Auditor’s Responsibilities Relating to Restructuring of Advances (27.03.2009)

1. Attention of the members carrying out audit of financial statements of banks for the year ended March 31, 2009, is drawn to Reserve Bank of India’s circular no. DBOD.BP.BC.No.105/21.04.132/2008-09 dated February 4, 2009 on Prudential Guidelines on Restructuring of Advances by Banks. The said circular: · Applies to advances to which Special Regulatory Treatment was extended in terms of RBI’s circular no. DBOD.BP.BC.93/21.04/132/2008-09 dated December 8, 2008 and also were Standard Assets as on September 1, 2008; · Extends the date of receipt of application for restructuring from January 31, 2009 to March 31, 2009; and · Clarifies that “the general framework of Restructuring of Advances by banks continues to be governed by the circular dated August 27, 2008”. 2. In view of the above, the members may note that mere receipt of an application for restructuring does not by itself makes the advance(s) referred to above qualified to retain its classification as “Standard Asset(s)”. Such retention can be done only if the following criteria are met: · The conditions subject to which the benefits of restructuring under Special Regulatory Treatment can be availed in terms of the circular no. DBOD.BP.BC.No.37/21.04.132/2008-09 dated August 27, 2008 read with paragraph 4(c) of RBI’s circular no. DBOD.BP.BC.No.104/21.04.132/2008-09 dated January 2, 2009 are met; and · The restructuring package is implemented within a period of 120 days of taking up of restructuring package. 3. In case of advances where the above conditions are not fulfilled then in terms of paragraph 6.2 of RBI’s circular no. DBOD.BP.BC.No.37/21.04.132/2008-09 dated August 27, 2008 on Prudential Guidelines on Restructuring of Advances by Banks read with paragraph 3.1.2 of the said Circular, the usual asset classification norms would continue to apply. Accordingly, an adequate provision in respect of such accounts needs to be made in the financial statements of the bank. Where the bank has not made such a provision in the financial statements, the auditor should consider the impact of such non-provisioning on his audit opinion in terms of the principles laid down in Standard on Auditing (SA) 700, The Auditor’s Report on Financial Statements. 4. Where the member, in accordance with the requirements of SA 700, decides to issue a modified audit opinion in respect of the above, his audit report should clearly bring out matters such as the fact of non-provisioning, the amount involved, the impact of such non provisioning on the relevant items of financial statements, reference to the relevant circular(s) of the Reserve Bank of India. 5. Further, the member would also need to consider the need for giving a suitable comment in this regard in his Long Form Audit Report. For example, in case of a bank branch, the Long Form Audit Report requires the auditor to provide details of such advances where the auditor disagrees with the branch classification of the advance(s) into standard/ sub-standard/ doubtful/ loss assets, along with the reasons therefor. 6. In addition to the above, it may also be worthwhile to reiterate that while carrying out statutory audit of the financial statements of banks, the members should ensure compliance with the applicable Standards on Auditing as well as the Guidance Note on Audit of Banks issued by the Institute of Chartered Accountants of India.

Online PAN Verification can be done

Dear friends,

Online PAN Verification is restricted to certain agencies and not for us. Many times it is difficult to cross check name written on PAN Card. Here is the way. online etax payment window made it is easy.click on following steps

1. Open following link

https://onlineservices.tin.nsdl.com/etaxnew/tdsnontds.jsp

2. Select Challan 280

3. Fill up all details including do the bank name.

4. Click Proceed.

5. Before moving to next window the name written for the challan and as per database of Income Tax is compared and message is flashed just at bottom.

6. The name as per income tax record can be seen and you can confirm the PAN Number against the name of PAN Holder.

Appointment of CS- Limit revised to 5 crores from 2 crores

COMPANIES (APPOINTMENT AND QUALIFICATIONS OF SECRETARY) AMENDMENT RULES, 2009 - AMENDMENT IN RULE 3

NOTIFICATION NO. G.S.R. 11 (E), DATED 5-1-2009

In exercise of the powers conferred by clauses (a) and (b) of sub-section (1) of section 642 read with clause (45) of section 2 and section 383A of the Companies Act, 1956 (1 of 1956), the Central Government hereby makes the following rules further to amend the Companies (Appointment and Qualifications of Secretary) Rules, 1988, namely :—

1. (1) These rules may be called the Companies (Appointment and Qualifications of Secretary) Amendment Rules, 2009.

(2) They shall come into force from the 15th day of March, 2009.

2. In the Companies (Appointment and Qualifications)of Secretary) Rules, 1988, in rule 2,

(i) in sub-rule (1) and in the proviso to sub-rule (4), for the words "rupees two crores" the following words shall be substituted, namely:—

"five crore rupees";

(ii) in sub-rule (3), the second and third proviso shall be omitted;

(iii) after sub-rule (3), the following sub-rule shall be inserted, namely:—

"(3A) A company having a paid up share capital of two crore rupees or more but less than five crore rupees may appoint any individual who possesses the qualification of membership of the Institute of Company Secretaries of India constituted under the Company Secretaries Act, 1980 (56 of 1980), as a whole-time secretary to perform the duties of a secretary under the Companies Act, 1956:

Provided that where a company has appointed under sub-rule (3) or this sub-rule, a whole-time company secretary, possessing the qualification of membership of the Institute of Company Secretaries of India, such a company is not required to obtain a certificate from a secretary in whole-time practice under rule 3 of the Companies (Compliance Certificate) Rules, 2001."

[F.No. 1/6/2008-CL.-V]

Changes in form 3CD

NOTIFICATION NO 36/2009,

Dated: April 13, 2009

In exercise of the powers conferred by section 295 read with section 44AB of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely : -

1. (1) These rules may be called the Income-tax (Tenth Amendment) Rules, 2009.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. In the Income-tax Rules, 1962, in Appendix II, in Form No. 3CD, after item 17, the following shall be inserted, namely:-

"17A. Amount of interest inadmissible under section 23 of the Micro, Small and Medium Enterprises Development Act, 2006."

F.No. 149/86/2008 -TPL

Anand Kumar Kedia
Director (TPL-III)

Note: - The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (ii) vide S.O. 969(E), dated the 26th March, 1962 and last amended by No. S.O. 866(E), Dated 27-3-2009.

Tips to pass CA Exams

Introduction

My discussion here dealt withCA course preparation and presentation. My articles deals what is the realproblemof a ca student , how mentally prepared for facing the challenges and finally how to handle the CAexam effectively and defiantly.

Phase I How tomentally be prepared for the CA course.

First problems with most of the CA student is a change over problem.....

If any student coming out from Graduation and enteres in to CA, they requires some time to settle in to their fled....Some problems were how to study..........which book to follow...........Etc.....Up to that time almost of great time will be over ........

If new student went to coaching alsojust limited to the coaching version and they were just like a spoon feed baby...........

The candidate undergoing article ship may not find sufficient time to study their Portion is also other threat.........They hardly get a lesser number of leave and no time to undergo the study..............

Repeated failures would result to destruction of our confident..................

How to overcome...............

1.Mental preparation

Please be understand the course is itself is tough in nature so the fresher be mentally be raised to the level of CA course....You should never be limit to your coaching classes or B.com.Think it is a tough but achievvable target for you........In short please raise according to your opportunity................

2.Self anaysis

It consist of evaluating yourself your strength and weakness in studies.... Some were very hard working than others, some otheres were strength in theory but some others were good command on the problems.....some were averages......

3.Pay more attention on weaker subject...

After self analsysi pay more time effort to weaker subject......Go consulting your doubt .... Go for the best coaching.........

4.Proper planing

It consist of systematic and logical alocation for your studies. Do pay more careful for your planing.......Divide the subject in smallest managable part and go ahead.....

5. Dedicate to studies

This is very critical.... study to be effient if you devote your soul and body exclusvely to CA... forget other occupations.....

Find atleast 6to 8 produtive study hours for articled student inculding their coaching and 12 to 15 hours for non articlestudent......You may be gradualy in the track........

6.Periodic revisons

Evaluate periodicaly that where you stand interms of studies and improvement you have achieve...............How to improve..... If you commit more corrections then more you will improve..............Commit mistake .......correct and improve................

7.Kep away from negatives

8.write exam according to your strength and weakness....

Start all subject in first pahse.......But before six month if you feel command on any one group then give more focuz on that and less focuz on other....

9.Keeping good notes.....

This is very critical.... For theory papers..... It adds your creativity also..............

10.Three round studies before exam.......

You have to cover three round of studies before exam........

11.confidence in writing.....

Take the exam as battle ... if you attack the exam with whaterver you know you will susceed. If you not know also but attempting also yu can suceed.

Lack of confidence and over confidence is too dangeroues......But their is only needed the self confidence............

Following a wrong method of studied and sticking with the same method is a great Disater

Phase II How to handle CA exam smoothly

Introduction

We all knew that the CA exam is itself is competitive. The exam is a game of 3 hours. The way in which we approaching the exam will lead you the success or failure. You may be studied harder but not able to produce any result. So managing the CA exam is a skill.

The day before exam.

The day before exam is very critical, do visit to any temple near to you. Be cool and relaxed and sleep well. Proper sleeping will make you to revise unconsciously what you have revised. Arrange your tool kit for the exam.

Find time to revise quickly

You must find time to revise the portion quickly. So, if you have the habit of making notes it will reduce your tension to revise the lesson. If there is no notes with you then you have to turn the entire book, It increase your hypertension and poor performance

For problem papers, please go to scanner you can get which problem is very important and which problems are less important. You should focus the important problems.

The Day of examination.

Please re look in to your tool kit and confirm .Please enter half an hour before exam and sit your seat. Please find the time yourself to settledown.Please write your roll numbers and ready for the exam .When you receiving the question papers just find the time to read the whole question papers.

Confidence in exam is a key

But the confidence is the key, If you tense, then you will forget whatever you have studied. Keep in mind that we will attack the exam than surrender. Take the exam as a battle between you and the ICAI. So do or die.

Approaches for tight papers of CA

When you receiving the toughest paper, Start writing the question you know well. If you not able to complete the question, stop that point and skip to other knowing question and so on and so froth. But never loose the confidence with you. Keep on writing .After half an hour you will defiantly on track.

Presentation is a great tools

While writing the exam care to be taken not to cut and paste from the module. It is not the right way to write the exam. You should convey the lesson in your way to the examiner. This is called presentation. You should give a maximum time to each question. That is called the Time management.

Dont discuss after the exam

After completing the exam even if it is toughest dont discuss with any body. Prepare for the next day exam. Each exam shall be unique chance.

Dont eat junk food

Study circle formed for members in industry

ICAI moves closer to its Members in Industry. Formation of Study Circles for Members in Industry

ICAI has achieved recognition as a premier accounting body not only in the country but also globally, for its contribution in the fields of education, professional development, maintenance of high accounting, auditing and ethical standards.

It is always the endeavour of ICAI to update its members about the changes taking place in various statutes, share the knowledge on various new techniques and sharpen their skills on various professional matters. So, the ICAI in 2008 made Continuing Professional Education mandatory to Members in Industry to earn minimum number of CPE Credit Hours by attending the programmes of academic/professional interest organized by ICAI and its organs.

There was an urgent prerequisite to have the platform exclusively for the members of ICAI who are in industry. Committee for Members in Industry (CMII) understood this necessity and took a step forward in this direction by setting up Study Circles exclusively for Members In Industry. At the platform of these Study Circles members in Industry would be able to update their knowledge base on the topics most relevant to them, leading to competency maintenance and development of members in service.

ICAI has developed the norms for CPE Study Circles which caters exclusively for the members in service. These CPE Study Circles are being contemplated to help Members to achieve the objectives of maintaining their core competencies and exchange professional knowledge amongst the members apart from fostering and developing fellowship

Thanks to President and Vice President ICAI, the Committee for Members in Industry has been empowered to approve, guide and supervise the CPE Study Circles for Members in Industry which will conduct Continuing Professional Education Programmes for the Members in industry. The norms provide for the minimum number of members required and the application procedure, rules for functioning, administration and accounts of these CPE Study Circles. For the full text of norms Kindly visit this link for full announcement

Mandatory application of Cost Accounting Standards

The Council of the ICWAI at its 251st Meeting held on 12-13 February 2009 decided as below:

Mandatory application of Cost Accounting Standards

“RESOLVED THAT the following Cost Accounting Standards

CAS 1: Classifications of Costs
CAS 2: Capacity Determination
CAS 3: Overheads
CAS 4: Cost of Production for Captive Consumption
CAS 5: Determination of Average (Equalized) Cost of Transportation
CAS 6: Material Cost

shall be mandatory with effect from period commencing on or after 1st April 2010 for being applied for the preparation and certification of General Purpose Cost Accounting Statements. Since there is no statutory requirement for the application of such Cost Accounting Standards for the preparation and certification of Cost Accounting Statements, in case the cost accountant is of the opinion that the aforesaid standards have not been complied with for the preparation of the Cost Statements, it shall be his duty to make a suitable disclosure/qualification in his audit report/certificate”

SC upholds Sebi supremacy over unregistered cos

Says SAT has no discretionary power on issues under Sec 12(1) of Sebi Act

The Securities and Exchange Board of India (Sebi) won a crucial judgment in the Supreme Court against the Securities Appellate Tribunal (SAT), which has many a time set aside its orders.
The SC on Tuesday held that the tribunal cannot set aside orders passed by Sebi under section 12(1) of the Sebi Act. The section provides for the compulsory registration of stock brokers, sub-brokers and other entities dealing with the securities markets.
Following this judgment, if Sebi cancels the license to trade issued to a broker on the charge of violations of the Sebi Act or imposes a heavy penalty under this provision, SAT can't modify or quash the decision.
The apex court's decision came in a Sebi appeal against SAT orders over two cases involving dealing of registered brokers with certain unregistered entities.
Sebi had invoked section 12(1) in these cases. The penalty provided for violation of this section is either suspension or cancellation of the certificate of registration. The section does not provide for monetary penalty or any other smaller punishment.
SAT had modified Sebi's orders in both the cases and awarded lesser penalty. The tribunal held that the proved charges against the respondents were not serious enough to warrant suspension.
Sebi moved the apex court raising the question of whether SAT is empowered to modify the penalty imposed by it in such cases.
Allowing Sebi's appeal, a bench of Justices Arijit Pasayat and Lokeshwar Singh Panta held that the tribunal had no business setting aside these orders. "No power is conferred on the tribunal to travel beyond the areas covered by Section 12 and Rule 3. When something is to be done statutorily in a particular way, it can only be done that way. There is no scope for taking shelter under a discretionary power," held the bench.
The judgment could have far reaching importance beyond the specific cases pertaining to which Sebi had appealed.

Service Tax on Commercial Rent Held Unconstitutional

The Delhi High Court has struck down the levy of service tax on renting
of immovable property as "unconstitutional", while deciding 26 writ petitions of different petitioners, by a combined order. The division bench of the Delhi High Court comprised of Mr. Justice Badar Durrez Ahmed and Mr. Justice Rajiv Shakdher observed that service tax shall not be levied on renting of immovable property.

Alishan Naqvee, Advocate, LexCounsel Law Offices, who represented his clients in two of the petitions disposed off today, tells that the category of "renting of immovable property service" was introduced by the Finance Act of 2007. This, in effect brought renting, letting, leasing, licensing or other similar arrangements of immovable property for use in the course of furtherance of business and commerce, within the service tax net with effect from June 1, 2007. This new levy severely impacted business models across India as most of the rent arrangements did not even stipulate it beforehand.

The businesses across India opted to en masse challenge the constitutionality of levy of service tax on rent, on the primary grounds that renting does not involve any service, and the Central Government is not empowered to tax consideration for transfer of rights in immovable property, being a state subject as per the Constitution of India. Few High Courts, including the High Court of Mumbai, Delhi, Gujarat, Andhra Pradesh, Kolkata and Chennai reportedly granted interim reliefs to the petitioners from payment of service tax until final disposal of their matters. The stays were however granted subject to undertakings by the petitioners, mainly tenants, to deposit the service tax amount with the Government if the tax was ultimately held constitutional. The Delhi High Court however is the first High Court to deliver the final order in the matter that would have persuasive value for the other High Courts.


The detailed order of the Delhi High Court is expected to be available within the next couple of working days. One issue that needs to be seen is whether the Delhi High Court has expressly limited the applicability of its judgment to its territorial jurisdiction. Notably, while granting interim orders, the Delhi High Court had expressed that the stays would be operative within the territorial jurisdiction of the Court. Consequently, a number of petitioners, having operations in multiple states, were constrained to knock at the doors of the other High Courts.

To avoid multiplicity of litigation, the Union of India preferred a transfer petition to the Supreme Court of India seeking transfer of all writ petitions pending before different High Courts of India, to the Delhi High Court for single window adjudication.

It is open for the Government to prefer an appeal before the Supreme Court of India, challenging the decision of the Delhi High Court. The judgment however delivers great relief to the business by helping liquidity in the current times.

Peer review for audit firms of Listed Company

Members may be aware that the Council had accepted the recommendation of Securities & Exchange Board of India (SEBI) that audit of listed companies shall be carried out by the auditors who have undergone Peer Review Process and have been issued Peer Review Certificate by the Peer Review Board

The above decision is effective for accounting periods commencing on or after April 1, 2009.

Consequent to the above decision, all the auditors of Listed Companies are required to undergo Peer Review Process and get Peer Review Certificate issued from the Peer Review Board.

The Peer Review Board is making all out efforts to cover those audit firms, which are not yet selected for Peer Review Process. While the Board will be sending a letter to each such audit firm, it will be in the professional interest of such firms to immediately get selected for Peer Review by emailing us the following information at email id peerreviewboard@icai.org;

* Name of the Firm
* FRN or Membership No. in case of Proprietor firm.
* Latest Contact details i.e. complete address, Tel No with STD Code, Mobile No. & email id.

The Firms who have already been selected under the Peer Review Process and their review is in progress at different stages may also hasten up their Peer Review Process and ensure that their Final report is submitted by the Reviewer to the Board. Such firms are requested to furnish the above details at S.No.1 to 3. along with their present status of review.

In order to complete the Peer Review Exercise timely and smoothly all the audit firms of listed companies and their Reviewers are hereby requested to expedite their Peer Review Process.

Measures initiated by ICAI for revisiting AS 11

Measures initiated by ICAI for revisiting Accounting Standard (AS) 11, The Effects of Changes in Foreign Exchange Rates

CA. Uttam Prakash Agarwal, President, The Institute of Chartered Accountants of India (ICAI) re-iterated the Institute's desire to work closely with Industry and Government in both framing and revising Accounting Standards. He briefly outlined the measures initiated by ICAI for revisiting Accounting Standard (AS) 11, The Effects of Changes in Foreign Exchange Rates.

Chronological order of discussions relating to Revision in Accounting Standard (AS) 11

Accounting Standards Board meeting (148) held on 1 February, 2009

A Working Group was set up for review of accounting treatment of monetary items under AS 11 on the matter being referred by National Advisory Committee on Accounting Standards (NACAS)

Working Group of meeting on AS 11 held on 16 February, 2009
- Discussed modalities for revision in accounting treatment.

Working Group meeting on AS 11 held on 2 March, 2009
- Discussed modalities for revision in accounting treatment.

Meeting at Ministry of Corporate Affairs Office on 4 March, 2009

There were discussions on various issues related to AS 11. The meeting was attended by President, Vice President and Director of the Institute. Mr. Jitesh Khosla’s presence was requested at the Accounting Standards Board meeting the next day but he regretted his inability to attend due to other preoccupations.

Accounting Standards Board meeting (149) held on 5 March 2009

Two senior ministry officials were present at the meeting. Discussions on revision to AS 11 could not be concluded as two diverging views were there on the matter. Industry Representatives gave presentation to the Board on their views. The meeting decided to refer the matter to the Council with both points of view on the matter as in technical matters there was a convention of seeking unanimity.

Council Meeting held on 6,7 & 8 March 2009.

The item relating to revision of AS 11 for long-term monetary items was introduced as an additional agenda item in view of its importance to Industry and the need for providing clarity in accounting treatment for the year ended 31 March 2009. Joint Secretary, Government of India along with other government nominees were present and participating. On the question of a member of the Council as to whether the matter under consideration was of revision of the standard or a discussion on the pros and cons of revision Mr.Jitesh Khosla confirmed it was a process of discussion. The matter thereafter was on the council table for discussion. The council discussed the matter for over 2 1/2 hours as members had strong concerns on the gravity of revising the accounting standard.

As the matter warranted further deliberations to address the concerns of members it was decided that the matter would be referred back to the Accounting Standards Board. It was also decided that a process of discussion would be taken up with industry representatives in the presence of Mr.Jitesh Khosla and a tentative date of 18 March 2009 was fixed for a meeting at Mumbai.

As on that date,CII had organised a seminar on IFRS where President ICAI, Vice President ICAI and Mr.Jitesh Khosla Joint Secretary Government of India were speakers, as per advise of Mr.Jitesh Khosla, a meeting was held with a small group from CII. President ICAI after listening to the views of the group assured them that the matter would be taken up in the Council meeting to be held in April 2009.Proposed meeting with industry representatives scheduled for 18 March 2009 was subsequently cancelled.

National Advisory Committee on Accounting Standards (NACAS) meeting on 24 March, 2009.

The meeting was attended by President ICAI, Vice President ICAI, Chairman Accounting Standards Board ICAI. The meeting was also attended by representatives of the Institute of Cost and Works Accountants of India, Institute of Company Secretaries of India, ASSOCHAM, FICCI, and CII were present. Representatives from the Comptroller and Auditor General’s Office and the Indian Institute of Management Calcutta were also present. At the meeting only the matter relating to AS 11 was discussed.

CA. Uttam Prakash Agarwal, President Institute of Chartered Accountants of India explained all the steps taken by the Institute in this matter to arrive at a consensus decision. He also informed the meeting that there was a process involved both in the issuing of accounting standards as well as revising any standard. He stressed the need that the request of Industry for a revision to the accounting standard be examined in the context of the principles of consistency, prudence and going concern basis so that such action was in the best interest of all concerned. He also pointed out that fluctuation in foreign currency and volatility in foreign exchange markets were a given factor today. There was a mechanism of hedging against the risk of foreign currency fluctuation and it was in fact a failure of business house’s decision-making process. He apprised Chairman NACAS of the various questions which had to be addressed such as whether this would require any amendment to the Companies Act as there was a contradiction between Schedule VI and AS? Whether this would amount to a deviation from IFRS? Are we going to defer convergence with IFRS? Whether the change will be specifically to the benefit of a group of people? Would this amount to distribution of losses? Is this an extraordinary circumstance? There has been a criticism that when it came to taking profits, Industry booked it, while when it comes to losses, Industry is approaching for changes. What are the hardships faced by the Industry? What is the impact on the share value? Is this going to be beneficial to the shareholders?

On the issue of certain comments made by Chairman NACAS on CNBC channel, President ICAI stressed that the Institute of Chartered Accountants of India had all along taken a very proactive role in the matter so that problems of industry could be resolved and that all the members of the Council were in support of the process initiated for the purpose of revision to the accounting standards.

clarification regarding Applicability of Form No.17

After amending the rules relating to Tax Deduction at Source (TDS) and Tax Collected at Source (TCS), the Central Board of Direct Taxes (CBDT) has said that the new Form No.17 (the challan for payment of TDS and TCS) will be applicable only for payment of TDS or TCS on or after April 1. ''In respect of any TDS or TCS made before April 1, 2009, the payment will continue to be made to the credit of the Central Government by using the challan in Form No 281, the old challan form, even after March 31, 2009,'' an official statement said today.

The Board will soon issue a detailed circular on the amended rules relating to TDS and TCS

New Income Tax Return Forms are Notified for A.Y.2009-10

The CBDT has notified new Income Tax Forms for F.Y. 2008-09 | A.Y. 2009-10. via vide notification No. 32/2009 (Income-tax 9th Amendments) Rules, 2009.

New ITR Forms Form ITR 1, Form ITR 2, Form ITR 3, From ITR 4, Form ITR 5, Form ITR 6, Form ITR 7, Form ITR 8, and ITR V, will be available very soon.



The detail notification is as under.

Notification - Income Tax - All
Income-tax (9th Amendment) Rules, 2009

[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (ii)]
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
CENTRAL BOARD OF DIRECT TAXES

NOTIFICATION NO. 32/2009 Dated: March 27, 2009

INCOME-TAX

SO. (E).- In exercise of the powers conferred by section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:

(.1) These rules may be called the Income-tax (9th Amendment) Rules, 2009.

(2) They shall come into force on the 1st day of April, 2009.

2. In the Income-tax Rules, 1962,

(a) in rule 12,-

(i) in sub-rule (1), for the words, figures and letters "on the 1st day of April, 2008", the words, figures and letters "on the 1st day of April, 2009" shall be substituted;

(ii) in sub-rule (5), for the words, figures and letters "on the 1st day of April, 2007", the words, figures and letters "on the1st day of April, 2008" shall be substituted;

(b) in Appendix- II, for Form ITR 1, Form ITR 2, Form ITR 3, From ITR 4, Form ITR 5, Form ITR 6, Form ITR 7, Form ITR 8, and ITR V, the following forms shall be substituted

MANDATORY E-PAYMENT OF TAXES

MANDATORY E-PAYMENT OF TAXES

CIRCULAR NO. 5/2008, DATED 14-7-2008

The Central Board of Direct Taxes, vide notification S.O. No. 493(E), dated 13.3.2008 have notified the categories of taxpayers who are mandatorily required to electronically pay taxes on or after the 1st day of April, 2008. The taxpayers who are required to pay taxes by the prescribed mode are - (i) a company; and (ii) a person (other than a company), to whom provisions of section 44AB of the Income-tax Act, 1961 are applicable.

2 Further, payment of tax electronically has been defined to mean payment of tax by way of - (i) internet banking facility of the authorized bank: or (ii) credit or debit cards.

3. In this context, representations have been received from some of the foreign assessee highlighting the difficulties being faced by them in complying with the provisions with regard to mandatory e-payment of taxes. It has been pointed out by such foreign assessee that they do not have a presence in India and, therefore, are not able to meet the 'know your customer norms' of the banks. This has resulted in their inability to open bank accounts and make payment of taxes, through the electronic mode. Representations have also been received from the resident taxpayers highlighting difficulties in availing internet banking facilities of the authorized banks. A clarification has also been sought as to whether payment of tax deducted at source by a deductor will fall within the meaning of 'tax' for the purpose of the impugned notification.

4 With a view to facilitating electronic payment of taxes by different categories of taxpayers, it is hereby clarified that, - an assessee can make electronic payment of taxes also from the account of any other person. However, the challan for making such payment must clearly indicate the Permanent Account Number (PAN) of the assessee on whose behalf the payment is made. It is not necessary for the assessee to make payment of taxes from his own account in an authorized bank. Further, it is also clarified that payment of any amount by a deductor by way of Tax Deducted at Source (TDS) or Tax Collected at Source (TCS) shall fall within the meaning of 'tax' for the purpose of the rule 125 of the Income-tax Rules, 1962

TDS and TCS changes from 2009-10

TDS/TCS systems have undergone several changes with effect from FY 2009-2010. These include the changes in Challan Payment, TDS Certificates, Return Filing, etc. A glimpse is here on it.

Changes in Challan Payment

• Challan Format:

1. New TDS Challan, Form 17 is introduced.
2. Challan is section Independent. Deductor can prepare a single challan at the end of the month for all his TDS deductions (Including Salaries and Non Salaries).
3. This additionally Contains, information of the Account No [or Card No] of the Deductor.
4. The earlier fields Surcharge and Cess break-ups are not necessary.
5. Information of Deductions paid under that challan has to be provided. This should contain PAN, NAME of the deductee and Total TDS.

• Payment:

1. Electronic Payment [e-Payment] of TDS made mandatory to all. No TDS/TCS Payments would be accepted directly at Bank Branches.
2. The system for acceptance of e-Payment would be ready by end of April in accordance to Form 17.
3. An entry form would be provided similar to Form 17 format.
4. Credit Card/Debit Card acceptance is likely to happen.
5. The old system of e-Payment may remain for challan payments of earlier years.

• Acknowledgement:

1. The Deductee records under that challan have to be entered online [if less than 10] or have to be uploaded through a file.
2. On successful payment, an acknowledgement would be generated in Form 17 format, which validates [Yes/No] for each PAN of the deductee and generates a Unique Transaction Number [UTN] for each deductee record.

• Due Date:

1. Challan Payment Due dates remain almost the same.
2. Joint Commissioner, on prior request through AO, can approve for Quarterly payment of TDS under certain sections.

Changes in Return filing

1. Earlier Forms:
   1. Earlier quarterly returns namely, Form 24Q, 26Q, 27Q and 27EQ remains as it is, with a little change in File structure.
      1. UTN has to be mentioned against each deduction.
   2. Quarterly Due dates for all the forms have been removed and annual due date of 15th June introduced.
      1. These forms have to be prepared quarterly and can file at the end of the year, before June 15th.
2. New Form:
   1. New Quarterly return, Form 24C introduced with following contents.
   2. With the Deductor information, Form 24C should contain Details of TDS Compliances for 3 months separately and the Challan Identification Numbers/Amounts in that quarter.
   3. Details of TDS Compliances should contain the section wise (all) information of Total Payment, Total amount eligible for deduction, Total amount considered for TDS at full rate, Amount of TDS at full rate, Total amount considered for TDS at lesser rate, Amount of TDS at lesser rate, Total TDS.
   4. The due dates are same as earlier quarterly returns.

File Validation Utility

• For 2008-09 financial year,

1. There is a new validation utility 2.126 [probably releasing by 15/04/2009]. This has nothing to do with the 09-10 changes.

• For 2009-10,

1. A new File Validation Utility is expected for uploading 2009-10 returns. However it is required only after June 30th, as far as first quarter return filing is concerned.

Changes in TDS Certificates

1. New Formats of Form 16 and 16A.
2. These formats may be applicable for FY 2009-10 and above.
   1. Form 2008-09, the same earlier formats may continue as the data for new formats would be less. However a confirmation circular is expected from CBDT.
3. The forms should contain the information of UTN against each payment shown in TDS certificate.
   1. UTN has to be mentioned, along with Gross amount paid and TDS amount.
   2. Date of Payment is not required. That means if a party payment is shown consolidate in monthly challan, a yearly Form 16A contains only 12 entries.
4. Form 16A is section independent. It can contain multiple section related deductions.

Certificates and Challan Payments for 2008-09 and before years may remain as earlier. However a circular on these lines is expected from CBDT, upon which the details can be confirmed.