Sandeep Ahuja & Co.

Established in the year 1986, we are a leading chartered accountancy firm based in Delhi & NCR rendering comprehensive professional services which include statutory audit, internal audit, direct tax, transfer pricing, GST, bank audit, propriety audit, cost accounting, internal financial controls and risk advisory.

Monday, July 31, 2017

Due Date for ITR Extended to 05.08.2017 and for Aadhar Linking to 31.08.17

Since the taxpayers have not been able to log on to the e-filing portal of the Income Tax Department or link their Aadhaar with PAN because of variations in names in the in the PAN and Aadhaar database, the Government has decided to take the following steps to ease the panic amongst the tax payers:

· The due date for filing of Income tax return has been extended by CBDT by 5 days i.e. upto 5th August, 2017.

· For e-filing return only quoting the Aadhaar or Aadhaar application acknowledgement no. is required. The actual linking of PAN with Aadhaar can be done subsequently any time before 31st August, 2017.

The returns however will not be processed until the linkage of Aadhaar with PAN is done.

Friday, July 14, 2017

Renting of Immovable Property Under GST


Renting Of Residential Immovable Property

For commercial use:

The CGST Act, 2017 provides for certain activities to be treated as supply of goods or supply of services and Section 7 which defines the scope of expression “supply” provides that that activities specified in the said Schedule II would also be covered within the scope of “supply”.

Clause 2(b) in Schedule II of the Act states that any lease or letting out of the building including a commercial, industrial or residential complex for business or commerce, either wholly or partly, is a supply of services.

Therefore, as per the above clause, renting of residential dwelling for commercial use is a service and thus will be liable for taxation under GST at 18%.

For residential use:

Service Tax Exemption of services by way of renting of residential dwelling for use as residence will continue to be exempt in GST as decided by the GST Council.

Renting Of Commercial Immovable Property

Renting of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes having room tariff Rs.1000 and above but less than Rs.2500 per room per day are taxable under GST at 12% with full ITC.

Renting of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes where room tariff of Rs 2500/ and above but less than Rs 7500/- per room per day are taxable under GST at 18% with full ITC.

Accommodation in hotels including 5 star and above rated hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes, where room rent is Rs 7500/- and above per night per room are taxable at 28% with full ITC.

Bundled service by way of supply of food or any other article of human consumption or any drink, in a premises (including hotel, convention center, club, pandal, shamiana or any other place, specially arranged for organizing a function) together with renting of such premises are taxable at 18% with full ITC.

- Compiled by Kashika Ahuja

Refunds under GST


Refund under GST can be claimed in the following situations:

i. Credit accumulation due to output being tax exempt or nil-rated.

ii. Refund of Pre – deposit for filing appeal including refund arising in pursuance of an appellate authority’s order (when the appeal is decided in favor of the appellant).

iii. Credit accumulation due to inverted duty structure i.e. due to tax rate differential between output and inputs.

iv. Excess payment of tax due to mistake or inadvertence.

v. Finalization of provisional assessment.

vi. Export (including deemed export) of goods / services under claim of rebate or Refund of accumulated input credit of duty / tax when goods / services are exported.

vii. Tax Refund for International Tourists.

viii. Refund of tax payment on purchases made by Embassies or UN bodies.

ix. Payment of duty / tax during investigation but no/ less liability arises at the time of finalization of investigation / adjudication.

x. Year-end or volume based incentives provided by the supplier through credit notes.
Time Limit for Filing for Refund:

Application for refund has to be filed within a period of 2 years from the relevant date.

An agency of the UN Organization or any multilateral financial institution and organizations notified under UN, Consulate or Foreign embassies can claim refund of tax on inward supply of goods/services, provided the refund application is filed before 6 months from last day of the quarter in which such goods/service were received.

Procedure of obtaining refund under GST:

1. Filing Application For Refund

An application may be filed in FORM GST RFD-01 (to be certified by a Chartered Accountant) through the GSTN Portal or through a Facilitation Centre accompanied by any documentary evidence as specified in the Rules.

2. Generation of Acknowledgement

Where the application relates to a claim for refund from the electronic cash ledger, an acknowledgement in FORM GST RFD-02 shall be auto-generated for future references and sent to the applicant via email and SMS. In any other case, an acknowledgement in FORM GST RFD-02 shall then be made available to the applicant within 15 days, after scrutiny by proper officer. Any deficiencies shall be communicated to the applicant in FORM GST RFD-03, requiring him to rectify the same.

Where the refund application is below Rs. 5 lacs, a declaration shall be made by the applicant that the amount of refund has not been utilised/transferred to any other person. Where such application exceeds Rs. 5 lacs, a document evidencing the amount paid by the applicant shall be attached along with the declaration.

There shall be no refunds where the amount of refund is less than Rs. 1,000/-

3. Scrutiny of Refund Application

Refund application and relevant documents submitted by the applicant are scrutinized within a period of 30 days of filing the refund application. If the amount of refund exceeds a prescribed amount, filed application will have to go through the pre-audit process for sanctioning the refund.

If the application after scrutiny by a proper officer qualifies for a refund, then an order shall be passed to that extent.

4. Grant of Provisional Refund

An authorized officer can issue a provisional refund order in FORM RFD-04 of an amount of 90% of the refund claim, in case Such a provisional refund can be made when the taxpayer:

When the refund relates to amount arising out of export of goods/services, the proper officer shall make an order in FORM GST RFD-04, sanctioning the amount of refund due on a provisional basis of an amount of 90% of refund within 7 days from the date of acknowledgement.

Applicant can avail provisional refund if he:

i. Has not been prosecuted for evading taxes for an amount exceeding Rs. 250 lacs over a period of 5 years.

ii. Has a GST compliance rating of more than 5 out of 10.

iii. Has no appeal or review pending with respect to refunds.

He shall issue a payment advice in FORM GST RFD-05 for the amount sanctioned and the same shall be electronically credited applicant's bank account.

5. Order Sanctioning Refund

In cases other than mentioned above, the refund application shall be processed within 60 days from the application date.

Where the proper officer is satisfied that the amount of refund is payable to the applicant, he shall make an order in FORM GST RFD-06 and issue a payment advice in FORM GST RFD-05 within 60 days from the date of application, for the amount of refund and the same shall be electronically credited to applicant's bank account.

Where the proper officer is satisfied that the whole/part of the amount claimed as refund is not admissible to the applicant, he shall issue a notice in FORM GST RFD-08 to the applicant, requiring him to furnish a reply in FORM GST RFD-09 within 15 days, and after considering the reply, make an order sanctioning the amount of refund in whole/part, or rejecting the refund claim (after giving the applicant a reasonable opportunity of being heard).

Rejection of Refund Claim

Where the proper officer is satisfied that the amount of refund is not payable to the applicant, he shall make an order in FORM GST RFD-06 and issue an advice in FORM GST RFD-05, for the amount of refund to be credited to the Consumer Welfare Fund.

Where any deficiencies have been communicated or any amount (fully or partly) claimed as refund is rejected, the amount debited shall be re-credited to the electronic credit ledger.

For this purpose, a refund shall be deemed to be rejected if the appeal is finally rejected or if the claimant gives an undertaking in writing to the proper officer that he shall not file an appeal.

Interest on Delayed Refunds

According to the recommendations from the Subramanian committee, a refund application is to be processed within a period of 90 days, on delay of which an interest at the rate of 6% is recommended.

According to Nirmala Sitharaman (Commerce and Industry Minister) who spoke for the concern of exporters on delay in refund, the refunds shall be processed within 7 days. If it is delayed more than 2 weeks, then refund will be provided with interest.

The proper officer shall make an order along with a payment advice in FORM GST RFD-05, specifying therein the amount of delayed refund, period of delay for which interest is payable and the amount of interest payable, and such amount of interest shall be electronically credited to the applicant's bank account.

Refund of Tax to Certain Persons

Any person eligible to claim refund on inward supplies shall apply for refund in FORM GST RFD-10 once every quarter along with a statement of inward supplies of goods/services/both in FORM GSTR-11, prepared on the basis of statement of outward supplies furnished by corresponding suppliers in FORM GSTR-1.
The acknowledgement for the same shall be issued in FORM GST RFD-02.
Refund shall be available if-

§ inward supplies were received from a registered person against a tax invoice, and the supply price covered under a single tax invoice exceeds Rs. 5000 excluding tax paid

§ name and GSTIN/UIN of the applicant is mentioned on the tax invoice

§ such other conditions as may be specified in the notification are satisfied.

- Compiled by Kashika Ahuja

Custom Duty under GST for Importers

Presently, the customs duty is having three major components

i. Basic Customs Duty (BCD),
ii. Countervailing Duty (CVD), and
iii. Special Additional Duty (SAD)

Under the GST Law, CVD and SAD will be subsumed by GST, however, BCD will continue as under the present regime and will be charged as per the current law.

EC & SHEC shall also continue to be levied on imports of goods on custom duties except CVD and SAD.

Some of the salient features of GST's impact on imports are given below.

Tax Structure under GST for Imports
Taxes Levied
Input Tax Credit
IGST
BCD 
IGST - Allowed
BCD - Not Allowed

Imports to be Treated as Inter-State Supply

Supply of goods in the course of imports will be deemed to be a supply of goods in the course of inter-state trade and accordingly leviable to Integrated Goods & Service Tax (IGST) in addition to the customs duties and other charges.

Destination Based Taxation

The incidence of tax will follow the destination principle i.e. GST shall be levied where goods are to be consumed and services are to be received. The liability of payment of tax and filing of return will, therefore, akin to the provision under reverse charge mechanism, be on the service receiver, if such services are provided by a person residing outside India.

Transaction Value Based Valuation

The concept of MRP valuation under GST will be replaced by the transaction value based valuation. Consequently, the amount of CVD levied on customs duty will be effected as this is calculated on MRP under the present regime, but the same will be replaced with IGST as calculated on the transaction value. This transaction value includes any taxes, duties, fees and charges such as anti-dumping duty, safeguard duties, and other additional duties levied under any other statute. This would impact the valuation, working capital and management of such imports.

Input Tax Credit Available

IGST paid on imported goods would be available as credit under "import and sale" model without any restrictions on credit of SAD. No such credit is available under the present regime for either CVD or SAD on which credit is available only after special compliances.

Hence, these changes will significantly impact the working capital requirements under GST regime, but at the same time decrease the cost of imports as there will be a free flow of credit.

Withdrawal of Exemptions

At present there are various exemptions available and CVD is calculated considering those exemptions. To align the provisions of Customs Act or Rules and Foreign Trade Policy with GST, the various exemption notifications which are presently available in customs would not be available due free flow of the credit chain.

Filing of Return

Under GST, a monthly tax return shall be filed by an importer as opposed to the present regime of filing return under state tax law for imports and for claiming CVD.


- Compiled by Kashika Ahuja

Hotels and Restaurants under GST

GST Rates for Hotels and Restaurants

Hotels

· Renting of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes having room tariff per room per day:

Rs.1000 and above but less than Rs.2500 - 12% with full ITC.
Rs. 2500 and above but less than Rs. 7500 - 18% with full ITC.

· Accommodation in hotels including 5 star and above rated hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes, where room rent is Rs. 7500 and above per night per room - 28% with full ITC.

· Bundled service by way of supply of food or any other article of human consumption or any drink, in a premises (including hotel, convention center, club, pandal, shamiana or any other place, specially arranged for organizing a function) together with renting of such premises - 18% with full ITC.

Restaurants

· Supply of Food/drinks in restaurant not having facility of air-conditioning or central heating at any time during the year and not having licence to serve liquor. - 12% with full ITC

· Supply of Food/drinks in restaurant having facility of air-conditioning or central heating at any time during the year - 18% with full ITC

· Supply of Food/drinks in restaurant having licence to serve liquor - 18% with full ITC

· Supply of Food/drinks in air-conditioned restaurant in 5-star or above rated Hotel - 18% with full ITC

- Compiled by Kashika Ahuja

Composition Scheme under GST

Every tax system requires compliance with statutory provisions which more often than not pose a challenge to small businesses. Therefore, such small businesses can opt for composition levy as per provisions u/s 10 of CGST Act, 2017 and pay GST as a fixed percent on turnover.

Composition Scheme under GST is merely an extension of the current scheme under VAT law.
Eligibility

Only dealers and manufacturers of goods are entitled to opt for composition scheme.
Services providers have been kept outside the scope of this scheme. However, an exception is made for the restaurant service providers.

Turnover Limit

For opting composition scheme, the aggregate turnover in the preceding year must not be more than Rs. 75 lacs.
The aggregate turnover limit for the Special Category States (Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Tripura, Sikkim, Himachal Pradesh) is Rs. 50 lacs.

Limit for the state of Jammu & Kashmir is yet to be decided.

Aggregate Turnover shall include the aggregate value of-

- All taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis),
- Exempt supplies,
- Exports supplies,
- Inter-State supplies

Tax Rates

Tax rates of taxpayers registered under the Composite Scheme shall be as follows:

Category of Taxpayers
SGST
CGST
Total
Manufacturers
1%
1%
2%
Restaurant Service Providers
2.5%
2.5%
5%
Other Suppliers
0.5%
0.5%
1%

Persons Excluded from the Composition Scheme

- Persons supplying service(s)
- Casual taxable person
- Non-resident taxable person
- Persons making inter-state supply of goods
- Persons supplying goods not taxable under GST
- Persons supplying goods through e-commerce and liable to collect taxes at source
- Persons manufacturing such goods as may be notified
- The goods held by the person in stock on the appointed date were purchased from a place outside his state.
- Where the person deals with unregistered person and tax remains unpaid or stock is held.

Where a taxable person has different business segments with the same PAN as held by the taxable person, he shall not be eligible for the scheme unless he has registered all such businesses under the scheme.

Effective Date for Composition Levy

Particulars
Effective Date
For persons already registered under pre-GST regime
Appointed Day
For persons registered under GST switching to Composition Scheme
Filing of Intimation
For persons who applied for fresh register under GST to opt scheme where the application for registration has been submitted within 30 days from the day he becomes liable for registration
Such Date

Salient features:

Ease in Maintenance of Records


A dealer registered under composition scheme is not required to maintain detailed records as in the case of a normal taxpayer.

Ineligibility to Collect Tax and Avail Input Tax Credit

A taxpayer under the scheme is not allowed to
- recover any tax from the buyer i.e. the burden of such tax is to be borne by taxpayer himself.
- avail input tax credit of GST paid to their supplier

Since the above restrictions have been imposed by the scheme, the tax payer cannot issue a tax invoice either.

Ineligibility to Continue under the Scheme


The option availed by the registered supplier shall lapse with effect from the day on which his aggregate turnover increases the specified limit.

He shall issue tax invoice for every taxable supply made thereafter and he shall also file an intimation for withdrawal from the scheme in FORM GST CMP-04 within 7 days of occurrence of such event.

Transition Provisions

Taxpayers registered under the current composition scheme will be allowed to take credit of input held in stock/semi-finished goods/finished goods on the day immediately preceding the date from which they opt to be taxed as a regular tax payer, provided they satisfy the following conditions:
  • Such inputs/goods are intended to be used for making taxable supplies under GST. 
  • He was eligible for CENVAT Credit on such goods under the previous regime, but was unable to claim it being under composition scheme. 
  • Such goods are eligible for Input Tax Credit under GST. 
  • He has legal evidence of input tax paid on such goods. 
  • Those invoices or documents should not be older than 12 months before the appointed date. 
Any balance which is left in Input Tax Credit account after such payment will lapse and not usable.

Returns to be Filed

- Quarterly return: FORM GSTR-4 (to be filed by the 18th of the following month of quarter)
- Annual return: FORM GSTR-9A

Penalty

If the tax administration has reason to believe that a composition dealer has wrongly availed the benefit under the composition scheme, then such a person shall be liable to pay all the taxes which he would have paid under the normal scheme.

A penalty equivalent to an amount of tax payable will also be levied on giving a show cause notice to the dealer.

- Compiled by Kashika Ahuja

Anti Profiteering Rules Under GST

According to the Anti Profiteering Measure u/s 171 of the Central Goods and Services Tax Act, 2017-

(1) Any reduction in rate of tax on any supply of goods or services or the benefit of input tax credit shall be passed on to the recipient by way of commensurate reduction in prices.
(2) The Central Government may, on recommendations of the Council, by notification, constitute an Authority, or empower an existing Authority constituted under any law for the time being in force, to examine whether input tax credits availed by any registered person or the reduction in the tax rate have actually resulted in a commensurate reduction in the price of the goods or services or both supplied by him.
(3) The Authority referred to in sub-section (2) shall exercise such powers and discharge such functions as may be prescribed.
In exercise of the powers of the Act, the Anti-profiteering Rules, 2017 were approved on the 17th GST Council Meeting held on 18th June, 2017 and shall come into force on the date of their publication in the Official gazette. Some of the key points of the said rules are given hereunder.

Extent: They extend to the whole of India except the State of Jammu & Kashmir.

Constitution of the Authority to be Nominated by the Council:

· 1 Chairman who holds/has held a post equivalent in rank to a Secretary to the Government of India; and
· 4 Technical Members who are/have been Commissioners of State/Central tax or have held an equivalent post under the existing law.

Constitution of the Standing Committee and Screening Committees:
The Council may constitute a Standing Committee on Anti-profiteering which shall consist of such officers of the State/Central Government as may be nominated by it.

A Screening Committee shall be constituted in each State by the State Governments. Constitution of the same shall be as follows:
· 1 officer of the State Government (nominated by the Commissioner)
· 1 officer of the Central Government (to be nominated by the Chief Commissioner)

Chairman and Members of the Authority:
Appointment: by the Central Government on the recommendations of a Selection Committee constituted by the Council.

Salary: · Chairman - Rs. 2,25,000 p.m. + allowances
· Retired Officer as Chairman - Rs. 2,25,000 p.m. - pension
· Technical Member - Rs. 2,05,400 p.m. + allowances
· Retired Officer as Technical Member - Rs. 2,05,400 p.m. - pension

Term of service: · Chairman - 2 years, or until he attains the age of 65 years, whichever is earlier.
· Technical Member - 2 years, or until he attains the age of 65 years, whichever is earlier.

They shall be eligible for reappointment, but cannot be appointed if attained the age of 62 years.

Secretary to the Authority: The Additional Director General of Safeguards under the Board shall hold this position.

Power of the Authority:
Determining the methodology and procedure determination as to whether the reduction in rate of tax on the supply of goods/services or the benefit of input tax credit has been passed on by the registered person to the recipient by way of commensurate reduction in prices.

Duties of the Authority:
i. to determine whether any reduction in rate of tax on any supply of goods/services or the benefit of the input tax credit has been passed on to the recipient by way of commensurate reduction in prices;
ii. to identify the registered person who has not passed on the benefit as mentioned above
iii. to order,
· reduction in prices
· to return the amount not passed on by way of commensurate reduction in prices to the recipient along with interest at 18% from the date of collection of higher amount till the date of such return or recovery of the amount not returned in case the eligible person does not claim return of the amount or is not identifiable, and depositing the same in the Consumer Welfare Fund
· imposition of penalty as prescribed
· cancellation of registration under the Act.

Examination of application by the Standing Committee and Screening Committee

The Standing Committee shall within 2 months from the date of receipt of a written application from an interested party/Commissioner/any other person, examine the accuracy and adequacy of the evidence provided in the application to determine whether there is prima-facie evidence to support the claim of the applicant that the benefit under this section has not been passed on to the recipient.

All applications from interested parties on issues of local nature shall first be examined by the State level Screening Committee which shall, upon satisfaction of contravention of the provisions of section 171, forward the application with its recommendations to the Standing Committee for further action.

Initiation and conduct of proceedings:
Where the Standing Committee is satisfied of the contravention of provisions u/s 171, it shall refer the matter to Director General of Safeguards for a detailed investigation.

Responsibilities of the Director General of Safeguards:
i. He shall conduct investigation and collect evidence necessary to determine whether the benefit of reduction in rate of tax or benefit of the input tax credit has been passed on to the recipient by way of commensurate reduction in prices.

ii. He shall, before initiation of investigation, issue a notice to the interested parties containing the following information:
· the description of the goods/services in respect of which the proceedings have been initiated;
· summary of statement of facts on which the allegations are based; and
· time limit allowed to the interested parties/other persons who may have information related to the proceedings for furnishing their reply.

iii. He may also issue notices to such other persons as deemed fit for fair enquiry into the matter.

iv. He shall make available the evidence presented to it by one interested party to the other interested parties, participating in the proceedings.

v. He shall complete the investigation within 3 months of receipt of reference from the Standing Committee or within such extended period not exceeding a further period of 3 months for reasons to be recorded in writing as allowed by the Standing Committee and, upon completion of the investigation, furnish to the Authority a report of its findings, along with the relevant records.

vi. He may seek opinion of any other agency or statutory authorities in discharge of his duties.

vii. He shall have the power to summon, either himself or through an officer authorized by him, any person whose attendance he considers necessary either to give evidence or to produce a document or any other thing u/s 70 and shall have power in any inquiry in the same manner, as provided in the case of a civil court.

Order of the Authority:
The Authority shall, within a period of 3 months from the date of receipt of the report from the Director General of Safeguards pass an order.

Where it is determined that a registered person has not passed on the aforementioned benefit, order may be passed for-
· reduction in prices
· return of the amount not passed on by way of commensurate reduction in prices to the recipient along with interest at 18% from the date of collection of higher amount till the date of such return or recovery of the amount not returned in case the eligible person does not claim return of the amount or is not identifiable, and depositing the same in the Consumer Welfare Fund
· imposition of penalty as prescribed
· cancellation of registration under the Act.

On a written request from the interested parties, an opportunity of being heard shall be granted by the Authority.

The decision shall be taken by the majority where the Members of the Authority differ in opinion on any point.

- Compiled by Kashika Ahuja

ICDS 10 vs. AS 29

The corresponding AS to ICDS - 10 'Provisions, Contingent Liabilities and Contingent Assets' is AS - 29 'Disclosure Provisions, Contingent Liabilities and Contingent Assets'

Point of Difference

Basis
AS - 29
ICDS - 10
Recognition Provisions shall be recognised if it is probable that outflow of economic resources will be required Provisions shall be recognised if it is reasonably certain that outflow of economic resources will be required.
Obligation Clarifies that obligations may be legally enforceable and may also arise from normal business practice, custom and a desire to maintain in good business relations or act in an equitable manner. No specific clarification.
Onerous Executory Contracts Applicable only on onerous contracts (not on other executory contracts).

Requires upfront recognitionof liabilities under onerous contracts.

Not applicable to executory contracts.

Onerous contracts not specifically excluded.

Contingent Assets/ Reimbursement Claims Recognised if inflow of economic benefits/ reimbursement is virtually certain. Recognised if inflow of economic benefits/reimbursement is reasonably certain.

ICDS 9 vs. AS 16

The corresponding AS to ICDS - 9 'Borrowing Cost' is AS - 16 'Borrowing Cost'

Point of Difference

Basis
AS - 16
ICDS - 9
Exchange Difference Borrowing cost includes exchange differences arising from foreign currency borrowings to the extent they are an adjustment to interest cost. Does not include exchange differences.
Qualifying Asset Asset that takes substantial period of time to get ready for its intended use. It means:
Tangible Assets - land, plant, etc.
Intangible Assets - patents, licenses, etc.
Inventories - that require 12 months or more to bring them in saleable condition.
Method of Capitalisation: Specific Borrowing

Actual borrowing costs incurred on the borrowing during the period less any income from temporary investment of those borrowings.

Actual borrowing costs incurred during the period on the funds borrowed.
Commencement of Capitalisation

 

The date of fulfilment of three conditions viz. incurrence of capex, incurrence of borrowing costs and preparatory activities are in progress. Specific borrowings - date on which funds were borrowed.
Suspension of Capitalisation During extended periods in which active development of the asset is interrupted.

No such provision.

Cessation of Capitalisation

When substantially all activities necessary to prepare the qualifying asset for its intended use or sale are complete. Qualifying Asset - when such asset is first put to use.
Inventory - when substantially all activities necessary to prepare it for its intended use is complete.

ICDS 8 vs. AS 13

The corresponding AS to ICDS - 8 'Securities' is AS - 13 'Accounting for Investments'

Point of Difference

Basis
AS - 13
ICDS - 8
Applicability Deals with accounting for investments in the financial statements of enterprises.
Stock-in-trade are not ‘investments’.
A deals with securities held as stock-in-trade.
Carrying Amount

Current investment are valued at lower of cost and fair value.


Individual Scrip Wise valuation.

Securities held as Stock-in-trade shall be valued at actual cost or NRV.

Category Wise valuation:
Classification into four categories namely:-
1. share
2. debt securities
3. convertible securities
4. other securities not covered above

At the end of any previous year securities not listed on a recognized stock exchange or listed but not quoted on a recognized stock exchange shall be valued at actual cost initially recognized.
Acquisition Investment acuired by issue of shares or assets.
The acquisition cost should be the fair value of the securities issued/ fair value of the asset given up.

A security is acquired in exchange for other securities or asset, the fair value of the security so acquired shall be its actual cost.

ICDS 7 vs. AS 12

The corresponding AS to ICDS - 7 'Government Grants' is AS - 12 'Government Grants'

Point of Difference

Basis
AS - 12
ICDS - 7
Recognition of Grant

Mere receipt is not sufficient.
Recognition cannot be postponed beyond date of actual receipt.
Grants other than those covered by specific provisions
Revenue grant recognised a income or reduced from related expenses

Doesnt clarify whether it is restricted to revenue grants
Relatable to depreciable fixed assets

Reduction from fixed assets OR Recognised as deferred revenue by systematic credit to P&L Reduced from fixed assets
Relatable to non depreciable fixed assets

No conditions - credited as capital reserve
Conditions attatched - credited to P&L over period of incurring cost of meeting condition of grant
No conditions - Treated as income
Conditions attached - income over period over which cost of meeting conditions is incurred
Grant in the nature of promoters contribution
Credited to Capital Reserve.
Treated as shareholders fund.
No clarity
(recognisable as income)
Disclosure requirement No disclosure for unrecognised grants
Disclosure for unrecognised grants

ICDS 6 vs. AS 11

The corresponding AS to ICDS 6 'The Effects of Changes in Foreign Exchange Rate' is AS 11 'The Effects of Change in Foreign Exchange Rate'.

Point of Difference

Basis
AS - 11
ICDS - 6
Revenue monetary items
(receivables/payables/bank balance,etc)

Reported using closing rate.
Exchange difference recognised in P&L a/c.
Converted to reporting currency using closing rate.
Recognised as income or expense subject to provisions of Rule115.
Revenue non monetary item (like inventory)

Carried at historical cost - exchange rate on the date of transaction.
Carried at fair value - exchange rate that existed when the value was determined i.e. closing rate.
Carried at historical cost - exchange rate at the date of transaction 
Carried at fair value - exchange rate at the date of transaction
Capital monetary items

Requires recognition in P&L.


Option of capitalization available -exchange differences arising out of long term foreign currency monetary items (LTFCMI)shall be either adjusted to capital asset or accumulated in FCMITDA.
Requires recognition in P&L subject to provisions of sec 43A.
No such option available.
Foreign Operations Foreign operation is a subsidiary, associate, joint venture or branch of the reporting enterprice, the activities of which ae based or conducted in a country other than the country of the reporting enterprise. It is a branch, by whatever name called, of that person, the activities of which are based or conducted in a country other than India.
Non Integral Foreign Operation

Exchange difference on translating monetary items ---> Foreign Currency Translation Reserve Exchange difference on translating assets and liabilities both monetary and non monetary ---> recognised as income or expense in that previous year.
Forward Exchange Contract
(trading speculation, firm commitment, highly probable forecast)

Marked to market at each balance sheet date - profit or loss arising thereoff recognised in P&L a/c.
No Amortisation of premium or discount.
Premium ,discounts or exchange difference on contracts be recognised at the time of settlement only.

ICDS 5 vs. AS 10

The corresponding AS to ICDS 5 'Tangibe Fixed Assets' is AS 10 'Accounting for Fixed Assets'.

Point of Difference

Basis
AS - 10
ICDS - 5
Applicability

Applies to tangible fixed assets and goodwill. Applies only to tangible fixed assets.
Revenue non monetary item Machinery spares - charged to P&L
For specific asset - capitalised
Machinery spares capitalised only when it can be used only with an item of tangible fixed asset and their use is expected to be irregular.
Asset acquired against non monetary consideration

Cost of acquired asset - FMV or NRV of asset given up adjusted for any balancing payment or receipt of cash or other consideration.Actual cost of asset acquired - its fair value
Fixed asset acquired in exchange of shares Cost of asset - FMV of asset OR
FMV of securities issued,
whichever is more clearly evident.
Actual cost of asset acquired - its fair value
Assets acquired for a consolidated price

When several assets are acquired at consolidated prices, the consideration is apportioned on fair basis as determined by competant valuers. When several assets are acquired at consolidated prices, the consideration is apportioned on fair basis.