ICAI UDIN : Negative List

ICAI-UDIN : Negative List

1. Auditor’s Opinion/Reports issued by the Practicing Chartered Accountant under any Statute w.r.t. any entity or any person (e.g.: Tax Audit, Transfer Price Audit, VAT Audit, GST Audit, Company Audit, Trust Audit, Society Audit, etc.,

2. Valuation Reports,

3. Quarterly Review Reports,

4. Limited Review Report,

5. Information System Audit,

6. Forensic Audit,

7. Revenue / Credit / Stock Audit,

8. Borrower Monitoring Assignments,

9. Concurrent / Internal Audit and like,

10. Any report of what so ever nature issued including Transfer Price Study Report, Viability Study Report, Diligence Report, Due Diligence Report, Management Report, etc.

TAXABILITY OF PENSION

People, who are working in government services or those working with government departments get pensions after retirement from their services. In addition to above those who have contributed towards Employee Provident Fund (EPF) also get pension under Employee Pension Scheme (EPS), 1995. Even after the death of the employee, their family members are also entitled to get the pension from the employer as well as under EPS.

Taxable Amount = Received Amount – Exempt Amount

Some employers contribute towards superannuation fund of employees so that they get pension after their retirement. From 2004, the government has shifted all its new joiners to New Pension System (NPS) where the amount of pension received by them is dependent on the amount contributed by them along with the employer to the NPS. Even self-employed can also contribute towards NPS account and get annuity after their retirement.

Generally the words pension and annuity are used interchangeably but strictly speaking the monthly amount received by an employee after retirement from his ex-employer or in connection with employment is called pension and periodical payments received from an insurance company on annuity policy is called annuity but such annuity is also referred to as pension.

Income Tax rules for such pension and annuity

  1. Pension received from ex-Employer

For those employees who receive pension from their ex-employer is taxable under the head salaries. Therefore, it is not only the active employees whose salary are taxable under the head Salaries but also the pension receive by ex-employee is tax under the same head. Like Salaried employees, the pensioners are also entitled to the benefit of standard deduction available upto Rs. 40000/- every year, which has been introduced from this year, against the pension received by them.

You are entitled to commute certain portion of your pension and receive the present value of such commuted value of pension at the time of your retirement. For government employees and those working with government companies the entire value of commute pension is exempt. However, for other employees commuted value of 1/3 of pension is exempt in case the employee receives any gratuity. In case the employee does not receive any gratuity, he can commute pension upto 50% of the pension and claim the same as exempt.

  1. Pension received under superannuation policy or employee pension scheme

In case your employer had contributed towards superannuation fund or ha purchased superannuation policy for you, the pension received by your from the insurance company is taxable under the head Salary as it is received as a result of your employment. Even for the 1/3 of the commuted portion of pension receivable under the superannuation is fully exempt.

Likewise, the pension received by you under the EPS based on your contribution towards EPF is taxable in your hand. Since this pension is received because of your employment, you are entitled to claim standard deduction as discussed above.

  1. Family pension

Pension received by the dependent of an employee is called family pension and is taxable in the hands of the dependent recipient/s. However as the pension is not received due to services rendered by the dependent the same is taxable under the head “Income From Other Source”. However, the dependent person who receives the pension is entitled to claim a deduction of 1/3 of the pension received subject to a maximum of Rs. 15000/- against the deduction of Rs. 40000/- available to retired employees.

  1. Annuity received from insurance company on the annuity policy purchased by you

In order to ensure that you receive a certain sum at a fixed period, you can buy an annuity plan from an insurance company, which in turn will pay the agreed amount at the agreed interval, which is annuity but loosely, called pension. The amount of pension received under an annuity plan is taxable under the head “income from other Sources.” Since this amount does not have any co-relation with any employment, you are not entitled to claim standard deduction against this amount.

  1. Annuity received from annuity policy purchased on maturity of the NPS account.

The employees who have opted for NPS instead of EPF account have to mandatorily buy an annuity plan from an Indian insurance company for 40% of the accumulated corpus. The pension received by these employee should be taxable under the head Salaries but since the employee can continue to contribute to his NPS account even after he leaves his employment or even when he turns self-employed, it is doubtful whether in such situation the annuity received will become taxable under the head Salaries or it should be taxable under the head “Income From other Sources”. Likewise even a self-employed person can also contribute towards the NPS account and receive pension. Presently the income tax law does not have any clear-cut provision as to the head under which the annuity received for annuity policy bough on retirement should be taxed. In my opinion for the salaried, the pension should be taxable under the head Salaries and should be entitled for standard deduction upto Forty thousand rupees. However, since the law is silent on this aspect it is risky to offer it under the head Salaries for claiming the standard deduction. Additionally salaried and self-employed both can contribute additional fifty thousand to claim deduction under Section 80 CCD(1B) so the head under which the pension received will become taxable and whether one will be entitled to claim standard deduction is a grey area and clarificatory amendment of the law is needed to clear the clouds.

Decision in favor of Assessee on penny stock

Some of them are as under:
i.  Mumbai ITAT in the case of Ramprasad Agrawal Vs. ITO, ITA No. 1228/m/2018 & ITA No. 4843/M/2018 wherein the Addition was rightly dropped by the Tribunal.
ii.  Rajasthan High Court pronouncement in the case of CIT Vs. Pooja Agrawal, DB ITA No. 385/2011
iii.  Jaipur Tribunal in the case of Pramod Kumar Lodha Vs. ITO, ITA No. 826/JP/2014
iv.  Kolkata Tribunal in the case of Shri Shreyan Chopra Vs. ACIT, Circle 36, Kolkata – ITA No. 661/Kol/201
v.  Smt. Shikha Dhawan, C-101, Centre Park, Sector-42, Gurgaon. PAN-CCBPS1718L Vs. ITO, Gurgao in ITA No.3035/Del/2018
vi.  Sarojbala A.Jain, Pune vs Acit Cen Cir 11, Mumbai on 6 April, 2018 vide ITA No.6360/MUM/2009.

Main Points of CMA

Some points which are generally considered while preparing CMA Data

  1. The current ratio should be greater than 1.33.
  2. The sales should be generally 4 or 5 times of the amount of loan.
  3. There should be sufficient stock to act as collaterally to the loan amount.
  4. In case, there is another loan, the bank requires the status of the loan and defaults made, if any.
  5. The loan payback capacity of the firm identified by the cash and bank balance, debtors collection period etc.
  6. Various ratios are to be computed related to working capital and assets.
  7. The capital contribution in relation to the loans and liabilities.

CMA

CMA means Credit Monitoring Arrangements. This full form of CMA is as given by Reserve Bank of India. For arranging working capital finance information about income, expenses, assets & liabilities is required to be given in a specific format to the bank by applicant. This specific format is referred to as CMA Report / CMA Data. Audited P & L A/c & Balance Sheet of at least last 1 year, estimates of current year & projections of next at least 2 years are provided to bank by the applicant along with Funds Flow Statement, Ratio Analysis, Comparative Statement of Current Assets & Current Liabilites & Statement of Maximum Permissible Bank Finance. Number of years for which data is required may vary from bank to bank. Even after getting the finance such data is required to be submitted to the bank periodically.

The Apprentices Act , 1961

This act is allowed to take casual leave of Twelve days (12), medical leave of Fifteen days(15) and certain other leaves of Ten days(10) in a year (which are paid) to an employee. And any employee  is just required to work for Forty-Two(42) or Forty-Eight(48) hours a week. This is to ensure there is a work-life balance for the employees.

Maternity Benefit (Amendment) Bill, 2017

Maternity Benefit Act was established in 1961 to benefit expecting mothers and later amendments were made in 2017 to provide more benefits to the expecting employee. The act was made to protect employment of the women employee during the time of maternity and provides her with ‘maternity benefit’ i.e. full paid absent from work – to let take care of her child and herself. The new amendments has increased the duration of paid maternity leave available for women employees from the existing Twelve weeks (12) to Twenty-Six weeks (26). Along with this, some more claws have been added like maternity leave for adoptive and commissioning mothers, work from home option, crèche facility and employee awareness at the time of appointment.

The Employees Provident Fund Act, 1952

The Employees Provident Fund (PF) 1952 is to sanction a type of social security to the employees. This particular Act is applicable for every employee who works in a factory or any other establishment whether organized sector or un-organized one, wherein they get welfare such as medical care, housing, retirement pension, benefits of education and financing insurance policy etc.

The Factories Act, 1948

This act was established to prevent any kind of exploitation on the factory workers by the owners and was created to defend the rights and interest of the employees. As per this law, it is mandatory to assure some sort of working conditions fixed by both the employers or the factory owners for the employees. It is clearly mentioned that the maximum working hours should not be more than forty eight hours per week (48 Hours/Week). And one (1 Day) weekly holiday is a must to be provided to every employee.