Casual taxable person under GST

In any tax regime, registration is considered as the most vital requirement in identification of the taxpayers and ensuring tax compliance. Under the GST regime, a number of categories of persons have to register themselves mandatorily under the Act which include:

• A business firm having annual turnover for INR 40 lakhs or more whereas the annual turnover limit is INR 20 lakhs or more in case of special states*
• A business firm already registered under the previous regime
• Casual taxable person
• Taxable person under reverse charge mechanism
• E-commerce operators and suppliers operating though an e-commerce operator
• Inter-state supplier of goods
• Input service distributor (or often abbreviated as ISD)
• TDS deductor

*Annual turnover limits for normal category and special category states are INR 20 lakhs or more and INR 10 Lakhs or more respectively for service providers.

Definition of a Casual Taxable Person
Under this Act, a casual taxable person (or usually abbreviated as CTP) is an individual who carries out transactions involving supply of taxable goods or services intermittently in a certain taxable territory (state or union territory) where he does not have a fixed place of business. The individual can either act as a principal or an agent or in any other capacity to involve in the supply of goods for the furtherance of business. However, a CTP cannot choose composition scheme.

The term, “person” signifies the individuals, Hindu Undivided family (HUF), corporation or company (including government company), an association of persons, limited liability partnership (LLP), a body of individuals, anyone incorporated under foreign laws, etc.

The term, “Place of business” signifies the place of business as stated in the registration certificate. It is the primary location where the business of the taxpayer is mainly performed.

The term, “Composition scheme” signifies an option or tax paying mechanism on the part of taxpayer who will have certain benefits upon registration under such scheme. The benefits may pertain to lower tax liability, and reduced paperwork and compliance.

For instance, an individual is having the place of business in Delhi and providing professional accounting services in Bangalore where he has no place of business. Thus, that individual will have to register as a casual taxable person in Bangalore so that he or she may carry out his business activities.

Registration under the Act
A CTP is under a mandatory obligation to obtain a temporary registration in the taxable territory where he seeks to involve in the supply of goods or services as a casual taxable person. This registration is generally valid for a period of 90 days in the state where he is going to supply as a CTP. A CTP is under the mandatory obligation to make an advance deposit of GST considering the tax liability estimation.

In the aforesaid example, if the individual estimates that his taxable services amounts to INR 100,000 then he will be required to make an advance deposit of INR 18,000 for obtaining the temporary registration.

Returns to be furnished
A CTP is required to furnish certain returns on or before specific days. These returns may include:

• Form GSTR 1 detailing outward supplies of goods and services must be furnished on or before 10th of the succeeding month.
• Form GSTR 2 detailing inward supplies of goods and services must be furnished after 10th but before 15th of the succeeding month.
• Form GSTR 3 must be furnished after 15th but before 20th of the succeeding month.
• Form GSTR 3B summarizing both purchases and sales of the month must be filed before the 20th day of the succeeding month.

A CTP is not under the obligation to file the annual return as mandated by a usual registered taxpayer.

Refund for Casual Taxable Person
A CTP may also become eligible for the refund of the amount deposited in excess of tax liability. He may claim this refund after furnishing all the required returns for the registration period. The refund balance is generally indicated in serial no. 14 of the Form GSTR 3 and one may apply for the same in case of amount deposited in excess of tax liability.

At AJSH, we assist our clients in dealing with various GST matters (GST registration, filing of GST returns, claiming refund & GST Audits) by providing them adequate support and guidance from our end. To know more about our services and offerings, you can write to us info@ajsh.in or click here.

Consolidated Financial Statements

Meaning
Consolidated financial statements (or usually abbreviated as CFSs) are defined as the financial statements in which the company’s financial statements, as well as financial statements for all of its subsidiaries, divisions, or sub-organizations, are combined and presented as being those of a sole business entity.

What is the purpose of consolidated financial statements?
Consolidated financial statements play an integral part in the accounting process and help in reviewing the overall financial position of the entire group altogether. It is of utmost significance from the viewpoint of creditors and shareholders of the parent company. It is always presumed that consolidated statements represent the result of operations and the financial position in a much meaningful manner as compared to separate individual statements. It is also obligatory for a fair representation when one of the business entities in the group has a pecuniary interest in the other business entities.

Example
Coca-Cola is a company having its operations globally and thus operates with many subsidiaries. Its worldwide subsidiaries help it to support its global presence in numerous ways. Each of its subsidiaries helps in contributing towards its food retail chain goals with subsidiaries in the areas of packaging, beverages, products, and more.

How do Consolidated Financial Statements work?
Let’s consider an example; Company ABC is a holding company that owns three other companies: Company X, Company Y, and Company Z. Each of the three companies pays a certain amount of royalties and other fees to Company ABC.

At the end of the financial year, the income statement of Company ABC is reflecting a large amount of royalties and fees with hardly any expenses — mainly because of the fact that they are being recorded on the income statements of subsidiary companies. In this case, an investor who is looking solely at financial statements of the holding company (Company ABC) possibly will easily get a misleading interpretation of the performance of the business entity.

However, if Company ABC goes with consolidating its financial statements — “adding” the financial statements of the group ( that is holding companies and its subsidiaries all together) mainly involving income statements, balance sheets, and cash flow statements — the outcomes would give a more comprehensive representation of the whole Company ABC enterprise.

In Figure 1 below, the assets of Company ABC are only $2 million, but the consolidated number shows that the entity as a whole controls $422 million in assets.

Figure 1

Company ABCCompany ACompany BCompany CConsolidatedRevenue$20,000,000$200,000$10,000,000$100,000$30,300,000Assets$2,000,000$10,000,000$400,000,000$10,000,000$422,000,000

Who should prepare consolidated financial statements?
When an investing company acquires less than 20 percent outstanding common stock of another company, then the fair value method is used by that company to show its investment while the company would use equity method if ownership interest in another company is in the range of 20–50%.

The investing company will be mandatorily required to prepare consolidated financial statements if ownership interest in another company is 50 percent or more. When a company is having more than 50 percent ownership interested, then that company enjoys the privilege of controlling the business and does take part in the company’s financial decisions. CFSs are generally prepared as per the Single economic entity concept which suggests that companies having an association with each other through the virtue of common control should operate as a single economic unit and represent their financial statements accordingly in the form of consolidated financial statements.

The accounting procedures that should be adopted for preparing the consolidated financial statements depend upon several factors. These factors are:

The extent of ownership: whether the subsidiary is wholly owned or not. Here, a wholly-owned subsidiary is one where the parent owns 100 percent of the subsidiary’s voting rights;

The amount of purchase consideration paid i.e. the amount transferred to subsidiary against the stock acquired. In other words, whether any goodwill arises or not;

The structure of the group: the number of subsidiaries and whether the subsidiary has further a sub-subsidiary or not;

How do you prepare a consolidated financial statement?
There are certain steps that must be followed for preparing a consolidated financial statement. These steps are as follows:

• Record intercompany loans
  The foremost step in preparing consolidated financial statements should be recording intercompany loans from the subsidiaries to the parent company while consolidating the cash balances of its subsidiaries into an investment account by the parent company. Additionally, interest income apportionment for the interest earned on consolidated investments should also be recorded from the parent company down to its various subsidiaries.
• Charge corporate overhead
  The overhead costs to subsidiaries should also be allocated to various subsidiaries and in this regard, computation should also be made so as to charge it to the various subsidiaries.
• Charge payables
  It should be verified that all accounts payable recorded in the course of the business are suitably charged to the various subsidiaries by the parent company if the parent company runs a consolidated payables operation.
• Charge payroll expenses
  There should be proper allocation of payroll expenses to its various subsidiaries by the parent company if the company is using a common paymaster system to make payments to all of its employees throughout the company.
• Complete adjusting entries
  The adjusting entries should also be made wherever required to suitably record business transactions in the correct financial year. This should be made to subsidiary as well as corporate levels.
• Investigate asset, liability, and equity account balances
  There should be proper verification on the matter that the contents concerning asset, liability, and equity accounts for the subsidiaries as well as the corporate parent are correct, and do make adjustments wherever required.
• Review subsidiary financial statements
  The financial statements for each subsidiary should be thoroughly reviewed and an investigation may be carried out to identify any item that may seem to be unusual or incorrect. All the rectifications or adjustments should be made in this regard.
• Eliminate intercompany transactions
  There should be an elimination of the intercompany transaction. If there are any intercompany transactions, these should be reversed on the part of the company to eliminate their effects from CFSs.
• Review parent financial statements
  The financial statements for the parent company should also be thoroughly reviewed and an investigation may be carried out so as to identify any item that may seem to be unusual or incorrect. All the rectifications or adjustments should be made in this regard.
• Record income tax liability
  The income tax liability should also be recorded if the company has made a profit. The same should be done at each of the subsidiaries’ level as well.
• Close subsidiary books
  In order to prevent the recording of additional transactions in the financial year being closed, it may be required to access each subsidiary’s financial records and mark them as closed with the help of accounting software in use.
• Close parent company books
  Once the subsidiary’s financial records have been marked as closed, the accounting period of the parent company should also be marked as closed so that no additional transactions may be recorded further in the accounting period being closed.
• Issue financial statements
  The last but not the least step is supposed to be printing and distributing the financial statements of the parent company.
  

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Section 141 of the Companies Act, 2013- Eligibility, qualifications, and disqualifications of auditors

Introduction

A company is defined as a business entity formed for performing certain lawful purposes and is incorporated under the Companies Act, 2013. It is somewhat imperative on the part of the company to work transparently in the best interests of the public in general and its stakeholders. In this regard, an auditor is generally appointed by the company who is entrusted with monitoring the company’s affairs and inspecting the company’s books of accounts and further validating the accuracy of the transactions.

An audit is an impartial or unprejudiced analysis and assessment of the financial statements of a business entity. It is carried out to ensure that the books of accounts are a fair and accurate representation of the affairs or transactions that business entity claims to represent.

The term “Auditor” refers to an individual who is entrusted with all the audit works of the business entity. In other words, the Auditor’s primary role is to critically and prudently inspect the books of accounts of the business entity.

Appointment of Auditors
It is mandatory on the part of the company to appoint an auditor in its very first Annual General Meeting (AGM). The written consent from the appointed auditor should also be produced before finally appointing him as the company’s auditor. In this regard, a certificate may also be taken from him concerning his appointment in compliance with prescribed rules and regulations. The auditor so appointed shall fulfill the criteria provided in Section 141 which mentions the qualifications and disqualifications of auditors. The Registrar of Companies (ROC) should also be notified about such an appointment and a notice must be issued within 15 days of the AGM in this regard.

Qualifications of an auditor [Section 141(1) & (2)]:There are certain conditions that must be fulfilled with a view to successfully qualify to be appointed as an Auditor in a company. The conditions are:

an individual shall be considered eligible to be appointed as company’s auditor if he mandatorily fulfills certain conditions prescribed under the Chartered Accountants Act (or CA Act), 1949 and further possesses a valid certificate of practice as-

• An individual, or
• In a partnership firm (a business entity of which majority of partners practicing in India are considered qualified for such appointment), or
• In a limited liability partnership (where an LLP is being appointed as a company’s auditor, then only the partners who are qualified chartered accountants (or abbreviated as CAs) shall be accredited with acting and signing on firm’s behalf).

Disqualifications of auditors [Section 141(3)]
The following individuals shall not be considered qualified for appointment as a company’s auditor.

• Body corporate-A body corporate except LLP registered under LLP Act, 2008 shall not be considered eligible for appointment as auditor.
• Officer or employee- An officer or company’s employee shall also not be considered eligible for an appointment as an auditor.
• Relative or partner- an individual who is a partner in business or who is rendering services as an employee, of an officer or company’s employee shall also not be considered eligible or qualified for appointment as auditor.
• Business relationship-An individual or a firm that is either directly or indirectly having an association with the company or its affiliates shall not be considered eligible for an appointment as an auditor.
• Director or Key managerial personnel (or abbreviated as KMP) — an individual whose relative is a director or rendering services as an employee in the position of company’s director or KMP shall not be considered eligible for appointment as auditor.
• Full-time employment and audit limit- An individual who is in employment at a different place or an individual or a firm’s partner holding appointment as its auditor, if such individuals or partner is at that particular time duration of such appointment or reappointment holding appointment as auditor over more than 20 companies should also not be considered eligible for appointment as auditor.
• Convicted by a court-an individual who was held guilty of some sort of conviction by a court of an offense involving fraud and a period of 10 years has not elapsed from the date of such conviction.
• Consulting and specialized services (or abbreviated as C&S services)- any company or business entity whose subsidiary or affiliates, is engaged as on the appointment date in C&S services as specified in section 144.
• Where an individual appointed as a company’s auditor sustains any of the disqualifications as specified in sub-section (3) after his appointment, he then will have to vacate his office as such auditor and such vacation would be considered as a casual vacancy in the auditor’s office.

At AJSH & Co, we do assist our clients in complying with the regulatory requirement by auditing their financial statements. To know more about our services and offerings, you can write to us info@ajsh.in or click here.

MSME- Micro, Small and Medium Enterprises

Introduction
A Micro, Small and Medium Enterprises Development Act, 2006 became operational on October 02, 2006. The act facilitates / boosts the promotion, development and enhancing the competitiveness of micro, small and medium enterprises.

Earlier, MSME’s were classified into two categories on the basis of amount of investment i.e., Manufacturing & Service Enterprises but now according to the revision made in October 2019 by Union Minister Nitin Gadkari, the proposed basis for categorizing MSME’s will be on the amount of turnover. Also, there will be no distinction between the manufacturing and service sectors.

Applicability
Previously (On the basis of the amount of investment)

EnterprisesMicroSmallMediumManufacturing EnterprisesLess than INR 25 lakhsMore than INR 25 lakhs, but less than INR 5 croreMore than INR 5 crore, but less than INR 10 croreService EnterprisesLess than INR 10 lakhsMore than INR 10 lakhs, but less than INR 2 croreMore than INR 2 crore, but less than INR 5 crore

Proposed (On the basis of the amount of turnover)

EnterprisesTurnoverMicro enterprisesLess than or equal to Rs.5 croreSmall enterprisesMore than Rs.5 crore, but less than Rs.75 croreMedium enterprisesMore than Rs.75 crore, but less than Rs.250 crore

Advantages or Benefits of MSME
There are various benefits or advantages of MSMEs which are as follows:

• Cheaper bank loans
  MSMEs can easily avail loans and that too at cheaper rates. There are certain loan programs available for SMEs as compared to big sized companies who generally do not qualify for such loans. It has come to notice over the period that the loans to SMEs are often backed up with small business administration. Even local banks may also wish to grant loans to MSMEs considering their loan amount request.
• MSMEs direct involvement
  One of the biggest advantages that MSMEs have is the fact that they can directly control their output and customer interaction as compared to companies having huge operations. The owner in an SME, for instance, maybe considered in a position to have an examination of the product quality and further he can also make necessary recommendations for its improvement. In this way, MSMEs are also able to undertake proper risk management at their earlier stages.
• Taking immediate decision
  The MSMEs tend to easily accommodate to the changes occurring in the business environment. Since there does not exist any specific formal hierarchy in the case of MSMEs, it helps in speeding up the decision-making process. If the business owner of an MSME believes that MSME is prone to certain business challenges with their competitors, he may act promptly as he does not have to wait for the approval from others.
• Encourages Team Spirit
  It has been observed over the period that MSMEs provide ample scope for encouraging team spirit within the organizational workforce. It is because an MSME business owner recognizes the talent and skill set of each employee and understand their importance. Cross-training also takes place at times across the departments to equip the employees to perform various allocated tasks even if they are being moved to another division or section within the organization.
• Other Advantages
  There are certain other advantages as well that are available to MSMEs. MSMEs may choose to avail subsidies in patent and trademark registration. They can also have access to industrial promotion subsidy along with low-cost ISO certification. Further, they can also take advantage of electricity concessions and tax benefits to some extent. Minimum Alternate Tax (MAT) can also be carried forward for up to 15 years instead of 10 years.

DisadvantagesThere are various disadvantages of MSMEs which are as follows:

• Difficulties to find funding
  Although cheap loans are easily accessible to MSMEs, yet they do not enjoy substantial support. They do not have huge financial capital as compared to large corporations. MSMEs cannot wish to go for listing themselves on stock markets, and cannot also raise funds through short term financial Instruments.
• Higher costs
  MSMEs often find it a challenging task to attain economies of scale. This is the reason as to why they are frequently seen struggling with adjusting to the prices they are planning to offer to their customers or end-users. Generally, they do not tend to compete on prices.
• Access to a less skilled workforce
  SMEs in general often fail to provide ample opportunities or possibilities of advancement. Young and fresh talent at certain times always give priority to the large enterprise over an SME. An SME may have to offer certain incentives in order to infuse young talent in the organizational workforce.
• Uncertainty
  SMEs also face a certain amount of uncertainty. They may be successful at the start but possibly will dilute the business growth in the long run due to certain external factors such as economic downturns, changing consumer demand, etc. It is imperative on the part of SMEs to anticipate all the potential changes in the business environment so as to properly survive in the market.
• Other challenges
  There are certainly other challenges as well that come in the way of SMEs. These challenges may include complex labor laws, unavailability of modern technology, and unequal distribution of MSMEs all over India.

Reduced corporate taxes

Various amendments to Income-tax Act, 1961 {Finance (no.2) Act, 2019} has been introduced vide Taxation Laws (Amendment) Ordinance, 2019. In order to boost growth in this period of sluggish economy and to promote “Make in India” initiative, Govt. of India has made series of announcements stated here as under:

1. A new section 115BBA has been introduced, which gives domestic companies an option to pay tax at reduced rates from 30 per cent to 22 per cent. Effective tax rate, including surcharge and applicable cess reduced from 34.944 per cent to 25.168 per cent.
2. Another section 115BAB has been introduced wherein the setting up of domestic manufacturing companies incorporated after October 1, 2019 and has commenced manufacturing on or before March 31, 2023 has been incentivized with a reduced corporate tax rate of 15 per cent.

However for availing tax concession under section 115BBA and 115BAB a company must have complied with the following conditions:

• No other deductions u/s 10AA, section 32AD, section 33AB or 33ABA, or under any provisions of Chapter VI-A under the heading C (like 80IA, 80IB, 80IC, etc.), is being claimed by the company.
• Such companies shall also be deprived of claiming set off of any loss carried forward from any earlier assessment year, if such loss is attributable to specified deductions as above.
• MAT provisions shall not be applicable to such companies.
• Option once exercised, cannot be revoked for the same or any other previous year.
• Depreciation shall need to be claimed in the manner which is yet to be prescribed.

1. Minimum Alternate Tax (MAT) has been reduced from 18.5 per cent to 15 per cent.
2. No tax on buy back of shares by listed companies which have already made a public announcement of buy-back before July 5, 2019.
3. Enhanced surcharge of 15 per cent shall not apply on capital gains arising on account of sale of equity share in a company or unit of an equity oriented fund or unit of business trust liable for STT.

Impact of corporate tax cut rate

Below mentioned are some of the impacts of corporate tax rate cuts:

1. It will boost Nifty earnings growth. Profitability of firms will improve. Analysts have accordingly revised earnings estimates upwards from 16 per cent to 25 per cent for 2019–20.
2. India will become more globally competitive, inducing domestic and foreign investment and boosting exports, as India’s base corporate tax now on par with most Asian countries.
3. Abheek Barau, Chief Economist of HDFC Bank addressed that tax rate cut can result in .20-.25 basis points in GDP growth.
4. As per Icra’s estimates, the extent of benefit that would accrue to discoms from the power generation and transmission segments, mainly from central and state utilities, would be about Rs 2500 crore annually.
5. However Govt. will face huge loss of tax revenue estimating INR 1, 45,000 crore.

Companies will have the option of lower tax rate after expiry of tax holidays and concessions they are availing now. Once they choose the new tax rate, they can’t go back to a concessional regime. This may help India attract some investments that are looking to shift out of China following the country’s spat with the US and also bring back investment in various sectors.

Source: Reduced corporate taxes

MSME- Micro, Small and Medium Enterprises

Introduction
A Micro, Small and Medium Enterprises Development Act, 2006 became operational on October 02, 2006. The act facilitates / boosts the promotion, development and enhancing the competitiveness of micro, small and medium enterprises.

Earlier, MSME’s were classified into two categories on the basis of amount of investment i.e., Manufacturing & Service Enterprises but now according to the revision made in October 2019 by Union Minister Nitin Gadkari, the proposed basis for categorizing MSME’s will be on the amount of turnover. Also, there will be no distinction between the manufacturing and service sectors.

Applicability
Previously (On the basis of the amount of investment)

EnterprisesMicroSmallMediumManufacturing EnterprisesLess than INR 25 lakhsMore than INR 25 lakhs, but less than INR 5 croreMore than INR 5 crore, but less than INR 10 croreService EnterprisesLess than INR 10 lakhsMore than INR 10 lakhs, but less than INR 2 croreMore than INR 2 crore, but less than INR 5 crore

Proposed (On the basis of the amount of turnover)

EnterprisesTurnoverMicro enterprisesLess than or equal to Rs.5 croreSmall enterprisesMore than Rs.5 crore, but less than Rs.75 croreMedium enterprisesMore than Rs.75 crore, but less than Rs.250 crore

Advantages or Benefits
There are various benefits or advantages of MSMEs which are as follows:

• Cheaper bank loans
  MSMEs can easily avail loans and that too at cheaper rates. There are certain loan programs available for SMEs as compared to big sized companies who generally do not qualify for such loans. It has come to notice over the period that the loans to SMEs are often backed up with small business administration. Even local banks may also wish to grant loans to MSMEs considering their loan amount request.
• MSMEs direct involvement
  One of the biggest advantages that MSMEs have is the fact that they can directly control their output and customer interaction as compared to companies having huge operations. The owner in an SME, for instance, maybe considered in a position to have an examination of the product quality and further he can also make necessary recommendations for its improvement. In this way, MSMEs are also able to undertake proper risk management at their earlier stages.
• Taking immediate decision
  The MSMEs tend to easily accommodate to the changes occurring in the business environment. Since there does not exist any specific formal hierarchy in the case of MSMEs, it helps in speeding up the decision-making process. If the business owner of an MSME believes that MSME is prone to certain business challenges with their competitors, he may act promptly as he does not have to wait for the approval from others.
• Encourages Team Spirit
  It has been observed over the period that MSMEs provide ample scope for encouraging team spirit within the organizational workforce. It is because an MSME business owner recognizes the talent and skill set of each employee and understand their importance. Cross-training also takes place at times across the departments to equip the employees to perform various allocated tasks even if they are being moved to another division or section within the organization.
• Other Advantages
  There are certain other advantages as well that are available to MSMEs. MSMEs may choose to avail subsidies in patent and trademark registration. They can also have access to industrial promotion subsidy along with low-cost ISO certification. Further, they can also take advantage of electricity concessions and tax benefits to some extent. Minimum Alternate Tax (MAT) can also be carried forward for up to 15 years instead of 10 years.

DisadvantagesThere are various disadvantages of MSMEs which are as follows:

• Difficulties to find funding
  Although cheap loans are easily accessible to MSMEs, yet they do not enjoy substantial support. They do not have huge financial capital as compared to large corporations. MSMEs cannot wish to go for listing themselves on stock markets, and cannot also raise funds through short term financial Instruments.
• Higher costs
  MSMEs often find it a challenging task to attain economies of scale. This is the reason as to why they are frequently seen struggling with adjusting to the prices they are planning to offer to their customers or end-users. Generally, they do not tend to compete on prices.
• Access to a less skilled workforce
  SMEs in general often fail to provide ample opportunities or possibilities of advancement. Young and fresh talent at certain times always give priority to the large enterprise over an SME. An SME may have to offer certain incentives in order to infuse young talent in the organizational workforce.
• Uncertainty
  SMEs also face a certain amount of uncertainty. They may be successful at the start but possibly will dilute the business growth in the long run due to certain external factors such as economic downturns, changing consumer demand, etc. It is imperative on the part of SMEs to anticipate all the potential changes in the business environment so as to properly survive in the market.
• Other challenges
  There are certainly other challenges as well that come in the way of SMEs. These challenges may include complex labor laws, unavailability of modern technology, and unequal distribution of MSMEs all over India.

At AJSH & Co, we do assist our clients in MSME registration services by providing them adequate support and guidance from our end. To know more about our services and offerings, you can write to us info@ajsh.in or click here.

Changes in form GSTR-9C

CBIC has issued Notification №56/2019–Central Tax dated 14th November, 2019 and has simplified Annual Return GSTR-9 & GST Audit GSTR-9C vide Central Goods and Services Tax (Seventh Amendment) Rules, 2019.

It notifies various changes in Form GSTR-9C to give effect to its applicability for F.Y 2017–18 and 2018–19. This notification provides substantial relief by making various mandatory fields ‘optional’ for the F.Y 2017–18 and F.Y. 2018–19.

Some significant fields which are made optional in GSTR 9C are listed below:

Reference	Particulars before change	Particulars after change
FORM GSTR-9C, in Paragraph 4-Table 5B	Unbilled revenue which was recorded in the books of accounts on the basis of accrual system of accounting in the previous financial year and was carried forward to the current financial year shall be declared here i.e., when GST is payable during the financial year on such revenue (which was recognized previously), the value of such revenue needs to be declared here.	For the FY 2017-18 and 2018-19, registered person shall have an option to not fill this table. If there are any adjustments required to be reported, then the same may be reported in Table 5O.
FORM GST GSTR-9C, in Paragraph 4-Table 5C	Value of all advances for which GST has been paid but the same is not recognized as revenue in the audited Financial Statement needs to be declared here.	For the FY 2017-18 and 2018-19, registered person shall have an option to not fill this table. If there are any adjustments required to be reported, then the same may be reported in Table 5O.
FORM GST GSTR-9C, in Paragraph 4-Table 5D	Aggregate value of deemed supplies under Schedule I of the CGST Act, 2017 needs to be declared here. Any deemed supply which is already part of the turnover in the audited Financial Statement is not required to be included.	For the FY 2017-18 and 2018-19, registered person shall have an option to not fill this table. If there are any adjustments required to be reported, then the same may be reported in the Table 5O
FORM GST GSTR-9C, in Paragraph 4-Table 5E	Aggregate value of the credit notes which were issued after March 31st in relation to supply booked in current year but such credit notes were reflected in the annual return i.e. GSTR-9 needs to be declared.	For the FY 2017-18 and 2018-19, registered person shall have an option to not fill this table. If there are any adjustments required to be reported, then the same may be reported in the Table 5O
FORM GST GSTR-9C, in Paragraph 4-Table 5F	Trade discounts which are accounted in the audited Financial Statement but on which GST was leviable (being not permissible) needs to be declared here.	For the FY 2017-18 and 2018-19, registered person shall have an option to not fill this table. If there are any adjustments required to be reported, then the same may be reported in the Table 5O.
FORM GST GSTR-9C, in Paragraph 4 Table 5G	Turnover included in the audited Financial Statement for April 2017 to June 2017 shall be declared here.	For the FY 2017-18 and 2018-19, registered person shall have an option to not fill this table. If there are any adjustments required to be reported, then the same may be reported in the Table 5O.
FORM GST GSTR-9C, in Paragraph 4 – Table 5H, 5I ,5J, 5K, 5L, 5M, 5N	5H-Unbilled revenue, 5I-Value of all advances 5J-Aggregate value of credit notes 5K-Aggregate value of all goods supplied by SEZs to 5L-DTA, composition taxpayer 5M-Valuation principles under section 15 of the CGST Act, 2017 5N-Difference due to foreign exchange fluctuation. All the aforementioned things shall be declared here.	For the FY 2017-18 and 2018-19, registered person shall have an option to not fill this table. If there are any adjustments required to be reported, then the same may be reported in the Table 5O.
FORM GST GSTR-9C, in Paragraph 6 – Table 12B	Any ITC which was booked in the audited Financial Statement of earlier financial year but availed in the ITC ledger in the financial year for which the reconciliation statement is being filed for shall be declared here. This shall include transitional credit which was accounted in earlier years but availed during Financial Year 2017-18.	For FY 2017-18 and 2018-19, the registered person shall have an option to not fill this Table
FORM GST GSTR-9C, in Paragraph 6 -Table 12C	Any ITC which has been booked in the audited Financial Statement of the current financial year but the same has not been credited to the ITC ledger for the said financial year needs to be declared here	For FY 2017-18 and 2018-19, the registered person shall have an option to not fill this Table
3(iv) (C) FORM GST GSTR-9C, in Paragraph 6-Table 14	This table requires reconciliation of ITC declared in the Annual Return i.e. GSTR 9 against the expenses booked in the audited Financial Statement or books of account. The various heads specified under this table are general expenses in the audited Financial Statements on which ITC may or may not be available. Taxpayers may change any of these heads but all heads of expenses on which GST has been paid/was payable needs to be declared here.	For FY 2017-18 and 2018-19, the registered person shall have an option to not fill this Table
Part-B of Form 9C	Cash flow statement was mandatory earlier.	Cash flow statement need to be attached, only if available
Para 5 of Section-I of Part B and Para 4 of Section-II of Part B	Currently in GSTR-9C, it is required for the auditor to certify that particulars given in GSTR-9C are ‘True and correct’.	‘True and correct’ has been replaced with ‘true and fair’. It is great relief to auditors.

We assist our clients in complying with the GST regime including filing of GST returns, GST assessments and GST audits.

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Critical Audit Matters (CAMs)

Critical Audit Matters (CAMs)

The new requirement for auditors to report critical audit matters (CAMs) is the most significant change to the auditor’s report by the Public Company Accounting Oversight Board (PCAOB) in United States via its new standard AS 3101. The determination of CAMs is principles-based and depends on the facts and circumstances of each audit. To date, only a limited number of audits have been subject to the CAM requirements. The second effective date, which impacts audits of all other companies to which the requirements apply is for audits of fiscal years ending on or after December 15, 2020.

What is a CAM?
A CAM is any matter arising from the audit of a company’s financial statements that meets all of the following criteria:

• A matter that was communicated or is required to be communicated to the audit committee;
• A matter that relates to accounts or disclosures that are material to the financial statements; and
• A matter that involved especially challenging, subjective, or complex auditor judgment.

A CAM may relate to a component of a material account or disclosure and does not necessarily have the need to correspond to the entire account or disclosure in the financial statements. A CAM can also be pervasive and relate to many accounts or disclosures. A matter that does not relate to a material account or disclosure cannot be a CAM.

The standard provides a list of factors for the auditor to take into account when determining whether a matter involved especially challenging, subjective, or complex auditor judgment. “Especially” is intended to convey that the matters are assessed on a relative basis within the specific audit and there could be multiple CAMs. CAMs are intended to enhance the auditor’s report to provide audit-specific information that is meaningful to investors and other financial statement users.

CAM Factors
The number of CAMs should be identified, audit by audit, based on the facts and circumstances of each audit. In determining whether a matter involved especially challenging, subjective, or complex auditor judgement, the auditor should take account, alone or in combination, the following factors, as well as other factors specific to the audit:

• Risks of material misstatement, including significant risks
• Degree of auditor judgement related to areas in the financial statements
• Significant unusual transactions
• Degree of auditor subjectivity in applying audit procedures
• Nature and extent of audit effort required
• Nature of audit evidence obtained

Most frequently communicated audit CAMs are Goodwill & Other Intangible Assets, Revenue Recognition, Taxes and Business Combinations.

Audit period covered by CAMs
CAMs are required for the audit of the current period financial statements only. The auditor shall communicate CAMs relating to a prior period. For instance:

• The prior period’s financial statements are made public for the first time, such as in initial public offering, or
• Issuing an auditor’s report on the prior period’s financial statements because the previously issued auditor’s report could no longer be relied upon.

Communication of CAMs
CAMs are drawn from matters required to be communicated to the audit committee even if not actually communicated and matters actually communicated even if not required. The standard does not exclude any required audit committee communications from the source of CAMs. When communicating CAMs in the auditor’s report, the auditor is required to include introductory language in the “Critical Audit Matters” section of the auditor’s report. For each CAM communicated in the auditor’s report, the auditor has to:

• Identify the CAM
• Mark out the principal considerations that led the auditor to determine that the matter is a CAM,
• Report how the CAM was dealt in the audit, and
• Take note of the relevant financial statement accounts or disclosures that relate to the CAM.

CAMs are intended to enhance the auditor’s report to provide audit-specific information that is meaningful to investors and other financial statement users.

Documentation of CAMs
An auditor must maintain proper documentation for each matter arising from the audit of the financial statements that was communicated or required to be communicated to the audit committee and relates to accounts or disclosures that are material to the financial statements. The auditor must document whether or not the matter was determined to be a critical audit matter and the basis for such determination.

The audit documentation should be in sufficient detail to enable an experienced auditor understand the determinations made to comply with the provisions of AS 3101:

For matters determined to be CAMs, the description in the auditor’s report will generally suffice as documentation and for matters determined not to be CAMs, the amount of documentation required could vary with the circumstances. A single sentence may suffice for some matters and other matters may require more extensive documentation.

Effective dates for CAM requirements

• Audits of Large accelerated filers: For fiscal years ending on or after June 30, 2019.
• Audits of all other companies to which the requirements apply: For fiscal years ending on or after December 15, 2020.

CAM requirements do not apply to the audits of:
Broker-dealers reporting under S-X Rule 17a-5

• Investment companies, other than business development companies
• Employee benefit plans
• Emerging growth companies

Auditors of these entities may choose to report CAMs voluntarily.

Collaboration Agreement

A collaboration agreement is an agreement between 2 or more parties looking to work together on a commercial project on a collaborative or cooperative basis. It involves participation by at least two parties who agree to share resources, such as finances, knowledge, and people. The essence of collaboration is for all parties to mutually benefit from working together. Collaboration agreement illustrates certain terms and conditions (T&C) of the parties’ working relationship including the allocation of responsibilities and division of revenues derived from the exploitation of the work. The agreement is made among the involved parties.

It is generally done when two or more companies want to be in mutually beneficial business collaboration. Any collaboration agreement will include involvement of person taking part in the partnership, purpose of collaboration, authority, and representation from each party, joint decisions, primary representatives, staffing, funding, profits and proceeds, additional parties, termination, insurance, agreement extension, and finally acceptance. The parties involved in the collaboration must have an agreement with the things they have discussed as a part of their business dealings.

A collaboration agreement helps to avoid uncertainties with the collaborator down the line, by clarifying the nature and scope of the relationship. These agreements help to define the relationship between the collaborators and their respective responsibilities. It is important to have the collaboration agreement in writing, and to make sure that all the key issues are addressed in the agreement. It helps in reducing disputes as all the issues have to be dealt as per the terms of the agreement and in case of disagreement between collaborators it helps in resolving the issues.

General provisions

• The agreement comes into force upon signing by both parties.
• The agreement may be modified by mutual written consent of the parties. The agreement may be ceased by either party with one month’s notice, subject to the orderly conclusion of any continuing activities and the settlement of any outstanding obligations.
• Any dispute relating to the execution or application of this agreement shall unless amicably settled be subject to conciliation. In the event of failure of the later, the dispute shall be settled by the arbitration.

Benefits of collaboration
The advantages of collaborative working are manifold and can have a big impact on the outcome of your projects. So, if you are looking to begin actively incorporating it into your management planning, here are some of the most important advantages you can be looking forward to:

• Increased creativity and out-of-the-box thinking
• More flexibility in project direction
• Increased learning possibilities
• Higher employee productivity
• Greater geographical spread
• Enhanced stakeholder relationships

Some key points to be included in the agreement:

• Particulars of the product or services that the business will provide;
• Inputs from each party;
• Start date and duration of collaboration;
• Termination arrangements;
• Invoicing and payment of collaboration
• Details and duration of the confidential information that must be protected; and
• Post-termination restrictions of collaboration.

Related documents of Collaboration Agreement:

• Business Referral Agreement
• Consignment Agreement
• Distribution Agreement
• Introduction Agreement
• Memorandum of Understanding

Collaboration in business benefit from the close trusting relationships between partners. Network strength creates profit among businesses that have created trust between them. Collaborative partnerships between businesses generate large amount of productivity and revenue when it is stable, bidirectional communication between parties. These collaborations develop into longstanding practices and relationships that can extend beyond the length of a single project.