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IDFC First Bank-Next Multi Bagger?

2020-06-15T18:31:00.001+05:30

IDFC First Bank- Next Multi bagger?

Just a thought, without looking to fundamentals, Technical Chart, Expert View etc etc , can IDFC First Bank be next multi-bagger?

How this thought emerges? Let us look at below comparison with recently established private sector bank(s).

Banking Licence history of recent private sector bank and their highest closing share price

In 1994, Reserve Bank of India (RBI) has issued banking licence to HDFC Bank and ICICI Bank. Thereafter in 2003-2004, RBI issued new licence to Kotak Mahindra Bank and Yes Bank. Latest in the category are IDFC First Bank and Bandhan Bank which got licence in 2015.

Highest closing share price of these banks since their listing are as follows (Source: MoneyControl.com)

Bank Name	Highest Closing Price	Date of Highest Price	Face Value (FV) of Share	No. of times from FV
HDFC Bank	1305.50	Dec 19, 2019	Re 1	1305.50
ICICI Bank	552.20	Dec 30, 2019	Re 2	276.10
Kotak Mahindra Bank	1740.00	Feb 19, 2020	Re 5	348.00
Yes Bank	404.00	Aug 20, 2018	Re 2	202.00
Bandhan Bank	741.80	Aug 09, 2018	Re 10	74.18

Data suggest that highest price has moved upto 1300 times of face value. Even if we consider lowest price movement in the category than also it comes to 74 times of face value.

Currently (around 15th June 2020), the market price of IDFC First Bank is in the range of Rs 20-25 per equity share. With face value of Rs 10/-. this share is currently traded at 2 to 2.5 times of face value. At this price, this share looks attractive if we compare the market price of recently established private sector banks.

Many factors affect the share price of any company and above analysis is just an attempt to connect the share price movement of other private sector bank vis-a-vis potential lies with IDFC First Bank.

As mentioned, above is Just a thought and you should do your own research before investing.

Disclaimer: No content on the article constitutes - or should be understood as constituting - a recommendation to enter in any securities transactions or to engage in any of the investment strategies presented in our content. We do not provide personalised recommendations or views as to whether a stock or investment approach is suited to the financial needs of a specific individual.

Investment/Trading in securities Market is subject to market risk, past performance is not a guarantee of future performance. The risk of loss in trading and investment in Securities markets including Equities, Derivatives, commodity and Currency can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. Please ensure that you understand fully the risks involved and do invest money according to your risk bearing capacity.

Nalin Bhandari Chartered Accountant Cell:+919930018666

To Clear Chartered Accountant (CA) Exams- Some Useful Tips

2020-06-08T16:12:00.000+05:30

To Clear Chartered Accountant (CA) Exams- Some Useful Tips

Become a member of one of the most respected chartered accountant fraternity is the dream of each student appearing for the exam. Chartered Accountancy Exam is organized by the Institute of Chartered Accountants of India and is held in May and November every year. The duration of the chartered accountancy course is 4.5 years after clearing the 12th exam and 3 years after clearing graduation in any stream. The duration of this course increases with the number of attempts.

An exam with an average of 8-10% as passing percentage is clearly the tough course for students to pass. Hard and persistent studies have no alternatives and along with studies, if students can practice following tips than it will enhance the possibility of clearing his/her exams. These tips are other than normal examination tips like start early, sleep well, draw realistic timetable etc.

1) Increase writing speed: You know the exact answer to question asked in the examination but knowing the answer will not convert into “marks” till you write on answer sheet. So, the practice to increase writing speed is extremely important during preparation of exams.

Immediately buy rough paper notebook and try to write at least one page every day while copying the contents from study material. You will notice that It took 15-20 minutes to write a single page and with this speed in an examination time of 3 hours you can write max 9-10 pages. Practice enough to write 6-7 pages in an hour with a writing speed of at least 1 page every 10 minutes.

2) Practice Formats: Every minute saved in the examination can be used by the student for other critical stuff like re-reading all the attempted answers, to give more thoughts to technical questions etc. In case of paper like accountancy, practice the exact format of Revenue account, Profit and loss account, Balance Sheet and practice to mention other small things like Rs in thousands/Lakh, reference of note number etc. To draw right format is non-technical but important step for scoring additional point in exams. Continuous practice of formats while solving accounting, costing, tax questions can easily save time during exams and also add additional marks.

3) Identify your strength and weakness: Student need atleast 40% mark in each paper and 50% mark in aggregate to clear any group of CA intermediate/Final exam. Identify your strong and weak subject and study with focused target to score atleast 40% marks in weak subject and 60% plus marks in strong subjects to achieve aggregate target of 50% marks.

4) Do focused Studies: Many students buy multiple text book authored by various author to practice subjects like accountancy, costing, tax etc. Please note everyone has limited time for preparation of exams and any group cannot be cleared by mastering in a particular subject. You have to attempt all the papers and has to study every subject in a limited span of time. Do focused study and spend more time to clear the “concepts” of the subject.

5) Revision before exams: Student generally gets a day off before next exam for any revision. While preparing for exams make small notes, rephrase key points on the right hand side of study material etc which will help you to revise the subject in short span of available time and also boost the confidence level.

6) Tutor another student: This tip is for student who had already appeared the same group/exam in earlier attempts. It is really boring to study the same subject which was already tried multiple times. By tutoring another student not only earns money but will also increases the clarity, gives different prospective of same problem while solving the queries of your student.

There is no alternative to hard work and with some different steps/efforts you can easily achieve your goals. I like to conclude this article with few lines on “efforts”. Albert Einstein is widely credited with saying, "The definition of insanity is doing the same thing over and over again but expecting different results." Success is not directly proportional to effort; Success is absolutely about what you focused on and how effective you use your time to achieve your goals.

Nalin Bhandari Chartered Accountant Cell:+919930018666

Gratuity Accounting in the books of Trust

2013-09-22T08:06:00.000+05:30

At the outset, I apologize to all my readers for such a long gap between these two blogs.

In this part-2 on Gratuity Accounting, we will learn the accounting and various other aspects in the books of Gratuity Trust.

In the books of Gratuity trust, the main source of fund is contribution received from employer company. This Fund is mainly used for investment as per the investment policy of Fund. At the time of retirement/ sepration of an employee, the gratuity amount is paid out of the Gratuity Fund.

The main source of income for gratuity trust is interest and dividend income. On the other hand, operating expenses include salary of trust staff, bank charges, professional fees etc.

Accounting Entries

The accounting entries in the books of Gratuity Trust will be as follows:

Date	Particular	Dr/Cr	Nature of Ledger	Amount
Payment Date	Bank A/c	Dr	Asset	100
Payment Date	Gratuity Fund-Contribution received	Cr	Contribution/Gratuity Fund	100
	(toward contribution received from employer company)

Payment Date	Gratuity Fund-Settlement	Dr	Contribution/Gratuity Fund	1
Payment Date	Bank A/c	Cr	Asset	1

	(towards payment made on separation of employee)

Accounting entries pertaining to investment (Asset), investment income (P/L item) and other operating expenses (P/L item) are simple as apply in case of other entities.

Under Source of Fund (in Balance Sheet), Gratuity Fund will be reflected as follows:

Particular	Amount

Opening Balance	Nil
Add: Contribution during the period	100

	100

Less: Settlements made during the period	1

Closing Balance	99

Presentation of above Gratuity Fund is same like “Capital Account” in case of proprietorship firm.

I hope readers must have enjoy this entire series on Gratuity Acc. In case of any query, the readers can post their comment and I will try to resolve the same at the earliest.

Nalin Bhandari Chartered Accountant Cell:+919930018666

Grautity Accounting in the Books of Gratuity Trust & Company

2011-12-12T19:47:00.000+05:30

This blog is intended to highlight the accounting treatment in the books of Employer Company and Gratuity Trust. I have divided this series in two parts. The first part is intended to help the reader to understand the accounting treatment in the books of Employer Company.

Case Study

The Employer Company has decided to create a Gratuity Trust in order to manage the Gratuity liability for their employees. The main motto of the Gratuity Trust is to manage the Funds contributed by Employer Company & to pay the Gratuity Amount to the employee at the time of retirement or separation. The payment will be made out of the funds managed by Gratuity Trust. The Employer Company will periodically contribute to the Funds of Gratuity Trust, which in turn will invest in the securities as approved at the time of creation of trust.

Above arrangement is treated as “Defined Benefit Plan” under AS-15_Accouting for Retirement Benefits issued by Institute of Chartered Accountants of India.

As per AS-15, the Employer Company is required to value the Gratuity Liability from the qualified actuary.

Looking to the above discussion & for the better understanding of the reader, we can take the following example:

In a Financial Year, Employer Company has contributed Rs 100 millions to Gratuity Trust. At the end of Financial Year, the further liability calculated by qualified Actuary is Rs 25 million. The extract from Actuary Report is as follows:

Balance Sheet Recognition (Rs in millions)
Present Value Of Obligation	125
Fair Value Of Plan Assets	-100
Liability (assets)	0
Unrecognised Past Service Cost	0
Liability (asset) recognized in the Balance Sheet	25

Accounting Entries

The accounting entries in the books of Employer-Company will be as follows:

Date	Particular	Dr/Cr	Nature of Ledger	Amount

Payment Date	Provision for Gratuity A/c	Dr	Liability	100
	Bank A/c	Cr	Asset	100

	(Toward Contribution to Gratuity Trust)

31/MAR/2XXX	Gratuity Expenses	Dr	Expense	125
	Provision for Gratuity A/c	Cr	Liability	125

	(Liability & Expense Booking As per Actuarial Valuation)

So the Gratuity Expense recognized in the books of accounts is Rs 125 million vis-a-vis Gratuity Liability as Rs 25 million. It means that the Employer Company has to still contribute Rs 25 millions to Gratuity Trust to meet the Gratuity Liability.

In case of any query, the readers can post their comment and I will try to resolve the same at the earliest.

Please follow this blog to learn the accounting treatment in the books of Gratuity Trust

Nalin Bhandari Chartered Accountant Cell:+919930018666

Cost of Living in Mumbai

2011-12-02T20:17:00.000+05:30

Mumbai is the Financial Capital of India. Most of the Corporates have their offices at Mumbai. The City is full of energy & having fast life. This article is meant for those people who are looking to come down to Mumbai for long stay/permanent stay.

Geographies of Mumbai

Mumbai is in the western part of India & is part of Maharashtra State. City is expanded from Churchgate to Virar on Western Lines and Churchgate to Thane on Central Line. Maximum offices are located between Dadar & Churchgate. Most of the people are stay in suburban areas of Mumbai. Andheri to Virar(western line) & Ghatkopar to Thane(Central Line) are generally referred to as Suburban areas.

Climate of Mumbai

Mumbai has tropical wet & dry climate. Rainy season starts from July & end till November.

Transport

Mumbai is well connected with all means of transport system. Public transport systems in Mumbai include the Mumbai Suburban Railway, BEST buses, Metre taxis & Auto rickshaws. Each Suburban Station is attached with Bus Depot & Taxi/Autorikshaws stand.

Other Facilities

Mumbai is well equipped with all type of other facilities like School,Colleges,Hospital,Malls,24 hr electricity & water supply.

Cost of Living at Mumbai

The main chunk of expenditure goes on rent. The flats are little bit costly as compared to other parts of India. Other household expenditure are almost equal to other metro cities of India. Household expenditure is bifurcated into following heads:

Rent

Flats are available in all sizes & ranges. The rent range is depending on the location & age of Flat. The rent per month is as follows:

Location	1 BHK	2 BHK	3 BHK
	565 Sq Ft	850 Sq Ft	1200 Sq Ft

Churchgate-Andheri/Ghatkopar	20,000-50,000	30,000-200,000	45,000-400,000
Andheri-Borivali or Ghatkopar-Thane	8,000-20,000	12,000-40,000	18,000-70,000
Beyond Borviali or Thane	5,000-8,000	8,000-12,000	12,000-15,000

Security Deposit of the Flat is generally 5-6 times of the monthly rent. Brokerage charges are equivalent to 1.5 month rent.

Electricity Charges & Water Charges

The Cost per unit of electricity is Rs 3.5/unit(upto 100 units) & there after Rs 6/unit (upto 300 units).Water charges are nominal and part of maintenance charges of Flats.

Transport

Suburban Rail Tickets (monthly pass) are available @ Rs 600 p.m for First class and Rs 200 for Second Class. Monthly Bus pass are available in the range of Rs. 200 to Rs. 1000.Minimum Bus fare for Short Distance route is Rs 4.

Minimum Fare of Auto/Taxi is Rs 11 & Rs 16 respectively for first 1.6 Km. Thereafter rate will be charged as Rs 7/Km for Auto & Rs 10/Km for Taxi. Auto & Taxi are run on the basis of Meter & fare is charge on the basis of kilometer run.

Petrol charges are in the range of Rs 65-70 per litre and diesel is available in the range of 30-35.The petrol & diesel prices are variable in nature.

Medical Facilities

All range of Medical facilities are available in Mumbai. There are sufficient amount of Hospital & Doctors Clinic both government as well as private. The Government Medical Facility are available at nominal cost. In Case of Private Clinics normally fees charged by the doctor is as follows:

First Visit: Rs 400

Next Visit: Rs 200

Medicines are easily available and sold on MRP rates.

Telephone Expenses:

Mobile call charges per minute are Rs. 0.50 for Local Call and Rs 1.00 for STD Call. The rates are very competitive and many cheaper plans are also available.

Education

School range from all Boards (State Board, CBSE, ICSE, IB, IGSE) are fairly available in Mumbai. Admission are generally started in the month of August-October for the next session (Session Starts from 1^st April).

	Most of the Schools
	Fee Range	One Time Deposit
State Board	Minimum-10,000	Minimum-10,000
ICSE	30,000-50,000	65,000
IB/IGSE	50,000-100,000	100,000

Other Grocery Items

Generally household items are available in the following ranges. Superstore are also located in the city which offer items at discounted rate.

	Amount in Rs.
MilK	30-45/ litre
Vegetables	60/Kg
Fruits	100/Kg
Cereals	40-100/Kg
Rice	58-120/Kg
Wheat	12-30/Kg

Entertainment

All Sort of Entertainment is available in the city that includes multiplex theatres, mall , restaurants, beer bar ,water park, amusement parks etc.

Normally Couple with two kids can enjoy their weekend in the range of Rs 2,500-3,000(i.e. decent weekend)

In case of any specific query about Mumbai then reader can write to me. I will try to resolve the same.

Nalin Bhandari Chartered Accountant Cell:+919930018666

Draft Circular on Refunds in Service Tax

2011-11-25T09:32:00.000+05:30

The Draft Circular of Refunds in Service Tax as issued by Central Board of Excise & Custom is published here for the comments of reader.On the basis of Comments, we will draft our response & sent to CBEC.Even readers can directly emailed at d.aron@nic.in to Shri Deepankar Aron, Director (Service Tax), CBEC (Phone No. 011-23092747 and Fax No. 011-23092275) by 30^thNovember 2011.

Draft Circular is attached herewith:

Problems faced by exporters in availing refund of excess credit

DRAFT CIRCULAR NO. _____/___2011 - SERVICE TAX

Representations have been received both from the field and the trade regarding difficulties being faced in the determination of the input services which are eligible for refund under notification 05/2006. Resultantly, the issue has spawned delays and disputes, which has necessitated the issue of this clarification.

2. The issue of eligibility of input services to refund under notification no. 05/2006 has been addressed in Circular No. 120/01/2010-ST dated 19^th January, 2010 in paragraph 3.1. The criterion laid down in this paragraph for determining the eligibility states that "in case the absence of such input/input service adversely impacts the quality and efficiency of the provision of service exported, it should be considered as eligible input or input service". This criterion has not been very useful as it is found to be too conceptual and not easily translatable into objective tests that could help in deciding actual cases. Thus a need has been felt for further elaboration by the Board on this issue.

3. The objective that is sought to be achieved by the refund of cenvat credit under notification 05/2006 is to zero-rate the exports. Zero-rating means that the goods and services that are exported from the country should not be burdened with any excise or service taxation. For a 100% exporter who has no domestic business this can be realized only when the ambit of services that are covered by notification 05/2006 is congruent with the ambit of services that are covered by the definition of "input service" that is given in Cenvat Credit Rules, 2004. Thus every input service has to be eligible for refund under notification 05/2006 for a 100% exporter who has no domestic business.

4. The above clearly implies that the scope of Rule 2(l) is congruent with the scope of Rule 5 and the scope of both is congruent with the scope of Notification No. 05/2006 i.e. any service that satisfies the definition of input service as given in Rule 2(l) would also fall within the mischief of Rule 5 and also of Notification No. 05/2006. This is necessary for a perfect pass through from Rule 2 (l) to Rule 5 to Notification No. 05/2010. Only such a construction can zero-rate the exports.

5. For a business entity that has both export business and domestic business the only additional requirement is to check whether the input service has contributed exclusively to domestic business. If the input service has made no contribution to exports and has been exclusively utilized for domestic operations the service has clearly not contributed to exports and so would not be eligible to refund. For example an advertising campaign for a product that is sold exclusively in the domestic market would not contribute to exports and so would not be eligible for the benefit of notification 05/2006. Every input service that is not identifiable as contributing exclusively to domestic business can be said to have a link with exports though its contribution to export may vary. In order to extract the extent of contribution that the input service has made to exports, notification 05/2006 provides for multiplying the credit that has been taken on an input service with the correction factor (export turnover/ total turnover). It is this extracted amount which indicates the contribution that the input service has made to exports. The extracted amount is also the maximum possible amount that is eligible as refund as per the current statute. In this backdrop, it would not be necessary to link every input service invoice with an output invoice, so long as the input service has a link with the export as discussed above.

6. Field formations and trade have represented about the problems being faced in identifying and linking the input services that have gone into providing the output services. Accordingly, the method to be followed for determining eligibility to refund can be summed up in the following principles:

(1) Check that the service on which refund is claimed satisfies the definition of input service that is given in Rule 2 (l) of the CENVAT Credit Rules, 2004.

(2) Next, service is eligible to refund unless facts of the case indicate that the benefit of the service has gone exclusively into domestic business with no spill over what-so-ever into export business.

(3) The second principle mentioned at sub-para (2) above is to be given a strict construction. Disqualification on this account would be an exception rather than a rule and should be done only when there is unmistakable indication that the benefit of the service has not gone into export business what-so-ever.

(4) The level at which a determination shall be made of whether the input service has gone exclusively into domestic business or not shall be at the level of the „input service invoice‟. The officer scrutinizing the claim will not disaggregate the invoice and extract elements from it and state that these elements have exclusively contributed to domestic business. If at the level of aggregation that is reflected in an invoice, a portion of the input service that is embodied in the invoice has contributed to exports, then the entire input service invoice shall be eligible for refund.

7. Keeping the above principles and statutory provisions in mind, as also after considering the feedback from the field formations on eligibility of input services, a list of input services that are eligible for grant of refund has been prepared and is in the Annexure. Apart from the conditions mentioned above, certain other conditions subject to which the refund would be applicable are also indicated therein. It may please be noted that the list is not exhaustive, but is illustrative. Further, the exact application would depend upon the facts of each case.

8. It is expected that the principle that has been outlined above would prove useful in determining eligibility to refund of the input services. At the same time, it is expected that the field formations shall strengthen the audit machinery including the pre-audit and the post audit mechanisms, so as to ensure that the process of sanctioning of refund is taking place in due accordance with the statutory provisions, so as to prevent the possibility of any misuse.

9. It is hoped that with the issuing of this circular, smooth and expeditious disposal of exporters claims for refund shall follow. In case of any doubt, an immediate reference may be made to the Board.

Annexure

List of Services on which refund is allowed (fully or partially)

S. No.	Category of Service	Exclusions or Limitations, if any	Remarks
1	Advertising agency's services 65(105)(e)		A company hires advertising agency for programming, broadcasting and releasing activities related to advertisements. This promotes the brand of the company which enhances its sales and hence is directly related to provision of output service.
2	Air travel agents services 65(105)(i)	Should not be allowed in case it is for personal use of employees	The services are procured by a company in relation to travel of employees for conducting business meeting and attending seminars towards professional objectives. Hence it is an eligible input service for exporting the taxable output service. These services are required for travel and tour of their employees in relation to the company's business which are essential for maintain orders and efficient work of the business i.e. export of services.
3	Asset management service 65(105)(zzzzc)	Should not be allowed in case for personal use of employees.	May be allowed when used for Banking and other financial services.
4	Banking and other financial services 65(105)(zm) & (zzk)	Should not be allowed in case for personal use of employees.	These input services are required for issuance of bank guarantee for overseas project/other business activities.
5.	Business auxiliary services 65(105)(zzb)		These input services are required for procurement of orders and some similar activities.
6.	Business exhibition services 65(105)(zzb)		These services would be required for furtherance of business activities.
7.	Business support Services 65(105)(zzzq)		Accounting payroll, transaction processing, routine administration, customer relationship management, telemarketing and IT support services are taken by the company to maintain the day to day operations of the company and are very much the input services on which refund would be eligible.
8.	Cargo handling service 65(105)(zr)		Should be allowed as it is used for business purposes.
9.	Chartered accountant's services 65(105)(s)	Should not be allowed in case for personal use of employees.	These services are required not only for maintaining the accounts and auditing the records but also for complying with the statutory requirements. Hence, these input services are essential for the business of export of services. Further, these services help to strengthen the internal controls for smooth functioning of the business.
10	Cleaning activity service 65(105)(zzzd)	Should not be allowed in case for personal use of employees.	Cleaning activities of the office premises are necessary to enable the employees of the company to perform efficiently.
11	Clearing and forwarding agent's services 65(105)(j)		Should be allowed as it is used for business purposes.
12	Commercial training or coaching service 65(105)(zzc)	Should not be allowed in case for personal use of employees.	These services are procured by a company so that employees can get regular updates of various changes in laws and technology during seminars, coaching or trainings.
13	Company Secretary Service 65(105)(u)		These services are required for complying with the requirements of Companies Act, 1956 as the assesses are normally registered under the said Act.
14	Consulting engineer's services 65(105)(g)		Various engineers are consulted for providing advice in respect of the output service and the same is used in relation to export.
15	Convention services 65(105)(zc)	Should not be allowed in case services are procured as a staff welfare measure.	As per Circular 120/01/2010-ST dated 19 January 2010, it should not be allowed for entertainment or staff welfare, however for official purposes, these are very much valid input services.
16	Copyright services 65(105)(zzzzt)	Should not be allowed in case for personal use of employees	Should be allowed as these are used for professional activities.
17	Cost accountant's services 65(105)(t)	Should not be allowed in case for personal use of employees	Should be allowed as these are used for professional activities.
18	Courier service 65(105)(f)	Should not be allowed in case for personal use of employees.	These services are consumed by a Company for delivery of business documents. The delivery of these documents is essential to process transactions related to exports. Hence, a valid service.
19	Credit rating agencies 65(105)(x)		These services are used for professional purposes.
20	Custom house agent's services 65(105)(h)		These services are used for professional purposes in relation to exports.
21	Design services 65(105)(zzzzd)		These services are required for making designing of consumer products, industrial products, packages, logos, graphics, website and corporate identity designing and production of three dimensional models. Without these services output services cannot be provided.
22	Development and supply of content service 65(105)(zzzzb)		These services are required towards marketing efforts of the company concerned and as such have a clear nexus with the output activities.
23	Dry cleaning services 65(105)(zt)	Should not be allowed in case for personal use of employees.	Should be used only for office cleaning/ maintenance.
24	Erection, commissioning or installation service 65(105)(zzd)	Should not be allowed in case for personal use of employees	These services rendered in connection with office premises or office equipment would have a direct nexus with the output activities.
25	Event management service 65(105)(zu)	Should not be allowed in case services are procured as a staff welfare measure.	As per Circular 120/01/2010-ST dated 19 January 2010, it should not be for entertainment or staff welfare. However, in so far as it is for promotion of the business, it should be a valid input.
26	Fashion designing service 65(105)(zv)	Should not be allowed in case for personal use of employees.	Should be used only for office purposes.
27	Forward contract services 65(105)(zzy)
28	General Insurance Service 65(105) (d)	Should not be allowed in case for personal use of employees; it is also not allowed in so far as it relates to a motor vehicle except when used for provision of a taxable service for which credit on motor vehicle is available as capital goods;	Should be used only for office purposes. This could include fixed assets insurance or group insurance for official activities.
29	Goods Transport operators 65(105)(zzp)	Should not be allowed in case for personal use of employees.	Should be used only for office purposes.
30	Information technology software service 65(105)(zzzze)		These services are availed for procuring the software for running the operation of company. As export of services is dependent on the better operation of company. Hence the software is an input for providing output service. In addition to this software is required for the data management
31	Intellectual property services 65(105)(zzr)		Should be used only for office purposes.
32	Interior decorator's services 65(105)(q)	Should be allowed if used for renovation or maintenance of office premises only.
33	Internet telecommunication Services 65(105)(zzzu)		A company uses the telecommunication /internet telecommunication services which are essential input services for providing output services. These input services are consumed essentially for providing the output services related to the export business and for discharging day to day duties by the administrative staff. Without the telephone and internet facility the services could not have been rendered.
34	Legal consultancy service 65(105)(zzzzm)	Should not be allowed in case for personal use of employees.	Should be used only for office purposes.
35	Management or Business consultant's services 65(105)		Consultancy Services are procured for providing advice, consultancy and technical assistance in relation to the business and therefore should be allowed.
36	Management, maintenance or repair service 65(105)(zzg)		A company procures services maintenance and repair of office premise, office equipments etc. The management, maintenance & repair service of office building is essential for conducting the business including exports.
37	Mandap keeper's services 65(105)(m)	Should not be allowed in case services are procured as a staff welfare measure.	As per Circular 120/01/2010-ST dated 19 January 2010, it should not be for entertainment or staff welfare. However, for activities relating to business, it should be allowed.
38	Manpower recruitment or supply agency's services 65(105)(k)		Procurement of manpower is a basic requirement of the industry and for which it has to engage recruitment agencies. The procurement of these services is essential in view of the high labor turnover and in order to identify the right person for the right job at the right time. An organization can't operate without appropriate people.
39	Market research agency's services 65(105)(y)		Required for business related activities.
40	On-line information and database access or retrieval services 65(105)(zh)		A company does market analysis, studies economic factors and other market parameters for the purpose of providing output service. For this purpose online database and other research database are used.
41	Packaging services 65(105)(zzzf)		Should be allowed.
42	Pandal or shamiana contractor's service 65(105)(zzw)	Should not be allowed in case services are procured as a staff welfare measure.	As per Circular 120/01/2010-ST dated 19 January 2010, it should not be for entertainment or staff welfare. However, for activities relating to business, it should be allowed.
43	Photography services 65(105)(zb)	Should not be allowed in case services are procured as a staff welfare measure.	As per Circular 120/01/2010-ST dated 19 January 2010, it should not be for entertainment or staff welfare. However, for activities relating to business, it should be allowed.
44	Promotion or Marketing of Brand service 65(105)(zzzzq)		Should be allowed.
45	Public relation management service 65(105)(zzzs)		To maintain public relations, professionals are hired in maintaining relations with govt. authorities and organizations. Should be allowed
46	Rail travel agent's services 65(105)(zz)	Should not be allowed in case for personal use of employees.	Should be allowed for business use.
47	Real estate agent's services 65(105)(v)	Should not be allowed in case for personal use of employees.	Should be allowed for business use.
48.	Rent a cab service 65(105)(o)	It is not allowed in so far as it relates to a motor vehicle except when used for provision of a taxable service for which credit on motor vehicle is available as capital goods.
49	Renting of immovable property services 65(105)(zzzz)		The premises from where the party renders output services or premises where books of accounts of company are maintained has been taken on rent and accordingly renting of immovable property is essential for operation for the output service.
50	Sale of space or time for advertisement services 65(105)(zzzm)		Should be allowed for business use.
51	Scientific or technical consultancy services 65(105)(za)		Should be allowed for business use.
52	Security agency's services 65(105)(w)	Should not be allowed when used for residential premises i.e. in case for personal use of employees.	The procurement of these services is essential for security of office buildings and equipment. Further, business operations involve handling of confidential data.
53	Service of permitting commercial use or exploration of any event organised by a person or organization 65(105)(zzzzr)		Should be allowed for business use.
54	Service relates to short term accommodation 65(105)(zzzzw)	Should not be allowed in case for personal use of employees	Should be allowed for business use.
55	Sponsorship services 65(105)(zzzn)	Should not be allowed in case services are procured as a staff welfare measure.	As per Circular 120/01/2010-ST dated 19 January 2010, it should not be for entertainment or staff welfare. Should however be allowed for business use.
56	Steamer agent's services 65(105)(I)		Should be allowed.
57	Stock broker services 65(105)(a)	Should not be allowed in case for personal use of employees	Should be allowed for business use.
58	Storage and warehousing service 65(105)(zza)		Should be allowed.
59	Survey and map-making service 65(105)(zzzc)		Should be allowed for business use.
60	Technical inspection and certification service 65(105)(zzi)		This input service is related to export of service which is mainly used for inspecting the items which are exported to other country at the ports and other places. Should be allowed for business use.
61	Technical testing and analysis service 65(105)(zzh)		Should be allowed for business use.
62	Telecommunication service 65(105)(zzzx)	Should not be allowed in case for personal use of employees.	Should be allowed for business use
63	Transport of coastal goods; and goods transported through inland water service 65(105)(zzzzl)	Should not be allowed in case for personal use of employees	Should be allowed for business use
64	Transport of goods by air service 65(105)(zzn)	Should not be allowed in case for personal use of employees	Should be allowed for business use
65	Transport of goods by rail service 65(105)(zzzp)	Should not be allowed in case for personal use of employees	Should be allowed for business use
66	Transport of goods by road service 65(105)(zzp)	Should not be allowed in case for personal use of employees
67	Transport of passengers by air service 65(105)(zzzo)	Should not be allowed in case for personal use of employees.	Should be allowed for business use
68	Travel agent's service 65(105)(zzx)	Should not be allowed in case for personal use of employees.	Should be allowed for business use

Nalin Bhandari Chartered Accountant Cell:+919930018666

Revised Negative List of Services

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Dated:18^th November 2011

The Central Board of Excise & Custom has issued Revised Concept Paper on the “Taxation of Services Based on a Negative List”. The Negative List of Service as revised is stated here:

Revised Negative List of Services

Sector	S. No.	Negative List
1. By specified persons	1.	All services other than notified services provided by government Proposed notified services: 1. Business promotion or business support services 2. Construction/works contract 3. Insurance services 4. Port or airport services 5. Postal services other than under Universal Service Obligations (post card, inland letter and money order) 6. Renting of an immovable property or right to enter or use an immovable property 7. Security 8. Trade fairs and exhibitions 9. Transport of goods and passengers 10. Warehousing
1. By specified persons	2.	Services by international bodies and diplomatic missions under diplomatic and consular arrangements as per laid down conditions
2. Social welfare and public utilities	3.	Services by organizations registered as non-profit entities under the Income Tax Act 1961 (DTC 2012) in matters relating to public and social welfare activities substantially at or below the costs (excluding health & education)
2. Social welfare and public utilities	4.	Funeral, burial, crematorium and mortuary services
3. Financial Sector	5.	Sale, purchase or acquisition of securities, debts, mutual funds and actionable claims on principal-to-principal basis excluding (1)services in relation to such transactions and (2) when acquired in lieu of a service
	6.	Interest or discount on cheques, promissory notes, bills of exchange or debt instruments
	7.	Dividend on investments
	8.	Sale and purchase of foreign currency amongst banks and/or authorized dealers of foreign exchange
4.Transport	9	Transport of passengers with accompanied belongings by: (a) Non-AC second class of passenger travel by railway and any class by metro and mono-rail; (b) Public transport buses on a point-to-point basis (except tourist buses) and stage-carriage basis; (c) Public transport in ship or vessel of less than 15 net tonnage on a point-to-point basis (except tourist purposes); (d) Metered cabs or three-wheeler auto-rickshaw
5. Construction & Real Estate	10	Construction, works-contract, repair, alteration, renovation or restoration of: (a) Specified infrastructure for larger public good; (b) Residential building comprising a single dwelling unit
5. Construction & Real Estate	11	Renting of personal dwellings in excess of Rs 1 lakh per month per dwelling
6. Education	12	Pre-school, school and recognized education** and vocational training recognized by NCVT except placement services and donations or similar charges in relation to admission
7. Health	13	Services by clinical establishments except in relation to health & fitness, weight reduction programmes, health check-up and cosmetic or plastic surgery;
8. Others	14	Copyright services of original literary, dramatic, musical and artistic works.
	15	Services provided by independent journalists, PTI & UNI for providing news
	16	Services provided by sportspersons, as a player, coach or referee/umpire and performing artists in that capacity (excluding as brand ambassadors)
	17	Services provided by a trade union to its members
	18	Representational services provided by an advocate to individuals
	19	Services to own members by an exempt entity by way of reimbursement of charges
	20	Tolls except services in relation to collection of tolls
	21	Betting and gambling except services in relation to promoting, marketing or organizing games of chance, including lottery services
	22	Advertisements other than advertisements published in newspapers or broadcast by radio or TV or displayed in other electronic media

*Government means the Union, State and local self government and government regulatory bodies established under an act but shall not include any other entity established under the Companies Act 1956 or any other law for the time being in force.

**Recognized education means education leading to the award of a certificate or degree recognized by a body established by an Indian law.

Nalin Bhandari
Chartered Accountant
Cell:+919930018666

Types of Banking Product in India

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Saving Bank Account:

A Savings bank account is the operating account for individuals and others for non-commercial transactions. A Savings account helps the account holder to do day-to-day banking transaction. The account holder also earns interest on the balance lying in this account.

General Features of Saving Bank Account:

· Mode of Operation: Single and/or Jointly

· Minimum Balance: Mostly Required. In case of Salary Account, minimum balance is generally waived.

· Mode of Transactions: Cheque, Cash, Internet Banking, Mobile Banking, ATM, Debit Card.

· Nomination Facility: Yes

· Earned Interest: Yes. Interest rate p.a. is 3.5% to 6%

· No. of transactions in a month: Generally number of withdrawal and deposits are restricted. Charges are applicable on any transactions beyond the restricted number.

· Account Maintenance Charges : No

Current Bank Account

A Current bank account is the operating account for commercial transactions. A Current account helps the account holder to do day-to-day banking transaction generally without any restrictions. As these accounts are commercial in nature & considering the large number of transactions in the account and volatile nature of balances maintained overnight banks generally levy certain service charges for operating a Current account.

General Features of Current Bank Account:

· Mode of Operation: Businesses

· Minimum Balance: Mostly Required. Banks generally insist on a higher minimum balance to be maintained in current account.

· Mode of Transactions: Cheque, Cash, Internet Banking, Mobile Banking.

· Nomination Facility: No

· Earned Interest: No

· No. of transactions in a month: Generally number of withdrawal and deposits are unrestricted.

· Account Maintenance Charges : Yes

Fixed Deposit Account

As the name suggests, Fixed Deposit Account are term deposit accounts. The interest rate, amount of fixed deposit & tenure is agreed and decided at the time of opening of Fixed Deposit Account. The duration of Fixed Deposit is min 15 days to 10 yrs. Generally, penalty is levied for premature encashment of deposits.

General Features of Fixed Deposit Account:

· Mode of Operation: Individual as well as Businesses

· Minimum Balance: Not Applicable

· Mode of Transactions: Cheque, Cash, Internet Banking, Mobile Banking.

· Nomination Facility: Yes

· Earned Interest: Yes. Higher interest rate than Saving Account.

· No. of transactions in a month: Not Applicable

· Account Maintenance Charges : No

Recurring Deposit Account

Recurring Deposit Account are also term deposit accounts but are different from Fixed Deposit Account. In case of recurring deposit account, the depositor can do multiple deposits unlike the fixed deposit where in each deposit is treated as new Fixed Deposit. The interest rate, amount of fixed deposit & tenure is agreed and decided at the time of opening of Recurring Deposit Account. The duration of recurring deposit is min 6 months to 10 yrs. Generally, penalty is levied for premature encashment of deposits.

General Features of Recurring Deposit Account:

· Mode of Operation: Individual as well as Businesses

· Minimum Balance: Not Applicable

· Mode of Transactions: Cheque, Cash, Internet Banking, Mobile Banking.

· Nomination Facility: Yes

· Earned Interest: Yes. Higher interest rate than Saving Account.

· No. of transactions in a month: Not Applicable

· Account Maintenance Charges : No

Nalin Bhandari

Chartered Accountant

Cell:+919930018666

Types of Insurance Products & its comparison

2011-11-01T09:27:00.001+05:30

Following are the products generally offered by Life Insurance Companies in India. The detailed description of each product, its feature and significance is described in this blog. Each product serve the specific purpose. Although there could be other products also but feature of all the product would be more or less the same as shown in this blog.

1. Pure Term Products : Pure term products are pure risk products & have no maturity benefits. In Case, the person (whose life is insured) dies during the term, the benefits equivalent to Sum Assured are payable under the policy and in case of his survival till the end of the selected term the policy normally expires without any benefit becoming payable

Other Feature are as follows:

· Premium Payment Mode : Single/Monthly/Quarterly/Half Yearly/Annually

· Term of Insurance: 1 yr to 35 yrs

· Minimum/Maximum Age at Entry: 18 yrs/70 yrs

· Death Benefit: Yes

· Maturity Benefit: No

· Surrender: Generally in case of Single Premium

· Sum Assured: As per Underwriting Rules

· Rider Available :Yes

· Tax Benefit on Premium Paid :Section 80C (IT ACT,1961) is available

· Tax Benefit on Death/Maturity: Section 10(10D) (IT ACT,1961) is available

2. Term Products with Return of Premium: These products are pure risk products. In Case, the person (whose life is insured) dies during the term, the benefits equivalent to Sum Assured are payable under the policy and in case of his survival till the end of the selected term the policyholder normally get refund of all the premium paid during the policy term

Other Feature are as follows:

· Premium Payment Mode : Single/Monthly/Quarterly/Half Yearly/Annually

· Term of Insurance: 1 yr to 35 yrs

· Minimum/Maximum Age at Entry: 18 yrs/70 yrs

· Death Benefit: Yes

· Maturity Benefit: Return of Premium paid.

· Surrender: Yes

· Sum Assured: As per Underwriting Rules

· Rider Available :Yes

· Tax Benefit on Premium Paid :Section 80C (IT ACT,1961) is available

· Tax Benefit on Death/Maturity: Section 10(10D) (IT ACT,1961) is available

3. Endownment Proucts: These products are risk plus investment products. In Case, the person (whose life is insured) dies during the term, the benefits equivalent to Sum Assured are payable under the policy and in case of his survival till the end of the selected term the policyholder normally get sum assured and bonus, if any

Other Feature are as follows:

· Premium Payment Mode : Single/Monthly/Quarterly/Half Yearly/Annually

· Term of Insurance: 5 yr to 35 yrs

· Minimum/Maximum Age at Entry: 18 yrs/70 yrs

· Death Benefit: Yes

· Maturity Benefit: Yes

· Surrender: Yes

· Sum Assured: As per Underwriting Rules

· Rider Available :Yes

· Tax Benefit on Premium Paid :Section 80C (IT ACT,1961) is available

· Tax Benefit on Death/Maturity: Section 10(10D) (IT ACT,1961) is available

4. Money Back Plans: These products are risk plus investment products. In Money Back plan, Generally certain percentage of sum assured is return at the end of each pre-decided period. In case of Death, the sum assured reduced by amount already paid is payable to legal heirs of policyholder. For E.g Sum Assured :Rs. 3 Lakh ,Money Back : After every 5 yrs @ 20%,Policy Term:20 yrs

So Benefit is payable as follows:

5^th Year: Rs. 60,000 (i.e. 20% of 3 Lakh)

10^th Year: Rs. 60,000 (i.e. 20% of 3 Lakh)

15^th Year: Rs. 60,000 (i.e. 20% of 3 Lakh)

20^th Year: Rs 120,000 plus bonus if any.

Suppose life insured dies during 8^th year of policy then his legal heir will get Rs. 240,000 (Rs. 3 lakh reduce by Rs. 60,000 already paid at the end of 5^th year)

Other Feature are as follows:

· Premium Payment Mode : Single/Monthly/Quarterly/Half Yearly/Annually

· Term of Insurance: 5 yr to 35 yrs

· Minimum/Maximum Age at Entry: 18 yrs/70 yrs

· Death Benefit: Yes

· Maturity Benefit: Yes

· Surrender: Yes

· Sum Assured: As per Underwriting Rules

· Rider Available :Yes

· Tax Benefit on Premium Paid :Section 80C (IT ACT,1961) is available

· Tax Benefit on Death/Maturity: Section 10(10D) (IT ACT,1961) is available

5. Children Plans: These products are risk plus investment products. The intention of this product is to support the Child education/marriage in case of sudden death of Insured person (normally Father). In Case, the person (whose life is insured) dies during the term, the benefits equivalent to Sum Assured are payable under the policy and in case of his survival till the end of the selected term the policyholder normally get sum assured and bonus, if any. These plan also have feature under which future premium is waived off.

For E.g.

Life Insured	Sum Assured	Premium	Policy Year	Death in
Father	300,000	10,000 p.a	20 Yrs	6th Year

Policy Feature is say: At the time of Death Child will get Sum Assured plus future premium will be waived off plus additional sum assured at the end of policy term.

So on 6^th year child will get Rs. 300,000 & policy will remain in force.

Future premium will be waived off i.e future premium of Rs 140,000 is not payable(14*10,000)

At the end of 20^th year, child will again receive Rs 300,000.

Other Feature are as follows:

· Premium Payment Mode : Single/Monthly/Quarterly/Half Yearly/Annually

· Term of Insurance: 5 yr to 35 yrs

· Minimum/Maximum Age at Entry: 18 yrs/70 yrs

· Death Benefit: Yes

· Maturity Benefit: Yes

· Surrender: Yes

· Sum Assured: As per Underwriting Rules

· Rider Available :Yes

· Tax Benefit on Premium Paid :Section 80C (IT ACT,1961) is available

· Tax Benefit on Death/Maturity: Section 10(10D) (IT ACT,1961) is available

6. ULIP Products: These products are risk plus investment products. The investment component in premium is invested in equity and/or debt securities. The policyholder is given the option to select different type of fund. In Case, the person (whose life is insured) dies during the term, the benefits equivalent to Sum Assured or Fund Value whichever is higher are payable under the policy and in case of his survival till the end of the selected term the policyholder normally get amount equivalent to Fund Value.

Other Feature are as follows:

· Premium Payment Mode : Single/Monthly/Quarterly/Half Yearly/Annually

· Term of Insurance: 5 yr to 35 yrs

· Minimum/Maximum Age at Entry: 18 yrs/70 yrs

· Death Benefit: Yes

· Maturity Benefit: Yes

· Surrender: Yes after 5 years

· Sum Assured: As per Underwriting Rules. Min Sum Assured is 5 times of Annual Premium

· Rider Available :Yes

· Tax Benefit on Premium Paid :Section 80C (IT ACT,1961) is available

· Tax Benefit on Death/Maturity: Section 10(10D) (IT ACT,1961) is available

History of Insurance Sector in India

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1. In 1818, Oriental Life Insurance Company was started by Anita Bhavsar in Kolkata to cater to the needs of European community.

2. In 1870, Bombay Mutual Life Assurance Society became the first Indian insurer.

3. In the year 1912, the Life Insurance Companies Act and the Provident Fund Act were passed to regulate the insurance business.

4. In 1956,Govt of India had nationalized the Life Insurance sector and Life Insurance Corporation came into existence in the same year. The Life Insurance Corporation (LIC) had absorbed 154 Indian, 16 non-Indian insurers as also 75 provident societies i.e total 245 insurance firm.

5. In 1972, the General Insurance Business (Nationalisation) Act was passed, General Insurance business was nationalized with effect from 1st January, 1973.

6. The General Insurance Corporation of India was incorporated as a company in 1971 and it commence business on January 1st 1973.

7. 107 insurers were amalgamated and grouped into four companies, namely National Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd and the United India Insurance Company Ltd.All four companies become subsidiary of General Insurance Corporation of India.

8. With effect from December 2000, these subsidiaries have been de-linked from the parent company and were set up as independent insurance companies: Oriental Insurance Company Limited, New India Assurance Company Limited, National Insurance Company Limited and United India Insurance Company Limited.

9. Until 1999, there were not any private insurance companies in India. The government then introduced the Insurance Regulatory and Development Authority Act in 1999, thereby de-regulating the insurance sector and allowing private companies. Furthermore, foreign investment was also allowed and capped at 26% holding in the Indian insurance companies.

10. No. Of Indian Insurance Companies in the market.

Type of insurance	Life insurance	General insurance	Re-Insurance
Public Sector Company (ies)	01	06	01
Private Sector Companies	23	18	00
Total	24	24	01

No Income Tax Return for Salary Income upto Rs. 5 lakh

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The Income Tax return is not required to file if following conditions are satisfied:

1. Total Income Should not exceed Rs. 5 Lakh(After deduction u/s 80C to 80U)

2. The Income should be from Salary and/or Interest from Saving Bank A/c (upto Rs. 10,000)

3. The Salary Income Should be from One Employer only.

4. Tax is deducted on Salary as well as Interest Income and Shown under Form 16.

5. No Tax refund is due to employee.

Case Study for better understanding:

	Mr. A	Mr. B	Mr. C	Mr. D

Employment in	One Company	Two Company	One Company	One Company

Salary Income (A)	5,80,000	5,80,000	5,80,000	7,30,000

Interest Income
Saving Bank Interest (B)	10,000	10,000	10,000	10,000

Interest deduction upto
Rs.1,50,000 on home loan '(C)	-	-	-	1,50,000

Deduction u/s 80C ( D )	1,00,000	1,00,000	1,00,000	1,00,000

Total Income E=A+B-C-D	4,90,000	4,90,000	4,90,000	4,90,000

Total Income As per Form 16	4,90,000	4,90,000	4,80,000	4,90,000

Whether Income Tax return is required to file	No	Yes	Yes	Yes

Reason for above		Note: 1	Note: 2	Note: 3

Reason for filing of Income Tax Return

Note:1 Mr. B had earned Salary Income from two employer, So he has to file Income Tax Return.

Note: 2 Interest Income of Mr. C is not shown under Form 16. So he has to file Income Tax Return.

Note: 3 Interest on home loan is covered under Loss from House property. So he has to file Income Tax Return.