CA. Amol Gopal Kabra

Suicide – Is it the way out?

2020-06-17T16:12:00.002+05:30

On the fine afternoon of June 14^th, 2020 a news popped up in my WhatsApp that young actor Sushant Singh Rajpoot ended his life by hanging to the ceiling fan. I thought it to be a fake news at first instance but then confirmed that it is true. I was shocked. So were the millions of people across the nation. An emerging, promising and dynamic actor is no more, that to by suicide?

A couple of days since then a lot of people from the film industry, politics, journalism, and all so called experts are out to give reason and cause for the suicide of the actor. A lot has been said in favour and people are mourning his death all across the nation. Few months back, one of my dear friends, also aged 34, also committed suicide owing to his some or other problems. It was very shocking for us and left us vacant in our minds.

If we go by statistics, on an average 367 people commit suicide daily in India (based on the reported suicide figures of 2018 in India). However, we are only concerned about it only if someone we know personally or a celebrity is involved in it. Rest all news and figures come and go without us noticing it. And that is natural phenomenon too.

Every time I come across such a news one question pops my mind – “Suicide, is it the way out?” It is easy for all of us to have discussion, write articles and give suggestions on what should have been done? But this is all for a couple of days after the incident and then we are back to routine. To suggest is easy, but we need to analyse the reasons behind it.

In the recent case of Sushant Singh Rajput, people have come up with many reasons regarding his suicide. These are the few popular reasons – nepotism in bollywood, over ambitions, love matter, temporary setback, not getting films as desired, etc. As he has not left any suicide note, it is difficult to conclude either of the reasons. But my question remains the same – is it the way out?

I have seen people suggesting that he should have shared his problems with someone, should have sought help from someone, speaking with some friend gives us relief from problems, etc. But all this comes after the damage is done. Everyone is ready to listen and understand after the person has left. Normally, people don’t listen to problems with empathy when we try to talk.

Usually, our problems are either treated as negligent, or ignored or not taken seriously. Also, few people have problems that are sensitive and discussing them may harm their public image and social status, if such information is leaked. So discussing your sensitive problems with someone may become difficult keeping in mind the issues of confidentiality.

Despite the above issues, in my view suicide cannot be the way out of any problem of your life. There exists no person who is living a perfect life free of problems. Problems are just perceptions we carry with us about a particular situation. Rather than thinking of suicide, one must proactively go and find a solution to the ongoing situation. Remember, there exists no lock for which a key is not made. So rather quitting the situation by way of suicide, it is better to think for the solution.

~ CA. Amol G. Kabra

[This article is introduction to the topic of “Suicide”. I have planned for a series of articles on this topic wherein I shall be discussing in detail more aspects thereto. If you have anything to share or any question to ask on this, kindly mail your thoughts on amol@amolgkabra.in so that I may answer it or discuss it in my upcoming article.]

Registration Under GST - Part 1 Requirement of Registration

2019-09-19T23:01:00.002+05:30

I have prepared a document presenting the requirement of registration under the GST laws. The same can be downloaded from the link given below. I request you to please download and also provide your feedback on the same.

Click Here to Download

GST Impact on Reorganisation of Jammu and Kashmir

2019-09-09T23:02:00.000+05:30

Our nation witnessed a drastic change on 1^st July, 2017 when Goods and Services Tax was implemented. However, the same was not applicable to the State of Jammu and Kashmir with effect from 1^st July, 2017. The State of Jammu and Kashmir adopted GST on 7^th July, 2017 and accordingly Goods and Services Tax was implemented in Jammu and Kashmir with effect from 8^th July, 2017.

The State of Jammu and Kashmir was considered to be a special category state as per sub-clause (g) of clause (4) of Article 279A of the Constitution. However, on implementation of the Central Goods and Services Tax (Extension to Jammu and Kashmir) Act, 2017, the State was considered as exception to the list of special category states. (Explanation (iii) to section 22 of the Central Goods and Services Tax Act, 2017)

Till 5^th August, 2019, the State of Jammu and Kashmir was given a special status vide Article 35A and Article 370 of the Constitution of India. However, the Government of India abolished the Article 370 with effect from 5^th August, 2019. Accordingly, the special status of the State was withdrawn.

Further, on 9^th August, 2019 the Government of India also enacted the Jammu and Kashmir Reorganisation Act, 2019 resulting into the bifurcation of the State of Jammu and Kashmir into two union territories namely Jammu and Kashmir (UT with legislature) and Ladakh (UT without legislature). This act shall be effective with effect from 31^st October, 2019. It means, Jammu and Kashmir shall cease to be a state with effect from 31^st October, 2019 and shall be bifurcated into the said Union Territories.

The reorganisation of Jammu and Kashmir has led to lot of confusions and speculations amongst the people with respect to the applicability of Goods and Services Tax to the State. The confusions are with regards to applicability of various GST acts to the UTs after the reorganisation of the State.

According to section 2(103) of the Central Goods and Services Tax Act, 2017, a Union Territory with legislature is also considered as a State. Consequently, the UT of Jammu and Kashmir shall have a State GST Law and the UT of Ladakh shall come under the purview of Union Territory GST Law. But the question is what shall be the status of applicability of the same.

The Jammu and Kashmir Reorganisation Act, 2019 clears all the confusion with regards to applicability of GST Laws to the State post its reorganisation. The Fifth Schedule to the Act mentions the various central laws applicable to the State and the status of state laws as applicable to the State before the appointed date, i.e. 31^st October, 2019.

Table 4 of Fifth Schedule contains the list of the state laws that shall continue to be effective post reorganisation of the State into two union territories. The list contains the Jammu and Kashmir Goods and Services Tax Act, 2017. Accordingly, the State GST Act shall remain effective in the State till further enactment or notification or amendment to the Reorganisation Act.

To conclude, the GST laws shall remain to be effective in the State of Jammu and Kashmir post its reorganisation as they were before. So, the taxpayers shall continue to charge CGST and J&K SGST, for intrastate transaction, till further changes in law. This clears the confusion amongst the taxpayers and professionals with regards to the applicability of GST Laws upon the reorganisation of the State.

© CA. Amol Gopal Kabra

A Brief Overview of Section 194N of Income Tax Act, 1961

2019-09-02T22:57:00.001+05:30

In order the discourage the cash transactions and encourage the digital economy, the Hon. Finance Minister Smt. Nirmala Sitharaman ji had introduced a new section 194N in the Income Tax Act, 1961 through the Finance Bill, 2019 presented at the Union Budget, 2019 on 5^th July, 2019. Let us have a brief overview on the section.

The section reads as follows –

“Payments of certain amounts in cash.

194N. Every person, being, —

(i) a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act);

(ii) a co-operative society engaged in carrying on the business of banking; or

(iii) a post office,

who is responsible for paying any sum, or, as the case may be, aggregate of sums, in cash, in excess of one crore rupees during the previous year, to any person (herein referred to as the recipient) from one or more accounts maintained by the recipient with it shall, at the time of payment of such sum, deduct an amount equal to two per cent of sum exceeding one crore rupees, as income-tax:

Provided that nothing contained in this sub-section shall apply to any payment made to, —

(i) the Government;

(ii) any banking company or co-operative society engaged in carrying on the business of banking or a post office;

(iii) any business correspondent of a banking company or co-operative society engaged in carrying on the business of banking, in accordance with the guidelines issued in this regard by the Reserve Bank of India under the Reserve Bank of India Act, 1934 (2 of 1934);

(iv) any white label automated teller machine operator of a banking company or co-operative society engaged in carrying on the business of banking, in accordance with the authorisation issued by the Reserve Bank of India under the Payment and Settlement Systems Act, 2007 (51 of 2007);

(v) such other person or class of persons, which the Central Government may, by notification in the Official Gazette, specify in consultation with the Reserve Bank of India.

Let us discuss this section here.

Ø Applicable to whom?

The section is applicable to the following persons (let us term it as payer) –

i. A Bank – either public sector, private sector, cooperative bank or even a branch of a foreign bank in India.

ii. A cooperative society engaged in banking business – Any cooperative society not being a bank but engaged in banking business.

iii. A post office.

Ø Who is recipient?

Recipient is any person to whom the payer pays an amount from one or more accounts maintained with it by such person.

Ø Applicable when?

The section is applicable when the payer is responsible to pay the recipient an amount, or aggregate of amounts during a previous year, in excess of one crore rupees in cash. So, when the payer pays an amount of more than one crore rupees in cash, either a single amount of aggregate of all amounts during the previous year (or for simple understanding the financial year), the provisions of this section shall be applicable.

Ø Responsibility of Payer

When the section becomes applicable, the payer shall be responsible to deduct an amount of 2% from the amount paid to the recipient in excess of one crore rupees. When during the entire year the amount paid in cash to the recipient by the payer exceeds one crore rupees, on each such amount paid in excess of one crore rupees, the payer shall deduct a sum of 2% from such payment. Such amount shall be deposited to the credit of central government and shall be reported in TDS return whereby the recipient shall get the credit of the tax so deducted.

This section is unlike other TDS provisions where, on applicability, tax is deducted on entire amount of payment. Under this section, tax shall not be deducted on one crore rupees. It shall be deducted on amount in excess of one crore rupees. For example, if a person withdraws one crore and fifty lakh rupees from a bank, tax shall be deducted on fifty lakh rupees and not on entire amount withdrawn.

Ø Effective date of applicability

As mentioned in the Finance Act, 2019 this section shall be effective w.e.f. 1^st September, 2019. Any amount paid by the payer to the recipient on or after 1^st September, 2019 shall be eligible for TDS if it satisfies all other conditions as mentioned above.

Ø Exempted recipients

Following recipients are exempted from the provisions of this section. When the payer pays an amount to following recipients, it is not required to deduct any tax on cash payments.

i. The Government

ii. Any banking company or cooperative society engaged in banking business or post office

iii. Any banking correspondent

iv. Any white label ATM operator of a banking company or cooperative bank engaged in banking business

v. Such other person or class of persons as may be notified by the Central Government by way of notification

Let us now discuss some issues related to the applicability of the section

Ø Applicability for the financial year 2019-2020

The section becomes effective from 1^st September, 2019, i.e. in mid of the year. There were lot of confusions about the applicability of the section for the F.Y. 2019-2020. However, the Income Tax Department has issued a clarification dated 30^th August, 2019 whereby it has clarified the applicability of the provisions.

Accordingly, the tax deduction shall be applicable on cash payments post 1^st September, 2019 but the limit of one crore rupees shall be counted with effect from 1^st April, 2019. Following table shall clarify the applicability of this section under various circumstances.

Amount withdrawn till 31^st August, 2019	Amount withdrawn after 31^st August, 2019	Total Amount Withdrawn during FY 2019-2020	Date of Crossing of One Crore Rupees	Date of Applicability of TDS	Amount on which tax is deducted
50,00,000	70,00,000	1,20,00,000	15th Oct.	15^th Oct.	20,00,000
1,50,00,000	1,50,00,000	3,00,00,000	18^th Jul.	1^st Sep.	1,50,00,000
80,00,000	15,00,000	95,00,000	-	N. A.	Nil
2,50,00,000	1,00,000	2,51,00,000	25^th Jun.	1^st Sep.	1,00,000
1,00,000	5,00,00,000	5,01,00,000	12th Nov.	12^th Nov.	4,01,00,000

The above illustrations are given for understanding purposes.

Ø Applicability – per bank or per person?

There is a concern regarding applicability of section 194N that whether it is applicable per bank or per person across all banks. The reading of the section clearly poses responsibility on a banking company. The limit of one crore rupees is applicable to each bank irrespective of accounts maintained with it. So, if a person withdraws ninety lakh rupees each from 3 different banks during a financial year, the provisions of this section shall not be applicable as the limit of one crore rupees not been completed in any of the banks.

Ø What if bearer cheque is issued to any other person?

The section speaks of an amount paid to ‘a recipient’ during the previous year. Recipient according to the section is a person who maintains one or more accounts with the banking company, cooperative society or the post office. In case a person issues a bearer cheque to another person, the person to whom the bearer cheque is issued doesn’t come in the meaning of recipient as per the section. So, the doubt remains about applicability of section for bearer cheque issued to third person.

Other provisions of Act shall be applicable such as 40A(3), 269T, etc. However, in case any bearer cheque is paid to an agriculturist of primary producer who are exceptions to section 40A(3) vide rule 6DD, whether such amount shall be eligible for TDS or not. Lets hope for a clarification from the Income Tax Department.

In my opinion, tax shall be deducted even if a bearer cheque is issued to a third person.

Ø Credit of Tax Deducted under this section

There is a fear amongst assessees regarding the treatment of the tax deducted by the banks on applicability of this section. There is no need to worry as this amount shall be eligible as tax credit while filing of return of income of person whose tax is so deducted.

This is in fact a good move by the Central Government to reduce the cash economy and promote the digital economy. However, even if the Government is promoting the digital economy and has introduced this section to discourage the cash withdrawals and accordingly cash payments, this section is going to adversely affect few sectors of the business community.

Especially, the agricultural commodity market where payments are allowed to be made in cash to farmers and cash payment is prominent mode of payments. The assessees in the Agriculture Produce Market Committee who have thin margins ranging from 1-2% shall now have 2% of their payments blocked as TDS.

Also, the businesses which are predominantly dependent on seasonal or temporary daily labour that require daily payments of labour to be met in cash, shall also face a hardship as considerable sum of money shall be blocked by the TDS credit.

Hopefully, the Government takes concern of this situation and comes up with some exemption or solution for the hardship faced by this sector.

Disclaimer:

The content of this hand-book is based on the interpretation of the author and is subject to difference of opinion with others. Care has been taken with respect to correctness the legal provisions mentioned herein. However, any errors or omissions are unintentional. The contents of the handbook should not be taken as opinion of the author for entering into any transaction.

APPLICABILITY OF UDIN TO STATUTORY BANK BRANCH AUDIT

2019-03-14T22:41:00.001+05:30

The ICAI vide announcement dated 26th September, 2018 has introduced the concept of UDIN. Initially it was applicable mandatory w.e.f. 1st January, 2019 which was later postponed to be applicable w.e.f. 1st February, 2019 in phased manner.

ICAI has issued an announcement dated 14^th March, 2019 wherein the applicability of UDIN is clarified. Accordingly, the UDIN is made mandatory to generated and used by members in practice, in following phases.

Effective Date	Type of Certifications
1^st February, 2019	All certifications done by Practicing CAs
1^st April, 2019	All GST and Tax Audit Reports
1^st July, 2019	All other attest functions.

BANK AUDITS

The Members are now concerned about the applicability of UDIN for Statutory Bank Branch Audits for the financial year 2018-2019 that are set to be conducted in the first half of April, 2019. I have discussed the applicability of UDIN in the process of Statutory Bank Branch Audit in the ongoing paragraphs.

FIRST PHASE – 1^ST FEBRUARY, 2019 -ALL CERTIFICATIONS DONE BY PRACTICING CAs

In the first phase, the ICAI had made it mandatory to generate and mention UDIN on all certifications done by Practicing Chartered Accountants. However, it had specifically excluded the audit and attest functions from the first phase that was mandatory with effect from 1^st February, 2019.

ICAI had also issued an illustrative list (enclosed in annexure 1 for ready reference) of certificates for which UDIN is mandatory. The list consisted of 29 types of certificates and 1 general heading ‘others’ for which UDIN has to be generated. Under that list point number 21 (i.e. roman xxi) states about “Certificate issued by Statutory Auditors of Banks.”

There are various certificates that are issued during the course of statutory audit of banks. Accordingly, for any certificate issued by the statutory auditors during the course of statutory audit of banks, UDIN has to be mandatorily generated and used.

In case of multiple certificates to be signed in course of statutory audit of banks, no need to generate multiple UDINs for the same. One blanket UDIN can be generated for multiple certificates generated and signed on one day for a given branch.

SECOND PHASE – 1^ST APRIL, 2019 – ALL GST AND TAX AUDIT REPORTS

In the second phase, the UDIN is applicable to all GST and Tax Audit Reports with effect from 1^st April, 2019.

The statutory auditors of banks are also required to conduct and sign the tax audit of the bank also. Accordingly, the auditors have to generate and use UDIN on the tax audit reports signed on or after 1^st April, 2019. There is no need to generate separate UDINs for Form 3CA, 3CD and related annexures and certificates coming under the purview of Tax Audit. Again, a blanket UDIN can be generated for all of these.

However, care has to be taken that the UDIN generated for certificates and that for tax audit should be different as these are different attest functions. Again, care has to be taken that separate UDIN has to be generated for tax audit of each branch.

THIRD PHASE – 1^ST JULY, 2019 – ALL OTHER ATTEST FUNCTIONS

For all other attest functions, UDIN is mandatory with effect from 1^st July, 2019. These include audits under other statutes.

During the statutory audit of bank branches, the auditors also have to issue statutory audit report. As the statutory audit report comes under other attest functions, there is no need to generate and use UDIN for statutory audit reports of bank branches for the financial year 2018-2019 completed and signed before 1^st July, 2019. However, it shall be applicable for the financial year 2019-2020, i.e. next year.

REPORTS AND CERTIFICATES ISSUED IN A DIGITAL FORM

Few banks, like State Bank of India, require various reports and certificates to be issued in digital form and signed digitally. In such cases, wherever possible the UDIN should be mentioned on the certificate before signing it digitally. However, wherever it is not possible to mention UDIN on digitally signed certificates and audit reports, the UDIN shall be generate and preserved to be intimated on request to the authorities as and when required.

REQUIREMENT OF UDIN IN SHORT

The requirement of UDIN during the statutory bank branch audit is briefed below.

Statutory Audit Report	No
Tax Audit Report	Yes
Certificates	Yes

POINTS TO REMEMBER

Following care should be taken by the auditors while generating UDIN in the course of Statutory Bank Branch Audit.

Ø UDIN has to be generated separately for each branch.

Ø UDIN has to be generated separately for each type of assignment per branch, e.g. tax audit, certification, etc.

Ø If certificates for one branch are issued and signed on different dates, separate UDIN is to be generated on daily basis.

Ø In case of certificates issued and signed in a digital form, where there is no provision to mention UDIN, UDIN has to be generated and preserved to be intimated if required in future.

Ø There is no need to upload any certificate for generating UDIN.

ANNEXURE – 1

List of certificates for which UDIN is applicable from 1^st February, 2019. (This is illustrative list obtained from the dropdown list while generating UDIN.)

(i)	Certificates issued on the basis of Financial books of accounts and annual financial statements-Capital Contribution Certificate/net worth certificate
(ii)	Certificates issued on the basis of Financial books of accounts and annual financial statements - Turnover Certificate
(iii)	Certificates issued on the basis of Financial books of accounts and annual financial statements -Working Capital Certificate/Net Working Capital Certificate
(iv)	Certificates issued on the basis of Statutory records being maintained under Indian Companies Act, 2013 and applicable provisions
(v)	Certification of Fair Values of Shares of Company for the scope of merger / de-merger, Buy Back, Allotment of further shares and transfer of shares from resident to non-resident.
(vi)	Certificates for Foreign Remittance outside India in form 15CB.
(vii)	Net worth Certificates for Bank finances
(viii)	Net worth Certificates for Bank Guarantee
(ix)	Net worth Certificates for Student Study Loan
(x)	Net worth Certificates for Issuance of Visa by Foreign Embassy
(xi)	Certificate in respect of Liquid Asset under Section 45-IB of RBI Act, 1945
(xii)	Certification of arms length price u/s 92 of the income Tax Act, 1961.
(xiii)	Certificates for funds/ Grants utilisation for NGO’s
(xiv)	Certificates for funds/ Grants utilisation for Statutory Authority
(xv)	Certificates for funds/ Grants utilisation Under FERA/FEMA/other Laws
(xvi)	Certificates for funds/ Grants utilisation Charitable trust/institution
(xvii)	Certification under the Income-Tax laws for various Deductions, etc.
(xviii)	Certification for claim of refund under GST Act and other Indirect Taxes.
(xix)	Certification under Exchange Control legislation for imports, remittances, ECB,DGFT,EOU, etc
(xx)	Certificates in relation to initial Public Issue/compliances under ICDR and LODR.
(xxi)	Certificate issued by Statutory Auditors of Banks
(xxii)	Certificate issued by Statutory Auditors of Insurance Companies
(xxiii)	Additional Certification by Concurrent Auditors of Banks not forming part of the concurrent audit assignment
(xxiv)	Certificate of Short Sale of securities issued by Concurrent Auditors of Treasury Department of Banks
(xxv)	Certificate of physical verification of securities issued by Concurrent Auditors of Treasury Department of Banks
(xxiv)	Certificate issued for KYC purpose to banks confirming sole proprietorship
(xxv)	Certificate Regarding Sources of Income
(xxvi)	Certificates for Claiming Deductions and Exemptions under various Rules and Regulations
(xxvii)	Certificates issued under LLP Act
(xxviii)	RBI Statutory Auditor Certificate for NBFCs
(xxix)	Certificate issued under RERA
(xxx)	Others

In case of any further query, members are free to contact me on following contact details.

CA. Amol Gopal Kabra

Latur, Maharashtra

Mobile – 9881-922-822

Email – amol@amolgkabra.in

Blog – https://www.amolgkabra.in

Twitter – www.twitter.com/amolgkabra

Equalisation Levy

2019-02-19T11:05:00.002+05:30

INTRODUCTION

The last two decades have witnessed momentous change in technology. The entire globe has been moving towards digitization in a lightening speed. The world in fact has become a global digital village.

We have witnessed transformation of business, the products, the services, the delivery of products and services, all because of digitization. Digitization knows no boundaries and not limitations. There are no custom barriers and check posts for digital transactions.

The definition of delivery of products and services has been changed. Lot of goods and services, earlier in either tangible or intangible form, now in digital form are being delivered cross border just at a click.

This digitization has resulted in complications in taxation of digital transactions by the nations.

TAXATION – PHYSICAL VERSUS DIGITAL

In the physical transactions or services, the levy of taxation is simple. Few parameters decide the levy of taxes, whether direct taxes or indirect taxes, that include the residency of the service provider or seller, the location of goods or services, the movement of goods, the destination of goods or services, etc. Accordingly, the basis of taxation is decided.

On the other hand, in the era of digitization, the services are provided and accessed on a digital platform which are beyond the scope of geographical boundaries of the countries. Services and intangible goods can be provided from any part of the world and accessed at a different place. This results into difficulties in deciding the parameters of taxation for such digital goods and services.

The services are provided from a server based in a different country, preferably a tax haven, where the rates of taxes on earnings are either zero or considerably lower than the country of service provider or service receiver.

Further, the intangible goods are services are delivered and accessed on a digital platform, that doesn’t know the geographical boundaries. Hence, there is no question of crossing the custom frontiers of the country.

Similarly, as the services are not provided by a person having permanent establishment in the country, the other indirect taxes such as Goods and Service Tax are also not leviable.

DISPARITY

The goods and services that are delivered through a digital platform create disparity amongst the services providers in the country and those from other countries. The resident service providers have to pay taxes and comply to the business regulations of the residence country. The resident service providers cannot compete the overseas service providers in lieu of taxation impact.

Further, the taxes (both direct as well as indirect) on the goods and services so provided on digital platform are being avoided and the government of the country is unable to tax the same. This is the problem with almost every country where the government is unable to collect taxes on such digital transactions.

OECD REPORT ON BEPS

The Organisation for Economic Co-operation and Developmemnt (OECD), consisting of 36 member countries, had constituted a group for study on taxing of such digital transactions and other relevant issues in 2013. Accordingly, the action plan to address the tax challenges of the digital economy was issued under the “Action Plan on Base Erosion and Profit Shifting.” (Source: OECD (2013), Action Plan on Base Erosion and Profit Shifting, OECD Publishing.

http://dx.doi.org/10.1787/9789264202719-en)

In 2015, the group issued its report on “Addressing the tax challenges of the digital economy” which discussed three alternative solutions. One of the solutions in the report was ‘Equalisation Levy’. (Source: OECD (2015), Addressing the Tax Challenges of the Digital Economy, Action 1 - 2015 Final Report, OECD/G20 Base Erosion and Profit Shifting Project, OECD Publishing, Paris.

http://dx.doi.org/10.1787/9789264241046-en)

EQUALISATION LEVY

Equalisation Levy is a type of withholding tax which is charged on the services provided on a digital platform across countries. The word “equalization” implies equalising the tax impact of resident service providers in line with the overseas service providers for services provided on digital platform.

In many countries, this equalisation levy is also called as ‘Google Tax’ as Google had the most impact on introduction of such levy. This ‘Google Tax’ or equalisation levy was also adopted by India.

The Honorable Finance Minister Shri. Arun Jaitley had in his budget speech of Union Finance Budged, 2016 had said the following.

“In order to tap tax on income accruing to foreign e-commerce companies from India, it is proposed that a person making payment to a nonresident, who does not have a permanent establishment, exceeding in aggregate Rs. 1 lakh in a year, as consideration for online advertisement, will withhold tax at 6% of gross amount paid, as Equalisation levy. The levy will only apply to B2B transactions.”

Accordingly, relevant provisions were included in Finance Bill, 2016. The provisions of equalisation levy are discussed in the following paragraphs.

APPLICABILITY OF THE LAW

The provisions of Finance Act, 2016 with respect to equalisation levy extend to whole of India, except the state of Jammu and Kashmir.

The said provisions are applicable for payment of consideration made on or after 1^st June, 2016.

CHARGE OF EQUALISATION LEVY

Section 165 of the Finance Act, 2016 states as below:

(1) On and from the date of commencement of this Chapter, there shall be charged an equalisation levy at the rate of six per cent of the amount of consideration for any specified service received or receivable by a person, being a non-resident from —

(i) a person resident in India and carrying on business or profession; or

(ii) a non-resident having a permanent establishment in India.

(2) The equalisation levy under sub-section (1) shall not be charged, where—

(a) the non-resident providing the specified service has a permanent establishment in India and the specified service is effectively connected with such permanent establishment;

(b) the aggregate amount of consideration for specified service received or receivable in a previous year by the non-resident from a person resident in India and carrying on business or profession, or from a non-resident having a permanent establishment in India, does not exceed one lakh rupees; or

(c) where the payment for the specified service by the person resident in India, or the permanent establishment in India is not for the purposes of carrying out business or profession.

Equalisation Levy @ 6% shall be charged on the provider of specified service in the following scenario:

1. The service provider is a non-resident person who does not have any permanent establishment in India.

2. The service receiver is either a person resident in India and carrying on business or profession, or a non-resident who has a permanent establishment in India.

Permanent establishment includes a fixed place of business through which the business of the enterprise is wholly or partly carried on. [Section 164(g)]

3. The service so provided is a ‘specified service.’ The Government of India has specified the service in section 164(i) of the Finance Act, 2016.

Specified service means online advertisement, any provision for digital advertising space or any other facility or service for the purpose of online advertisement and includes any other service as may be notified by the Central Government in this behalf. [Section 164(i)]

Online means a facility or service or right or benefit or access that is obtained through the internet or any other form of digital or telecommunication network. [Section 164(f)]

4. The aggregate amount of consideration paid to non-resident service provider as mentioned earlier for such specified services exceeds rupees one lakh during the previous year.

5. The payment of consideration of such specified service is for the purpose of business or profession only.

COLLECTION, RECOVERY AND COMPLIANCES

Following are the provisions with respect to collection, recovery and compliances of the equalisation levy.

1. The service receiver (the assessee) who pays the consideration for specified services shall deduct the equalisation levy @ 6% at the time of payment of credit in the books of account.

2. Such amount so deducted shall be paid to the credit of central government by the 7^th of succeeding calendar month. Point is to be noted here that for the month of March the due date shall be 7^th April and not 30^th April as in case of TDS.

3. Even if the assessee fails to deduct such levy, the same shall be paid to Central Government irrespective of such failure.

4. The amount of equalisation levy is to pe paid vide form ITNS-285 that is available on https://www.tin-nsdl.com.

5. The assessee has to furnish a return of equalisation levy decuted and paid to the credit of Central Government on an annual basis. The same is to be furnished in Form-1 electronically specified by the Equalisation Levy Rules, 2016. The due date for furnishing the form is 30^th June after the end of the financial year.

INTEREST, PENALTIES AND PROSECUTIONS

Following are provisions with respect to interests, penalties and prosecution with respect to equalisation levy.

1. The assessee who fails to pay the amount of equalisation levy to the credit of Central Government within due date has to pay simple interest @ 1% for every month or part of month for the delayed period. [Section 170]

2. The assessee who fails to deduct whole or any part of equalisation levy shall be liable to pay a penalty of the amount equal to the default. [Section 171(a)]

3. The assessee who fails to pay the equalisation levy so deducted shall be liable to pay a penalty of Rs. 1,000 per day for which the default continues. However the amount of penalty shall not exceed the amount of equalisation levy deducted. [Section 171(b)]

4. The assessee who fails to furnish the statement in Form-1 shall be liable to pay penalty of Rs. 100 per day during which the default continues. [Section 172]

It is to be noted that section 172 does not specify the maximum amount of penalty.

5. The penalty under sections 171 and 172 shall not be imposed unless the assessee has been given a reasonable opportunity of being heard and the assesse proves to the satisfaction of the assessing officer that there was a reasonable cause for the failure. [Section 173]

6. If the assessee furnishes a statement that is false, or he knows or believes it to be false, or he does not believe it to be true, shall be liable for punishment with imprisonment for a term which may extend to 3 years of with fine or both. [Section 176]

7. However, the prosecution against any person shall not be instituted except with the prior sanction of the Chief Commissioner of Income Tax.

ASSESSMENT AND APPEALS

Following are the provisions with respect to processing of statements and appeals with respect to equalisation levy.

1. The statement filed by the assessee shall be processed and an intimation thereof shall be sent to the assessee. Such intimation shall be sent before the end of one year from the end of financial year in which the statement is filed. [Section 168]

2. If any amount is payable by the assessee by way of equalisation levy, interest, or penalty, an intimation or the notice of demand shall be issued to the assessee. [Rule 7]

3. An assessee aggrieved by an order imposing penalty, may refer an appeal to the Commissioner of Income Tax (Appeals) within a period of 30 days from the date of receipt of such order. [Section 174]

Such appeal shall be filed in Form-3 accompanied with an appeal fees of Rs. 1,000. [Rule 8]

4. An assessee aggrieved by an order of Commissioner of Income Tax (Appeals), may appeal to the Appellate Tribunal against such order within a period of 60 days from the date of receipt of such order. [Section 175]

Such appeal shall be filed in Form-4 accompanied with an appeal fees of Rs. 1,000. [Rule 9]

IMPACT UNDER INCOME TAX ACT, 1961

The Finance Act, 2016 has also inserted sub-clause (ib) after sub-clause (ia) in section 40(a) whereby the consideration paid or payable by way of specified services (online advertisement) without deduction or payment of equalisation levy shall be disallowed.

However, the same shall be allowed in a subsequent year when it is paid to the credit of Central Government.

PRACTICAL DIFFICULTIES

The Finance Act, 2016 has imposed equalisation levy of 6% on non-resident persons not having permanent establishment in India for providing online advertisement services to persons resident in India or non-residents having permanent establishment in India.

However, the liability and burden of compliance is imposed on the person who pays such consideration. This is because, the Government of India does not have any jurisdiction on the overseas entities. The levy so charged is in nature of withholding tax.

The practical difficulty faced by the service receivers is that the service providers are not concerned with the taxes and levies applicable for the service receiver. Many of these service providers have clarified that the amount agreed for the services to be provided is deemed to be after all the applicable levies and taxes of the country of service receiver.

In this scenario, the service receiver has to pay the levy from his own pockets. Also, when the amount paid to the overseas service provider is deemed to be after all applicable taxes and levies, the calculation of 6% also changes. This is explained in the below example.

Example 1 – Where the service provider agrees for deduction of equalisation levy.

Consideraton Paid	5,00,000
Equalisation levy @ 6%	30,000
Net Consideration Paid	4,70,000

Example 2 – Where the service provider doesn’t agree for deduction of equalisation levy.

In this case the actual consideration paid is assumed to be the net consideration and levy has to be calculated on inverse basis in the following manner.

Equalisation Levy = Consideraton Paid x (6 / 94)

In above case, if we assume Rs. 5,00,000 as the net consideration paid, the equalisation levy comes to 31,915.

Also, we need to understand the stand taken by the service providers. The service providers do not agree for the deduction of equalisation levy for the reason that they do not get any deduction of such taxes paid in the country of their residence in absence of any DTAA between such countries with respect to equalisation levy.

CONCLUSION

We can conclude on the following with respect to the equalisation levy.

1. The government has made an attempt to tax the non-taxable by introducing the equalisation levy in line with OECD Reports.

2. This reduces the inequality created between the pricing of domestic and overseas service providers.

3. Even if the levy is charged on overseas service providers, the same is burden of the resident service receiver.

DISCLAIMER

Taxation of Gifts under Income Tax Act, 1961

2019-02-18T15:49:00.003+05:30

BACKGROUND

Gifts have always been a topic of hot discussion as far as income tax laws in India are concerned. We have experienced a lot of changes in taxability of gifts. It is said that ‘necessity is the mother of inventions’, so I quote that ‘loop hole is the mother of amendments’. Because of various lacunas and loop holes, the income taxation of gifts in India has undergone lot many changes.

These include abolition of Gift Tax Act, changes in limit of gifts accepted from per person to a blanket limit, including gift of immovable properties in tax bracket, etc.

This gives rise to a need for a detailed study the income taxation of gifts in India.

WHAT IS A GIFT?

The dictionary meaning of gift is ‘a thing given to someone without payment.’

Section 122 of Transfer of Property Act, 1882 defines Gift as ‘the transfer of certain existing movable or immovable property made voluntarily and without consideration, by one person called donor, to another, called donee, and accepted by or on behalf of the donee.’

If we analyze this definition, we get the following essentials of a gift.

There must be transfer of ownership

The ownership must be of a property in existence

The property can be movable or immovable

The transfer must be without consideration

The transfer must be voluntary

The donor must be a party competent to contract

The donee must accept the gift

So, a gift will be complete only if all the above conditions are satisfied.

Gift has nowhere been defined under the Income Tax Act, 1961. However, section 56(2)(x) mentions certain moneys and properties received by assessee as taxable in the hands of receiver. These receipts of moneys and properties without any consideration can be construed as gift received by the assessee.

SECTION 56(2)(x)

Section 56(2)(x) of the Income Tax Act, 1961 reads as under:

Where any person receives, in any previous year, from any person or persons on or after the 1st day of April, 2017,—

(a) any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum;

(b) any immovable property,—

(A) without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property;

(B) [for a consideration which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as exceeds such consideration:]*

Provided that where the date of agreement fixing the amount of consideration for the transfer of immovable property and the date of registration are not the same, the stamp duty value on the date of agreement may be taken for the purposes of this sub-clause:

Provided further that the provisions of the first proviso shall apply only in a case where the amount of consideration referred to therein, or a part thereof, has been paid by way of an account payee cheque or an account payee bank draft or by use of electronic clearing system through a bank account, on or before the date of agreement for transfer of such immovable property:

Provided also that where the stamp duty value of immovable property is disputed by the assessee on grounds mentioned in sub-section (2) of section 50C, the Assessing Officer may refer the valuation of such property to a Valuation Officer, and the provisions of section 50C and sub-section (15) of section 155 shall, as far as may be, apply in relation to the stamp duty value of such property for the purpose of this sub-clause as they apply for valuation of capital asset under those sections;

(c) any property, other than immovable property,—

(A) without consideration, the aggregate fair market value of which exceeds fifty thousand rupees, the whole of the aggregate fair market value of such property;

(B) for a consideration which is less than the aggregate fair market value of the property by an amount exceeding fifty thousand rupees, the aggregate fair market value of such property as exceeds such consideration:

Provided that this clause shall not apply to any sum of money or any property received—

(I) from any relative; or

(II) on the occasion of the marriage of the individual; or

(III) under a will or by way of inheritance; or

(IV) in contemplation of death of the payer or donor, as the case may be; or

(V) from any local authority as defined in the Explanation to clause (20) of section 10; or

(VI) from any fund or foundation or university or other educational institution or hospital or other medical institution or any trust or institution referred to in clause (23C) of section 10; or

(VII) from or by any trust or institution registered under section 12A or section 12AA; or

(VIII) by any fund or trust or institution or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10; or

(IX) by way of transaction not regarded as transfer under clause (i) or clause (iv) or clause (v) or clause (vi) or clause (via) or clause (viaa) or clause (vib) or clause (vic) or clause (vica) or clause (vicb) or clause (vid) or clause (vii) of section 47; or

(X) from an individual by a trust created or established solely for the benefit of relative of the individual.

Explanation. —For the purposes of this clause, the expressions "assessable", "fair market value", "jewellery", "property", "relative" and "stamp duty value" shall have the same meanings as respectively assigned to them in the Explanation to clause (vii).

{* This sub clause shall be substituted by Finance Act, 2018 with following words w.e.f. 1^st April, 2019

For a consideration, the stamp duty value of such property as exceeds such consideration, if the amount of such excess is more than the higher of the following amounts, namely:—

(i) the amount of fifty thousand rupees; and

(ii) the amount equal to five per cent of the consideration:}

SECTION 56(2)(x) – AN ANALYSIS

The sub clause (x) of clause (2) to section 56 was inserted by the Finance Act, 2017 w.e.f. 1^st April, 2017. This clause defines taxability of amounts or properties received without any consideration. These are referred to as ‘gifts’ in common parlance. Accordingly, the following amounts are taxable. However, these amounts are subject to exceptions that are mentioned thereafter.

1. Whole amount of money received (from person or persons), if it exceeds Rs. 50,000.

If a person receives from any other person or persons amounts exceeding Rs. 50,000 in aggregate, then entire such sum is taxable. This limit is not per payer but in aggregate. Also, point is to be noted that the amount of Rs. 50,000 is not a threshold exemption, but a maximum limit exceeding which the entire amount becomes taxable.

So, if a person receives Rs. 25,100 and Rs. 25,000 from two different persons, then as the aggregate amount being Rs. 50,100 exceeds Rs. 50,000 the entire amount of Rs. 50,100 is considered as taxable income charged under income from other sources. The same principle applies to other sub clauses under section 56(2)(x).

2. The stamp duty value of an immovable property received without any consideration, if such value exceeds Rs. 50,000.

If a person receives from another person or persons, any immovable property without any consideration, and the stamp duty value of such property exceeds Rs. 50,000 in aggregate, such entire amount becomes taxable. This provision relating to gift of immovable property was introduced w.e.f. 1^st October, 2009.

Whereas, in case of amount of money received or property other than immovable property is received, the aggregate of the amount received during the year is considered for the limit of Rs. 50,000, in case of an immovable property, the limit of Rs. 50,000 is counted separately for each property.

3. The differential amount in the stamp duty value and actual consideration of an immovable property where the actual consideration is less than the stamp duty value, and the difference in such value exceeds Rs. 50,000.

If a person receives from another person or persons an immovable property where the consideration paid for the same is less than the stamp duty value and such difference is more than Rs. 50,000 then entire such difference is considered taxable.

This creates a practical difficulty in cases where the fair market value of the immovable property is less than the stamp duty value of the said immovable property. In such cases, the assessees may face hardship as the amount becomes taxable despite not in the nature of income (gift).

However, to avoid this difficulty, the third proviso states that in such cases, the assessing officer may refer the case to valuation officer for assessing the fair market value of the property. This proviso is a relief to assessees in bonafide cases.

Another difficulty comes in case of properties with huge valuation and the consideration so paid in marginally less than the stamp duty value but more than Rs. 50,000. For example, a property having stamp duty value Rs. 5 crores, is purchased for a consideration of Rs. 4.80 crores. In this case the difference is marginal however more than 50,000.

This difficulty is removed by Finance Act, 2018 w.e.f. 1^st April, 2019 where the difference if less than 5% of consideration shall not be taxable.

4. The fair market value of any property, other than immovable property, received without any consideration, if such value exceeds Rs. 50,000.

If a person receives any property, other than an immovable property, from another person or persons, the aggregate value of which exceeds Rs. 50,000 then the entire of such value of the property so received becomes taxable. This provision has been introduced w.e.f. from 1^st October, 2009.

5. The differential amount in the fair market value and actual consideration of any property, other than immovable property, where the actual consideration is less than the fair market value, and the difference in such value exceeds Rs. 50,000.

If a person receives from another person or persons any property, other than an immovable property, where the consideration paid is less than the fair market value of such property and such difference exceeds Rs. 50,000, the aggregate of such difference becomes taxable.

Following are some illustrations on the above provisions.

Type of Property	Value	Consideration Paid	Taxability
Money	45,000	0	No
Money	51,000	0	Yes
Money	A – 24,000 B – 24,000	0	No
Money	A – 24,000 B – 26,100	0	Yes
Immovable Property	49,000	0	No
Immovable Property	51,000	0	Yes
Immovable Property	5,00,000	4,60,000	No
Immovable Property	5,00,000	4,40,000	Yes
Immovable Property¹	25,00,000	24,60,000	No
Immovable Property¹	25,00,000	24,00,000	No
Immovable Property¹	25,00,000	23,75,000	Yes
Other Property	49,000	0	No
Other Property	51,000	0	Yes
Other Property	1,00,000	51,000	No
Other Property	1,00,000	45,000	Yes

1 – Introduced by Finance Act, 2018 applicable for transactions entered into after 1^st April, 2019.

EXCEPTIONS

The aforementioned provisions are subject to certain exceptions. The amounts received from following persons or on following occasions are exempt from tax even received without sufficient consideration.

1. From relatives:If any amounts of money or property are received from relatives of the individual, such amounts are exempt from tax. The proviso to clause (vii) also mentions the list of relatives which is as under.

a. In case of an individual

i. Spouse of the individual

ii. Brother of the individual

iii. Sister of the individual

iv. Brother of the spouse of the individual

v. Sister of the spouse of the individual

vi. Brother of the either of the parents of the individual

vii. Sister of the either of the parents of the individual

viii. Lineal ascendant or descendant of the individual

ix. Lineal ascendant of descendant of the spouse of the individual

x. Spouse of above-mentioned persons

b. In case of a Hindu Undivided Family – its members.

In case of relatives of an individual, it is not necessary that the exemption is available reciprocally for all relatives. For example, amount received by the nephew from his uncle is exempt, but amount received by the uncle from his nephew is not exempt. So, utmost care is to be taken to ascertain the exemption status before determining the taxability of the transaction.

In case of a Hindu Undivided Family, amount received from its members is exempt. However, amount received by an individual from HUF is not exempt.[Gyanchand M. Bardia v. Income Tax Officer,(Ahmedabad - Trib.) 2018 ITL 1035]

2. On occasion of marriage: Amounts of money or property received by an individual on occasion of his / her marriage, without consideration are exempt. The exemption is simple but again care has to be taken to understand that such amounts or property received on occasion of marriage, and not before or after that, are exempt. For example, money or property received at the engagement ceremony, or received before or after marriage at any other occasion, etc. are not exempt.

Gifts received on occasion of marriage of child are not exempt at the proviso specifically mentions “on occasion of marriage of the individual” [Rajinder Mohan Lal v. Dy. CIT, Punjab and Haryana High Court, 2013]

3. Under a will or by inheritance: Amount of money or property received by a person under a will of a deceased person or are inherited by the person are exempt.

4. In contemplation of the death of the payer: If a person receives any money or property without sufficient or without any consideration from a payer in contemplation or his / her death, it is treated as not taxable.

5. From local authority: If any amount of money or property is received from a local authority defined under explanation to section 10(20) such receipts are exempt from tax.

6. From a fund, foundation, university, educational institution, hospital or medical institution referred to under section 10(23C): If any amount of money or property is received from the afore mentioned entities those are referred to under section 10(23C), such amount of money or property is exempt from tax.

7. From trust or institution registered u/s 12AA: If any amount of money or property is received from trusts or institutions registered u/s 12AA of the Income Tax Act, such amount of money or property is exempt from tax.

8. By way of transaction not regarded as transfer:If any amount money or property is received by way of a transaction that is not regarded as transfer pursuant to clause (vicd) or clause (vid) or clause (vii) of section 47, then such amount of money or property is not regarded as taxable.

The respective transactions not regarded as transfer are mentioner hereunder.

a. by a shareholder, in a business reorganisation, of a capital asset being a share or shares held by him in the predecessor co-operative bank if the transfer is made in consideration of the allotment to him of any share or shares in the successor co-operative bank.(vicd)

b. any transfer or issue of shares by the resulting company, in a scheme of demerger to the shareholders of the demerged company if the transfer or issue is made in consideration of demerger of the undertaking. (vid)

c. any transfer by a shareholder, in a scheme of amalgamation, of a capital asset being a share or shares held by him in the amalgamating company, if—

(a) the transfer is made in consideration of the allotment to him of any share or shares in the amalgamated company except where the shareholder itself is the amalgamated company, and

(b) the amalgamated company is an Indian company. (vii)

PROPERTY

For the purpose of section 56(2)(x), property means the following capital asset of the assessee, namely –

a. immovable property being land or building or both

b. shares and securities

c. jewellery

d. archaeological collections

e. drawings

f. paintings

g. sculptures

h. any work of art

i. bullion

Any other asset apart from the above-mentioned property is not considered as ‘property’ for the purpose of this section.

GIFT DEED

Following points are relevant with respect to gift deed.

1. The gift of an immovable property is complete only if it is done vide a gift deed and the same is registered and requisite stamp duty is paid.

2. The gift of a movable property or money doesn’t require a gift deed. However, it is advisable to make a gift deed for movable property and money also.

3. The gift deed should also contain the acceptance of the receiver of gift as the gift transaction is not complete unless accepted by the donee.

OTHER POINTS FOR CONSIDERATION

Few other points of consideration in case of transaction of gifts are as below:

1. In case of gift of money received for Rs. 2,00,000 or above in cash, the penalty u/s 269ST shall get attracted.

2. The onus to prove the transaction of the gift lies on the receiver of the gift.

3. In case of gifts that are exempt owing to the proviso to section 56(2)(x), the existence, genuineness and credibility of the donor is also required to be proved and the onus is on the receiver to prove it.

4. The effect of other applicable laws like Registration Act, Stamp Duty Law, Transfer of Property Act, Goods and Service Act, and other relevant laws has also to be considered for respective treatment.

DISCLAIMER

Are You Prepared to Die???

2017-05-18T16:10:00.001+05:30

Err. What type of question is this? You must be wondering ‘am I out of my minds’ to ask such type of question. You read it right but understood it wrong.

The question exactly means – “What if you die today? Have you planned your ‘after-life’ for your family?”

Now this article is definitely not about taking or investing in any insurance. Everyone who is financially literate to some extent is aware about the importance of the need for insurance. The attempt to write an article is far ahead than just insurance.

Few years ago, one of my clients passed away at an early age in an accident. That was a deep grief for the family. I have seen the after effects of the incident. After the demise, the father and other dependent members of the family were in stress apart from the grief of the loss of the person. The stress was of settlement of financial transactions.

The settlement included various types of transactions like, bank accounts, fixed deposits, investment in shares and securities, trade payables, loans taken and given and so on. Most of these were rather not known to the family. The family has passed through so much of hardships that can’t be exactly expressed in words. I have witnessed many such cases apart from the above one.

Following are few things that should be followed as a part of financial planning so that your after-life is not painful for your family in financial matter. (Definitely, the pain of loss of the person is inevitable.)

· Keep your insurance policies up-to-date. No matter what, but don’t skip the payment of your insurance premium. You can compromise with any other luxury or need in your life, but please don’t compromise with the insurance premium of the policies taken.

· Keep the nomination status for all your financial assets updated. Transfer of any financial asset with nomination registered is very simple and easy process as compared to those where nomination is not registered. Nominations can be registered for all financial assets including bank accounts, fixed and recurring deposits, bank lockers, shares (demat accounts), mutual funds, bonds and securities, insurance policies, etc.

· Keep a list of advances given and advance taken even on personal basis. Failing to do this may result in heavy losses as in case lack of information about loans advanced there is a very low possibility of the recovery of such advances.

· Maintain a list of all financial assets category wise that can be easily accessible in your permanent absence. That will keep your family away from extra stress in an hour already of grief.

· Also maintain a list of all immovable properties held by you, either singly or jointly also accessible in your permanent absence.

· Keep all the financial instruments (in materialized form), property documents, other key papers at one single and secure place.

· Discuss all major financial transactions and decisions with the key members in your family. These can be parents, spouse, etc.

· In addition to above, it is highly recommended that you should prepare your will so as to avoid any sort of dispute in your family in your after-life.

These tips are useful not just in your after-life for your family, but also during your lifetime. These can help you for an effective financial planning. All these are simple and easy steps that can be taken to avoid any inconvenience and stress during time or after your life.

Stay blessed.

CA. Amol G. Kabra, Latur

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The Rules of Thoughts

2014-06-09T23:25:00.001+05:30

We all know the rules of multiplication of mathematical signs ‘positive’ and ‘negative’. Still, we’ll have a look at those. These are as below.
‘positive’ x ‘positive’ = ‘positive’
‘positive’ x ‘negative’ = ‘negative’
‘negative’ x ‘positive’ = ‘negative’
‘negative’ x ‘negative’ = ‘positive’

One thing we can observe from above is that opposite signs give the negative results whereas same signs give the positive result. Similarly, there are some rules for thoughts also. But these rules are something different.

Before that, let us understand some points about thoughts. Thoughts are the things we feel in our mind. On an average, a human mind gets around 60,000 thoughts in one day. Most of the thoughts are unconscious also. The thought process is mostly out of control. However, we have the capability to control some of our thought, if not all.

Thoughts can be of two types – one which originate within us and one which originate with the input we get from others. Let us name these thoughts as internal thoughts and external thoughts respectively. External thoughts have, in most of the times, potential to influence the internal thoughts. In turn, internal thoughts also have potential to defend external thoughts.

These thoughts are further of two types – positive and negative. It means we have four types of thoughts in all – internal positive, external positive, internal negative, external negative. Internal thoughts are more in abundance than external thoughts. However, the chances of external thoughts influencing the internal thoughts are more.

As discussed above, thoughts also have rules. Let us discuss these rules.

Internal Positive x External Positive:

When internal thoughts are positive and external thoughts are also positive, the result, as like in mathematical signs, is positive.

Internal Negative x External Negative:

When internal thoughts are negative and external thoughts are also negative, the result is not positive. In case of thoughts, negative multiplied by negative is not positive.

Internal Negative x External Positive:

When internal thoughts are negative and external thoughts are positive, the result is still negative.

Internal Positive x External Negative

When internal thoughts are positive and external thoughts are negative, there is a magic and the result is positive.

Now what can we observe from the above? The answer is whenever the internal thoughts are positive, the result is always positive. On the other hand, when internal thoughts are negative, the result is always negative. So, bottom line is positive thoughts should originate from within.

I conclude by giving a thought – One positive thought from within can fight with millions of negative thoughts from outside.

(This write up is restricted to convey the rules with respect to thoughts. However, I shall try to elaborate more on thoughts in upcoming writings.)

CA. Amol G. Kabra
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Substance over Form

2014-06-06T19:19:00.004+05:30

The concept of substance over form is very difficult to understand for the students in the initial stage. Owing to initial confusion many students either keep it in option or even if they study, don’t understand it fully. I have made a short attempt to explain this concept in a brief manner.

This phrase contains two words, ‘substance’ and ‘form’. The phrase ‘substance over form’ is a short version of its original meaning “In case of conflict between ‘substance’ and ‘form’ of a transaction, the ‘substance’ of transaction shall prevail over its ‘form’.”

Let us understand the meanings of ‘substance’ and ‘form’ separately.

Substance of a transaction means its actual nature. Whatever is the original nature of transaction is its substance. Form is the way the transaction is recorded or presented. So, basically substance relates to content of transaction whereas form relates to its presentation. It is not always necessary that the substance of a transaction shall differ from its form. In most of the cases, the substance of a transaction and its form are one and the same. However, in select cases, the substance can be different from the form of the transaction.

The concept of ‘substance over form’ may be relevant in three cases viz., accounting, audit, and regulatory assessments. But, it mainly comes under focus either during audit or during regulatory assessments.

Accounting requires that whenever a transaction is recorded or it’s presented in the financial statements of an enterprise, the substance of transaction should prevail over its form. However, in case of accounting, it is not independent of its management or ownership. So there can be bias in avoiding this requirement.

In case of audit, an auditor is under obligation to follow substance over form. So auditors require examining transactions (obviously considering the materiality concept also) so as to check whether the financial statements follow the concept of substance over form.

Also in the case of regulatory assessments, the assessing authorities always go by substance and not by its mere presentation so as to make sure the revenue of their department is not at loss.

Let us understand ‘substance over form’ by small example. X Limited has paid a commission of Rs.1,00,000. to its agent. However, while recording, the company recorded it as Rent. Now what can be the implication of this change in presentation? With respect to net result of the business there shall be no impact as both commission and rent shall be debited to profit and loss account and net profit or loss shall remain unchanged.

But with respect to audit and regulatory point of view, it can make a difference. In case of tax audit, the auditor is required to report on compliance with respect to TDS of the company. Take in the same example, the company has debited the amount to rent instead of commission. If we go by its form, on a rent of Rs.1,00,000 there is no requirement of tax to be deducted u/s 194I. However, if we go by the substance of transaction, i.e., its original nature being commission, tax is required to be deducted @ 10% u/s 194H.

Now, the duty of auditor or regulatory authority is to consider the actual nature of transaction and not merely the form in which it is presented. This consideration of substance of transaction over its form is called as ‘substance over form’.

CA. Amol Gopal Kabra, Latur

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Road to Professionalism – 1: Be a Professional and Look like a Professional.

2014-06-05T19:22:00.003+05:30

Having a professional qualification and being a professional is far different. Just qualifying a professional education course does not necessarily give you professionalism. Professionalism is to be learnt in addition to getting the professional degree.

When we understand this word ‘professional’, most of the people have a wrong perception about the word. Many people confuse ‘professional’ with ‘commercial’. Whereas commercial is merely concerned with money, professional is concerned with quality, service and well as monetary terms. So, at first, the perception needs to be cleared.

It is very obvious that we refer the word professional to a person who has got some professional qualification like CA, CS, MBA, Doctor, Engineer, Architect, etc. But the word professionalism means something different. The dictionary meaning of the word professionalism is ‘professional character, spirit or methods’ and another is ‘the standing, practice or methods of a professional, as distinguished from an amateur’. It is quite clear that professionalism involves character, methods, practice and also expertise.

To head towards professionalism from being an amateur, one needs to bear a professional character. Professional character does not mean just to show off like a professional, but a person should possess these qualities. It should be the part of its ‘substance’ and not just ‘form’. Behaving like professional without having it in character is like the wolf wearing the tiger skin. It gets uncovered someday definitely.

Professionalism involves methods to be followed. We may also term it as techniques of professionalism. These techniques may involve proper planning, formation of strategies, delegation of work, handling the people, executing the plans, etc. A professional definitely follows all these techniques to achieve professional success.

Professionalism is not a one day affair. That you behave like a professional for a day and it’s achieved. It requires continuous and consistent practice. It needs to be imparted within a person through practice, practice and practice. And over a period of time this practice gets converted into a professional character.

Professional is a person who is not an amateur, i.e. a beginner. It means that professionalism requires expertise. Expertise is definitely attained through some professional course. But it needs to be maintained. A professional needs to be updated on all aspects of his area of practice. Expertise can be achieved through continuous updation process.

Having these qualities is just a part of being a professional. However, only being a professional is not sufficient, you should also look like a professional. Looking like a professional can mean to include your dressing, grooming up, looks, behavior, etc. However, looking like professional includes much more than having professional attire. It’s not just about attire but it should be about a professional attitude.

So, I briefly conclude the article with the heading – be a professional and also look like a professional.

CA. Amol Gopal Kabra, Latur

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Marks – A real measure of performance or just a record?

2014-06-04T17:20:00.001+05:30

Recently, the results of HSC i.e. 12^th Grade have been declared. As usual, there were mixed feelings for the students. Passed students have scored marks as low as 35% to as high as over 98% also. However, if we can see a large number of students are not satisfied with the result. Be it a student scoring 50% or be it a student scoring 95%. The main issue with students is that the marks are below expectations.

Being in a teaching profession, I am closely associated with students. After the results, I got to know the feedback from the students about their results. The main feeling amongst most of the students was ‘disappointment’. The main reasons for disappointment were – 1. Scoring below expectations, 2. Should have prepared more, 3. Some other students more than me, etc. On analyzing these reasons I have something to convey to all the students who have passed out of HSC or shall be appearing next year.

Almost all students, and also their parents, are concerned with marks only. Everything in the career achievement process of a student is measured in terms of marks only. I have seen teachers discriminating the students on the basis of marks. But one question I need to ask that whether marks are the only criteria to judge a student’s worth? The answer is NO. It’s definitely not. But still students are being judged and graded on the basis of marks only.

No doubt, scoring good marks is an achievement while pursuing your academic goal. But what I mean to convey is that it is not the only criterion. I have seen students scoring top marks in exams but having less regards to common sense and vice versa. Scoring good marks need not always bring you wisdom. Then why to get disappointed about marks after the results?

I have experienced in life that all these marks and scores are a matter of a month after the result. If you get good marks, people will cherish for a month, if not the will blame for a month. They won’t pay heed after that. So what I mean exactly that your marks, whether good or bad, just remain as a record in the file of your academic accomplishments. So, if you want to score good marks, prepare and perform for it, but once the result is out there is no scope for ifs and buts.

Have a lot to say in this topic, but if I continue, this article may get lengthier. May be I’ll discuss other aspects in upcoming posts.

Heartiest congratulations to all the students for their success in HSC exams. Also, my advice is look forward and pursue your further education with full of confidence and determination.

All the best.

CA. Amol G. Kabra, Latur.

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THINK BEFORE YOU LIKE, SHARE OR FORWARD

2013-10-05T19:01:00.000+05:30

Today, we are in the world of technology. Technology is so much advanced today that communication is now at fingertips. Communication today is fastest in terms of time for delivery and cheapest in terms of cost of delivery. There are various modes of communicating such as SMS, e-Mail, Instant Messaging, Facebook, Twitter, Whatsapp, We Chat, etc. All this is result of advanced and ‘smart’ technology.

Now-a-days we have smart phones, smart computers, smart tablets, smart technology, etc. We can see everything is becoming smart and smarter. But do we ask ourselves, that in the age of technology becoming smarter, are we also becoming smarter? What comes to my mind always looking at the today’s scenario that – This is the age of smart technology and idiot people. Technology is getting smarter but people are getting idiots.

With the increase in the use of social networking, we have definitely reduced the gap between ourselves, but alongside it, there is an increasing amount of spam in the social media world. I wonder how people fall prey to such spam messages. It all started when I was still studying in CA Final and one fine day just before exams I got a message as below –

“This message has come from Sai Baba Shirdi. This is a good luck message. Pass this message to 15 people except me and you’ll get good luck for next 5 years. Don’t ignore or delete or you’ll face bad luck for next 7 years”

Without thinking for a single moment, I deleted the message and I am still wondering where is my bad luck. Do you really think the message is sent by any God or any Deity? Are we really so insane of dumb to believe such things immediately? This comes to my thinking of smart technology and idiot people. This links to my article – “Think before you like, share or forward”.

What I have given above is just one example. There are many such examples of fooling people through technology. The intention is just to keep people busy in irrelevant things. I want to share examples of such spamming through social networking with an appeal to people not to fall prey for such spams.

Following are some popular of spamming on various social networks including SMS, IM, Facebook, Twitter, Whatsapp, etc.

1. Forward this message to get good luck or if ignored face bad luck for years. Do you really think that your good luck is depending on some type of forwarding of messages? Then I request you one more thing that forward ‘that’ message to 21 people as required and then don’t take any efforts in your life. Let’s see how and who gives you good luck. Even God will not help you if you don’t help yourselves.

2. There is one popular spam on all types of social networks about ATM machines that if in case of emergency or some danger situation, if you enter your ATM PIN in reverse order, than the ATM machine will understand the danger and inform the nearest police station. I have seen when people get such messages they share or forward it immediately in a hope of sharing valuable information with someone else. But have you thought for a moment that this information might by fake or spam. Have you tried to check the authenticity of such message? For example, if my ATM PIN 1221 or say 4444 then I don’t have the right to inform the nearest police station in case of danger? The message clearly indicates itself that it’s fake information. Still people blindly share or forward it. This is one such example. There are many. You need to be careful before you share with someone.

3. Pictures of religious places, Gods, of deities are posted on media and people are asked to like it or share it to get good luck. Do you think God is sitting there with facebook and observing people who like His photo and then to transfer good luck to that person. By liking or sharing religious photos you are not worshipping God but in turn you are insulting Him.

4. Posting photos of health affected people or children and asking for likes and shares so that you can pray to God for saving the person in the image from such medical illness. For example 1 like = 1 prayer and 1 share = 100 prayers. I think you are not praying for the health of affected person but you are just making fun of such people.

5. Apart from the above there are various types of spamming in form of creative manipulation of images so as to make people believe them to be true and think of it like a miracle, again demanding likes and shares on such information. I have seen people sharing or liking such images assuming it to be true.

I have covered a very limited aspect of spamming here. But whenever I use social networking, I find spamming to a very large extent. Even if it doesn’t cost you anything to like, share or forward something, still whenever you forward some information in the social media, you should at least check for its authenticity. We are generally advised to ‘Think before you speak’. But in this social media context I would like to change it to ‘Think before you like, share or forward.’

CA. Amol Gopal Kabra

Value of CA Services

2012-05-25T18:21:00.001+05:30

Earlier, I have written various articles relating to students. This is my first article keeping in mind Chartered Accountants in Practice. This article also applies to any professional providing services in the form of practice. However, I am writing this article for Chartered Accountants only. This article is regarding the value of services given by CA’s in Practice.

Ours is not a business industry whereby we can estimate the cost of goods manufactured or cost of goods traded. If we consider the expenditure we incur on providing our services, it is very negligible. Being a professional we spend our time or rather we invest our time. So the value of services cannot be measured as easily as compared to products. So how should the services be valued?

There may be different perceptions about how to value the services and charge accordingly. But by any means or methods, the crucial factor on which the calculation should be done is time. We provide our time to clients. Time is the most important factor of our services. Here the question arises is how should we charge on timely basis. Calculating the value of time is not so easy task. There are certain criteria on which it is based. Two of these are estimated time of work expressed in terms of hours and remuneration expected from practice expressed in terms of money.

First we need to calculate how much time we are going to work effectively during a given period of time, say one year. This time should be expressed in terms of hours. Second, we need to calculate what our expected remuneration from practice is. This should also include the overheads we incur for maintaining our professional office. On the basis of these two criteria, we can estimate the expected earnings per hour. Here I am not giving any demonstrations for this. This thing is simple to understand. My purpose is to make the readers understand the need of calculating the expected remuneration per hour and charge accordingly.

However, in practical, this thing does not happen. Especially in non-metro cities, the members don’t charge or at least don’t calculate their expected remuneration per hour. This leads to under valuation of their services. In most of the cases, fees are not charged in proportion of the time devoted for the respective work. Our prime investment in services is time. So while charging the fees, due respect should be given to time also.

Apart from calculating the hour rates of partners / proprietor in the firm, similar calculations should also be made for the qualified and semi-qualified staff members, audit and articled assistants, support staff, etc. This calculation not only makes us realize the value of time, but also results in improved efficiency of partners and staff in the office.

There are certain tasks for which the time involved and fees charged cannot be exactly correlated, because of which such assignments cannot be charged on hour-rate basis. Examples are audits of small traders, tax advisory services, etc. However, in such cases we should estimate time involved for each of such service and derive the fees to be charged.

I would like to make it clear that time is not the only factor on which the fees should be decided. There are various other factors on which the charging of fees can depend. Some of them are the nature and volume of work, scope of work, the needs of the client, priority of the work, etc. These factors affect on the charging of fees from time to time and case to case.

This was regarding how to value our service. But now the prime reason why there should not be undervaluation of our services. I repeat again, we are not selling any product in the market, but we are providing services. But as like product, clients expect quality services from professionals. If we compare among products in the market, the better the quality the higher is the price and vice-versa. Similar is the case for services. But here fees are not based on quality, but quality is based on fees.

If we try to charge less to clients, initially we may attract some clients but we cannot assure quality services to them, because if the remuneration is less, the dedication is also less. On the contrary, if the remuneration is more, the dedication is also more. This results in providing of qualitative services which in turn results building the goodwill of the professional as well as the profession. If a person is charging less just to sustain in competition, he will sustain the price competition but he won’t sustain the competition of quality and enrichment of services.

The race of service industry cannot be won on the basis on reduced prices but on the basis of improved quality. And for providing improved quality services, the right price is also to be charged. So, all the members of the fraternity, please value you services properly, and the services will value you in return.

CA. Amol Gopal Kabra

Failure is not Falling Down

2012-05-22T10:37:00.002+05:30

In this age of cut-throat competition, everybody is racing towards success. However, it is not possible for everyone to succeed at once. There is competition almost everywhere. In every phase of life, in every sector of life, there is competition. Everybody wants to succeed. Nobody wants to fail. Still it is not possible that everyone will succeed. But in this race, people fail to understand the real meaning of success and failure.

Those who succeed don’t think need to understand what the real meaning of success is. They are too much satisfied to care about. On the contrary those who don’t succeed are also not aware what the exact meaning of failure is. They are too much depressed to care about. In this article, I’ll just write about the latter part and not the former. I’ll write another article for it.

In common parlance, failure means not achieving something that is desired. Examples of failure are, failing in exams, making losses in business, failing in job interviews, failing in scientific inventions, failing in love, failing to win sports tournaments, etc. These are the ‘so called’ examples of failure.

However this is not the real meaning of failure. According to a popular maxim, “Failure is not falling down, but refusing to get up.” This maxim looks easy to read but again people fail to understand it properly. They don’t apply this in their own life when they fail to achieve something they desire. The point of failure is not that when you didn’t get success, i.e. you fell down. The point of failure is when you don’t get up again to achieve what you desire.

There is an example which all of us have experienced in our life. As an infant, nobody can walk. Babies just crawl and make their moves. But after a certain period of time, the same baby can walk fairly well. After some more period of time, the baby can walk perfectly. Does this change take place overnight? The answer is no. There are many instances when the baby in an attempt to stand on his own legs and walk, falls down. But he still manages to stand up again and again and after numerous attempts, he makes himself capable of walking.

This baby is none other than what we ourselves are. If suppose we didn’t get up after falling and didn’t try again and again, then I think, the scenario would have been like this – We all would have crawled instead of walking and running. This seems to be a very simple example, but this is the first success in everybody’s life.

We tend to forget that we didn’t have the attitude of quitting in our childhood. This results in many people quitting their own efforts that lead them towards the success. Failure is final when one decides to quit. In fact if it is your dream to achieve it, then you should not quit till your dream is fulfilled.

Swamy Vivekanand has also given the same message in one of his saying – Arise, Awake and Stop not till the Goal is achieved. This thought also means the same that don’t stop after you fail. Don’t quit till you achieve your goal.

The great scientist Thomas Edison failed for almost 10000 times before inventing the electric bulb. But finally he succeeded after these many attempts. After so many attempts, his attitude was I have found 10000 ways of not inventing an electric bulb. This attitude of not quitting after failed attempts has led him to the success of inventing the electric bulb.

If we look at most successful people in life, everyone had to face to different failures before achieving the successful position in their life. When we look at the successful people, we just say that it their luck. But I would like to tell that luck favours the one who is prepared to achieve in all respects. So don’t just look at the luck of successful people. There are lot of other things that led them to their success.

I’d like to conclude that whenever in file you come across any failure, don’t get disappointed, don’t feel down. Just get up and get going. Success is waiting for you.

CA. Amol Gopal Kabra

Believe in Yourself...!

2012-05-10T17:45:00.002+05:30

There is an old maxim which says, “God helps those who help themselves”. It means that God, the super natural power favors only them who are ready to help themselves. Those who just wait and watch for letting things happen automatically end up achieving nothing. However, working only is not sufficient. Barring a few exceptions, people keep on working or taking efforts. These efforts may be for any purpose, e.g. study, employment, business, sports, developing personal skills, social contributions, etc. Everybody is busy in some or other activity.

It is rightly said that hard work cannot be avoided. But despite of everybody taking so much of hard work we don’t see everybody succeeding till the end. What might be the reason? Many of us believe that it may be bad luck or in common parlance we say “naseeb me hi nahi hai”. But this is not so. For any given achievement, luck works only to the level of 2-5%. If it is so, then what is the lacking element? That element is self-belief. Yes, self-belief.

It tends to happen that generally people keep on working without believing in themselves. If you just keep on working hard without believing in yourself, all your efforts will go in vain. The foundation stone for any structure of success is the self-belief itself. Without the ingredient call self-belief, the delicious success dish cannot be prepared.

We all know about the giant mammal elephant. If we observe carefully, this mighty animal, which can destroy strongest of the trees in the forest, is tied easily with the support of just a metal chain. If we compare the support given by the chain and the power of the elephant, the support is very easy for the elephant to break, but still it can’t. Why? The reason is that the elephant thinks that he cannot break the chain. The reason relates to its infancy. When the elephant was just an infant, and was tied to a similar chain, it was not possible to break it out. Since then, it has got in its mind that the chain is impossible to break. So after all it relates to the power of self-belief.

Similar is the situation of most of us in our day to day life. Students study with the fear of failure. Our mind is a case which can occupy only one sword, either belief or fear. But most of us carry the fear with us. It is very necessary for the students to stop worrying about failure and start believing in themselves. Students get the fear because of various inputs they get from various sources. No doubt, any exam in this world is hard to clear but it does not mean it cannot be cleared. The basic thing required for any exam is belief about oneself.

Not only students, but businessmen, professionals, sport persons, and people involved in various other activities carry the fear of failure in their mind. This fear does not let them achieve the results. To repeat again, only one thing can get rid of fear and that is belief. So not just students, but all other people who aspire to achieve new heights of success in life should first start believing in yourself.

In the beginning of this article, I have quoted one maxim. I repeat it here – God helps them who help themselves. I have an idea ahead of it and I know it works. Unless you believe in yourself, neither the world will believe nor will God believe. And if God does not believe in you, then I don’t think there is any possibility of achieving anything. So if you wish and pray God to help you then first believe in yourself, then help yourself and then only will God come to your help, that too if required.

So, the bottom-line is that if you want to succeed in anything you desire, first you should believe that you can and then start working on you. I am sure, the success is yours.

The 3D's of Success

2011-07-27T15:26:00.000+05:30

Recently I have written some articles for PCC and Final students. This article is especially written keeping the CPT students in mind. This is because they are new to the course and they should know the basic factors that are required for this course. Nevertheless, it also applies to the students of IPCC and Final and even to students of any stream.

We all of know the concept of 3D. It means 3-Dimensional. But this concept of 3D is a bit different. Here this is a Formula for Success. More or less, this is also a three dimensional formula with three D’s standing for the three requirements below –

D – Desire

D – Dedication

D – Direction

These words seem to be simple words at the beginning, but there is a lot of deep meaning hidden inside them. We begin with these one by one.

The First “D” – Desire

The first D is of Desire. Desire means one’s wish or willingness or aspiration. Here it means that, it should be one’s own wish to join the course and complete it. Most of the students join the course, not because of their own wish. There are many reasons for their doing CA. Some of them are – their parents require them to do; because majority of their classmates has joined CA and they don’t want to remain alone from the group in a new college or course; or because their best friend has joined the course. These should not be your reasons for joining the course. You can achieve success, only if you on your own aspire to do anything. Own willingness is the prime requirement for completing any task in this universe. If you aspire it, then only you can put your soul into it to complete it. So, ask yourself this question – Do I really aspire to do CA? In case the answer is no, you should really think about it seriously.

The Second “D” – Dedication

As I have said it earlier, if you aspire, then only you can put your soul into it to complete it. But now, I change my statement slightly. If you aspire, then you have to put your soul into it. You have to dedicate yourself for the course. For achieving success, there is no other option for hard work. I keep on saying people not to misinterpret this word. Hard work does not mean study for 14-16 hours. Hard work means serious approach towards the study. Hard work is a relative concept. The definition of hard work differs from person to person. One may require 3-4 readings to understand whereas other may require just 1-2 readings. So, hard work has no specific definition. One should realize his requirement and then work accordingly. I just wish to say that, mere desire is not sufficient, but you also require dedication for the same.

The Third “D” – Direction

What is the use of hard work if it is not in proper sense? Suppose you need to go New Delhi and you board the flight to Chennai, will it be of any use? Hard work needs the assistance of proper direction. As you are new to the course, you should have a proper guidance from the one who are experts in the field. In case you are not going in proper direction, all your hard work will go in vain. There is one short poem about guidance –

Najar badlo, Najare badal jayenge,

Soch badlo, Sitare badal jayenge,

Kashthiya badalne ki jarurat nahi hai,

Rukh badlo, Kinare badal jayenge.

The literal meaning of this poem is somewhat like this –

Change the way you look, the Scene will change,

Change the way you think, the Luck (Stars) will change,

Why do you keep changing the Ship?

Change the direction, the Destination will change.

I am sure that you got the real meaning of direction.

To conclude, I must say that to view the true picture of success, you must wear the goggles of “3D”.

Wish you all the best.

CA. Amol Gopal Kabra

The Path of Fire!

2011-07-23T17:38:00.002+05:30

After my recent article giving some tips to prepare for forthcoming exams, I thought of writing an article for those who were not able to qualify their exams. Those who never fail can never have the true test of success. Failure here is easy to speak but very tough to accept. All the dreams, aspires, desires are crushed and it feels to us that we are nowhere. But wait, and think that this is not just the end of our struggle, it’s just the beginning. The pressure of exam is very very small as compared to the pressure of life. So don’t get shattered by one failure in a ‘big’ exam of the course which in fact is a very ‘small’ exam of life.

I remember, when I was in CA Final, I used to rehearse these lines from the writings of the great poet Shri. Harivanshraiji Bachchan –

Tu na thakega kabhi,

Tu na thamega kabhi,

Tu na mudega kabhi,

Kar shapath, Kar Shapath, Kar Shapath,

Agnipath, Agnipath, Agnipath.

Believe me; this poem gives us a lot of meaning and inspiration in our hardest times. I have tried to translate in my best possible manner here –

You won’t ever be tired,

You won’t ever stop,

You won’t ever turn back,

Promise, Promise, Promise,

(even if)

The Path is of Fire.

Translation was very simple. But the meaning is very deep. These lines require us to make a strong determination that you will not stop until you reach your goal irrespective of the fact that the path to success is very difficult. If you want to enjoy the fruits of success, you will have to face the difficulties to reach there.

Tu na thakega kabhi (You won’t ever be tired)

Despite the failure, make sure that you won’t be tired of it. When the feeling of tiredness will creep up in your mind, then the ‘foundation’ of your determination will start to weaken. Yes, the fact is that the result was not in your favor, but if you get depressed at this point, then the urge to succeed will disappear. You have to forget it as a nightmare and start afresh for the goal.

Tu na thamega kabhi (You won’t ever stop)

When you joined the course, there was a dream in your mind. The dream was – Some day after a few years, I will be a Chartered Accountant. But now there is an obstacle in your dream. So what, it’s not over yet. You still have a chance to fulfill your dream. Don’t stop, go ahead. Once you start feeling the depression, thoughts will come to your mind to stop here. But you have to continue. You have to continue so that your dream does not remain just a Dream.

Tu na mudega kabhi (You won’t turn back)

Winners never quit. Quitters never win. If after feeling depressed, somewhere you feel to stop, the next thing which comes to your mind is – Should I quit from here? But you are forgetting something, that you are just a step away from your success. You can see the success just one step ahead, but if you quit or turn back from here, you won’t ever fulfill your dream. Even at the last step, success will not come to you. You will have to go towards it. So, never quit you dream just because you failed this time.

Kar Shapath (Promise)

Now the question is to whom are you required to make these promises – your parents, your teachers, your friends, your society, or your God? No, to none of these. You have to make these promises to yourself. You have to make a strong determination to make, follow and fulfill these promises. Yes, fulfill these promises even if the path towards success is made up of fire.

Swami Vivekanand has rightly said – Arise, Awake, and Stop not till the goal is achieved.

Forget the failure, not the Reasons

You should forget the failure but not the reasons. You have to analyse and ask youself – what went wrong? Find the reasons and make sure you don’t repeat them. Remember one thing; there is a lot of difference between ‘Reason’ and ‘Excuse’. Don’t make excuses for your failure, but find out and correct them. If you go on with this attitude then nobody will stop you from enjoying the success this time.

So go ahead and conquer the dream. All the best.

CA. Amol Gopal Kabra

100 Days to Go

2011-07-22T11:38:00.000+05:30

The result of CA Final exams was declared recently. Heartiest Congratulations to all those who cleared their finals, but hard luck for those who didn’t manage to. But don’t worry and concentrate on the attempt to come. The PCC/IPCC result is yet to be declared, but then the result will be similar, some will qualify and some wont. In any case, those who shall be preparing for the November Exams, there are a hundred odd days to go. I am writing this article to present some tips for the exams. Needless to say but this article is for both category of students appearing for Final and IPCC, i.e. fresher and repeater.

1. Considering the time span remaining for the exam, that is around 100 days, you need to fully dedicate towards studies. It does not mean that you should study for 24 hours a day, but now your approach towards the exams must be serious.

2. The prime requirements for beginning the studies are Confidence and Self Belief. Unless and until you have these two ‘deadly weapons’, you are not going to conquer the exams.

3. The level of Confidence should be optimal. Under-Confidence as well as Over-Confidence, both are equally harmful. So, the dose of Confidence should be appropriate.

4. Until you believe in yourself, nobody else will do so. If you pray to God without believing in yourself, God will also not believe in you and may not help you.

5. Remember, study and hard work comes first. All other things, i.e. luck, wishes, God’s grace, etc. follow. So, there is no other option than hard work and study.

6. Study for 7-8 hours a day for the next 2 months and for 10-12 hours a day for the rest of the days. This much of study with good level of concentration is sufficient for anybody to clear CA exams.

7. Don’t chalk out time-wise or subject-wise time table for study. You won’t be able to follow the same. And then this will result into frustration or loss of concentration which will adversely affect your studies. Whatever may be the time and whatever may be the subject, study as per your mood. But at the same time keep in mind two constraints – time and subjects. You need to study for the above mentioned time and in a span of 8-10 days you give justice to each subject you are going to appear.

8. Don’t ever plan to leave any subject to be prepared at end. A subject left is left forever. So, irrespective whether the subject is your favorite or not, you have to study it well before exams.

9. Apart from studies, also include recreational activities in your schedule. These activities should be of such nature those give peace to your mind. Examples are listening to silent music, going for a walk, etc. These are just examples. You can do any activity that gives peace to your mind.

10. Keep your attitude positive throughout the preparation period as well as the exam period. Keep out of reach of people who give you negative inputs, even if such person is your best friend. Because, his intentions might not be to harm you, but still it may affect you adversely.

11. Don’t compare your studies with your mates. If you think you are lagging behind them, it will frustrate you. If you think you are ahead of them, it will relax you and you may lose down on your studies. If you want to compare, just compare with yourself.

12. Give proper rest to your body even during your exams. After all our body is not a machine. And even machines need rest and repairs if used excessively. Have a sleep of at least 6 hours a day. 8 hours of sleeping is highly recommended. If you go on studying on without giving rest to your body, the body may face a breakdown during exams. And if anything adverse happens, no problem, just wait for 6 more months to achieve your success in exams.

13. Don’t gulp down entire syllabus. Study with proper understanding. Remember you can’t eat an entire Chapati or Roti in one stroke. You have to eat it bite by bite. Same is with or brains. The input has to be in small parts and, to ‘digest’ the input, we need the ‘saliva’ of understanding.

14. Don’t study till the last moment of the exam and till the invigilator asks you to leave your books. Leave the books at least 1 hour before the exams. This will give rest to your brain to be used with more efficiency during exams.

15. Most important thing, don’t get nervous before the start of exams. Most of us think that how to recall such a huge syllabus. But what we have to recall is just answers to 8-10 questions that we have to face in the exam. If you are calm during the exam, the brain will work at least 10 times faster. And if you panic, it won’t help you to recall.

16. If you think that by sending a message to 15 people, you will get success in exams and by not sending the same you will face bad luck for years, then you are the biggest fool in this entire universe. These are all the tricks to lose your concentration. So better don’t believe on such rubbish things.

17. Always keep a smile on your face. This will help your nervousness to get down.

18. Even during exams, do spare some time to talk with your relatives and friends. But the topics of discussion should be strictly other than studies. This is just to reduce the nervousness about exams.

19. In case you feel down and need motivation, feel free to speak to those people who you think can inspire you. Motivation is highly needed at the times of exams.

20. All the best for your studies and exams.

CA. Amol Gopal Kabra

Corruption - The Vicious Cycle

2011-07-19T18:32:00.003+05:30

[Disclaimer: The views which I have expressed in this article are not supporting/against any political party or not even against any specific class of public. The views are entirely focused on the system of corruption rather than any person or group of persons. My view towards public, government and political parties is completely neutral]

The word “Corruption” is derived from the word ‘Corrupt’ (Latin corruptus) which means completely broken. We can now realize what may be the literal meaning of the word which has actually ‘completely broken’ the Administrative System of our country. Not only administrative, but it has broken almost all systems of the country.

In philosophical or theological or moral discussions, corruption is spiritual or moral impurity or deviation from an ideal. (Source: Wikipedia). Truly, corruption is deviation from an ideal – ideal procedure, ideal legal compliance, ideal working, ideal results, etc. Any reward or any benefit that is offered of given to change the situation from an ‘ideal’ situation to benefit the person doing so is called corruption. This was something about the meaning and definition.

Almost every day, we get new information on any scam, new protest against corruption, new demands for enactments against corruption. After some days, we shall be used to it a routine matter of our life. But do we really think who is responsible for this corruption – the Government Officials, Members of Parliaments / Legislative Authorities, Business Houses or Public? Usually if you ask that who is responsible for corruption, you will get answers like Government Officials or Ministers or Political Parties. But has anybody realized that not just these people but the public itself is also responsible for corruption. To be more specific, we ourselves are responsible for corruption. Both the parties who pay bribe and who accept bribe are responsible.

The Practical Scenario:

On a fine morning, you get ready for going out. You take your vehicle and as you are in a hurry either you take a no entry or you break a traffic signal. Here the law has been broken for your own advantage. (Advantage is that you have to ‘save’ your time to reach early at your destination.) What happens next is that you are caught by the traffic cop for breaking the law. He charges you Rs. 300 as fine. Here, you only offer him Rs. 100 to avoid the ‘extra financial loss’ of Rs. 200. Now who is responsible for corruption? You or the traffic cop or both? But we blame just the person who is accepting the bribe, whereas we ourselves are equally responsible.

This is just one situation of our life where we ourselves offer bribes so that we avoid the penal consequences. There are many more consequences. Right from an individual to a big business house who are responsible to initiate corruption. A businessman wants to earn ‘tax-free’ money (i.e. the black money) for which, when situation arises, he is ready to ‘share’ the benefit earned from black-money with the tax officials. Big business houses are ready to pay huge sums of money to ministers or government officials to get their proposals of new units approved without much hassles. This was the aspect where the corruption is initiated from the public side.

There also exist cases of corruption, where the public has to pay bribe for reasons out of their control. Many government officials demand for bribe despite of all the required legal compliance is valid. This happens in various government departments. It happens even in case of police departments in cases where the robbers are arrested and the victims claim their belongings back from the department. There is a very practical case know to all of us. Even the postman asks for some money when he delivers you the passport. If you don’t pay him, he’ll demand you various documents and in case of non-availability of some of any of them, he’ll threaten you for returning the passport. And so as to avoid further consequences, you get ready to pay him.

What is the vicious cycle of corruption?

As discussed everybody does corruption for some or the other reason – either to benefit himself or for situations out of his own control. Now, I’ll show you the vicious cycle of corruption.

A common person / businessman pays bribe to government officials for his own benefit.
The government official, who was once a candidate for the post, has paid a huge amount as bribe to the head of that department for his appointment for the post. So he is trying to recover the amount from public / businessmen.
The respective head of the department has already paid a huge amount (more than his junior has paid to him) to some state or central minister. So he is trying to recover it from his juniors.
The respective minister has incurred huge expenditure in contesting elections and winning them. The so called huge expenditure also includes amounts and ‘benefits’ paid to common people to cast vote in their favor.

This is the vicious circle of corruption. We can put the blame just on the ministers or the government. We should realize that we all are equally responsible for it.

What is the Solution?

As I have already discussed that there are two situations for corruption – one that we ourselves create to avoid law and consequences and the other that we are forced to. We on our individual basis can totally avoid the former situation that we ourselves have created. This can be done by proper legal compliance on our part irrespective of the financial outflow is required on legal part. However, the later one cannot be controlled by any single individual. For the later one, there is a requirement of mass response. But one thing is for sure, unless we prevent the former situation, we won’t be ‘eligible’ for the later one. So to curb the corruption, the action should begin at your own rather than just blaming the system.

CA. Amol Gopal Kabra

Happy Man's Shirt

2011-07-13T17:10:00.004+05:30

Many amongst us know the story of the King who was in search of happiness. Still, I’ll discuss it here so that you recall it. Long time ago there was a king who was very anxious and so he was not happy for n number of reasons. He had lot of wealth, money, estate, property, etc. but still was not happy. So, he decided to consult to his Guru. His Guru suggested him that he’ll be happy if he gets and wears a shirt of the person who was the most happy in his kingdom. So he began the search of such person. Many days passed but the king didn’t find any such person. Every person he met was unhappy for one or the other reason. But finally after lot of search, he found a person who was very happy. The person was a poor farmer who used to earn his daily livelihood on his small piece of land but was satisfied and content with what he had. The king was happy to find him and immediately asked him for his shirt. But soon the king noticed that the farmer was not wearing a shirt. Here he realized the real meaning of his Guru.

Similar to the king, everybody in our own life is in search of happiness through external sources, but the fact is that the happiness lies within. A person with millions of wealth may not be happy but a person who barely earns his livelihood may be happier. The reason is the later one is content with what he has. Happiness is not from the physical amenities we enjoy, but it is the sense of satisfaction that our soul feels. Happiness is not what we own and what others see in us. It is what we feel within.

Today, the definition of happiness is totally changed. People just want to seem happy to the world but they actually are not happy within. Everyone is conscious about what people think about them but nobody is conscious about what he himself thinks. People run after money, wealth, prosperity, etc. to gain happiness but they forget the things which make them happy. They just want to ‘show-off’ their happiness rather than feeling it. In an urge to ‘make others feel’ them happy, they forget about the things what actually ‘make’ them happy.

The one who is most happy in this world is a small child who is unaware of all the external sources of the so called ‘happiness’. He finds his happiness in his own activities and own style. He is not bothered about any finance, wealth, amenities, money, property, etc., but is happy with his basic needs only. Once he starts growing and becomes aware of the external environment, his ‘needs’ of happiness changes and as the ‘tradition’ goes on, he tries to find happiness in external things forgetting what his own mind and soul needs.

Mahatma Gandhi has rightly said – “Happiness is when what you think, what you say, and what you do are in harmony.” So, it’s our own responsibility to ask our soul rather our body the needs of happiness. We should think, say and accordingly act for our happiness. Do what you like and be happy.

Stress - How to handle it?

2011-07-12T12:27:00.005+05:30

One thing that every human has got by birth is – Stress or what we call it in our customary language as Tension. There is no person in this universe that is free of tension. It is an inherent part of our lives.

A school going kid has the tension for studies, a pass out graduate has the tension for placement or career, a businessman has the tension for his revenues, a housewife has her household tensions, etc. However, every other person assumes himself to be the most stressful in this entire world. But the fact is that, if we were asked to exchange our problems with other people, we will exchange them back in less than a span of 24 hours. So, the problem is not about the stress or the tension, but about how to tackle it.

A simple quote says that “If problem can be solved, there is no need to worry; if the problem cannot be solved, there is no use of worrying.” The stress we have grows bigger and bigger only if we keep on worrying about it. Rather than worrying about the stress, what we need to do is work on it. The best way to get rid of a problem is to solve it and not just think about and keep worrying.

In case of stress, one should ask this question to himself. Whether I can control the situations that result into stress? If the answer is yes, the just go and control the situations in the best possible manner you can. If the answer is no, just keep your head cool and wait patiently to get the situations better in your favor. Even a marble needs to go through various strokes of the sculptor to be finally worshiped as God. So, in case of stress, patience always pays you.

Even the perception of the problem also results in the stress. We consider the problem to be very complex but actually it’s a small one. The more we think about it, the more complex it seems to us. The decision is your as to how much to entertain a problem that results in a stress for you. Entire water in the ocean could never sink a ship, unless it gets inside. Similarly, all the pressures of life can never hurt you, unless you let them in. So, if you don’t want to allow the pressure to be built in, there is no way it will hurt you.

I am very much inspired by M. S. Dhoni, the Captain of Indian Cricket Team, by one of his incidences in his career which all of us know very well. It’s about the great Final match of Cricket World Cup 2011. The toss was initially won by India, but owing to confusion, the match referee asked for repeat toss. Without any hesitation, our Captain gave his consent. This was such a pressure situation, where any other person would have lost his temper and would have acted aggressively. But keeping his cool, he accepted the situation and rather that putting energy in aggression he utilized it for his performance which was, I think, his best performance ever as it led India to a World Cup Victory.

To conclude, “Any problem in this world is not BIG, unless you make it so.”

Fastrack IPO - List within 12 days

2010-04-10T11:22:00.000+05:30

The Securities and Exchange Board of India (SEBI) has said that the Companies coming up with Initial Public Offering (IPO) in the Stock Market shall be required to list their shares within 12 days of the close of the issue as compared to 22 days in the current scenario. The reduction in the time of listing of the shares from the date of closure of the issue shall also resulting the reduction in the risk of investors. This shall lead to a confidence and healthy environment among investors regarding the IPO's.