2 NOVEMBER, 2013 GURGAON BRANCH NEWSLETTER

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2 2 NOVEMBER, 2013 GURGAON BRANCH NEWSLETTER EDITORIAL BOARD Chairman Vice Chairman Members Editor CA. Vikas Goyal CA. Suresh Chawla CA. Naveen Garg CA. Rajiv Dagar CA. Sanjay Kumar Agrawal CA. Lalit Jain CA. Pradeep Lakhani CA. Sanjay Goyal CA. Vikas Goyal Whatever you do will be insignificant, but it is very important that you do it -Mahatma Gandhi- GURGAON BRANCH OF NORTHERN INDIA REGIONAL COUNCIL OF The Institute of Chartered Accounts of India Published & sent through by Mrs. Prem Taneja Office Administrator, on behalf of the Gurgaon Branch of Northern India Regional Councl of The Institute of Chartered Accaounts of India DISCLAIMER: The Gurgaon Branch of NIRC of ICAI is not in any way responsible for the result of any action taken on the basis of the advertisement published in the Newsletter. The Members, however, may bear in mind the provision of the Code of Ethics while responding to the advertisements. GURGAON MANAGING COMMITTEE CA. Vikas Goyal Chairman CA. Suresh Chawla Vice-chairman CA. Naveen Garg Secretary CA. Rajiv Dagar Treasurer CA. Sanjay Kumar Agrawal Member CA. Lalit Jain Member CA. Pradeep Lakhani Member CA. Sanjay Goyal Member

3 3 NOVEMBER, 2013 Gurgaon Branch of NIRC NEWSLETTER Dear Professional Colleagues, Let me first give my heartiest wishes to all the members & students on the upcoming Diwali Festival. This year Diwali will be celebrated on 3rd November. This festival is the most prestigious festival of India and everyone know its importance. On this occasion, I w ish for happiness, success & prosperity in the life of all the members & students. The month of October was full of festivals and I am sure that everybody must have enjoyed these Festivals, Dussehra, also known as Vijaya Dashami, is an Indian festival that celebrates good forces over evil forces, with joy and happiness. First E-Newsletter I give my sincere gratitude to all the Gurgaon Committee members for taking the great initiative for publishing this first e-newsletter. I trust this initiative will prove to be highly beneficial and increase the involvement of the members & students in the branch activities. Through this newsletter we will be sharing important aspects / news for profession & our activities. Interaction with the Hon ble President and Vice-President, ICAI Interaction with the Hon ble President and Vice-President, ICAI was held on 7 th October, 2013 at hotel Fortune Select Global, Gurgaon in which the deliberations on various professional matters, Challenges before the Profession, Professional Opportunities for Members, Matters related to Gurgaon Branch building, DCO status etc. were held. The interaction with the worthy President and Vice President was a grand success and members at large attended the programme. Celebration of Independence Day The 67th Independence Day was celebrated by Gurgaon Branch with a great zeal. The National Flag was hoisted by the Management Team of Gurgaon Branch at the Branch office while the main programme was held in the ICAI Bhawan, I.P. Marg, New Delhi in which the National Flag was unfurled by Hon ble President, ICAI. Celebration of Chartered Accountants Day CA Day has great importance in each one s life as our whole identity is due to our worthy Institution. Like all year, this year also we celebrated the day with full of activities comprising of social, cultural, educational progrmmes. On the Occasion of CA Day celebration the programs were organized on 30 th June & 1 st July, The activities held on 30 th June were Tree Plantation at ITI College, Blood Donation Camp and Donation to NGOs in which members and students participated at large. A cultural evening was held on 1 st July at Epicenter where Chartered Accountants, their family members and Students participated in various programmes and shown their hidden talents. The performance of participants was appreciated by all. During the cultural programme we honoured senior members of the profession for their great contribution Since 1 st April 2013, when new managing committee formed and I took charge as chairman of the Branch, we tried to do various programs for students and members. These programmes include: For Members During the last few months number of programmes were conducted for the members viz. seminar on Companies Act, 2013, seminar on Issues on TDS, seminar on Issues in E-filing and Tax Audits, workshop on Service Tax, Seminar on Revised Schedule-VI, seminar on Domestic Transfer Pricing and also number of Group Discussions were orgnised to give a complete knowledge on the topic to the members. Further Gurgaon Branch jointly hosted Residential Refresher course held at Hrishikesh organized by Committee for Capacity Building of CA Firms & Small and Medium Practitioners with Karnal Branch. Also Branch hosted Certification course on Concurrent Audit of Banks organized by IASB of ICAI. For Students Since April 2013 various student programmes have been organized by the Branch which includes Seminar on E-filling of Tax Audit Reports, for CA Students organized on 16 th September, 2013, Indoor Sports competitions organized on 30th June, 2013 and other student s workshops, mock test etc. The Branch level winners of Indoor Sports participated in the Regional Level competition. Participation of students in sports make them fit physically & mentally. Forthcoming Programmes For the coming months the Gurgaon Branch of NIRC of ICAI is under process of planning to organize number of Programmes for Updating the Knowledge base of member and various programmes for student I again wish all a very happy Diwali. Let us celebrate it with happiness and joy. Date: 1st November, 2013 Place: Gurgaon With Warm Regards, CA. Vikas Goyal Chairman M:

4 4 NOVEMBER, 2013 Gurgaon Branch of NIRC NEWSLETTER Dealing TDS at the time of Buying Immovable Property from NRIs CA. Rajiv Dagar Treasurer, G u r g a o n B r a n c h o f NIRC of ICAI As per section 195 of Income Tax Act, any person responsible for paying to a Non-Resident, not being a company or to a foreign company, of any interest or any other sum chargeable under the provisions of this Act (not being income chargeable under the head salaries) shall at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force This means unlike resident Indian, properties purchased from a non-resident Indian will be subject to TDS at prescribed rate. Let us understand it in detail. If you look at the very first phrase which talks about if one is paying any sum to a Non-Resident, where such sum is chargeable under the Act, one is required to deduct tax. Hence, it means the buyer is liable to deduct tax from the payment made to the seller. Now come to the second part of the statement i.e. at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force.this indicates whether seller has any gains ( long term capital gains or short term capital gains) or no gains, the buyer has to deduct tax on that sum. To clarify further; Whether TDS under section 195 buyer has to be applicable on whole of the sale consideration or only on the amount of capital gains in case of purchase of immovable property situated in India from an NRI seller. Answer is; any person buying property from an NRI needs to deduct TDS from the whole sale consideration (not on gains) before making payment to the said NRI. At what rate such TDS has to be deducted? The answer is 20%. Selling of immovable property by a Non Resident Indian is taxable under the income tax under Chapter XII-A of the Income Tax Act, more specifically under section 115E of the Income Tax Act The rate of tax prescribed and in force is 20%. Further NRI needs to file his/her return of income in India to claim the refund of excess amount deducted if any. How the buyer should deduct TDS? The answer is: Normal and Standard Process. The buyer needs to have a Permanent Account Number (PAN) prior entering into any such transactions. Also he/she needs to have a Tax deduction Account Number (TAN) as per section 203A of the Income Tax Act 1961 as well. Buyer should also collect the Permanent Account Number (PAN) of the seller ( NRI) before deducting the tax. Deposit the tax, so deducted (by using challan for payment of TDS), with the government (through banks authorized to collect direct taxes) within seven days from the end of the month in which such tax is deducted. Once the TDS has been paid, the buyer should file the TDS returns electronically, within the due dates as applicable (to be submitted in the Form No. 27Q) giving the details of the Non Resident Indian, his/her address, PAN along with self PAN and TAN details. After filing the TDS returns electronically, the buyer shall issue the TDS certificate in Form 16A to the said Non resident Indian, within 15 days from the due date of furnishing TDS returns. Remember, if the buyer fails to deduct or fails to pay the amount deducted he/she will be treated as Assessee in Default as per section 201 of the Income Tax Act, 1961 and will be liable for payment of interest, penalties and prosecution. Is there a way out to avoid the TDS? NRI will get the tax exemption if he is planning to re-invest the capital gains of the property in another property or in tax exempt bonds within the stipulated time. In such cases, the NRI will be exempt from tax in India and would not like to have TDS deducted. Even there is no capital gain at all in the transaction or the tax payable on capital gain is less that the TDS deducted, then the payer (buyer) can approach the assessing officer and get a certificate of lower or nil deduction of TDS. This is provided in subsection (2) of Section 195. Alternatively, u/s 195(3), payee (the NRI seller) also can approach the AO and get the certificate. In such cases, the NRI can apply to the income tax authorities for a tax exemption certificate under section 195 of the Income Tax Act through an application in the same jurisdiction that his PAN belongs to. There he/she will have to show proof of reinvestment of capital gains. If he/she is planning to buy another house, then the allotment letter or payment receipt has to be produced. Even if he/she is planning to invest in capital gains bonds u/c 54EC, he/she would need to submit an affidavit stating that he/she would invest the capital gain amount in to bonds. It is advisable for the buyer holds back the last installment of payment until this certificate of exemption is furnished to him/her by the seller. Please note that as per the Finance Act, 2013, TDS at the rate of 1% is applicable on sale consideration above Rs 50 lacs on transfer of immovable property (applicable to resident transferor/seller). The views expressed herein are personal views of the authors and do not necessarily represent the views of the G u r g a o n B r a n c h o f NIRC of ICAI

5 5 NOVEMBER, 2013 Gurgaon Branch of NIRC NEWSLETTER LOAN TO DIRECTORS (Under Section 185 Companies Act, 2013) CA. Parveen Kumar APPLICABILITY OF SECTION Section 185 of the Companies Act, 2013 is applicable on private company as well as public Company. PROHIBITED TRANSACTIONS IN CASE OF LOAN (INCLUDING BOOK DEBTS):- No Company advances any loan to its director. No Company advances any loan to director of the lending company, or of a company which is its holding company or any partner or relative of any such director. No Company advance any loan to any firm in which any such director or relative is a partner; No Company advance any loan to any private company of which any such director is a director or member; No Company advances any loan to anybody corporate at a general meeting of which not less than twenty five per cent. of the total voting power may be exercised or controlled by any such director, or by two or more such directors, together; or No Company advance any loan to anybody corporate, the Board of directors, managing director or manager, whereof is accustomed to act in accordance with the directions or instructions of the Board, or of any director or directors, of the lending company GUARANTEE AND SECURITY Company in no circumstances gives any guarantee or provides any security in connection with aforesaid loan. ALLOWABLE TRANSCATIONS UNDER THIS SECTION 1- Loan given to Managing Director or Whole Time Director as part of the conditions of services etc or pursuant to the scheme approved by the member by Special Resolution. 2- A company make loan or give guarantee or provide security in ordinary course of its business for due repayment of loan. In this regard interest is charged at a rate not less than the bank rate declared by RBI. PENAL PORVISIONS 1- IN CASE OF COMPANY If default has been made by the company relating to provision of sub section (1) of the Act, the company shall be punishable with fine which shall not be less than Five Lacs Rupeesbut which may be extended to Twenty Five lacs. 2- IN CASE OF DIRECTOR The director or the other person to whom any loan is advanced or guarantee or security is given or provided in connection with any loan taken by him or the other person, shall be punishable with imprisonment which may extend to six months or with fine which shall not be less than five lakh rupees but which may extend to twenty-five lakh rupees, or with both. BARE ACT LANGUAGE 185. (1) Save as otherwise provided in this Act, no company shall, directly or indirectly, advance any loan, including any loan represented by a book debt, to any of its directors or to any other person in whom the director is interested or give any guarantee or provide any security in connection with any loan taken by him or such other person: Provided that nothing contained in this sub-section shall apply to (a) the giving of any loan to a managing or whole-time director (i) as a part of the conditions of service extended by the company to all its employees; or (ii) pursuant to any scheme approved by the members by a special resolution; or (b) a company which in the ordinary course of its business provides loans or gives guarantees or securities for the ue repayment of any loan and in respect of loans an interest is charged at a rate not less than the bank rate declared by the Reserve Bank of India. Explanation. For the purposes of this section, the expression to any other person in whom director is interested means (a) any director of the lending company, or of a company which is its holding company or any partner or relative of any such director; (b) any firm in which any such director or relative is a partner; (c) any private company of which any such director is a director or member; (d) any body corporate at a general meeting of which not less than twenty five per cent. of the total voting power may be exercised or controlled by any such director, or by two or more such directors, together; or (e) any body corporate, the Board of directors, managing director or manager, whereof is accustomed to act in accordance with the directions or instructions of the Board, or of any director or directors, of the lending company. The views expressed herein are personal views of the authors and do not necessarily represent the views of the G u r g a o n B r a n c h o f NIRC of ICAI

6 6 NOVEMBER, 2013 Gurgaon Branch of NIRC NEWSLETTER GURGAON BRANCH ACTIVITIES Date Programme/Topics Guest Speaker Total Participants Seminar on Transfer pricing - special Reference toca. Manoj Pardasani, CA Atul Jain domestic Transfer pricing Seminar on latest Amendment in Direct Taxes in finance Act 2013, & Discussion on E -filling of Latest income tax forms CA Vijay Sahni, CA Ashwani Taneja CPT Mock Test Indoor - Sports competition for students Group Discussion on Appeal Proceedings CA. Lalit Jain, CA Suresh Chawla CA Student Workshop Effectiveness in CA Exams 2013 Ravish Bhateja, Seminar on Revised Schedule VI CA Parveen Kumar to to & to Residential Refresher course jointly hosted by Gurgaon Branch with Karnal Branch Organised by Committee for Capacity Building - - of CA Firms & Small and Medium Practitioners Certificate course on concurrent Audit of Banks Organized by IASB Group Discussion on Applicability of without Holding Tax on Foreign Remittance and others CA. Lalit Jain, CA Suresh Chawla Blood Donation Tree plantation Donation to NGO s CA Day Celebration Workshop on Service Tax CA Atul Gupta, CA Sanjay Malhotra Group Discussion on Tax Audit Report Other foms CA. Lalit Jain, CA Suresh Chawla Workshop on Service Tax CA Bimal Jain, CA Puneet Agrawal, CA Naveen Garg, Mr. Parmod Rai Workshop on Service Tax CA Puneet Agrawal, CA Ashok Batra E-Filling of Tax Audit Report & Issue on Tax CA Sanjay Agarwal, Mr. Siddharth Jain Audit Group Discussion on Form 3CD CA Suresh Chawla, CA Vikas goyal Carrier Council Programme for students at Dronacharya College, Gurgaon CA Rajiv Soni, Ca Vikas Goyal Student seminar on Tax Audi Issue & E filling CA Suresh Chawla, CA Vikas goyal, CA. Lalit Jain Mock test for Nov 2013 students CPE Hrs Seminar on Introduction on new Companies Act & Important issues on TDS Group Discussion on Service Tax Issues Dr. Girish Ahuja, CA Pawan Vijay CA Naveen Garg, CA Sanjay Goyal Seminar On Companies Act, 2013 CA Vijay Jhalani, CA. Anil Sharma 194 4

7 7 NOVEMBER, 2013 Gurgaon Branch of NIRC NEWSLETTER GLIMPSES GURGAON BRANCH ACTIVITIES Interaction with Hon ble President & Vice-president ICAI Seminar on Companies Act, 2013 & issues on TDS GLIMPSES - REGIONAL COUNCIL ACTIVITIES

8 8 NOVEMBER, 2013 Gurgaon Branch of NIRC NEWSLETTER GLIMPSES GURGAON BRANCH ACTIVITIES A Various activities by Gurgaon Branch Write to Editor Do you have any relevant points to make, experiences to share, and views to spread among the CA fraternity? If yes, us at Gurgaon@icai.org