price Audit, VAT Audit, GST Audit, Company Audit, Trust Audit, Society Audit, etc.,
  • Valuation Reports,
  • Quarterly Review Reports,
  • Limited Review Report
  • Information System Audit,
  • Forensic Audit,
  • Revenue / Credit / Stock Audit,
  • Borrower Monitoring Assignments,
  • Concurrent / Internal Audit and the like,
  • Any report of what so ever nature issued including Transfer Price Study Report, Viability Study Report, Diligence Report, Due Diligence Report, Management Report, etc.
UDIN generation has been made mandatory as per the Council Decision, hence not generating UDIN for mandatory documents will amount to non-adherence of the Council Decision and may attract disciplinary proceedings as per the Second Schedule Part II of The Chartered Accountants Act, 1949.

How do Authorities/Regulators/Banks/Others can search UDIN?

The UDIN so indicated on certificate can be searched through the search option on UDIN Portal by sharing few details such as Name of the Authority, Mobile Number and Email of the person searching the UDIN. However they are not required to register themselves on the UDIN Portal.


The content of this article is intended to provide a general awareness to the subject matter.