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1. Hard Work Don't believe in luck, believe in hard work. Stop trying to rush the process or searching for a shortcut. There is none. 2. Patience If you are losing the patience, you are losing the battle. First nothing happens, then it happens slowly and suddenly all at once. Most people give up at stage one. 3. Sacrifice If you don't sacrifice for what you want, then what you want becomes the sacrifice. Everything has its price. The question is: Are you ready to pay it for the life you desire? 4. Consistency Consistency is what transforms average into excellence. Without consistency, you will never achieve greater success. 5. Discipline Motivation gets you going, but discipline keeps you growing. There will be days when you don't “feel” like doing it. You have to push through those days regardless of how you feel. 6. Self Confidence Confidence is, I'll be fine if they don't like me. #thanksforreading #successdiamond Are you searching for Accountant Jobs? If yes then click on link to apply https://www.accountantscareer.com/jobs

EPCH Membership registration & RCMC Introduction: EPCH is a non-profit organisation. It’s an apex body formed under the companies act. Setting up EPCH aims to promote and preserve the traditional handicraft industry and promote handicraft export in the international market. EPCH membership and registration cum membership (RCMC) certificates are two different registrations offered by the export promotion council. The RCMC registration is explicitly for manufacturers and manufacturer-exporters Importance of EPCH RCMC for merchants and manufacturers Getting an EPCH RCMC registration is important for “MSMEs” manufacturers and merchants. The export promotion council can help businesses grow through market access initiatives and various schemes. Exporters and manufacturers of handicraft products also enjoy tax benefits and the opportunity to get together in buyer-seller meets and trade fairs. What are handicraft products? Definition: As per the established definition by the esteemed government committees, a handicraft product is described as: “An Item or product produced through manual skills, with or without mechanical or electrical or other processes, which appeals to the eye, due to the characteristics of being artistic or aesthetic or creative or ethnic or being representative of cultural or religious or social symbols or practices, whether traditional or contemporary. These items or products may or may not have a functional utility and can be used as a decorative item or gift.“ Role of export promotion council for Handicrafts? Providing commercially helpful information and assistance to members in developing and increasing exports Offering professional advice and services to members in areas of technology upgradation, quality and design improvement, standards and specifications, product development, innovation, etc Organizing visits of delegations of its members abroad to explore overseas market opportunities Participating in specialized International Trade Fairs of handicrafts & gifts Holding Indian Handicrafts and Gifts Fair Interaction between exporting community and Govt. both at the Central and State level and representation in almost all the committees or panels of Central and State and represented in nearly all the committees or boards of Central and State To create an environment of awareness through Workshops on “Export Marketing, Procedures, and Documentation,” Packaging, Design Development, Buyer Seller Meet, Open House, etc., interaction with Central and State Govt. and various other similar programs. Dissemination of government notifications, orders, information on trade, and other relevant information to members Cost of EPCH Membership registration? As per the rules of the Export promotion council of handicraft, any person who wants to register with EPCH must get a membership before getting RCMC. The registration can be done as a merchant or manufacturer exporter. The cost of Membership remains the same. The fee for EPCH RCMC is as follows: If the applicant wants only Membership, then the Membership is granted without any additional cost. Renewal and validity of EPCH RCMC EPCH memberships are valid for up to 5 years. However, an annual renewal fee is to be submitted, which is due each year from the 1st of April and has to be submitted by the 30th of June. Benefits of EPCH membership registration=H2 Buyer-seller meet Better infrastructure Tax relaxation for exporters Direct interaction between members and government bodies Helps create awareness and market development programmers Access to Data and various initiatives to improve the handicraft industry Members can take part in international trade events organized by EPCH. i. Market entry: Exporters must select the right product for the market. After carefully selecting a market, exporters must find a suitable way to enter that market. They can enter the international market via direct or indirect method i,e, with the help of merchants or export houses. ii. Participation in trade fairs: Exporters can also participate in trade fairs organized in India or foreign countries to explore market opportunities. iii. Market research: Market research is also essential for exporters as it helps make the right decisions in the right direction. iv. Export pricing: Pricing is essential in expanding the export market for new merchants or exporters. Effective pricing assumes strategic significance because of the lower technological base in developing economies. v. Selection of agent: Many exporters with good products and effective pricing need help to select overseas agents. It is essential to evaluate multiple agents and have good contact with them to avoid such difficulties. vi. Promotion: Exporter can promote their products through various means in their desired marketplace. Upgrading can help get recognition and expand their market sphere. vii. Terms of payment: The nature of credit terms offered by suppliers is decisive and vital. The exporter should take caution while dictating. viii. Export contracts: The export contract between the exporter and seller should be transparent without ambiguity. Both parties should be aware of what obligations and duties they suppose to perform. ix. Export finance: Financing the export is an important aspect that export needs to plan. Financing of export happens in 2 stages. x. Pre-shipment: For purchase, manufacturing, and for assembling of the product. xi. Post shipment: Financing is required for providing facilities to overseas customers. xii. Other documents: The exporters must also take care of other mandatory documentation required for exports. For this, they may take the assistance of DGFT, the Indian Institute of Foreign Trade (IIFT), the India Trade Promotion Organization (ITPO), Foreign Embassies in India, Buying Agents, Freight Forwarding Agents, etc. EPCH Code of conduct for the Members of the council While applying for the Membership for EPCH, applicants are required to sign the mandatory Code of conduct against child labour. It should be signed on a minimum of 10 rupees stamp and submitted along with the other necessary documents. 1. The members are responsible for ensuring that no child labour is used on their premises and the premises of the entities they are outsourcing from. 2. if any member is found violating the rule, will serve them with a show-cause notice to explain. 3. The explanation will further be placed before the Committee of Administration to enable it to decide on an action to be taken in respect of that violation. 4. If members violate the rules of the Code of conduct on more than 2 occasions, they will discontinue their Membership. 5. It is the responsibility of all the EPCH members to ensure strict compliance with the Code of conduct. The Code of conduct shall apply to all the members of the export promotion council of handicraft. Conclusion: The Export Promotion Council of Handicrafts is a perfect promotional body for the handicraft industry of India. It not only preserves traditional handicraft skills but also promotes them on the global stage and helps the traditional handicraft industry to grow in the local and international export markets. The RCMC membership program of EPCH is proven to be a boon for exporters and manufacturers as it has helped the industry grow significantly in domestic and international exports. #DGFTNotifiction, #ExportIncentive

Question XYZ Pvt. Ltd. has converted itself into a Limited Liability Partnership (LLP) on 1.4.2019 and at the time of conversion, all the conditions specified in section 47(xiiib) have been fulfilled. The unabsorbed business loss and depreciation of the company as on the date of conversion were Rs. 40 lakhs and Rs. 27 lakhs respectively. The business profits of the LLP for the previous year 2019-20 were Rs. 75 lakhs. However on 5.9.2020 two partners (who were erstwhile shareholders of XYZ Pvt. Ltd) having in aggregate 51% of the profit sharing in LLP, resigned. Discuss the tax consequences of the conversion of company into LLP and subsequent resignation of partners. LET'S FIRST CONSIDER APPLICABLE PROVISIONS SECTION 47(xiiib) of the Income Tax Act,1961 any transfer of a capital asset or intangible asset by a private company or unlisted public company (hereafter in this clause referred to as the company) to a limited liability partnership or any transfer of a share or shares held in the company by a shareholder as a result of conversion of the company into a limited liability partnership in accordance with the provisions of section 56 or section 57 of the Limited Liability Partnership Act, 2008. Provided that— (a) all the assets and liabilities of the company immediately before the conversion become the assets and liabilities of the limited liability partnership; (b) all the shareholders of the company immediately before the conversion become the partners of the limited liability partnership and their capital contribution and profit sharing ratio in the limited liability partnership are in the same proportion as their shareholding in the company on the date of conversion; (c) the shareholders of the company do not receive any consideration or benefit, directly or indirectly, in any form or manner, other than by way of share in profit and capital contribution in the limited liability partnership; (d) the aggregate of the profit sharing ratio of the shareholders of the company in the limited liability partnership shall not be less than fifty per cent. at any time during the period of five years from the date of conversion; (e) the total sales, turnover or gross receipts in business of the company in any of the three previous years preceding the previous year in which the conversion takes place does not exceed sixty lakh rupees; and (f) no amount is paid, either directly or indirectly, to any partner out of balance of accumulated profit standing in the accounts of the company on the date of conversion for a period of three years from the date of conversion. Explanation.—For the purposes of this clause, the expressions "private company" and "unlisted public company" shall have the meanings respectively assigned to them in the Limited Liability Partnership Act, 2008. SECTION 56 OF LLP ACT,2008 A private company may convert into a limited liability partnership in accordance with the provisions of this Chapter and the Third Schedule. SECTION 57 OF LLP ACT,2008 An unlisted public company may convert into a limited liability partnership in accordance with the provisions of this Chapter and the Fourth Schedule. SECTION 72A(6A) of LLP Act,2008 Carry Forward and Set Off of Accumulated Losses and Unabsorbed Depreciation in case of 'Reorganization of Business' [Section 72A(6) & (6A)]: Where there has been reorganisation of business, whereby,— a. a firm is succeeded by a company fulfilling the conditions laid down in clause (xiii) of section 47, or b. a proprietary concern is succeeded by a company fulfilling the conditions laid down in clause (xiv) of section 47, or c. a private company or unlisted company is converted into limited liability partnership then, the accumulated loss and the unabsorbed depreciation of the predecessor firm or the proprietary concern or a company, as the case may be, shall be deemed to be the loss or allowance for depreciation of the successor company or successor LLP for the purpose of previous year in which business reorganisation was effected. Business loss will be allowed to be carried forward and set off for fresh 8 years and unabsorbed depreciation can be carried forward and set off indefinitely. Answer As per section 72A(6A), the LLP would be able to carry forward and set-off the unabsorbed depreciation and business loss of Rs. 40 lakhs and Rs. 27 lakhs, respectively, of XYZ Pvt. Ltd. Since at the time of conversion, all the conditions specified in section 47(xiiib) have been fulfilled. Further, the LLP can set off the unabsorbed depreciation and business loss aggregating to Rs. 67 lakhs against its business profits of Rs. 75 lakhs for A.Y.2020-21. However, if in any subsequent year, the LLP fails to fulfill any of the conditions mentioned in section 47(xiiib), the business loss or unabsorbed depreciation of the company already set off by the LLP would be deemed to be the income chargeable to tax of the LLP for the year in which it fails to fulfill such conditions. One of the conditions mentioned in section 47(xiiib) is that the erstwhile shareholders of the company continue to be entitled to receive at least 50% of the profits of the LLP for a period of 5 years from the date of conversion. Since two partners (who were erstwhile shareholders of ABC Pvt. Ltd.) holding in aggregate 51% of the profit-sharing in the LLP have resigned on 5.9.2020, thus the LLP has failed to fulfill this condition. Therefore, the amount of Rs. 67 lakhs representing unabsorbed depreciation and business losses set-off against profits of the LLP for the A.Y. 2020-21, would deemed to be income of the LLP for the A.Y.2021-22, being the year in which it failed to fulfill the conditions. DISCLAIMER: The case study presented here is only for sharing knowledge with readers on subject matter. The views are personal and shall not be considered as professional advice. In case of necessity do consult with professionals. #corporatelaw #law

For most Indians, fixed deposits have been the most popular tools for savings. The risk-free and assured-return mode of parking your surplus money has been the preferred option across generations for a long time. However, many investors feel that while FDs ensure capital protection, they are not the perfect tax-saving instrument. If you are keen on investing in FDs, there are multiple ways in which you can save on taxes. Read on to understand the tax liability on fixed deposits and also take away a few tips to make the most of FD tax exemption. Fixed Deposits and Income Tax The interest that you earn from a fixed deposit is considered an income that falls under the category of ‘income from other sources’, and is thus, taxable. It gets added to your annual income and would be taxed as per the income slab that you fall in. When your bank credits interest to your account, if the total interest on FDs is over ₹40,000, then TDS is applicable. In case you are a senior citizen, then this limit can go up to ₹50,000. Tax Deducted at Source For any payment made to an individual, a certain amount of tax is deducted and paid to the Central Government, before making the payment. This payment is known as ‘Tax Deducted at Source’ or TDS. Then while adding the gross amount to your income, you can report this when filing your ITR, and in case of zero tax liability, you would be able to claim a TDS refund. Let us see this example, you earn an interest of ₹1,000 on your fixed deposit. The bank is supposed to deduct 10% of this as TDS and deposit this amount with the government. Then, when it is time for you to file your annual ITR, you need to report the total interest of ₹1,000 that you have earned. If you are eligible for the rebate you would be granted an FD tax exemption. Paying Tax on the Fixed Deposit Interest In case there is tax applicable on the interest that you have earned on your FD, you need to pay it before the financial year ends, which is the 31st of March. If the payable tax after including the interest income in your total income is ₹10,000 or more, then you need to pay advance tax. Calculating Tax on the Interest Income To calculate the tax on your income interest, you need to add it to the total income and file it in your Income Tax Return. This has to be reported as “Income Under Other Sources”. The IT department will make the required adjustments in the TDS, which has already been deducted. In case the bank/ financial institution where you have the FD, did not deduct the TDS, you need to add it to your total income and pay the required tax. It is also advisable that you do not wait for the FD to mature and then report the interest that you have earned. An accumulated amount of interest may raise your income to a higher slab, thus you may end up paying more tax. The following points will help you better understand Tax Deduction as well as FD tax exemption: The bank will not deduct a TDS if: The interest amount from all the FDs you possess is less than ₹40,000. In case you are above the age of 60 years, the limit will be raised to ₹50,000. 2. The bank will deduct 10% TDS if: The interest income is more than ₹40,000 or ₹50,000 in case you are a senior citizen. 3. The bank will deduct 20% TDS if: Your PAN information is not available with the bank. 4. If you have an annual income of ₹2.5 Lakhs or less, then there would be no TDS. Here, your bank would not deduct TDS, even if the interest income is more than ₹40,000. Make sure that you submit 15G or 15H so that you can claim the interest income with the TDS. Ensure TDS Deduction When your annual income is not subject to tax, you can submit Form 15G and Form 15H to your bank/ financial institution before the due date. If you submit these forms in the beginning of the financial year, you can save yourself from the trouble of first the TDS deduction and then requesting the subsequent refund in your Income Tax Return. This is the only way to ensure that the bank does not deduct the TDS. Tax-Saving Fixed Deposits Another way to get FD tax exemption is through tax-saving FDs. Quite similar to a regular FD, in a tax saving FD, you can avail of tax benefits up to ₹1.5 Lakhs, as per Section 80C of the Income Tax Act, 1961. Unlike other investments such as ULIPs or mutual funds, FDs are not linked to the market and offer a fixed return. A lock-in period of 5 years makes tax-saving FD compound interest over time, thus making your money grow. Things to keep in mind when investing in a Tax-Saving FD If you wish to make a low-risk investment for a short term of 5 years, that offers you assured return and tax benefits, you may want to consider tax-saving fixed deposits, however, you must keep the following points in mind: These FDs come with a minimum lock-in period of 5 years A premature withdrawal or loan facility is not allowed The interest that you earn on the FD is taxable The rate of interest varies from 5.5% to 7.75% The minimum deposit can start from ₹1,000 and the maximum is ₹1.5 Lakhs Only HUFs and individuals over the age of 18 years can invest in this scheme The rate of interest offered by different banks/ financial institutions would be different The FD can be a ‘single’ as well as a ‘joint’ account. In the case of a joint FD account, only one of the two account holders would be allowed to get tax benefits Nomination option is available In the case of a Post OfficeFD, a transfer from one PO to another is allowed The taxable interest is subject to and would vary as per the income slab you fall into Senior citizens may get a higher rate of interest on their tax saving FD. Other Tax Saving Options In the market today, there are a number of tax saving options available. The table given below will help you draw a comparison and help you in making a well-informed decision. For an investor with a low-risk appetite, a tax saving FD offers the safety and security he/ she is looking for. There are other options such as mutual funds, NSC, Post Office schemes etc, but if you are someone who does not mind a low return and is seeking to make a short-term investment of 5 to 10 years, then investing in a fixed deposit might be the best option for you. You can make the most of your investment and get an FD tax exemption. #financialplanning , #incometaxtips

QUESTION M/s Jooly Private Limited (Corporate Debtor) is a company incorporated on 01.01.2005 under the provisions of Companies Act, 1956, having its registered office at Mumbai. The Authorised Share Capital of the company is Rs. 100, 00, 00,000/- and Paid-up Share Capital of the company is Rs. Rs. 99, 00, 00,000/-. M/s Jemmy Private Limited(Operational Creditor) is a company incorporated on 01.01.2006 under the provisions of Companies Act, 1956 having its registered office at Kolkata. M/s Jooly Private Limited approached M/s Jemmy Private Limited for purchase of inputs for his production. It was specifically agreed that upon procuring the inputs by M/s Jooly Private Limited and raising of invoices by M/s Jemmy Private Limited , the entire payment for such invoices shall be made in a timely manner. As per the arrangement, the M/s Jooly Private Limited placed various purchase orders for supply of inputs . M/s Jemmy Private Limited supplied the goods as per the orders placed by M/s Jooly Private Limited and raised invoices against the said supply. The invoices were duly acknowledged by M/s Jooly Private Limited and an amount as part payments were also made. But thereafter, inspite of various requests made and reminders sent by M/s Jemmy Private Limited, the M/s Jooly Private Limited had neither responded nor repaid the remaining claim. On failure to pay the outstanding dues by the M/s Jooly Private Limited, the M/s Jemmy Private Limited sent a demand notice dated 01.012019 under Section 8 of the Insolvency and Bankruptcy Code, 2016 to the respondent asking them to make the entire outstanding payments of Rs. 10,00,000/- (Rupees Ten Lakhs) inclusive of interest within 15 days from receipt of the notice, failing which the M/s Jemmy Private Limited shall initiate the Corporate Insolvency Resolution process against the M/s Jooly Private Limited. Despite the demand notice, the M/s Jooly Private Limited did not pay the amount demanded, neither raised any notice of dispute nor replied to the said notice. As a next action M/s Jemmy Private Limited filed an application before National Company Law Tribunal (NCLT), seeking to unfold the process of Corporate Insolvency Resolution Process (CIRP). Based on the above fact, answer the following: (a) Who can make application before the Adjudicating Authority on behalf of Operational Creditor and where to file such application to initiate the Corporate Insolvency process in the given case and also state the documents needs to be attached with such application under Insolvency and Bankruptcy Code, 2016. (b) Who can appoint Interim Resolution Professional in case Resolution Professional is not appointed by the Operational Creditor? State the moratorium as envisaged under the provisions of Section 14(1) to (4) of the Insolvency and Bankruptcy Code, 2016 in relation to the Corporate Debtor. (c) Enumerate the duties of interim resolution professional during the Corporate Insolvency Resolution Process (CIRP) specified under Section 18 of the Insolvency and Bankruptcy Code, 2016. ANSWER (a) As per Section 6 of the Insolvency and Bankruptcy Code, 2016, where any corporate debtor commits a default, a financial creditor, an operational creditor or the corporate debtor itself may initiate corporate insolvency resolution process in respect of such corporate debtor in the manner as provided under Chapter II of the Part II of the Insolvency and Bankruptcy Code, 2016. It may be noted that in terms of Section 5(20) of the Insolvency and Bankruptcy Code, 2016 operational creditor means a person to whom an operational debt is owed and includes any person to whom such debt has been legally assigned or transferred. Application to initiate the Corporate Insolvency process may be filed before the Adjudicating Authority. In terms of Section 5(1) of the Insolvency and Bankruptcy Code, 2016, Adjudicating Authority means National Company Law Tribunal constituted under section 408 of the Companies Act, 2013. According to Section 9 of the Insolvency and Bankruptcy Code, 2016, Application for initiation of corporate insolvency resolution process by operational creditor shall be filed in such form and manner and accompanied with such fee as may be prescribed. The operational creditor shall, along with the application furnish following documents- A copy of the invoice demanding payment or demand notice delivered by the operational creditor to the corporate debtor. An affidavit to the effect that there is no notice given by the corporate debtor relating to a dispute of the unpaid operational debt. A copy of the certificate from the financial institutions maintaining accounts of the operational creditor confirming that there is no payment of an unpaid operational debt by the corporate debtor, if available. A copy of any record with information utility confirming that there is no payment of an unpaid operational debt by the corporate debtor, if available; and Any other proof confirming that there is no payment of any unpaid operational debt by the corporate debtor or such other information, as may be prescribed. ANSWER (b) Adjudicating Authority (National Company Law Tribunal) appoint Interim Resolution Professional in case Resolution Professional is not appointed by the Operational Creditor. Section 14 of the Insolvency and Bankruptcy Code, 2016 deals with Moratorium. Section 14(1) provides that subject to provisions of sub-sections (2) and (3), on the insolvency commencement date, the Adjudicating Authority shall by order declare moratorium for prohibiting all of the following, namely: (a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgement, decree or order in any court of law, tribunal, arbitration panel or other authority. (b) transferring, encumbering, alienating or disposing off by the corporate debtor any of its assets or any legal right or beneficial interest therein. (c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. (d) the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor. Section 14(2) states that the supply of essential goods or services to the corporate debtor as may be specified shall not be terminated or suspended or interrupted during moratorium period. As per Section 14(3) the provisions of sub-section (1) shall not apply to - (a) such transaction as may be notified by the Central Government in consultation with any financial regulator. (b) a surety in a contract of guarantee to a corporate debtor. Section 14(4) provides that the order of moratorium shall have effect from the date of such order till the completion of the corporate insolvency resolution process. It may be noted that where at any time during the corporate insolvency resolution process period, if the Adjudicating Authority approves the resolution plan under sub-section (1) of section 31 or passes an order for liquidation of corporate debtor under section 33, the moratorium shall cease to have effect from the date of such approval or liquidation order, as the case may be. (c) Section 18 of the Insolvency and Bankruptcy Code, 2016 deals with the duties of interim resolution professional. The interim resolution professional shall perform the following duties, namely: - (a) Collect all information relating to the assets, finances and operations of the corporate debtor for determining the financial position of the corporate debtor, including information relating to - (i) business operations for the previous two years. (ii) financial and operational payments for the previous two years. (iii) list of assets and liabilities as on the initiation date; and (iv) such other matters as may be specified. (b) Receive and collate all the claims submitted by creditors to him, pursuant to the public announcement made under sections 13 and 15. (c) Constitute committee of creditors. (d) Monitor the assets of the corporate debtor and manage its operations until a resolution professional is appointed by the committee of creditors. (e) File information collected with the information utility, if necessary; and (f) Take control and custody of any asset over which the corporate debtor has ownership rights as recorded in the balance sheet of the corporate debtor, or with information utility or the depository of securities or any other registry that records the ownership of assets including - (i) assets over which the corporate debtor has ownership rights which may be located in a foreign country; (ii) assets that may or may not be in possession of the corporate debtor. (iii) tangible assets, whether movable or immovable. (iv) intangible assets including intellectual property. (v) securities including shares held in any subsidiary of the corporate debtor, financial instruments, insurance policies. (vi) assets subject to the determination of ownership by a court or authority. (g) To perform such other duties as may be specified by the Board. It may be noted that the term “assets” shall not include the following, namely: - (a) assets owned by a third party in possession of the corporate debtor held under trust or under contractual arrangements including bailment. (b) assets of any Indian or foreign subsidiary of the corporate debtor; and (c) such other assets as may be notified by the Central Government in consultation with any financial sector regulator. CONCLUSION The IBC,2016 is a comprehensive Code for dealing with insolvency of Corporates, Individuals and others. The main objective of CODE,2016 is to resolve insolvency status of a Corporate Debtors through re-organisation and reconciliation. A Financial Creditor, Operational Creditor or a Corporate Debtor itself apply to the Authority for initiation of Corporate Insolvency Resolution Process of the Corporate Debtor. The time period within which CIRP shall be completed in 180 dates from the date of commencement of process. In certain cases, maximum period will be 330 days from the date of commencement. An Interim Resolution Professional shall be appointed by the Financial Creditor , in case of Operational Debtor , IRP shall be appointed by IBBI on the recommendation of NCLT. Please note that the date of commencement will be date of appointment of the IRP, and it is duty of IRP to appoint Committee of Creditors, to ask the creditors to submit their claims and to maximise the value of the Corporate Debtor. The management of the Corporate Debtor transferred in the hand of IRP and CIC. After allowing petition for CIRP the authority declared a moratorium, which lasts from the date of declaration to 180 days. During this period no proceedings started, decree order enforced and any proceedings in any other law will start against the Corporate Debtor. Please note that moratorium is only for Corporate Debtor and not for promoters and personal guarantor of the Corporate Debtor. DISCLAIMER: The case law presented here is only for sharing knowledge and information with readers. The views are personal and shall not been considered as professional advice. In case of necessity do consult with professionals for more understanding and clarity on subject matter.

In the era of current business cycle, to run a business on wide platform it is required to form an organization which can protect the interest of governing board as well as stakeholders. As we all know that the most popular form of business entity now a day is a “Company” whether it is a Private or Public. To form and run a private company is quite simple than the Public. But simultaneously there are certain privileges which only given to the public companies. Some time at the initial stage investor form a private company as per Companies Act and later on when there are many opportunities to expand the business via multiple ways they convert it into Public to get that privileges viz., to increase the number of members more than 200, for the purpose of accepting money from public, no restriction on transfer of shares etc… Therefore, growth and flexibility are ideally the reasons for the switch from private to public. Stepwise process for conversion of Private Limited Company to Public Limited Company Step 1 Conduct a Board Meeting to pass Board Resolution for the approval of Notice of General Meeting, Conversion and for the alteration of MOA and AOA Step 2 Conduct General Meeting and pass Special Resolution for the Conversion, Alteration in MOA and AOA and for the name change of company (delete word “Private”) Step 3 File an E-Form MGT-14 within 30 days from the passing of Special Resolution with following attachments: 1. Notice of General Meeting along with copy of Special Resolution 2. Altered MOA 3. Altered AOA (Note: As per section 117 (1) of the Companies Act, 2013 copy of every resolution which has the effect of altering the articles shall be embodied in or annexed to every copy of the articles issued after passing of the resolution) Step 4 File an E-Form INC-27 for conversion of Private to Public Company within 15 days from passing of Special Resolution with following attachments: Notice of General Meeting along with copy of Special Resolution Altered MOA Altered AOA Details of Director Promoter and Subscribers Minutes of the General Meeting After the approval of both the above forms the CIN number of Company will be change by substituting word “PTC” to “PLC”. Post Conversion Requirements: A Fresh PAN card has to be applied for All Business letterheads and related stationery should be updated with the company’s new name The bank account details of the company to be updated Intimation to concerned authorities to be given Printing of copies of New MOA and AOA The article has been prepared considering the relevant Guidelines/ Circulars/ Notifications/ Provisions of the Companies Act, 2013, the rules made there under Readers are requested to cross-cw5heck the provisions before acting upon the same. The author will not be liable for any damages or penalties caused. #CompaniesAct #CompaniesAct2013

A. OBSERVATIONS RELATED TO EQUITY 1. BENEFICIAL INTEREST It was viewed that effectively the beneficial interest in Trust which represents investments in company's own shares, is nothing but treasury shares, and hence should not have been recognized as financial asset rather be deducted from equity in line with the requirements of paragraph AG 36 of Ind AS 32. 2. STATEMENT OF CHANGES IN EQUITY It was noted that the company, which is preparing financial statements as per Ind AS, inter-alia, is required to prepare and present the Statement of Changes in Equity. However, in the above-mentioned case, the Statement of Changes in Equity was not prepared which is a mandatory requirement. Further, there was a reference given in the auditor's report that the statement of changes in equity has been audited by them although it was not forming part of the annual report. 3. RE-MEASUREMENT GAINS/(LOSSES) ON DEFINED BENEFIT PLANS It was noted from note to the financial statements on Other equity that Re- measurement gains/(losses) on defined benefit plans as adjusted/ recognized during the year were taken to OCI (Other comprehensive income). However, the accumulated remeasurement of defined benefit plans at the end of each reporting period were not disclosed. Also, a reconciliation of Re- measurement gains (losses) on defined benefit plans was not made, as per the above-stated requirement of the Guidance Note. Click here to read the 1st part of the article https://www.accountantscareer.com/post/common-non-compliances-of-financial-reporting-part-1 Click here to read the 2nd part of the article https://www.accountantscareer.com/post/non-compliances-of-financial-reporting-assets-part-2 4. NATURE AND PURPOSE OF RESERVES As per the above stated requirements of Ind AS 1 and Guidance Note on Division II - Ind AS Schedule III to the Companies Act, 2013, the nature and purpose of each reserve is required to be disclosed which was not given by the company. B. OBSERVATIONS RELATED TO LIABILITIES 1. FINANCIAL GUARANTEE CONTRACT A significant feature of a letter of comfort and corporate guarantee contract is the contractual obligation to make specified payment in case of default by the credit holder. As such, the contract may not necessarily be called as financial guarantee contract and it may take any name or legal form, however, the accounting will be same as that of a financial guarantee contract. If a contract legally meets these requirements, then it would be accounted for as the financial guarantee contract as per Ind AS 109. Accordingly, in the given case, it was viewed that both the letter of comfort and corporate guarantee by their nature, are financial guarantees and therefore, the same should have been recognized as financial guarantee as per the requirement of Ind AS 109. 2. CORPORATE GUARANTEES Guidance Note on Division II - Ind AS Schedule III to the Companies Act, 2013, Other financial liabilities are required to be presented as a separate line item on the face of the Balance Sheet under Financial Liabilities Items like financial guarantees meet the definition of financial liabilities as per Ind AS 32 and should be presented under other financial liabilities. 3. NON-CURRENT BORROWINGS It was noted from the notes to the financial statements on Non-Current Borrowings that loans from related parties were classified as non-current. It was viewed that since loans from related parties are interest free and repayment terms have not been stipulated, such loans are callable on demand. Accordingly, the classification of such loans as non-current was not in line with the above stated requirements of Ind AS 1. 4. DEFAULTS IN THE REPAYMENT OF LOANS It was noted from the note to the financial statements on Borrowings that there were various defaults in the repayment of loans. Annexure to the Auditor's Report, the auditor had reported that there has been delay in timely repayment of dues to banks for External Commercial Borrowings (ECB) and to financial institutions for debentures. It was viewed that the details of defaults remedied before the date of the financial statement was not disclosed, which is not in line with the above stated requirements of paragraph 18 (c) of Ind AS 107 and paragraph 8.2.3.16 of Guidance Note on Division II- Ind AS Schedule III to the Companies Act, 2013. 5. MATURITIES OF LONG-TERM DEBTS It was further noted from the note on Borrowings that certain amount of External Commercial Borrowings was due in the next 12 months, however, no disclosure was given for current maturities of long-term debts under current liabilities which is not in line with the above stated requirement of paragraph 8.2.10 of Guidance Note on Division II- Ind AS Schedule III to the Companies Act, 2013. 6. INSURANCE CONTRACTS It was noted that the corporate guarantees given by the company are in the nature of insurance contracts. However, the given policy regarding Corporate Guarantee omits to disclose about liquidity adequacy test. From the information available in financial statements, it appeared that no liability adequacy test was conducted. Accordingly, it was not found to be in line with the requirement of paragraph 15 of Ind AS 104, Insurance Contracts. Disclaimer: The information contained in this article is based on knowledge obtained from ICAI Publications. It is provided for general guidance to the intended user. I recommend that professional advice is necessary before taking any action on the basis of the article provided. #accounts #accountants #update

OBSERVATIONS 1. INVESTMENTS IN EQUITY SHARES It was observed from the note to the financial statements on Non-Current Investments that the value of investments in equity shares of a company was same as at the end of reporting year and previous year. It was viewed that such investment increased in terms of number of shares as well as in face value without any change in value of investments and no explanatory note was provided for the same. The requirements of Ind AS 1 have not been complied with. 2. DISCLOSURE OF CATEGORIES OF FINANCIAL INSTRUMENTS It was noted that the total of Financial Assets given under the notes was less than the amount of total financial assets shown under disclosure of Categories of Financial Instruments. This difference was due to double counting of the amount of Unquoted Equity Shares in the total of financial assets included under disclosure of Categories of Financial Instruments. Accordingly, it will give incorrect picture to the readers of the financial statements. 3. INVESTMENTS IN SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES It was noted that the investments in Subsidiaries, Associates and Joint ventures have been disclosed separately from other than financial assets. However, as per the above-stated para of Guidance Note, it was viewed that such investment may be shown under the head of financial assets as a separate line item on the face of the Balance Sheet. Click here to read the 1st part of the article https://www.accountantscareer.com/post/common-non-compliances-of-financial-reporting-part-1 NON-FINANCIAL ASSETS As per the requirements of paragraph 11 of Ind AS 32, it was viewed that interest accrued is in the nature of financial asset and hence should be disclosed under the head of non- financial assets. Further, prepaid expenses and balances with revenue authorities are in the nature of non-financial assets and hence it should be shown under the head of non- financial assets. 4. INVESTMENT IN SHARES OF OTHER COMPANIES It was viewed that investment in shares of other companies are in nature of financial assets and hence they should be shown under the head Financial Assets‟ and should have been accounted for accordingly. It was viewed that due to incorrect disclosure of investment in shares, inventories have been overstated and investments have been understated which does not give true picture of financial position of the company. 5. JOINT OPERATION WITH ANOTHER COMPANY It was noted from the footnote under note to the financial statements on Non- Current Financial Assets that the company had entered into a joint operation with another company and has disclosed the details of arrangements and share of assets. However, the company did not recognize the obligation for liabilities, expenses and did not account for revenue pertaining to its joint operations. 6. FINANCIAL ASSETS (LOANS) It was noted from the note to the financial statements on Financial Assets (Loans) that the loans were not classified as per the above stated requirement specifying whether these loans were secured, unsecured or doubtful. Accordingly, it was viewed that the above-stated requirements of General Instructions for preparation of Balance Sheet of Division II – Ind AS Schedule III to the Companies Act, 2013 have not been complied with. 7. TOLL COLLECTION RECEIVABLE Toll Collection Receivable and Receivable from Authority is in respect of the amount due on account of services rendered in the normal course of business and the company had an unconditional right to these amounts of consideration. Receivable from Authority and Toll collection receivable were in the nature of trade receivables and should have been classified as ‘Financial Assets -Trade Receivables instead of Financial Asset – Others. 8. RECEIVABLE FROM REDEEMABLE PREFERENCE SHARES Receivable from redeemable preference share pertains to an enterprise controlled by the company and it is a related party. However, under note to the financial statements on Non-Current Loans, Receivable from redeemable preference shares were not classified as from related party, which is not in line with the requirement of paragraph 8.1.10 of Guidance Note on Division II- Ind AS Schedule III to the Companies Act, 2013. 9. INTEREST ON INVESTMENTS Interest received on investments valued at amortized cost has not been shown separately, which is not in line with the requirement of paragraph 20 of Ind AS 107. Requirements of Guidance Note on Division II - Ind AS Schedule III to the Companies Act, 2013 as well as Ind AS 107 have not been complied with. 10. BALANCES CONFIRMATION Balances pertaining to trade receivable, loan and advances, trade payable and other liabilities were disclosed as subject to confirmation and reconciliation. It was viewed that information disclosed as above, is ambiguous. If such balance confirmations/ reconciliations are not material and does not affect the true and fair view of the financial statements of the company, then such information shall not be disclosed in the financial statement as disclosure of such facts may create doubts in the mind of readers of the financial statements. SA 505, External Confirmation, the auditor shall maintain control over external confirmation requests, and in case management refuses the auditor to send a confirmation request, the auditor shall, inter-alia, perform alternative audit procedures designed to obtain relevant and reliable audit evidence. 11. RELATED PARTY TRANSACTIONS In the notes to the financial statements on Other Non- Current Financial Assets, interest receivable from related party was disclosed. Similarly, in the notes to the financial statements on Other Current Assets, advances to related party were disclosed. It was viewed that for the ease of understanding of the users and better presentation of the financial statement the cross-referencing of the items of assets and liabilities should be made with the relevant note for the related party disclosures It was noted from note to the financial statements on Other Financial Assets that dues from related parties were not classified into secured, unsecured and doubtful as per the above stated requirement of General Instructions for preparation of Balance Sheet of Division II, Schedule III to the Companies Act, 2013. 12. INVENTORY VALUATION Net realizable value of inventory refers to the net amount (estimated selling price less estimated cost of completion and estimated cost of sale) that an entity expects to realize from the sale of inventory in the ordinary course of business whereas the fair value reflects the price at which an orderly transaction to sell the same inventory in the principal (or most advantageous) market for that inventory would take place between market participants at the measurement date. The inventories ought to be valued at lower of the cost or net realizable value and not the fair value. 13. OTHER BANK BALANCES It was noted that other bank balances were disclosed under the head of Balance with Banks. However, the nature of these bank balances had not been specified as per the above stated requirements. Further, it was also noted that the amount was material; therefore, the nature should have been disclosed appropriately for the understanding of the users of the financial statements. Accordingly, it was viewed that the above-stated requirements of General Instructions for preparation of Balance Sheet of Division II – Ind AS Schedule III to the Companies Act, 2013 have not been complied with Disclaimer: The information contained in this article is based on knowledge obtained from ICAI. It is provided for general guidance to the intended user. I recommend that professional advice is necessary before taking any action on the basis of the article provided. #Accounts #accountants

The common non-compliances in reporting requirements of various applicable Statues as observed by the Financial Reporting Review Board (FRRB) constituted by ICAI during the review proceedings. OBSERVATIONS RELATED TO ASSETS 1. SUBSEQUENT EXPENDITURE It would be recognized in the carrying amount of PPE when that cost/ expense would meet the recognition criteria given in paragraph 7 of Ind AS 16. There is no criterion that capitalization should be done only if there is increase of future benefits from the existing asset beyond previously assessed standard of performance. 2. CAPITAL WORK-IN-PROGRESS It was viewed that since the capital work in progress is also the part of property, plant and equipment and therefore the amount of expenditures recognized in the carrying amount of capital-work-in-progress should have been disclosed by the company in line with the above-stated requirement of Ind AS 16. 3. DEPRECIATION ON LEASEHOLD IMPROVEMENTS As per paragraph 56 of Ind AS 16, various factors are considered in determining the useful life of an asset which, inter-alia, includes legal limits on the use of asset such as the expiry dates of related assets. Accordingly, it was viewed that for providing depreciation on leasehold improvement, lease term should have been considered instead of considering primary period of lease. 4. TOLL EQUIPMENT CLASSIFICATIONS Accounting policy on Property, Plant and Equipment as well as the fact that Toll Equipment is a tangible asset, it was viewed that classification of Toll Equipment under Intangible asset is not correct 5. PROJECT RELATED EXPENSES As per paragraph 20 of Ind AS 16, recognition of costs in the carrying amount of PPE ceases when the item is in the location and condition necessary for it to be capable of operating in the manner intended by management. Hence capitalizing expenses incurred upto the date of commercial operations is not in line with Ind AS 16. 6. PREVIOUS YEAR FIGURES IN PPE It was noted that the previous year figures have not been provided for all the items of Property, plant and equipments which was not in line with the above stated requirements of Schedule III to Companies Act, 2013. 7. BORROWING COST CAPITALIZATION As per paragraph 22 of Ind AS 23, borrowing costs should be capitalized till the asset is ready for its intended use or sale. Hence, capitalization of expenses incurred upto the date the asset is put to use is not in line with Ind AS 23. 8. LEASEHOLD LAND -AMORTISATION As per the requirements of Ind AS 16, a depreciable asset should essentially have a limited useful life. Leasehold land by its nature has a limited useful life and AS such, it should be amortised as required under paragraph 43 and 50 of Ind AS 16. It was viewed that non- amortisation of leasehold land is against the requirements of Ind AS 16. 9. FINANCE LEASE Footnote given under a note to the financial statements of a company that the company has acquired a land under finance lease. In the absence of accounting policy, principles, bases, conventions, rules and practices applied by the company in preparing and presenting the disclosures related to finance lease is not clear. it was viewed that the requirements of Ind AS 8 have not been complied with 10. ASSET NOT OWNED It was noted that no disclosure was made in the financial statements as to which are these assets that are not owned by the company. Further, the basis for ten years period of amortisation‟ has also not been disclosed 11. TOLL COLLECTION RIGHTS In case of Toll Collection Rights under Intangible Assets, the accumulated depreciation as on the date of transition was not reduced from Gross Block as per the above stated requirement. Accordingly, it was viewed that the presentation of Toll Collection Rights was not in line with the above stated requirement of the Guidance Note on Division II of Schedule III to the Companies Act 2013. 12. CAPITAL WORK IN PROGRESS (CWIP) It was further observed from note to the financial statements of the company on Capital Work in Progress (CWIP) that the total CWIP was stated as ―Total intangible assets under development. However, no policy was disclosed or explanation was given regarding capitalisation of such internally generated intangible assets. Accordingly, it was viewed that the requirements of Ind AS 1 have not been complied with. 13. DEPRECIATION ON INVESTMENT PROPERTY Under the cost model, investment property is measured at cost less accumulated depreciation and any accumulated impairment losses and Fair value is disclosed in notes to accounts. Accordingly, depreciation should have been charged on these properties and debited to Statement to Profit and Loss. Accordingly, it was viewed that the requirements of Ind AS 40 have not been complied with. 14. UNQUOTED INVESTMENTS It was noted from note to the financial statements on Investments that the investments were classified as unquoted investments; however, as per the above stated requirement of Schedule III, aggregate amount of unquoted investments was not disclosed. Further, it was noted from another note to the financial statements that the investments were not classified into quoted or unquoted investments and disclosures as required under Schedule III to the Companies Act, 2013 were also not made. 15. FIXED DEPOSIT MORE THAN 12 MONTHS It was viewed that the fixed deposits with banks having a maturity period of more than 12 months should have been classified as other bank balances under financial assets instead of investments. Accordingly, it was viewed that the requirements of Division II - Ind AS Schedule III to the Companies Act, 2013 have not been complied with. Disclaimer: The information contained in this article is based on knowledge obtained from ICAI Publications. It is provided for general guidance to the intended user. I recommend that professional advice is necessary before taking any action on the basis of the article provided.

FAKE INVOICE Fake Invoice refers to a 'Non-compliant GST Invoice' "Non-compliant GST Invoice' means any invoice which does not comply with the provisions of the CGST Act and Rules, 2017. Usually, 'fake invoice' refers to a non-compliant GST Invoice of the following types: Invoice without any 'Supply' Invoice with a 'Non-compliant' Supply The 'Invoice' that are usually treated as 'fake' are those wherein the GST invoices are raised by an entity without actual supply of goods or services or payment of GST. There are three ways in which such fake invoices could be misused in GST regime. Issue of invoices without supply of goods or services where payment of tax is made by way of Input Tax Credit which not available to the issuer of invoice. In such cases, there is no receipt of goods or credit by the issuer of Invoice. He merely issues invoices and shows payment of tax by non-existent input tax credit. This results in actual loss in revenue where the buyer of the Invoice avails inadmissible credit which is used for payment of tax. There have also been instances where no GST has been paid even by input tax credit by the issuers of the fake invoice. Issue of invoices by persons where the invoices is issued to one person and the goods are diverted to some other person. The person who purchases invoices may utilize the credit for payment of taxes at the time of export of goods and claim refund of the said tax paid, resulting in loss of revenue. Routing of invoices through a series of shell companies/dummy companies and transfer of input tax credit from one company to another in a circular fashion to increase the turnover. In such cases, there is no supply of goods or services and thereby availment of credit based on such invoices gets hit by the provisions of Rule 16 of the CGST Act, 2017, which stipulates that the conditions that to avail credit, the buyer should have an invoice on which tax has been paid and he should have received to goods. In such cases, availment of credit without receipt of goods is inadmissible and utilization of such credit for actual regular supplies results in loss of revenue and financial accommodation. In such cases, unscrupulous traders are utilizing the GSTN system to create Invoices, fake e-way bill showing movement of goods etc. to defraud the revenue and the banking system. USE OF FAKE INVOICES Issue of Invoice without supply of goods/services No receipt of goods Payment of tax by non-existent ITC No Credit by Issuer of Invoice Issue of Invoice with goods Issue of Invoice Supply of goods but diverted to another recipient Utilize ITC for payment but claim export refund Through circular Trading Creation of several dummy/shell companies Transfer ITC through circular trading in contravention of Section 16 of CGST Act, 2017 No actual supply of goods and services MOTIVE BEHIND FAKE INVOICE Any business or trade, who use 'fake invoice' earn input tax credit which is illegal and hence are liable for punishment under CGST law. There could be following possible objectives which encourage fraudsters to indulge in issuing and using fake invoices: Evasion of GST on taxable output supplies by Availing under Input tax Credit (ITC) Saving GST (cash) by payment of tax liability using undue Input Tax Credit (ITC) Clandestine supply without invoices and without payment of taxes Converting excess Input Tax Credit (ITC) into cash by Transferring of Input Tax Credit (ITC) to those who can utilize it. Shifting Input Tax Credit (ITC) from exempted supplies to taxable supplies Encashment of Input Tax Credit (ITC) by way of IGST refund or unutilized Input Tax Credit (ITC) refunds Inflating turnover for the purpose of Availing higher credit limit/overdraft from Banks Obtaining bank loans Improving valuations for issue of capital or sale of stake Obtaining contracts including Government contracts Booking fake purchases for getting Income-tax Benefits by Showing reduced profit margins and higher expenses Avoiding payment of Income-tax by reducing net profit Cash generation/diversion of company funds Laundering of money IMPACT OF FAKE INVOICES The issuance of fake invoice results in fake trade which is illegal. Preparing and trading 'fake invoice' is criminal activity; this crime is punishable under the law with maximum imprisonment of upto five years, in addition to recovery of illegal input tax credit with interest and penalty. In fact, it is social menace; it is against economy, society and development. Illegal input tax credit earned using 'fake Invoice' is a drain on the economy and affects the GST revenue collections. Evil forces use 'fake Invoice' to generate 'cash' which is most likely to be used for nefarious crimes and to fuel social tension. Following is the effects or outcome of an issuing, using and dealing with fake invoices: It amounts to fraudulent and illegal activities It is counter-productive and works against the national and economic interest of the country It is social evil It results in tax avoidance and tax evasion It attracts penal provisions under section 122 of CGST Act, 2017 It is a criminal and cognizable act liable for imprisonment under section 69, 132 and other provisions of the Act Loosing right to carry on business as a result of cancellation of registration. GST FRAUD THROUGH FAKE INVOICES Based on the cases of fraud emanating from issue and use of fake invoices, following assertions can be made: The Input tax credit (ITC) involved in the fraud cases usually reaches a large sum in a short timeframe. Some reported frauds are hundreds of crores. Fake invoice case involves fabrication of Invoices which is an offence under Indian Penal Code. The Investigating Authority has to take call regarding how to get this part of the case investigated. Issues of legality, jurisdiction are involved. In a number of cases, e-Way bill has been generated without the corresponding filing of returns. The lack of real time connectivity between e-Way Bill system and GSTN is being exploited by fraudsters. The frauds usually a large number of GSTIN entities spread over states. Some of the entities would fall under the jurisdiction of the CGST authorities while the connected entities fall under the jurisdiction of the state authorities. Data adequacy and availability has become another challenge. The capacity of Invoice matching is yet to be provided. In multi-jurisdictional investigations, Tax administration do not have access to supplies in other jurisdictions, even though data resides in the GSTN. In many cases, dummy firms are created/floated to commit the fraud. The address is often incorrect/incomplete and the details revealed in the registration forms are often false. As entry barriers is very low, and there is a lack of a proper system of scrutiny and verification of registration data, fraudsters are able to commit frauds with impunity. There is another class of dummy companies with verifiable facts but no assets or means to do business; they act as surrogate for other large companies to camouflage their activities. Connivance with transporters to get bogus bilty/consignment note to show movement of goods on paper and creating fake e-Way bills with fake/wrong vehicle registration details without the supply of any goods. There is no system in place to see if vehicle registration data is correct or not. Fly-by-night operators are used to get GSTIN and generate large number of tax invoices and e-way bills in the first few months and disappear. In this way the fly-by-night operators help other large companies to supply and transport their goods without Invoice and paying taxes. Encashment of Input Tax Credit (ITC) availed on fake Invoices by obtaining IGST/Input Tax Credit (ITC) refunds especially in case of free shipping bills raise the issue of valuation of export goods. Further Customs GST coordination with regard to such fake invoice cases required to be looked into. Supplies made and GST collected but not paid i.e., GSTR-1 is filed but GSTR-3B is not filed. In some cases, both GSTR-1 and GSTR-3B are not filed. CIRCULAR TRADING Circular trading is a fraudulent transaction that creates an artificial trading activity by issuance of sales Invoice amongst a close group without an actual supply of goods. In simple words, circular trading refers to the transactions of selling and buying of goods (without actual movement of goods) through shell companies. Circular trading refers to issuing of Invoices in transactions among multiple companies without actual supply of goods. This is done to use input tax credit in the GST regime, meaning Circular Trading is a type of cycle that takes place when a company tries to create flow of fake sales transaction with its colluding parties by producing fake invoices. The objective of circular trading is for inflating turnover of the business. However, through circular trading, companies may also aim to: To Increase the valuation of the company/business To bring in black money into the system To avail fake Input tax credit To divert or siption out funds Section 132(1)(b) of the Central Goods and Service Tax Act, 2017 covers the situation, wherein, the person issues Invoices without actual supply of goods (i.e., circular trading) Section 132(1) (c) also covers the situation, and wherein the person avails input tax credit based on the invoice so issued without actual supply of the goods. The provisions of GST for circular trading are very harsh and are covered under serious offense as non-bailable and cognizable offense. USE OF INTELLIGENCE AGAINST TAX EVASION The use of intelligence is for identification of tax evasion through the help of Artificial Intelligence and data analytics in order to stop the leakages in revenue collection. Its goal is to make a targeted approach to counter the leakages. It wants to ensure the process of red-flagging the tax evaders thereby making calculated steps to avoid harassment or overreach to genuine taxpayers. CBIC officers are using latest IT tools, digital evidence and also collecting information from other government department to catch the fraudsters. Along with legislative and procedural changes in the law, the nationwide drive has contributed to better compliance and revenue collection. During the drive, case of input tax credit availment against some well-known companies were also booked. CBIC has also decided to take the following steps in order to curb tax evasion: A mechanism and machinery for disseminating inter-departmental data among various agencies like GSTC, CBDT, CBIC, FIU, DOR, DGGI and state tax administrations etc. in order to achieve efficiency in curbing evasion and augment revenue collection. Constituting a committee of center and state officers to examine and implement quick measures in a given time frame to curb fraudulent refund claims including the inverted tax structure refund claims and evasion of GST. The committee will come out with detailed SOP with in a week, which may be implemented across the country. Considering fraudulent IGST refund claims, to link foreign exchange remittances with IGST refund for risky and new exporter. All major cases of fake Input Tax Credit, export/import fraud and fraudulent refunds shall also be compulsorily investigated by Investigation wing of the Income Tax Department. MoU among CBDT, CBIC and GSTN to exchange data through API, from CBDT to GSTN and CBIC and vice-versa. This data should be shared on quarterly basis, instead of being shared on yearly basis. Sharing data of cases involving evasion and fraudulent refund detected by CBIC with CBDT and vice versa, so that proper profiling of theses fraudsters could also be done. Verification of unmatched Input Tax Credit availed by taxpayers. STANDARD OPERATING PROCEDURE (SOP) ON FAKE INVOICES CBIC through its GST investigation wing has formulated standard operating procedure (SOP) on dealing and tacking the issue of frauds arising from fake invoices. Accordingly, the frauds in question need to be tackled by putting in place a regime that enables to the extent possible the identification of suspect entities at the initial state it self and in other cases the detection of GST frauds at the earliest. The former becomes especially important as the past experience is that many of such operators have a tendency to operate through impersonation in the name of dummy persons who have no real assets making it virtually impossible to recover any amounts from them, if a case is detected at later stage. The following safeguards are suggested as key elements of risk profiling to check such GST frauds: Scrutiny/verification of registered taxpayers through risk profiling and verification for early identification of fraudsters indulging in fake Invoices. Historically tax evasion prone sectors. Maintenance of offence database of those figuring in frauds to prevent their reentry in the system. Some of the risk indicators of such persons or activities done by them or commodities traded by them or patterns behind their activities are as under: Multiple registration on same PAN Common email, common mobile numbers, common address, common authorized signatory, common promoters etc. A person whose registration application is rejected or a person whose registration is cancelled may apply again for registration. Live registration against the said PAN with the CGST jurisdiction where offence has been booked by SGST authorities. STEPS INVOLVED The SOP on procedure to detect and tackle 'fake Invoices' frauds involve the following steps: Identification Identification of entities to generate fake invoices Identification of entities who use the fake invoices Common e-mails/mobiles/addresses Use of fake (PAN) cards Determination/detection Search of premises Physical space availability verification Ascertainment of non-existent inputs/outputs Lack of documentation Mis-match of e-way bills Fake or non-existent vehicle numbers Mis-match of information amongst regulators such as Income Tax, commercial & other taxes, ROC etc. Post detection Issuance of show cause notice (SCN) Issuance of summons Blocking of Input Tax Credit (ITC) Cancellation of registration Attachment of bank account and other assets Detention and confiscation of goods and conveyance Prosecution and arrest #GST #INCOMETAX #RETURNS

A. TECHNICAL REVIEWER AT FINANCIAL REPORTING REVIEW BOARD To improve the financial reporting practices in the country, the ICAI has constituted Financial Reporting Review Board (FRRB). The Board reviews the General-Purpose Financial statements of enterprises with a view to determine compliance with the reporting requirements of various applicable statutes, accounting standards and standards on auditing. Eligibility Criteria Possess at least ten years' experience of audit and Be currently active in the practice of accounting and auditing The members of the Institute who are having comparable experience in industry are also eligible for empanelment on the panel of Technical Reviewers. B. TECHNICAL REVIEWER AT QUALITY REVIEW BOARD Quality Review Board (the 'Board') to recommend to the Council, review and guide the members regarding the quality of services provided by the members of the Institute including audit services as per Section 28B of the Chartered Accountants Act, 1949. Eligibility Criteria You should have minimum fifteen years of post-qualification experience as a chartered accountant and be currently active in the practice of accounting and auditing; You should have handled as a signing partner/proprietor at least three statutory audit assignments as a Central Statutory Auditor of Banks/Public Limited Companies/ Government Companies/Private Limited Companies having annual turnover of rupees fifty crore and above during the last ten financial years; Provided that out of the aforesaid three statutory audit assignments, at least one must be in respect of entities other than Private Limited Companies; You should not have any disciplinary proceeding under the Chartered Accountants Act, 1949 pending against you or any disciplinary action under the Chartered Accountants Act, 1949 / penal action under any other law taken/pending against you during last three financial years and/or thereafter. You should not currently be a Member of the QRB Board or ICAI's Central Council/Regional Council/Branch level Management Committee. C. ENGAGEMENT AS PEER REVIEWER (a) comply with Technical, Professional and Ethical Standards as applicable including other regulatory requirements thereto and (b) have in place proper systems including documentation thereof, to amply demonstrate the quality of the assurance services. Eligibility Criteria an individual serving as a reviewer shall (a) be a member; (b) possess at least ten years' experience of audit; (c) be currently active in the practice of assurance service engagements; and (d) be free from any obligation or conflict or interest in the reviewed firm or its partners or personnel D. OPPORTUNITIES IN BOARD OF STUDIES Visiting faculty in IT labs run by Board of Studies. Video lecturing to Students of CPT, Inter and Final – 4000- 6000 per hour. Articles in ICAI Journal - 5,000 per published article. Articles in Students Newsletter - 2,500 per published article. Review of article to be published in Students' Newsletter - 1000. Review of Study Material - 100 per page and 150 per page of addition suggested. Faculty in GMCS classes and Orientation Programmes - 750 to 1500 per 90 minutes. E. OPPORTUNITIES IN EXAMINATION COMMITTEE The services of Chartered Accountants are also utilized by ICAI as Evaluators for the Exam Papers with following terms and conditions: Chartered Accountants with a minimum of four years standing in practice or in service are eligible. University Lecturers/Professors with a minimum of five years teaching experience are eligible. ICWA, ACS, M. Com, Post Graduates in Economics or Law, Lawyers, IT Professionals, MBA (Finance) and other professionals with at least five years' experience, either in academic position or in practice or in employment are eligible to apply. Those with work experience having direct relevance to the aforesaid subjects(s) of examination(s) will be preferred. Persons above 65 years of age are not eligible. Persons who are visually impaired or suffer from such other physically disability that might necessitate taking the assistance of any other person for evaluation of answer books are not eligible. Persons who are undergoing CA Course of the Institute are not eligible. Persons whose applications were rejected earlier from the Panel are eligible to apply again after a gap of 1 year from the date of rejection. Those who are already empanelled with ICAI as examiners and have not been rested/removed need not apply. Their candidature will be considered in the normal course, at the appropriate time. Persons associated with the coaching activities are not eligible. Those who have ceased to be associated with the coaching activity are permitted to apply after a gap of 5 years. An applicant for empanelment is required to appear and pass an on-line test in the subject of his choice, answer books of which he would like to evaluate, before being empanelled. F. TAX AUDIT REVIEW BOARD (TAQRB) For empanelling as a Technical Reviewer with TAQRB, a member needs to satisfy the following conditions: Possess at least 10 years' Post Qualification experience in the practice of taxation (Direct and/or Indirect); and Be currently active in the practice of taxation. A technical Reviewer is entitled to receive an honorarium of 10,000/- per report reviewed. G. OTHER OPPORTUNITIES IN ICAI One can act as a Resource Person in Study Groups. Faculty in in-house Executive Development Programmes. For contribution on Technical Publications on varied subjects – 25,000 to 60,000. Faculty in Certificate courses and PQ courses conducted by ICAI, 1,000-3,000 per hour. Paper Setter and Examiner in the examinations conducted arising out of above PQ and Certificate Courses – Honorarium ranges around 6000 to 1000 for paper setting, 50-100 for examinership. Disclaimer: The information contained in this article is based on knowledge obtained from ICAI. It is provided for general guidance to the intended user. I recommend that professional advice is necessary before taking any action on the basis of the article provided.

As you are aware taxable event in GST is supply of goods or services or both. Various taxable events like manufacture, sale, rendering of service, purchase, entry into a territory of State etc. have been done away with in favour of just one taxable event i.e. supply. The constitution defines "goods and services tax" as any tax on supply of goods, or services or both except taxes on the supply of the alcoholic liquor for human consumption. The Central and State governments have simultaneous powers to levy GST on Intra-state supply. However, the Parliament alone have exclusive power to make laws with respect to levy of goods and services tax on Inter-state supply. The term, "supply" has been inclusively defined in the Act ,2017; SUPPLY includes all forms of supply of goods and/or services such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business. The meaning and scope of supply under GST can be understood in terms of following parameters, which can be adopted to characterize a transaction as supply: Supply of goods or services or both(Supply of anything other than goods or services does not attract GST). Supply should be made for a consideration. Supply should be made in the course or furtherance of business. Supply should be a taxable supply. While these parameters describe the concept of supply, there are a few exceptions to the requirement of supply being made for a consideration and in the course or furtherance of business. Any transaction involving supply of goods or services without consideration is not a supply, barring few exceptions, in which a transaction is deemed to be a supply even if it is without consideration. IMPORT OF GOODS OR SERVICES Under the GST regime, Article 269A constitutionally mandates that supply of goods, or of services, or both in the course of import into the territory of India shall be deemed to be supply of goods, or of services, or both in the course of inter-State trade or commerce. So import of goods or services will be treated as deemed inter-State supplies and would be subject to Integrated tax. While IGST on import of services would be leviable under the IGST Act, the levy of the IGST on import of goods would be levied under the Customs Act, 1962 read with the Custom Tariff Act, 1975. The importer of services will have to pay tax on reverse charge basis. However, in respect of import of online information and database access or retrieval services (OIDAR) by unregistered, non-taxable recipients, the supplier located outside India shall be responsible for payment of taxes (IGST). Either the supplier will have to take registration. IMPORT OF SERVICES To be treated as supply i) if received for a consideration, whether for personal use or business use. ii) However if import of services is received without any consideration, then it will be treated as supply if it is received by a Taxable person from a related person or from any of his other establishment outside India, and it is in course or furtherance of business. A CRYPTOCURRENCY is a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend. Many cryptocurrencies are decentralized networks based on blockchain technology—a distributed ledger enforced by a disparate network of computers. A defining feature of cryptocurrencies is that they are generally not issued by any central authority, rendering them theoretically immune to government interference or manipulation. Bitcoin is one of the earliest forms of cryptocurrency, forming part of the worldwide peer-to-peer payment system. Cryptocurrency is digital money. It is considered to be more secure that the real money. Cryptocurrency uses something called cryptography to secure its transactions. Cryptography, to put it in simple words is a method of converting comprehensible data into complicated codes which are tough to crack. Cryptocurrencies are classified as a subset of digital currencies, alternative currencies and virtual currencies. Bitcoin was the first ever cryptocurrency created in the year 2009. Subsequently, there has been a rapid increase in the number of cryptocurrencies that have been created some of which are Litecoin, Ethereum, Zcash, Dash, Ripple etc. Bitcoins, in India, have slowly started gaining popularity, given the efforts of the government to move towards a cashless economy. However, one should know that bitcoins, as of today, are not centrally administered or regulated by any specific body like the RBI which administers physical currency in India. In fact, peer-to-peer transactions with bitcoins are managed using something known as the blockchain technology which serves as a public ledger for all transactions. 1. WHETHER CRYPTO CURRENCY FALLS UNDER DEFINITION OF "GOODS" OR " SERVICE" Therefore it becomes imperative to understand if the Cryptocurrency falls within the meaning of " Goods or Services" under the GST laws. This classification would further be important to understand the treatment of transactions in terms of provisions such as place of supply , time of supply , rate of tax, valuation ,reverse charge etc. MEANING OF GOODS: Section 2(52) of CGST Act 2017 "goods" means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply". It means that: Goods in GST means every kind of movable property like pen, car, food, animals etc. It also includes actionable claims and growing crops or grass, although these things are not normally construed as movable and are attached to earth. Reason for the same being, these things can be sold separately or sold under a combined contact with land. But, goods in GST does not include Money Securities. LET’S ANALYSE ABOVE DEFINITION The term "Movable Property" is not defined under GST ACT,2017 and hence reference has been taken from provisions of General Clauses Act, 1897 ,where it is defined as " Property of every description other than Immovable Property". Thus to fall within the meaning of goods, , the property should not be immovable in nature. Since Cryptocurrency is not satisfying above definition of immovable property. The " Movable" means something that has ability to move. If we use word property with the move, then we can say that any property , which is movable is a " Movable Property", comes within definition of "Goods" under GST,2017. Please note that: property may be tangible or intangible property or it also includes rights ,which can be traded in the market. Let’s consider Supreme Court’s Judgment in case of Vikas Sales Corporation Vs. Commissioner of Commercial Taxes 1996 taxmann.com 1126(SC). The Question before the Apex Court was whether the transfer of import license ,i.e. REP License or Exim Scrip constitute the sale of goods for the purpose of the Sales Tax Laws of Tamil Nadu, Karnataka and Kerala. In this regard, the Supreme Court had made following observations ; 1. The term property is extended to every species of valuable right and interest; 2. It also covers the unrestricted and exclusive right to a thing; more specifically ,ownership , the right to dispose of a thing in every legal way, to possess it, to use it and to exclude everyone else from interfering with it; 3. Property embraces everything which is or may be the subject of ownership , whether legal ownership, or whether beneficial or a private ownership; 4. The word is commonly used to denote everything which is the subject of ownership , corporeal or incorporeal , tangible or intangible ,visible or invisible , real or personal, everything that has an exchangeable value or which goes to make up wealth or estate; 5. It also includes real and personal property; 6. Even incorporeal rights like trademarks , copyrights ,patents and rights in personam capable of transfer or transmission ,such as debts, are also included in its ambit. THE APEX COURT further said in relation to REM License "REM licenses have their own value. They are bought and sold as such. The original licence or purchaser is not bound to import the goods permissible thereunder. He can simply sell it to another and that another to yet another person. In other words , these license /Exim Scrips have an inherent value of their own and are traded as such. They are treated and dealt within the commercial world as merchandise , as goods. A REP License/Exim Scrip is neither a chose-in-action nor an actionable claim. It is also not in nature of a title deed. It has value of its own. It is by itself a property, and it is for this reason that it is freely bought and sold in the market. For all purposes and intents, it is goods". IT MEANS THAT: the property term includes all species of valuable right and interest. It would not be restricted to tangible items but also include Incorporeal Rights. The Apex Court in Tata Consultancy Services Vs. State of Andhra Pradesh 2004 taxmann.com101(SC) held that the transaction sale of computer software would be considered as sale of goods. The court provided that the Indian Laws does not make any distinction between tangible property and intangible property. Therefore "Goods" may be a tangible or an intangible one, and the property would become goods provided it has the attributes thereof having regard to ; (a) Its utility; (b) Capable of being bought and sold; and (c) Capable of being transmitted , transferred , delivered ,stored and possessed. PLEASE NOTE THAT the CBIC has also clarified that the Priority Sector Lending Certificate ( PSLC) is taxable under GST as goods. The PSLC certificate is traded on E-KUBERPortal of the RBI and it is sold from one bank to another bank. The CRYPTOCURRENCIES has an inherent right and is capable of being bought and sold or we can say that these Virtual Asset is marketable just like goods. These VDA can be transferred from one person to another and can be utilised as medium of exchange. IFRS IAS 38 defines -Intangible Assets, which are non-monetary assets without physical substance and identifiable (either being separable or arising from contractual or other legal rights). Intangible assets meeting the relevant recognition criteria are initially measured at cost, subsequently measured at cost or using the revaluation model , and amortised on a systematic basis over their useful lives(unless the asset has an indefinite useful life , in which case it is not amortised). The International Financial Reporting Interpretations Committee(IFRIC) said that Virtual Currency fits the definition of an Intangible Assets as; (a) It is capable of being separated from the holder and sold or transferred individually; and (b) It does not give the holder a right to receive a fixed or determinable of unit’s currency. PLEASE NOTE THAT Many European Countries follow Court Judgement in case of Skatterverket Vs. David Hedqvist Case C-264/14 in which it was held that exchange of Cryptocurrency against Fiat Currency to be treated as Supply of Service. The Court held that Cryptocurrencies used in settlement or payment in the course of trade fulfils conditions of Legal Tender. In these countries supply of Intangible or tangible goods come under Supply of Goods and hence taxable. WHAT IS AN ACTIONABLE CLAIM Actionable claim is defined in Section 3 of the Transfer of Property Act, which was included in the Act by the Amending Act II of 1990. Actionable claim is an intangible movable property, and its transfer is dealt with in Chapter VIII of the Act. According to Section 3 of the Act, actionable claim means: 1. Claim to an unsecured debt 2. Beneficial interest in a movable property. These are both claims that are recognized in the Courts of law as affording relief. There are other types of claims also that afford relief and are actionable in the Courts of law, such as secured debts and tortuous suits like defamation or nuisance. But those are not categorized under the meaning of actionable claim. The term actionable claim only covers the above mentioned two types of claims. Section 2(1) of CGST Act, 2017 defines Actionable Claims as the one having the same meaning as assigned to it in Section 3 of the Transfer of Property Act, 1882. As per the Transfer of Property Act, Actionable Claim means: a claim to any debt other than a debt secured by mortgage of immovable property or hypothecation or pledge of movable property or Claim to any beneficial interest in the movable property not in the possession, either actual or constructive, of the claimant. Further, such actionable claims are recognized by the civil courts as affording grounds for relief. This is irrespective of the fact whether such debt or beneficial interest is existent, accruing, conditional or contingent. In a nutshell, there are two parts to the definition of actionable claims: A claim to unsecured debt or Any interest in the movable property which is not in the possession of the claimant. Actionable Claims are applicable only for goods and not for services. Section 2(52) of the CGST Act defines goods as every kind of movable property other than money and securities but includes actionable claims, growing crops, grass and things attached to land which are agreed to be severed before supply. 2. WHETHER CRYPTOCURRENCY IS AN ACTIONABLE CLAIM (a) The first limb of the above definition intends to cover the claim in the nature of debt other than secured debt i.e. unsecured debt. (b) The second part refers to the claim to any beneficial interest in movable property, not in the possession of the claimant. From above it is clear that cryptocurrency is not a debt , as there is no such type of transfer. That is there is no lender or borrower. Since holder of a cryptocurrency is the owner of the movable property in the cryptocurrency and movable property is always in his possession and hence second part of above definition is not also satisfied. At last cryptocurrency is not an " Actionable Claim". 3. WHETHER CRYPTOCURRENCY IS MONEY the money has been excluded from the definition of "Goods Section 2(75) of the CGST,2017 provides that -It means the Indian legal tender or any foreign currency, cheque, promissory note, bill of exchange, letter of credit, draft, pay order, traveller cheque, money order, postal or electronic remittance or any other instrument recognised by the Reserve Bank of India when used as a consideration to settle an obligation or exchange with Indian legal tender of another denomination but shall not include any currency that is held for its numismatic value. The RBI defines legal tender as - " Legal Tender is a coin or a banknote that is legally tenderable for discharge of debt or obligation." PLEASE NOTE THAT: Coins of any description not lower than one rupee note shall be legal tender for any sum not exceeding Two Thousand Rupee. The definition of bank notes covers both physical and digital notes issued by RBI. By inserting the meaning, the Government included CBDC within the meaning of Bank Notes. A CBDC is a legal tender issued by a Central Bank in digital form and it is same as Fiat Currency . A CBDC is denominated in the currency of the issuer country and is intended to maintain same value as is physical counterpart. As cryptocurrencies are not in form of coins or bank notes and also RBI has not issued the same and hence it does not fall under definition of Coins or Bank Notes and hence it is not money. The cryptocurrencies are also not treated as foreign currency. From above discussion it is clear that cryptocurrencies do not satisfy conditions to be called as " Money" and hence cannot be treated as " Money". Since " Money" has exclusively out of preview of GST ACT,2017. 4. WHETHER CRYPTOCURRENCY IS SECURITIES SECTION 2(h) of the Securities Contract Regulation Act ,1956 (i) shares, scrips, stocks, bonds, debentures, debenture stock or other marketable securities of a like nature in or of any incorporated company or other body corporate; (ia) derivative; (ib) units or any other instrument issued by any collective investment scheme to the investors in such schemes; (ic) security receipt as defined in clause (zg) of section 2 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002); (id) units or any other such instrument issued to the investors under any mutual fund scheme; (ida) units or any other instrument issued by any pooled investment vehicle; (ie) any certificate or instrument (by whatever name called), issued to an investor by any issuer being a special purpose distinct entity which possesses any debt or receivable, including mortgage debt, assigned to such entity, and acknowledging beneficial interest of such investor in such debt or receivable including mortgage debt, as the case may be; (ii) Government securities; (iia) such other instruments as may be declared by the Central Government to be securities; and (iii) rights or interests in securities; LET’S ANALYSE since cryptocurrencies freely traded on the Crypto Exchanges, may still not be referred to as securities for GST law because these are not covered under definition of Securities and also not declared by the government as such. SERVICES under Goods and Service Tax means anything which is NOT- Section 2(102) of CGST Act 2017. As per Section 2(102) of CGST Act, 2017 services means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged. It means that: Service includes all things other than Goods, Securities, Money But activities like the conversion of money-by-money exchanges or authorized dealers for a service charge or fee is included under the ambit of Service. GST ACT,2017 defines service means anything other than goods, money and securities but include activities relating to the use of money or its conversion by cash or by any other mode, from one form ,currency or denomination , to another form ,currency or denominated for which a separate consideration is charged. Since in previous discussion we have analysed that Cryptocurrencies are goods and hence these are not falls under category of service. CONCLUSION From above discussion we may conclude that Cryptocurrency does not falls within ambit of specific exclusions in the definition of "Goods". We can say that Cryptocurrency is covered under definition of " Movable Property", and hence Cryptocurrency would qualify as goods for the purpose of GST Act, 2017. Since government has till date not recognised Cryptocurrency and transactions in Cryptocurrency. DISCLAIMER: The article presented here is only for sharing information and knowledge with the readers. The views are personal ,shall not be considered as professional advice. In case of necessity do consult with tax professionals for more clarity and understanding on subject matter. Footnotes: As per the Finance Bill, 2022, the cryptocurrencies are classified as a capital asset for the purpose of taxation and hence, income under the head capital gain will arise on transaction of the same. Tax on income from Cryptocurrencies [Section 115BBH] i) Income from transfer of cryptocurrencies will be taxed at the rate of 30%; ii) Deduction - No deduction of any expenditure except for cost of acquisition will be allowed; iii) Set off/ Carry forward of losses - No set off of losses against any income is allowed as well as carry forward of losses in this respect is also not allowed. Please Note That: The following should be ignored while computing capital gains on transfer of cryptocurrencies i) Cost of improvement relating to the asset; ii) Selling expenses i.e. the expenditure incurred in connection with the transfer of virtual digital asset; iii) Indexation of cost of acquisition iv) Any exemption under section 54F. Further, no deduction under Chapter VI-A shall be allowed. However, relief under section 87A i.e. rebate can be claimed. Applicability of TDS provisions [Section 194S] A new section 194S is proposed to be inserted in The Income Tax Act, 1961 w.e.f. 01.07.2022 regarding TDS. Deductor - Any person responsible for paying any sum by way of consideration for the transfer of cryptocurrency. Deductee - Tax is required to be deducted if amount is payable to a resident person Rate of TDS - 1% of consideration. When to deduct - At the time of payment or at the time of credit of such sum to the account of resident, whichever is earlier. Exemption from TDS 1. If consideration is payable by any person (other than a specified person) and its aggregate value does not exceed Rs. 10,000 during the financial year. 2. If consideration is payable by a specified person and its aggregate value does not exceed Rs. 50,000 during the financial year.