bcasnewsletter for members only. for private circulation ... · for brain research by infosys...

February 20141

7, Jolly bhavan #2, New Marine Lines, Mumbai - 400020. Tel : + 91 22 613 77 600 ; F : + 91 22 613 77 666 ; email: [email protected] ; Website : www.bcasonline.org ; WebTV : www.bcasonline.tv

Vice-President’s Communiqué

Dear Members,

Satya Nadella’s appointment as the software giant Microsoft’s third CEO has been flashing in our media as India is making a power-point through its talent machine which is consistently churning out global CEOs. While there is some justification in feeling over the moon about this news, we need to ask a question: Why is it that India’s technical talent shines mainly outside India?

The three persons of Indian origin who won the Nobel Prize in Science post-independence are not Indian citizens:Hargobind Khurana won the prize for medicine in 1968, Subramanyan Chandrasekhar for physics in 1983 and Venkatraman Ramakrishnan for chemistry in 2009. Is it that they found the ecosystem necessary to flourish outside India? Do the IITs genuinely produce talent or do they act largely as effective filtering points?

In 2004, while reviewing the science and technology policy of the Government of India, Dr. A.P.J. Abdul Kalam said, “In a world where the powers are determined by the share of the world’s knowledge, reflected by patents, papers and so on…it is important for India to put all her acts together to become a continuous innovator and creator of science and technology intensive products.” The winner of Bharat Ratna Shri C. N. R. Rao, a rare personality who returned to India after very successful stints at Purdue and Berkley in the US, has lamented the inadequate priority being given to the scientific sector.

Vol. 16 n No. 11 n February 2014

Harnessing Talent and Providing Quality Service A Monthly Newsletter of the Bombay Chartered Accountants’ Society

BCASNewsletterFor Members only. For Private Circulation only. Price: R10

PROGRAMMES AT A GLANCE DATE VENUE PAGE NO.

Youth Residential Refresher Course .................................................21.02.2014 to 23.02.2014 ..............Byke Resort, Matheran ............................................................................................ 5

Fourth Intensive Study Course on Transfer Pricing .................01.03.2014 to 10.05.2014 ..............Indian Merchants’ Chamber, Churchgate ..................................................... 6

Seminar on Software Industry .............................................................07.03.2014 ............................................I.T.C. Grand Central, Parel ....................................................................................... 4

Full day Workshop on Practical Issues in

Tax Deduction at Source .........................................................................21.03.2014 .............................................Navinbhai Thakkar Auditorium, Vile Parle (East), ................................... 6

Full day Seminar on Charitable Trusts .............................................22.03.2014 ............................................M.C. Ghia Hall, Kala Ghoda .................................................................................... 3

Two-Day Orientation Workshop specially designed

for Fresh Articled Students ....................................................................18.04.2014 & 19.04.2014 ...............M.C. Ghia Hall, Kala Ghoda .................................................................................... 4

Lecture Meeting ..........................................................................................18.02.2014. ...........................................Indian Merchants’ Chamber, Churchgate ..................................................... 1

(Continued on page 2)

President: Naushad A. Panjwani 98200 59048 | [email protected]

Vice-President: Nitin P. Shingala 98200 57694 | [email protected]

Hon. Jt. Secretary: Raman H. Jokhakar 98208 77976 | [email protected]

Hon. Jt. Secretary: Mukesh G. Trivedi 9820182456 | [email protected]

Hon. Treasurer: Chetan M. Shah 98202 23402 | [email protected]

LECTURE MEETING

under the auspices of amita Memorial Trust and jointly with the Chamber

of Tax Consultants

*Fellowship over a cup of tea at 5.45 p.m.

Venue: Walchand Hirachand Hall, Indian Merchants’ Chamber,

Churchgate, Mumbai - 400020

Day, Date & Time: Tuesday, 18th February 2014, 6.15 p.m.*

Speaker: Nipun Mehta, Founder of CharityFocus.org

Subject: Spirit of Service: Connecting to the Inner-Net

India's current spending lags behind its global peers in R&D and Engineering with R&D expenditure accounting for 0.9% of the GDP in FY11. India's expenditure is much lower than its global peers with Japan 3.5%, the US 2.8%, Singapore 2.6% and China 2%. Further, even the patent filing rate is quite low in India. Last week, while addressing the 101st Indian Science Congress, the Prime Minister emphasised the need to increase annual expenditure on science and technology to at least 2% of our GDP. This is a mammoth task to be left alone to the Government. The recent announcement of a massive grant of Rs. 225 Crores for brain research by Infosys co-founder Kris Gopalakrishnan underscores the importance of private initiatives in augmenting our efforts in this field.

The DST-CII white paper on stimulation of private sector’s investments into R&D released last year has made six key

BCAS 2

(Continued from page 1)

recommendations: 1. Redefine private sector R&D investment as per global norms and practices; 2. Mandatory disclosure of R&D investment by Private Sector; 3. Constitution of an Expert Committee for rationalisation of Heads of R&D investment for direct and indirect facilitation; 4. Valuing IPR assets and provide for demand pool for R&D outputs through provisions for public procurement; 5. Build Technology Depth of Industry in Priority Sectors and usher in an era of PPP R&D and Technology Deployments for providing technology solutions to National Priority Areas; and 6. Incentivise commercialisation on R&D. Isn’t it evident from above recommendations that chartered accountants have an important role to play in their implementation?

Talking about technology, the accounting profession continues to see impact of the developments. The top technology trends shaping the Accounting World in 2014 include:

• Cloud computing continues to leap forward with IDCpredictions that between 2013–2017, public IT cloud services will have a compound annual growth rate (CAGR) of 23.5 %, five times that of the IT industry as a whole.

• Smart mobility evolving from consuming information ona mobile device to using a mobile device to harvest new information for data-rich ecosystem where important decisions can be made ‘on the go’.

ALL THE THREE CLINICS wILL bE HELD IN THE LIbRARy OF THE SOCIETy

Right to infoRmation CliniC

ChaRitable tRust CliniC

aCCounts & audit CliniC

Advisory Panel : Narayan K. Varma, Adv A K Asher, Hema D. SampatClinic Co-ordinator: Aparna S. Bagul - 6137 7614

Advisory Panel : Ratanshaw J. Damanwala, Shariq M. Contractor, Gautam S. Nayak, Anil J. Sathe, Atul H. ShahClinic Co-ordinator: Aparna S. Bagul - 6137 7614

Advisory Panel : Sanjeev R. Pandit, Himanshu V. Kishnadwala, Jayesh M. Gandhi Clinic Co-ordinator : Aparna S. Bagul - 6137 7614

BCAS Foundation operates a Right to Information (RTI) Clinic on a regular basis. The Clinic provides help and guidance to BCAS members as also to non-members, i.e., all citizens, for making applications under the RTI Act and also assists in resolving any related difficulties on the subject of RTI. The RTI Clinic operates on every 2nd, 3rd and 4th Saturday from 11 a.m. to 1 p.m. The next RTI Clinic days accordingly are 8th, 15th, 22nd and 29th March 2014. Please call to obtain a prior appointment.

The next Charitable Trust Clinic will be held on 7th March 2014 from 5 p.m. to 7 p.m.

Chartered Accountants and Trustees interested in having their queries solved are requested to send their queries by email to [email protected] and call to obtain a prior appointment, latest by noon on the day of the clinic. Querists are also advised to bring along relevant papers like trust deeds, audited accounts, etc.

The next Accounts & Audit Clinic will be held on 8th March 2014 from 10.30 a.m. to 11.30 a.m.

Persons interested in having their queries pertaining to accounting and auditing issues solved are requested to send the queries by e-mail to [email protected] one week in advance and call to obtain prior appointment, at least a day before the day of the clinic. Please note that the panel will not answer any queries pertaining to tax issues.

• Real-time analyticswill be a key differentiator in enablingorganisations to take threads of information and gather them together to identify trends and opportunities.

• Data security will need to continuously evolve to protectfrom risks arising fromgrowth in mobile computing, cloud computing, and BYOD.

Led by several Young Turks, the BCAS has been not only adapting to the technology changes continuously but also has been spreading awareness and knowledge through dedicated column in the BCAJ and several ongoing programmes that the members find extremely helpful and I am sure will continue to guide and support the members in adapting to these changes. Presently, the team is working on launching the online version of the BCAJ and also revamping its website. Watch out for the announcement in the coming weeks!

With best wishes,

Yours truly,

Nitin P. Shingala

February 20143

IndIrect taxes & allIed laws commItteeChairman : Govind G. Goyal Convenors : Mandar U. Telang, Suhas S. Paranjpe & Sunil b. Gabhawalla Co-ordinators : Suhas S. Paranjpe & Ashok L. Sharma

JoIntly wIth the chamber of tax consultants

Full Day Seminar on Charitable Trustsa full day Seminar is organized jointly with allied Laws Committee of The Chamber of Tax Consultants (CTC) on Formation, registration, Taxation and compliance of various statutory provisions by the Charitable Trusts to discuss and deliberate on the various issued faced in day to day practice.

The details are as under:

Day & Date Saturday, 22nd March 2014

Time 9.30 a.m. to 5.30 p.m.

Venue M. C. Ghia Hall, Kalaghoda, Mumbai – 400 001

Fees for Members R 1,200 + R 148 (ST) = R 1,348

Fees for Non-Members R 1,800 + R 222 (ST) = R 2,022

Fee includes course material, breakfast, lunch and tea & coffee.

The details are as follows:

Sessions Topics Speakers

Inauguration & 1st Technical Session

Key Note address/recent Issues in case of Charitable Trust

Charity Commissioner* and DIT (exemption) Chairman arvind H. Dalal, Chartered accountant

2nd Technical Session

Important Provisions of bombay Public Trust act, Drafting of Trust Deed etc.

eminent Faculty

3rd Technical Session

Formation of Trust, Provisions relating to accounts & audit etc.

Vipin batavia,Chartered accountant

4th Technical Session

registration with I.T. Dept. exemption u/S 80- G & under section 10 (23) (c).

Paras Savla,Chartered accountant


Taxation of Charitable Trust

Gautam Nayak,Chartered accountant


Foreign Contribution regulation act and provisions of DTC

anil Sathe,Chartered accountant

*Confirmation awaitedenrolment form is printed on page 12

bcas foundatIonuttarakhand relief Fund: School rehabilitation Project – appeal for Support

The bCaS Foundation and the National Centre for Peoples’-action

in Disaster Preparedness (NCPDP) http://www.ncpdpindia.org/have

been collaborated for repair, retrofitting and rehabilitation of Schools

in Chamoli District in uttarakhand.

We are glad to inform to you that Shri rajendrabhai Desai and his

team from NCPDP is doing excellent work. The repair, retrofitting

and rehabilitation of Subhashnagar Primary School in Gopeshwar

has been completed using the unique environment friendly retro-

fitting techniques. The use of this technique has resulted in savings

of over rs. 25 lakh in this project besides positive environmental

impact. This newly retrofitted school has also become a show-

piece for benefits of the unique technique of retrofitting. The local

community and the district authorities have also well received

and acclaimed this project. The bCaS Foundation plans to explore

supporting similar projects in uttarakhand and I am sure you will

continue your support and contributions generously.

The bCaS Foundation has so far collected rs. 8.87 lakh out of which

rs. 6 lakh have been utilized towards the above school project.

We are now exploring further similar school projects jointly with

NCPDP and once again request the members to contribute

generously for this noble cause and send cheques in favour of

“bCaS Foundation” at the Society’s office.

The donations are eligible for tax benefits under Sec 80G of the

Income Tax 1961 vide registration Number: DIT (e) / MC / 80G/ 2345.

The bCaS Foundation is registered with the Charity Commissioner

under the bombay Public Trust act, 1950 vide registration no.

e-20379 (Mumbai).

your timely support would be of great help.

Thanking you,

Trustees

bCaS Foundation

There is one and only one social responsibility of business–to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages

in open and free competition without deception or fraud.

Milton Friedman

BCAS 4

InternatIonal taxatIon commIttee

JOINTLY WITHtaxatIon commIttee

Chairman : Kishor b. KariaCo-Chairman : Deepak R. ShahConvenors : Dhishat b. Mehta, Gaurang V. Gandhi & Suril V. Shah

Chairman : Gautam S. NayakCo-Chairman : Sanjeev R. PanditConvenors : Anil D. Doshi, Jagdish T. Punjabi & Saurabh P. Shah Co-ordinators : Gaurang V. Gandhi, Anil D. Doshi & bhadresh K. Doshi

Seminar on Software IndustrySoftware development has contributed immensely to the development of the economy and international trade. One of the fastest growing sectors is the software sector in India and its growth in short period is commendable. Software development is a complex subject and it has thrown up various tax and accounting issues. This seminar is organized to understand the various nuances of direct tax, transfer pricing, indirect tax and accounting issues related to software. The recent judicial pronouncements and the undercurrent of various contentious issues faced by the software industry will also be discussed.

Program details are as follows:

Days & Dates Friday, 7th March 2014

Time 9.30 a.m. to 6.00 p.m.

Venue ITC Grand Central, 287, Dr. babasaheb ambedkar road, Parel, Mumbai - 400012


Fees for Non Members

R 3,500 + R 432 (ST) = R 3,932

Fee includes course material, breakfast, lunch and R 50 towards contribution to bCaS Foundation

Topics Faculty

Direct tax aspects H. Padamchand Khincha, Chartered accountant

Transfer pricing provisions

Hasnain Shroff, Chartered accountant

Indirect tax aspects Sagar Shah, Chartered accountant

accounting and auditing aspects

rajan Kamat, Chartered accountant

enrolment is restricted to 100 participants. Members are requested to take advantage of this unique opportunity and enroll early to avoid disappointment.

enrolment form is printed on page no. 12

human resources commItteeChairman : Mayur b. NayakConvenors : bharatkumar K. Oza, Hemant P. Gandhi & Mihir C. Sheth Co-ordinator: Smita H. Acharya

2-Day Orientation workshop specially designed for Fresh Articled StudentsTo help members in discharging their responsibility of imparting effective training and to orient articled Students into learning mode with basic knowledge in variety of technical subjects including e-filing, the Committee is pleased to announce a two-day Orientation Workshop specially designed for the fresh articled students. The workshop will give an introductory insight to the students on a variety of topics which will assist them in their articled period. The workshop will help them expand their knowledge base and sharpen their skills to discharge their duties more effectively.

Details of the workshop are as follows:

Days & Dates Friday, 18th & Saturday 19th april 2014

Time 9.00 a.m. to 5.30 p.m.

Venue M. C. Ghia Hall, Kalaghoda, Mumbai - 400 001.

Fees R 1500 + R 186 (ST) = R 1,686

Fee includes course material, breakfast, lunch and tea & coffee.

Topics to be covered would be as follows:

Introduction to accounting Standards

Introduction to auditing

Introduction to Direct Taxes Introduction to Internal audit

Introduction to Service Tax e-Filing of returns

Introduction to VaTCode of conduct for articled students and ICaI regulations relating to students

Kindly bring the contents of above Notice to students’ attention and encourage them to enroll for the workshop.

Due to constraint of space, the enrolment is restricted to first 100 students.


If we stop thinking of the poor as victims, or as a burden, and start recognising them as resilient and creative entrepreneurs and

value-conscious consumers, a whole new world of opportunity will open up.

C. K. Prahlad

BCAS 6

taxatIon commItteeChairman : Gautam S. NayakCo-Chairman : Sanjeev R. PanditConvenors : Saurabh P. Shah, Anil D. Doshi & Jagdish T. PunjabiCo-ordinators: Jagdish T. Punjabi & Saroj V. Maniar

Full day workshop on Practical Issues in Tax Deduction at SourceThe importance of TDS provisions cannot be undermined. TDS is a significant source of revenue for the Government. Non-compliance with TDS provisions may invite disallowance of expenditure in addition to applicability of penal provisions. There are additional payments liable for tax deduction at source such as purchase of immovable property.

There are constant changes both in the regulatory as well as the compliance aspects of TDS provisions. The transition from NSDL to Centralised Processing Cell (CPC) is now complete. as we all know, CPC (TDS) set up in Ghaziabad has introduced TraCeS (TDS reconciliation analysis and Correction enabling System) since last year.

This Workshop is intended to keep you updated with the recent developments in this field. Participants may send their queries in advance to the Society to enable the speakers to deal with them.

details of the workshop:

Day & Date Friday, 21st March 2014

Time 9.00 a.m. to 5.30 p.m.

Venue Navinbhai Thakkar auditorium, Vile Parle (east), Mumbai.


Fees for Non- Members

R 1,250 + R 155 (ST) = R1,405


Topics Faculty

Overview of TDS Mr. V. K. Pandey, CIT(TDS)

Section 192 – Salary including salary paid to expats and Section 194-Ia

Ms. Sonalee Godbole,Chartered accountant

Section 194a, Section 194C, Section 194H, Section 194I, and Section 194J

Mr. N. C. Hegde,Chartered accountant

Section 195 - Payment to Non-residents

Mr. Naresh ajwani,Chartered accountant

Practical Issues in e-filing of TDS returns and Statements

Mr. ameet Patel,Chartered accountant

InternatIonal taxatIon commItteeChairman : Kishor b. KariaCo-Chairman : Deepak R. ShahConvenors : Dhishat b. Mehta, Gaurang V. Gandhi & Suril V. ShahCo-ordinators : Suril V. Shah, Ganesh Rajagopalan, Dhaval J. Sanghavi & Rajesh P. Shah

Fourth Intensive Study Course on Transfer Pricing1st March, 2014 to 10th May, 2014

The Fourth Intensive Study Course on ‘Transfer Pricing (TP)’ to be conducted in classroom style, will be spread over 35-37 sessions on 10 Saturdays, covering various aspects of TP including:

• Associated Enterprises • International transactions • Concept of ALP • Domestic transfer pricing • Comparability study • Transfer pricing methods – CuP, rPM, CPM, transactional and profit methods • Selection of comparables • Safe harbor rules • Thin capitalization rules • APAs • OECD transfer pricing guidelines • Intangible property • Intra group services • Cost contribution arrangements • Financial service sector - transactions • Transfer Pricing documentation • Drafting audit report and Transfer Pricing study including live case studies of select industries • Transfer pricing controversies • Transfer pricing litigations • Transfer pricing dispute resolution through MAP • International decisions on transfer pricing

Faculty will comprise of senior professionals having expertise in the field of Transfer Pricing.

Days & Dates all Saturdays from 1st March 2014 to 10th May 2014 (excluding 5th april 2014)

Time 9.00 a.m. to 6.00 p.m.

Venue 4th Floor, Walchand Hirachand Hall, Indian Merchants’ Chamber, Churchgate, Mumbai

Fees for Members R 15,000 + R 1,854 (ST) = R 16,854

Fees for Non- Members R 20,000 + R 2,472 (ST) = R 22,472


as the Course is spread over a period of almost three months, in case of any contingency, the Society may be required to change the venue and/or the date at short notice.

enrolment is restricted to 80 participants on first-come-first-serve basis. To give benefit of this course to a larger spectrum of members, enrolment would be restricted to a maximum of 7 members from the same group of organisations on a first come first served basis and the additional members from that group of organisations would be placed on waiting list. Subject to availability of the seats they may be enrolled one week before the commencement of the Course.

Course fees are non-refundable. The enrolment is non-transferable. as per the Society’s policy, a participant is not permitted to substitute another person.



February 20147

recently released PUbLICATIONS OF bCAS

BCAS 8

Payment can be made by cheque/DD payable at par in Mumbai in favour of ‘Bombay Chartered Accountants’ Society’. You can also pay by cash/credit card at the payment counter of BCAS Office. If you have an Imprest Account, then you can instruct us to adjust the subscription through the imprest Account. For further details log on to www.bcasonline.org

Particulars Subscription Charges + Service Tax

till 31st March 2014

Total Charges

Ordinary, Life and Associates of Corporate Membership R 600 + 12.36% R 674

Students R 600 + 12.36% R 674

Journal subscribers R 900 + 12.36% R 1,011

Non-members R 1,200 + 12.36% R 1,348

1. Lecture Meeting on Commonly found mistakes in Financial Statements and SEBI Review of Qualified Audit Reports by Nilesh Vikamsey, held on 5th February 2014

2. Lecture Meeting on Important Income-tax Rulings of 2013 by Hiro Rai held on 29th January 2014

3. Lecture Meeting on Charitable Trusts – Recent Issues by Gautam Nayak held on 15th January 2014

are now available on BCAS Web TV.

bCAS wEb TVRecent Additions Subscribe

Now!!!

February 20149

From rBIContributed by : Gaurang V. Gandhi

The Reserve Bank of India has issued the following 15 circulars

a. P. (dIr series) circular no. 86 dated January 9, 2014 foreign direct Investment – Pricing Guidelines for fdI instruments with optionality clauses

This circular permits the issue of equity shares and compulsorily and mandatorily convertible preference shares/debentures under FDI Scheme to a person resident outside with an “optionality clause”. Under this clause, after a minimum lock-in period of one year or a minimum lock-in period as prescribed under FDI Regulations, whichever is higher (e.g. defense and construction development sector where the lock-in period of three years has been prescribed), the non-resident investor exercising option/right of buy-back will be eligible to exit without any assured returnat the price prevailing/value determined at the time of exercise of the option. The lock-in period will be effective from the date of allotment of such shares or convertible debentures unless otherwise prescribed.

Valuation will be as under: -(i) In case of a listed company, the market price prevailing at the

recognized stock exchanges.(ii) In case of unlisted company, price not exceeding that arrived at

on the basis of Return on Equity (i.e. Profit After Tax / Net Worth – where Net Worth would include all free reserves and paid up capital) as per the latest audited balance sheet.

(iii) Compulsorily Convertible Debentures (CCD) and Compulsorily Convertible Preference Shares (CCPS) are to be transferred at a price worked out as per any internationally accepted pricing methodology at the time of exit and which is to be duly certified by a Chartered Accountant or a SEBI registered Merchant Banker.

all existing contracts will also have to comply with the above conditions to qualify as FDI compliant.

a. P. (dIr series) circular no. 87 dated January 9, 2014resident bank account maintained by residents in India –Joint holder – liberalization

Presently, individuals resident in India can include Non-resident Indian (NrI) close relative(s) as defined in Section 6 of the Companies act, 1956 as a joint holder(s) in their resident savings bank accounts on “former or survivor” basis. However, such NrI close relatives cannot operate the said account during the life time of the resident account holder.

This circular provides that individuals resident in India cannow include NrI close relative(s) as defined in Section 6 of the Companies act, 1956 as a joint holder(s) in their new / existing resident savings bank accounts / other bank accounts on “either or survivor” basis. The NrI has to give a declaration in the prescribed format stating that he / she will not use the proceeds lying in the above account for any transaction in contravention of FeMa and in case of any violation he / she will be responsible for the same.

The above liberalization is subject to the following: -a) The said account will be treated as resident bank account for all

purposes and all regulations applicable to a resident bank account will be applicable.

b) Cheques, instruments, remittances, cash, card or any other proceeds belonging to the NRI close relative cannot be credited to

the said account.c) The NRI close relative can operate the said account only for and

on behalf of the resident for domestic payment and not for creating any beneficial interest for himself.

d) Where the NRI close relative becomes a joint holder with more than one resident in the said account, such NRI close relative must be the close relative of all the resident bank account holders.

e) Where due to any eventuality, the non-resident account holder becomes the survivor of the said account the same must be categorized as Non-Resident Ordinary Rupee (NRO) account and all such regulations as applicable to NRO account shall be applicable. Onus will be on the NRI account holder to inform the Bank to get the account categorized as NRO account.

a. P. (dIr series) circular no. 88 dated January 9, 2014memorandum of Instructions for opening and maintenance of rupee / foreign currency Vostro accounts of non-resident exchange houses

This circular has expanded the scope of the rupee Drawing arrangements (rDa) by including thefollowing items under the list of Permitted Transactions: -1. Payments to utility service providers in India, for services such as

water supply, electricity supply, telephone (except for mobile top-ups), internet, television etc.

2. Tax payments in India.3. EMI payments in India to Banks and Non-Banking Financial

Companies (NBFCs) for repayment of loans.

The detailed list under Part (b) of annex-I is annexed to the circular.

a. P. (dIr series) circular no. 89 dated January 9, 2014exim bank's line of credit of usd 42.61 million to the Government of the republic of benin

exim bank has made available, subject to certain terms and conditions, to the Government of the republic of benin a Line of Credit of uS $ 42.61 million for financing purchase of eligible goods, services, machinery and equipment including consultancy services for upgrading of water supply schemes in 69 villages in benin, subject to the Government of benin appointing a Project Management Consultant (PMC) for the preparation of Detailed Project report (DPr) in benin.eligible goods and services including consultancy services of the value of at least 75% of the contract price must be supplied by the sellers from India, while the remaining 25% of the goods and services may be procured by the sellers from outside India.

The last date for opening of Letters of Credit and Disbursement for project exports will be 48 months from the scheduled completion date of the contract and September 5, 2019 in case of supply contracts.

a. P. (dIr series) circular no. 90 dated January 9, 2014Provisions under section 6 (4) of foreign exchange management act, 1999 - clarifications

Section 6 (4) of FeMa, 1999 permits a person resident in India to hold, own, transfer or invest in foreign currency, foreign security or any immovable property situated outside India if such currency, security or property was acquired, held or owned by such person when he was resident outside India or inherited from a person who was resident outside India.

This circular clarifies that the following transactions are covered under Section 6(4) of FeMa, 1999: -(i) Foreign currency accounts opened and maintained by such a

person when he was resident outside India.

BCAS 10

(ii) Income earned through employment or business or vocation outside India taken up or commenced while such person was resident outside India, or from investments made while such person was resident outside India, or from gift or inheritance received while such a person was resident outside India.

(iii) Foreign exchange including any income arising therefrom, and conversion or replacement or accrual to the same, held outside India by a person resident in India acquired by way of inheritance from a person resident outside India.

(iv) Persons resident in India can freely utilize all their eligible assets abroad as well as income on such assets or sale proceeds thereof received after their return to India for making any payments or to make any fresh investments abroad without RBI approval if the cost of such investments and/ or any subsequent payments are met exclusively out of funds forming part of eligible assets held by them and the transaction is not in contravention ofthe provisions of FEMA.

a. P. (dIr series) circular no. 91 dated January 13, 2014exim bank's line of credit of usd 125 million to the Government of the republic of sudan

exim bank has made available, subject to certain terms and conditions, to the Government of the republic of Sudan a Line of Credit of uS $ 125 million for financing purchase of eligible goods, services, machinery and equipment including consultancy services for Mashkour (earlier elduem) Sugar Project in Sudan.eligible goods and services including consultancy services of the value of at least 75% of the contract price must be supplied by the sellers from India, while the remaining 25% of the goods and services may be procured by the sellers from outside India.

The last date for opening of Letters of Credit and Disbursement for project exports will be 48 months from the scheduled completion date of the contract and July 23, 2019 in case of supply contracts.

a. P. (dIr series) circular no. 92 dated January 13, 2014risk management and Inter bank dealings

Presently, residents (other than exporters and importers) cannot cancel and rebook forward contracts, involving rupee as one of the currencies, booked by them to hedge current and capital account transactions. exporters are allowed to cancel and rebook forward contracts to the extent of 50% of the contracts booked in a financial year for hedging their contracted export exposures and importers are allowed to cancel and rebook forward contracts to the extent of 25% of the contracts booked in a financial year for hedging their contracted import exposures.

This circular now permits everyone with a contracted exposure to freely cancel and rebook forward contracts in respect of all current account transactions as well as capital account transactions with a residual maturity of one year or less. In the case of FII/QFI/other portfolio investors, forward contracts booked by them, once cancelled, can be rebooked up to the extent of 10% of the value of the contracts cancelled. However, forward contracts booked by themcan be rolled over on or before maturity.

a. P. (dIr series) circular no. 93 dated January 15, 2014notification no.fema.293/2013-rb dated november 12, 2013, vide G.s.r.no.767(e) dated december 06, 2013clarification- establishment of liaison office/ branch office/ Project office in India by foreign entities – General Permission

Presently, no entity or person, being a citizen of Pakistan, bangladesh, Sri Lanka, afghanistan, Iran or China is permitted to establish in India, a branch office or a liaison office or a project office or any other place of business by whatever name called, without obtaining prior permission of rbI.

This circular clarifies that the said restrictions also apply to entities from Hong Kong and Macau. as a result, prior permission of rbI is required to be obtained by entities from Hong Kong and Macau to setup, in India, a Liaison/ branch/ Project Offices or any other place of business by whatever name.

a. P. (dIr series) circular no. 94 dated January 16, 2014conversion of external commercial borrowing and lumpsum fee/royalty into equity

Presently, an Indian company can issue equity shares against its liability in respect of external Commercial borrowings (eCb), import of capital goods,lump sum fees/royalties, etc.

This circular clarifies that the rate of exchange prevailing on the date of the agreement between the parties concerned hasto be applied at the time of conversion of foreign currency liability in respect of external Commercial borrowings (eCb), import of capital goods,lump sum fees/royalties, etc. into Indian rupees, for the purpose of issue of equity shares / other securities, as the case may be, against the same. However, the Indian company is free to issue equity shares for a rupee amount less than that arrived at based on the rate of exchange prevailing on the date of the agreement by a mutual agreement with the lender / supplier.

a. P. (dIr series) circular no. 95 dated January 17, 2014merchanting trade transactions

This circular contains the revised guidelines with respect to merchant trade transactions or intermediary trade transactions. Some of the important points are: -1. The merchanting traders have to be genuine traders of goods and

not mere financial intermediaries. Confirmed orders have to be received by them from the overseas buyers.

2. Trading in goods involved in the merchanting or intermediary trade transactions must be permitted for exports / imports under the prevailing Foreign Trade Policy (FTP) of India, at the time of entering into the contract.

3. Both the legs of a merchanting or intermediary trade transaction mustbe routed through the same bank.

4. The entire merchanting or intermediary trade transactions must be completed within an overall period of nine months and there should not be any outlay of foreign exchange beyond four months.

5. The inward remittance from the overseas buyer should preferably be received first and the outward remittance to the overseas supplier will be made subsequently.

6. The commencement of merchanting or intermediary trade is the date of shipment / export leg receipt or import leg payment, whichever is first. The completion date is the date of shipment / export leg receipt or import leg payment, whichever is the last.

7. Short-term credit either by way of suppliers' credit or buyers' credit will be available for merchanting or intermediary trade transactions including the discounting of export leg LC by an AD bank, as in the case of import transactions.

8. Banks must ensure one-to-one matching in case of each merchanting or intermediary trade transaction and defaults in any leg by the traders has to be to the concerned Regional Office of RBI on half yearly basis in the format annexed to the circular.

9. Where advance against the export leg is received by the merchanting trader, the advance payment must be held in a separate deposit / current account in foreign currency or Indian Rupees.

10. Where Advance for the import leg is demanded by the overseas seller, the same must be paid against bank guarantee from an international bank of repute.

11. Reporting by Banks for merchanting or intermediary trade for compilation of R-return must be done on gross basis.

February 201411

a. P. (dIr series) circular no. 96 dated January 20, 2014facilities for Persons resident outside India – clarification

This circular clarifies that a foreign investor is free to remit funds on cash /TOM /spot basis through any bank of its choice for any permitted transaction. The funds so remitted must be transferred to the designated custodian bank through the banking channel. KyC in respect of the remitter, wherever required, will bethe joint responsibility of the bank that has received the remittance as well as the bank that ultimately receives the proceeds of the remittance. The remittance receiving bank is required to issue a FIrC to the bank receiving the proceeds to establish the fact the funds had been remitted in foreign currency.

Extant Guidelines Revised Guidelines

Features Documents Features Documents

Establishment of Business Relationship – Corporate

Certified copy each of the following documents

Establishment of Business Relationship – Corporate

Certified copy each of the following documents

(i) Certificate of incorporation (i) Certificate of incorporation

(ii) Memorandum & Articles of Association

(ii) Memorandum & Articles of Association

(iii) Resolution of the Board of Directors for undertaking forex transactions with the AP

(iii) List of officials with names, designation and signatures authorized by the Managing Director / Chief Financial Officer of the company to conduct forex transactions onbehalf of the company

(iv) Power of attorney granted to its managers, officers or employees to conduct forex transactions on behalf of the corporate and their identification

(iv) PAN Card

(v) PAN Card (v) Telephone BillNote: Corporate should invariably pay to AMCs towards rupee leg of forex transactions through a cheque/bankaccount of corporate irrespective of theamount of forex transaction

(vi) Telephone Bill

a. P. (dIr series) circular no. 97 dated January 20, 2014Know your customer (Kyc) norms/anti-money laundering (aml) standards/ combating the financing of terrorism (cft) obligation of authorisedPersons under Prevention of money laundering act, (Pmla), 2002, asamended by Prevention of money laundering (amendment) act, 2009 money changing activities

This circular contains the amended the instructions issued to authorized Money Changers (aMC) with respect to establishment of business relationships by corporates. The revised guidelines are as under: -

a. P. (dIr series) circular no. 98 dated January 27, 2014exim bank's line of credit of usd 19.50 million to the Government of the socialist republic of Vietnam

exim bank has made available, subject to certain terms and conditions, to the Government of the Socialist republic of Vietnam a Line of Credit of uS $ 19.50 million for financing purchase of eligible goods, services, machinery and equipment including consultancy services for two projects in Vietnam.eligible goods and services including consultancy services of the value of at least 75% of the contract price must be supplied by the sellers from India, while the remaining 25% of the goods and services, other than consultancy services, may be procured by the sellers from outside India.

The last date for opening of Letters of Credit and Disbursement for project exports will be 48 months from the scheduled completion date of the contract and July 10, 2019 in case of supply contracts.

a. P. (dIr series) circular no. 99 dated January 29, 2014foreign investment in India by sebI registered long term investors in Government dated securities

Presently, FII, QFI and other long term investors registered with SebI, viz. Sovereign Wealth Funds (SWF), Multilateral agencies, Pension/ Insurance/ endowment Funds and Foreign Central banks, are permitted to invest up to uS $30 billion, on repatriation basis, in Government dated securities. Out of

the above limit of uS $ 30 billion, a sub-limit of uS $ 5 billion has been marked out for investment by other long term investors registered with SebI.

This circular has increased the said sub-limit of uS $ 5 to uS $ 10. as a result, other long term investors registered with SebI, viz. Sovereign Wealth Funds (SWF), Multilateral agencies, Pension/ Insurance/ endowment Funds and Foreign Central banks, can now invest up to uS $ 10 billion in Government dated securities within the overall limit of uS $ 30.

a. P. (dIr series) circular no. 100 dated february 4, 2014third party payments for export / import transactionsthis circular has, with respect to third party payments for export / import transactions, made the following changes: -

1. Removed the conditions that a “firm irrevocable order backed by a tripartite agreement should be in place”. This is subject to the following: -

a. Bank has to be satisfied with the bona-fides of the transaction and export documents, such as, invoice / FIRC.

b. Bank has to consider the FATF statements while handling such transaction.

2. The limit of US $ 100,000 eligible for third party payment for import of goods stands withdrawn. As a result third party payments for imports can be made without any limit.

BCAS 12

Registered with the Registrar of Newspapers for India under R.N. 68365/98 Regd. No. MH/MR/South-88/2012-14Posted at Mumbai Patrika Channel Sorting Office, Mumbai-1Published on 15th of every month • Posted on 15th & 16th of every month

Edited, printed & published by Narayan Varma on behalf of Bombay Chartered Accountants’ Society, Mumbai-400020. Printed at Spenta Multimedia, Mumbai-400013.

• Please fill in the above form and send the same to the Society’s office along with requisite payment. • Please mention your name and membership number on the reverse side of the local cheque/at par cheque/Demand Draft. • Kindly note that the cash counter timings are from 10.30 a.m. to 5.30 p.m. on Monday to Friday and 10.30 a.m. to 1 p.m. on Saturday. The lunch time is 1.30 p.m. to 2 p.m. Members are requested to co-operate in this regard. • Cancellation policy: Kindly note that no refund will be given in case of cancellation for any reason and no substitute will be allowed.

Name : .............................................................................................................................................................................................

Address : .........................................................................................................................................................................................

E-mail :............................................... Mobile : ........................................... Tel. : ............................... Fax : .................................

BCAS Memb. No. : .................................. Tel. (O) : .................................... Tel. (R) : .......................... Fax : .................................

Choice of food (wherever applicable) .......... Jain Non-Jain Cash/Draft/ Cheque no. .................. Drawn on ................................................................................................................... Bank,

Dated ......................... for an amount of r.......................................................................................... is enclosed.

Date : ...................(Signature)

BCAS Study Circles 2013–14Study

Circle No. Subject Fee Tick your choice here

I Direct Tax Laws 449*

II Indirect Tax Laws 449*

III Company Law, Auditing & Accounting 449*

IV FEMA 449*

V Information Technology 449*

Study Circle No. Subject Fee Tick your

choice hereVI Human Resource Development 449*

VII ITF 1,123*

VIII BCAS Suburban Study Circle 674*

IX International Economics 1,123*

X Students Study Circle 224*

* Inclusive of Service Tax of 12.36%

Com

bine

d En

rolm

ent F

orm

Seminar on Software Industry .........................................07-03-2014 ........................................................r 3,146 for members .......... ...........................r 3,932 for non-members .........

Full day Seminar on Charitable Trusts .............................22-03-2014 ........................................................r 1,348 for members .......... ...........................r 2,022 for non-members .........

Seminar

Fourth Intensive Study Course on Transfer Pricing ...........01-03-2014 to 10-05-2014 ...............................r 16,854 for members ........ ...........................r 22,472 for non-members .......

Study Course

Youth Residential Refresher Course .................................21-02-2014 to 23-02-2014 ...............................r 5,506 for members .......... ...........................r 6,741 for non-members .........

Refresher Course

Full day Workshop on Practical Issues in Tax Deduction at Source ..............................................21-03-2014 ........................................................r 1,123 for members .......... ...........................r 1,405 for non-members .........

Two-Day Orientation Workshop specially designed for Fresh Articled Students ...............................18-04-2014 & 19.04.2014 ..................................r 1,686 ...............................

Workshop