Secretarial standards question and answer

Some important question answers prepared after Icsi webcast on Secretarial Standard;-
1st ques ;- If co. is giving notice in June month for its  board meeting going to held in july so will SS be applicable for that meeting??
Answer:- No as SS will be applicable w.e.f 01.07.2015 

2) ques ;- What is serial no. of board meeting?

Ans ;-  Every co. has to give serial no. to their meeting but suppose if a Company is incorporated in the year 2000 & its not possible to calculate serial no. since incorporation as we do in Agm like 15th AGM of Co. then those Company can pass board resolution in month of June & fix their new serial no. like 1 from beginning  for board meeting going to held w.e.f 01.07.2015 as per secretarial Standard
3) ques ;- Who will be members in attendance & invitee?
Ans ;- Only Cs & Directors will be members in attendance & rest will be considered as
invitee
Ques ;- Notice to whom?
Ans;- Notice will serve to every director in case of Board Meeting via hand, mail, or by post but Co. must have proof of acknowledgement .

Ques :- In case of sending notice via hand how one can keep its proof?

Ans ;- Co. has to maintain register & took sign of director as an acknowledgement.

Ques :- How SS controlled mismanagement;-
Ans :- Earlier some co. never give notice to some directors & later on remove them by giving reason that for 3 consecutive board meeting they have not attended board meeting but after SS applicability co. cannot do as they have to keep proof of delivery the notice.

Ques;- For F.Y 2014-15 is it mandatory to mention in secretarial audit report regarding compliances of Secretarial Standard ;-

Ans :- No it is mandatory from F.Y 2015-2016

Ques :- Presence of quorum in Meeting ??

Ans:- Quorum has to be present not only at time of commencement of meeting while at time of transacting business activities also.

Ques :- Any item can be discuss which was not mentioned in Agenda of meeting::-

Ans :- No firstly consent of majority of directors are required & if independent director is there then take consent from him also.

Que:- Time period for keeping record of notice/agenda /resolutions ?
Ans :- 8 years after that before destroying firstly pass board resolution & then destroy it.

Que :- How Minutes can be circulated under SS??
Ans ;- Firstly drafted minutes has to be circulated to all directors within 15 days of meeting then once it is signed then get it certified by CS if not there then any of authorise director & circulate signed minutes copy also to all the directors

Que :- is casting vote allowed under SS or not??

Ans :- Yes it  is still allowed.

Ques;- Can we conduct meeting on National Holiday??
Ans:- One cannot conduct meeting on national holiday.

Que;- What is Time stamp on minutes??
Ans :- It is new concept under which when we took print out of minutes it will show date & time of printing as we do in case of email but this is under process very shortly Icsi will clarify exact meaning of time stamp.

Even past or ceased directors can inspect minutes book

If chairman is interested then he has to leave meeting room as his interest is prevailing

Chairman will give objectivity of every resolution before passing it & it has to be mentioned in minutes book also about objectivity of resolution.

Even Cs can conduct board meeting with request of any of director but with prior approval of Chairman

Notice along with agenda items, resolutions should be serial numbered

Resolution once proposed cannot withdraw or modify later on except in case of typing/clerical or grammatical error.

Meeting of independent directors can be conduct by CS.

These are some imp points about Secretarial Standard going to implement w.e.f 01.07.2015.

RBI COMPOUNDING

Compounding of Contraventions under FEMA, 1999📢

🔵Meaning of the word ‘compound’ or ‘compounding’ not defined in the Act or in the Rules.

🔵The expression ‘Compounding’ has been explained in Law Lexicon as “arranging, coming to terms; condone for money.

🔵Section 15 of FEMA 1999 covers powers to compound contraventions and empowers the Compounding Authority to compound the contraventions.

🔵Section 13 of FEMA covers penalties in respect contraventions which are compounded

🔵The Government of India has, in consultation with the Reserve Bank placed the responsibilities of administering compounding of cases with the Reserve Bank, except under Section 3(a) of FEMA, 1999.

🔵Compounding is a voluntary process and refers to admitting a contravention, pleading guilty and seeking remedy. The application is liable to be disposed off/compounded with a period of 180 days from the date of its submission.

An application for 🔵compounding of a contravention to be submitted to the Compounding Authority either on being advised of a contravention through a memorandum or suo moto on being made or becoming aware of the contravention.

🔵Further, if Contraventions relating to any transaction under FEMA but requiring approval or permission from the Government Department concerned or any Statutory Authority as the case may be, would not be compounded UNLESS the required approval is obtained from the authorities concerned.

🔵What are the contraventions?

Contravention may be of the following👇

• Provisions of the Act
• Rules made under the Act
• Regulations
• Notifications
• Direction or order issued in exercise of the powers under the Act.

🔵Penalties-Quantum of penalty 💸-

• Compounding may be subject to a penalty up to thrice the sum involved in such contravention where such amount is quantifiable,

or

• up to Rs 2 Lakhs where the amount is not quantifiable,

and

• where such contravention is a continuing one, further penalty which may extend to Rs 5000/-for every day after the first day during which the contravention continues.

🔵Advantages of compounding-📝

• It is a voluntary process • Compounding makes one clean of the past mistakes and look forward to the future
• After compounding, the contravener is absolved of the contravention and can concentrate on the business opportunities

• It saves time and energy One application – One hearing – One order.

• The existence of such facility provides comfort while undertaking global transactions since FEMA facilitates compounding of any contraventions which are not malafide.

I hope the article on acceptance of default i.e compounding was useful.

XBRL TAXONOMY RELEASED BY MCA

Exposure Draft for New XBRL Taxonomy for Financial Year 2014-15 has been released.  In New XBRL Taxonomy New disclosures have been added, few modified & few line items have been deleted as per Companies Act, 2013.

Key Changes in Draft XBRL C & I Taxonomy: 

Ø  Detailed Disclosure of Directors Report with 12 New Tables.

(Detailed disclosure required for Shareholding Pattern, Shareholding Of Promoters, Indebtedness Of Company, Penalty Punishment Compounding Of Offence , Particulars Holding Subsidiary And Associate Companies etc.)

Ø  New Disclosure on Corporate Social Responsibility.

Ø  New Disclosure on Secretarial Audit Report.

Ø  New Disclosure added for Subsidiaries/Joint venture/Associates which are yet to Commence Operations.

Ø  Joint venture, Associate etc. added in Consolidated Financial Statement.

Ø  Chief Financial Officer name included for signing Balance sheet..

Ø  Disclosure required of Web Link Of Company, Registration Date, Name of Registrar of Company.

Ø  Changes in the Auditors Report owing to the introduction of CARO 2015 in place of CARO 2003.

Ø  SRN of filing of B/S by Subsidiary, Subsidiary date, Classification of equity share capital, Guarantee party disclosure etc. no longer required in Subsidiary details.

Ø  Directors are replaced by Key Managerial Personnel details.

Ø  Detailed disclosure of Defined Benefit Plans Categories.

Further, please also take note of following:

v  Use new single e-form AOC-4 to be used for filing in place of 23AC/23ACA.

Comments have been invited by ICAI on Draft XBRL taxonomy to be submitted upto July 10, 2015.

Depreciation under 2013 & Calculator

1. What are the key changes in Depreciation in CA 2013
The important changes in the Act are as under
• Change from rate based approach to useful life approach and the Act has specified useful lives for various classes of assets

• Schedule II rates are not the minimum rates and the company can adopt different useful lives based on technical advise

• Assets less than Rs 5000 need not be depreciated completely

• No rates for double and triple shift but extra depreciation of 50% and 100%

• Componentisation - If a part of an asset has a separate useful life independent of the parent, then a separate rate has to be applied for that part if that part is material in relation to the asset

• Assets which do not have a useful life as at the commencement of the Act are required to be written off completely. Such amounts may be debited to P& L or adjusted to General Reserves

2. Do we have to align depreciation with the new Companies Act 2013 rates for the year ended March 31, 2015
Of the above, the change in rates has to be effected for the year ended March31, 2015 whereas the component level depreciation has been deferred as per a notification and is not applicable for the period ended March 31, 2015
3. My client has a financial year ending December.  Should we revise the depreciation as per the new Act or does the old Act apply for “year ended Dec 31 2014”
The revised useful life system applies for accounting periods commencing on or after April 1, 2014 and hence the client may prepare the accounts as per the earlier Act in reference to depreciation as there is a specific mention of the term accounting period
4. Schedule II speaks of technical opinion.  Should this be an independent opinion
The Schedule II does “not” speak of an independent opinion.  But from an auditors perspective, one may not be wrong in asking for one especially if the value of the depreciation and change to the same is material
5. What are the provisions relating to assets working on double shift or triple shift basis?
• Useful life given in Part C assumes single shift working
• Double shift -  increase depreciation by 50%
• Triple shift – increase depreciation by 100%
• Take note of number days for which the company has worked double shift and triple shift and the rates have to be increased proportionately
6. How do we calculate the WDV rates based on the useful life of the asset

The WDV rates are calculated by applying the formula as specified below Cell reference
Useful life –n Years 5 C4
Residual value – s Rs. 5 C5
Cost of the asset – c – Rs. 100 C6
Rate % 1-POWER((Residual value/Cost),(1/No of years)) C7

7. How do we calculate the WDV rates if residual value is Rs zero

Assume Rs 1 as the residual value

8. Is this depreciation revision a change in estimate or accounting policy

This change is a change in accounting estimate only

9. There is an amount of Rs 1.2 crores which is the value of assets whose useful life has expired ( as per CA 2013 useful life ) and needs to charged off.  Can we take a part to the P & L and a part to the Reserves and Surplus

From the date Schedule II comes into effect i.e. 1 April 2014, the carrying amount of the asset as on that date

(a) Shall be depreciated over the remaining useful life of the asset

(b) After retaining the residual value, may be recognised in the opening balance of retained earnings or may be charged off to Profit and Loss account where the remaining useful life of an asset is nil. Hence the company will have to reassess the useful life of its existing fixed assets in accordance with Schedule II.

It would be advisable to follow one treatment only

10. In addition to the changes prescribed by CA 2013, my client would like to change the method of depreciation from SLM to WDV.  How should I go about doing it?

• First Calculate retrospective workings and transfer to P & L or reserves
• Calculate the depreciation for the year as if there was no change in the method
• Calculate the depreciation under the revised method on a retrospective basis from the date of capitalization of the asset
• The difference between points 2 and 3 above reflects the difference to be disclosed

Click on the link for a WDV depreciation calculator under the new Companies Act 2013. http://www.thesmartca.com/mip.php?type=wdv150510

Tax Awareness

Points to be noted by common man with regards  TAX

Income Tax:

1)      Detailed information of Income Tax is available on www.incometaxindia.gov.in
2)      As per Income Tax Act, Income is taxable under five heads- Salary, House Property, Business or Profession, Capital Gain and Other Sources.
3)      Salaried person must obtain Form 16 from his Employer Every Year.
4)      Income Tax Return should be filed by considering Form 16 and other Income.
5)      Transport Allowance is exempt up to Rs. 1,600 per month.
6)      30% Standard deduction is available on Income from House Property.
7)      Income to be considered as deemed let out on second House property.
8)      For self-occupied house property, deduction of Interest on Housing Loan is allowed up to Rs. 200,000/- and for other house property actual expenditure of Interest on Housing Loan is allowed.
9)      Repayment of Principal amount of Housing Loan is deductible u/s 80C up to Rs. 150,000/-.
10)  Tax Audit is compulsory if sales turnover exceeds Rs. 1 crore in case of business.
11)  Tax Audit is compulsory if the Gross Receipts of Professionals exceeds Rs.25 lakhs.
12)  If sales turnover is below Rs. 1 crore, then net profit of 8% or higher is to be taken as business income otherwise tax audit is required.
13)  The Due Date for Tax Audit and income Tax Return is 30th September.
14)  Assessee other than Company and those eligible for Tax Audit are required to file Income Tax Return before 31st of July. Extended date is 31st Aug for F.Y. 14-15.
15)  Accurate Stock Valuation should be done on 31st of March.
16)  Cash payment should not be made to a person in single day exceeding Rs.20, 000.
17)  Cash Payment limit for Transporters is Rs. 35,000/-.
18)  Loans, deposits and Immovable Properties transactions should not be carried out above Rs. 20,000 in cash.
19)  Business loss can be carried forward to Next 8 Years.
20)  Tax Audit applicable assesses should deduct TDS on particular transactions.
21)  TDS should be made on the date of Credit or Payment basis of whichever is earlier.
22)  TDS payment should be made on or before 7th day of Next Month.
23)  TDS Returns are to be filed Quarterly.
24)  TDS returns can be revised any number of times.
25)  TDS should be deducted and paid if applicable.
26)  If TDS is not deducted then deduction of 30% of Expenditure is not allowed.
27)  Late filling of TDS return attracts late filing fees of Rs. 200 per day.
28)  Long Term Capital Gain will arise if transfer of specified Capital Assets is made after 3 years.
29)  Generally Long Term Capital Gains is taxable @ 20%
30)  STT paid Long Term Capital Gain on Shares,etc is exempt from Tax.
31)  Short Term Capital Gain is Taxable @ 15% if STT is paid.
32)  Capital Gain on Immovable Properties is chargeable at Stamp Duty Value or Selling Price whichever is higher.
33)  Dividend received from domestic company is exempt from Tax.
34)  Agricultural Income is exempt from Tax.
35)  Gifts received form stranger of an Amount exceeding Rs. 50,000 is taxable.
36)  Income Tax is not chargeable on Gifts received at the time of Marriage, Will, and in case of Succession and from specified relatives.
37)  Maximum deduction limit u/s 80C, 80CCC and 80 CCD is Rs.1, 50,000.
38)  Deduction of Medical Insurance Premium is available up to Rs. 25,000.
39)   Deduction of Medical Insurance Premium paid for Parents is available up to Rs. 20,000.
40)  Deduction limit of Interest earned on Saving Account is up to Rs.10, 000.
41)  Income earned by a Minor child is clubbed in the hands of Parents.
42)  Every Taxpayer should verify his Form 26AS.
43)  Form 26AS provides the Information regarding the TDS, Advance Tax paid and details of refund.
44)   Notice may be sent to the Taxpayer if the Income mentioned in Form 26AS and the Income Tax Return filed is having difference.
45)  Basic Exemption Limit for individuals for F. Y. 2015-16 is Rs. 2,50, 000.
46)  Basic Exemption Limit for Senior Citizen i.e. above 60 years age is Rs. 3,00, 000.
47)  Basic Exemption Limit for Super Senior Citizen i.e. above 80 years age is Rs. 5,00,000.
48)  Advance Tax is to be paid if Tax Liability during the year exceeds Rs. 10,000.
49)  12% of Surcharge is applicable if Income Exceeds Rs. 1Crore.
50)  Income Tax Return should be filed if Income exceeds Basic Exemption Limit.
51)  30% of Tax applicable on Income of Partnership Firm, Company, LLP etc.
52)  For Companies – Minimum Alternate Tax and for other Assesses – Alternate Minimum Tax rate is 18.5%.
53)  Details of all Bank Accounts have to be given in Income Tax return.
54)  Passport number is required to be given in Income Tax return.
55)  Detail of Fixed Assets held in Foreign Country is required to be given in Income Tax return.
56)  If taxable income of Individual is less than Rs. 5 Lakhs then relief of Rs. 2,000/- is available in Tax.
57)  Aadhar Card No. is required to be mentioned in Income Tax return.
58)  E-filling of return is compulsory if income exceeds Rs. 5 lakhs.
59)  In Income Tax, E-filling of return can be done for Previous 2 Years only.
60)  PAN Card is essential for Taxpayer and it should not be used as Id Proof.
61)  From FY 2014-15 Depreciation is to be calculated as per New Companies Act.
62)  Domestic Transfer Pricing is applicable on transaction exceeding an Amount Rs. 20 Crores.

Now some points about MVAT:

63)  VAT registration is compulsory if Gross Turnover exceeds Rs. 10 lakhs.
64)  VAT rate is 1%, 5%, 12.5%, and 20% and CST rate is 2% on respective commodities.
65)  Return Periodicity should be verified every year from the Departments site www.mahavat.gov.in
66)  Periodicities of Returns are Monthly, Quarterly and Half yearly.
67)  Vat payment and return should be filed within 21st of next Quarter, Month or Half Year.
68)  Late payment of VAT will attract Interest @ 1.25% p.m.
69)  A late fee of Rs. 1000 is to be paid if late return is filed.
70)   Late fee of Rs. 5000 is charged if Return filed after 30 days.
71)  Full set off can be taken on Plant and Machinery and Electrical Fitting.
72)  3% of retention is to be taken on Office Equipment’s and Computer.
73)  Setoff of Software, Building and passenger car is not available.
74)   AnnexureJ1 mentioning TIN of sellers has to be filed with Vat return.
75)  AnnexureJ2 mentioning TIN of buyers has to be filed with Vat return.
76)  Vat Setoff cannot be carried forward to next year if it exceeds Rs. 5 lakhs.
77)  VAT Audit is compulsory if Gross Turnover exceeds Rs. 1 Crore.
78)  Due date for filling VAT Audit report is 15th January.
79)  Dealer can verify the details of return filed and Registration from the “Dealer information System.”
80)  Mis-match report of Annexure J1 and J2 should be verified and should be reconciled.
81)  Composition Scheme is available for Retailers having Gross turnover less than Rs. 50 Lakhs.
82)  WCT is to be deducted if Works Contract exceeds Rs. 5 lakhs.
83)  5% of WCT is to be deducted for non-registered dealers instead of 2%.
84)  TDS deductor has to file return before 30th June after end of financial year.

Profession Tax:

85)  Profession Tax is required to be paid for Employer and Employee.

SEBI BOARD MEETING DATED 23rd June 2015

Highlights of SEBI Board meeting held on 23.06.2015:-

1. ASBA (Application Supported Blocked by Amount) now mandatory.

EFFECT:-
i. Post-issue timeline will reduce to  T+6 from T+12.
ii. No hassle of refunding excess money back to applicant.

2. Application forms can also be accepted by RTA & DPs now.

EFFECT:- Increased application centers.

3. Simplified framework for capital raising by technological start-ups and other companies through ITP (Institutional Trading Platform).

EFFECT:- Easier capital market access to technological startups.

4. Market capitalization of public shareholding of the issuer for Fast Track Issues (FTI) reduced to Rs. 1000 crore (in case of FPO) and Rs. 250 crore (in case of Right Issue).

5.  Changes proposed to encourage greater retail participation in OFS (Offer for Sale).

6. Re-classification of promoter shall be permitted subject to approval of shareholders in the general meeting.

7. Outgoing promoter can hold KMP position subject to specific approval of Shareholders and cannot
i. hold more than 10% shares.
ii. continue as KMP for more than 3 years in any case.

8. Existing promoters may be re-classified as public in case the company becomes professionally managed and does not have any identifiable promoter.

9. Net Issue proceeds pending utilization (for the stated objects) shall be deposited only in the Scheduled Commercial Banks now.

Source: SEBI. Website
http://www.sebi.gov.in/sebiweb/home/detail/31307/yes/PR-SEBI-Board-Meeting

Mgt 14 exemption

PRIVATE COMPANY:
“As the effective date of exemption notification applicable to private company is 05.06.2015 (thereby u will not be required to file resolutions passed under section 179(3)), u can hold board meeting on following important matters (few of them) on or after 05.06.2015 to avoid ROC filing:
- To borrow monies;
- To Invest the funds of the company;
- To grant loans or give guarantee or provide security in respect of loans;
- To approve financial statement and board’s report;
- To take note of disclosure of director’s interest and shareholding”