28 February 2011

CA. V.M.V.SUBBA RAO : Highlights of Union Budget 2011-12

HIGHLIGHTS OF UNION BUDGET – 2011-12

 

  1. The basic exemption limit in the case of individuals increased from Rs.1.60 lacs to Rs.1.80 lacs. However, there is no increase in basic exemption limit in the case of Resident Women who is below 60 years at any time during the previous year.

 

  1. The qualifying age limit for senior citizens has been lowered from 65 years to 60 years and  increased the current exemption limit under two categories

 

    1. Category -1 - Age of Individual – 60 years or more but less than 80 years at any time during the previous year. The basic exemption limit is increased from Rs.2.40 lacs to Rs.2.50 lacs

 

    1. Category – 2 -   Age of Individual beyond 80 years or more at any time during the previous year. The basic exemption limit is Rs.5.00 lacs.

 

  1. In the case of domestic companies the surcharge has been reduced from Rs.7.5% to 5%

 

  1. In the companies other than domestic companies the surcharge has been reduced from 2.5% to 2%

 

  1. The definition of charitable purpose u/s 2 (15) includes "the advancement of any other object of general public utility". The monetary limit in respect of such activities has been enhanced from Rs.10.00 lacs Rs.25.00 lacs.

 

  1. The amount paid by an assessee as an employer by way of contribution towards pension scheme, as referred to in sec 80CCD(2) on account of an employee to the extent it doesn't exceed 10% of the salary of employee in the previous year, shall be allowed as a deduction u/s 36 in computing the income under the head profit and gains of business or profession.

 

  1. The Indian company which receives foreign dividend from foreign subsidiary company such dividend is taxable at the 15% as against 30% plus applicable surcharge.

 

  1. The rate of MAT is increased to 18.5% from the existing rate of 18% of such book profit.

 

  1. Minimum Alternative Tax has been introduced for Limited Liability Partnership (LLP) in line with MAT on companies with effect from the Assessment Year 2012 – 2013.

 

  1. The Government  exempts assessees having no other income other than salary from furnishing the return of income by notification. The proposed amendment shall be effective from 1st June, 2011.

 

  1. It is proposed to omit the requirement of quoting of Documentary Identification Number in notices / order / correspondences issued by Income tax department.

 

  1. The SEZ developers are required to pay dividend distribution tax on dividends declared / distributed on or after 1st June, 2011.

 

  1. The deduction u/s 80CCF to investment in notified long term infrastructure bonds extended for the A.Y. 2012-13 also.

 

  1. Liaison offices of a company will be required to file Annual Information in the prescribed form with in the 60 days from the end of the financial year.

 

  1. The tax holiday for power sector has been extended for further period of one year i.e. upto 31.03.2012.

 

SERVICE TAX

 

  1. The following two new services have been proposed
    1. Services by air conditioned restaurants having licence to serve liquor; and 

 

    1. short term accommodation hotels / inns / clubs / guest houses etc.

 

  1. The monetary limit for adjustment of excess service tax paid is increased from Rs. 1.00 lacs to Rs.2.00 lacs.

 

  1. The penalty for delayed payment of service tax u/s 76 has been reduced from 2% to 1% per month or Rs.100 per day whichever is higher.

 

  1. The maximum penalty reduced to 50% of the tax.

 

  1. The rate of interest is reduced by 3% for assesses with turnover of upto 60 lacs.

 

  1. The maximum penalty for delay in filing of return increased from Rs.2,000 to Rs.20,000

Budget 2011: CA Anshuma Rustagi

CA Anshuma Rustagi

1.       GST in 2012 -  IT infrastructure to be laid down by NSDL - Pilot Project in 2011 – 13 states to adopt GST.

2.       Service tax refunds for exporters to be made easier. Tax Free receipts of services by exporters to be put into place.

3.       New Companies Bill to be introduced in this session of the Parliament.

4.       Income Tax exemption limit increased from 1,60,000 to 1,80,000 – individual tax payers

5.       Income Tax exemption limit increased from 2,40,000 to 2,50,000 – for senior citizen above 65 years of age

6.       Income Tax exemption limit increased to Rs 5,00,000 – for individual tax payers above 80 years of age

7.       Surcharge payable by companies reduced to 5% from 7.5%

8.       MAT increased to 18.5% from 18%

9.       Additional Rs. 20,000 investment in long term infrastructure bonds sop to continue

10.   15% tax on dividend recd by Indian company earned from foreign subsidiary

11.   Scientific Research Expenditure – contribution to National Laboratory etc  – weighted deduction increased from 175% to 200%

12.   Central Excise Duty to remain at 10%

13.   SEZ companies to come under MAT

14.   Service Tax to remain at 10%

15.   New services to be taxed

a.       AC Restaurants serving liquor – with 75% abatement

b.      Hospitals with more than 25 beds having AC – with 50% abatement

c.       Diagnostic Test Centres – with 50% abatement

d.      Government Hospitals not to be subject to service tax

e.      Air Travels to be subject to service tax

f.        Life insurance companies to pay service tax on investment activities

g.       Legal services subject to service tax

16.   Input and Input services to be defined more clearly

17.   Allocation of CENVAT credit between exempt and taxable services to be rationalized

 

 

 

Budget 2011: Synposis by Anand Wadadekar

GENERAL:
 
Economy to grow at 9%, plus or minus 0.25% in 2012
Agriculture growth at 5.4%, industry at 8.1% in 2010-11
Agricultural credit limit raised to Rs 4,75,000 crore
Food inflation declined to less than half to 9.30%
Food inflation is a big concern
Economy has regained pre-crisis growth momentum
States to cut down fiscal deficit to 3% of Gross State GDP by 2014
Growth rate of services sector expected at 9.3%
Exports up 9.4% in 2010-11
FY2012 Divestment Target at Rs 40,000 crore
Removal of supply bottlenecks in food sector in focus in 2011/12
Food Security Bill to be introduced in this year
FY 2012 defence capital expenditure seen at Rs 69,199 crore
Allocation to Department of Justice increased 3 fold to Rs 3000 cr
Plan expenditure at Rs 4.14 lakh crore
To distribute 1 million Unique Identification (UID) cards per day shortly
Fiscal deficit down at 5.1% from 5.4%
Fiscal deficit seen at 4.1% in FY 13, 3.5% in FY 14
Budget estimates for 2011-12 projects Rs 9,32,440 crore - an increase of 24 per cent

FINANCE:
 
FIIs allowed to invest in Mutual Funds and in 5-year unlisted bonds with minimum lock in period of 3 yrs
Plan to allow FII limit in infrastructure bonds to $25billion
FII limit in corporate bonds raised to $ 40billion
Plan to introduce Companies Bill in current session

Infrastructure spending to be raised by 23%
Priority home loan limit raised to Rs 25 lakh from Rs 20 lakh
Tax-free bonds worth Rs 30,000 cr proposed to boost infrastructure
To introduce self assessment in customs to facilitate fast clearance
General Sales Tax (GST) Bill to be introduced in the current session
To introduce Public Debt Management Bill in 2012; To set up independent debt management office
To provide Rs 200 cr grant to IIT Kharagpur, Rs 20 crore to IIM Calcutta
Banks to cover 20,00 villages for opening accounts in FY12
Have set up dedicated cell on transfer pricing monitoring
To amend Indian Stamp Act shortly
Gross Tax Receipts at Rs 9.32 lakh crore, up 25%
Tax sops of Rs 20,000 on Infra Bonds extended for one year
Revenue deficit for FY11 seen at 3.4%
 
DIRECT TAX:
 
Direct tax code will be effective from April 1, 2012; DTC after getting Standing Committee Report; Direct Tax Code likely to be passed by parliament next fiscal year
No Tax Return to be filed if TDS deducted by employer
Age for being classified as Senior Citizen cut to 60 years from 65 years
 
Corporate Tax reduced to 5%
Minimum Alternate Tax (MAT) raised to 18.5% of book profits
Surcharge on domestic companies cut to 5% from 7.5%
Foreign unit dividend tax rate cut to 15 percent for Indian companies
Special Economic Zones to come under MAT
 
Personal Taxation:
 
Individuals:
Income up to Rs 1.80 lakh: NIL tax
Income between Rs 1.80-5 lakh: Tax at 10%
Income between 5-8 lakh: Tax at 20%
Income above Rs 8 lakh: Tax at 30%
 
Senior Citizen: Minimum Tax Exemption limit raised to Rs. 2,50,000 from Rs. 2,40,000
women Citizens: Remains unchanged; i.e. at Rs. 1,90,000
New category of very senior citizens introduced under which Senior Citizens above the age of 80 years to get Rs. 5,00,000 as minimum tax exemption
 
Rs 20,000 deduction made available for investment in Infrastructure Bonds extended for one year. This is above Rs. 1,00,000 80C exemption
 
INDIRECT TAX:
 
Service Tax rates unchanged at 10%;
Service tax to cover more areas:
Service tax net extended to include health check-ups
Domestic travel to pay Rs 50 service tax, Rs 250 on international travel
Service tax on hotel accomodation above Rs 1500 per day
Legal representation for businesses under service tax
To tax life insurance service providers
 
Peak excise duty unchanged at 10%; To withdraw 130 items from exemption under Central Excise; Base rate on excise duty raised to 5% from 4%
No change in peak customs duty rate i.e. customs duty remains unchanged at 10%
No change in CENVAT rates
 
 
***********************************************************
Disclaimer: This Synposis prepared by Anand Wadadekar, has been prepared with utmost care and accuracy, however errors or omissions cannot be fully ruled out and the Author is not responsible for the same. The recipient is advised to go through the original Finance Bill if required.
Source: The Economic Times, Rediff.com

26 February 2011

Indian Accounting Standards Converged with IFRS Notified

Ministry of Corporate Affairs25-February, 2011 20:15 IST
Indian Accounting Standards Converged with IFRS Notified

Reliable, consistent and uniform financial reporting is important part of good corporate governance practices worldwide in order to enhance the credibility of the businesses in the eyes of investors to take informed investment decisions. In pursuance of G-20 commitment given by India, the process of convergence of Indian Accounting Standards with IFRS has been carried out in Ministry of Corporate Affairs through wide ranging consultative exercise with all the stakeholders. Thirty five Indian Accounting Standards converged with International Financial Reporting Standards (henceforth called IND AS) are being notified by the Ministry and placed on the website. . These are: IND ASs 1, 2, 7, 8, 10, 11, 12, 16, 17, 18, 19, 20, 21, 23, 24, 27, 28, 29, 31, 32, 33, 34, 36, 37, 38, 39, 40, 101, 102, 103, 104, 105, 106, 107 and 108. The Ministry of Corporate Affairs will implement the IFRS converged Indian Accounting Standards in a phased manner after various issues including tax related issues are resolved with the concerned Departments. It would be ensured that the implementation of the converged standards in a phased manner is smooth for the stakeholders. The date of implementation of the IND AS will be notified by the Ministry at a later date.

The Press Release and IND ASs are available on the Ministry's website at www.mca.gov.in .

Ministry of Corporate Affairs, Government of India

New Delhi February 25, 2011

RCJ/VL/PT-Corporate Affairs Press Note
(Release ID :70248)


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25 February 2011

IndianCAs: Revised Schedule of Membership fee from 1-04-2011 [1 Attachment]

 
[Attachment(s) from Ashwin Nagar included below]

Hi Members
 
Find attached Revised Schedule of Membership fee from 1-04-2011.
 
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Attachment(s) from Ashwin Nagar

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24 February 2011

Increase in Interest Rate on EPF

Ministry of Labour & Employment23-February, 2011 16:32 IST
Increase in Interest Rate on EPF
For the financial year 2010-2011, 9.5% rate of interest on EPF has been recommended by the Central Board of Trustees, Employees' Provident Fund [CBT(EPF)] in the 190th meeting held on 15.09.2010 based on the funds available in the interest suspense account. The Ministry of Labour & Employment has forwarded the recommendation of CBT to the Ministry of Finance (Department of Financial Services) for approval.

This information was given


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Nellore-524 003
Andhra Pradesh
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22 February 2011

[2011] 9 taxmann.com 261 (Agra - ITAT)(TM) - speculative transaction

[2011] 9 taxmann.com 261 (Agra - ITAT)(TM)

Income-tax : Speculative Transactions [Section 43(5)] - Transaction of the purchase and sale of shares cannot be regarded to be speculative transaction in case same is settled through actual delivery through demat account of investor.

[2011] 9 taxmann.com 252 (Mum. - ITAT) : Bad debts

 [2011] 9 taxmann.com 252 (Mum. - ITAT)

Income-tax : Section 36(1)(vii) - Bad debts - It is not requirement of law that assessee has to establish that debts which were written off as bad debts have in fact become bad

 

    l  Prior to 1-4-1989, every assessee had to establish, as a matter of fact, that the debt advanced by the assessee had, in fact, become irrecoverable, but that position got altered by deletion of the word "established", which earlier existed in section 36(1)(vii)

20 February 2011

IndianCAs: ICAI announcement on AS 30

 

ICAI announcement on AS 30

Application of AS 30, Financial Instruments: Recognition and Measurement, for the accounting periods ending on or before 31 st March 2011.


1 AS 30 was issued by the Institute of Chartered Accountants of India (ICAI) in 2007 but as not yet been notified by the Government under Section 211(3C) of the Companies Act, 956. As per this standard;

"Accounting Standard (AS) 30, Financial Instruments: Recognition and Measurement, issued by the Council of the Institute of Chartered Accountants of India, comes into effect in respect of accounting periods commencing on or after 1 -4-2009 and will be recommendatory in nature for an initial period of two years. This Accounting Standard will become mandatory in respect of accounting periods commencing on or after 1 -4- 2011 for all commercial, industrial and business entities except to a Small and Medium -sized Entity…."

2 AS 30 further states;

From the date this Accounting Standard becomes recommendatory in nature, the following Guidance Notes issued by the Institute of Chartered Accountants of India,stand withdrawn:

(i) Guidance Note on Guarantees & Counter Guarantees Given by the Companies.

(ii) Guidance Note on Accounting for Investments in the Financial Statements of Mutual funds.

(iii) Guidance Note on Accounting for Securitisation.

(iv) Guidance Note on Accounting for Equity Index and Equity Stock Futures and Options."

3 Subsequent to the issuance of AS 30, the world witnessed financial crisis which raised issues with regard to accounting treatment of financial in struments. Accordingly, various accounting standards setting bodies including the ICAI examined these aspects. Insofar as International Accounting Standards Board is concerned certain modifications have been made in the corresponding International Account ing Standard, viz., IAS 39, Financial Instruments: Recognition and Measurement . The International Accounting Standards Board has also issued IFRS 9, Financial Instruments, which replaces certain requirements contained in IAS 39 and it is expected that ultimately the entire IAS 39 on which AS 30 is based is not expected to be replaced before June 30, 2011 as presently committed by IASB. Accordingly, AS 30 is not expected to continue in its present form including for those entities for which converged Indi an Accounting Standards will come into force from 1st April, 2011. In this changed scenario, the Council has reconsidered the matter regarding the status of the existing AS-30 and has decided to issue the following clarification for the guidance of the Members and others concerned.

4 It is clarified that in respect of the financial statements or other financial information for the accounting periods commencing on or after 1 st April 2009 and ending on or before 31 st March 2011, the status of AS 30 would be as below:

(i) To the extent of accounting treatments covered by any of the existing notified accounting standards (for eg. AS 11, AS 13 etc,) the existing accounting standards would continue to prevail over AS 30.

(ii) In cases where a relevant regul atory authority has prescribed specific regulatory requirements (eg. Loan impairment, investment classification or accounting for securitizations by the RBI ,etc), the prescribed regulatory requirements would continue to prevail over AS 30.

(iii) The preparers of the financial statements are encouraged to follow the principles  enunciated in the accounting treatments contained in AS 30 . The aforesaid is, however, subject to (i) and ( ii) above.

5. From 1st April 2011 onwards,

(i) the entities to which converged Indian accounting standards will be applied as per the roadmap issued by MCA, the Indian Accounting Standard (Ind AS) 39, Financial Instruments; Recognition and Measurement , will apply.

(ii) for entities other than those covered under paragraph 5(i) above, the status of AS 30 will continue as clarified in paragraph 4 above .

6. The abovementioned clarifications would also be relevant to the existing AS 31, Financial Instruments: Presentation and AS 32, Financial Instruments: Disclosures as well as for Ind AS 32, Financial Instruments: Presentation and Ind AS 107, Financial Instruments: Disclosures , after 1st April 2011 onwards.

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12 February 2011

IndianCAs: G.Ramaswamy new President & Jaydeep Shah Vice President of ICAI

 

CA. G.Ramaswamy has been elected as new President & CA. Jaydeep Shah as new Vice President of ICAI for the year 20011-12

 
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11 February 2011

IndianCAs: Revised Limits For Filing Appeals By Department Before Appellate Authorities

 

 

INSTRUCTION NO. 3/2011 [F. NO. 279/MISC. 142/2007-ITJ], DATED 9-2-2011

 

Reference is Invited to Board's instruction No. 5/2008 dated 15-5-2008 wherein monetary limits and other conditions for filing departmental appeals (In Income-tax matters) before Appellate Tribunal, High Courts and Supreme Court were specified.

 

2. In supersession of the above instruction, it has been decided by the Board that departmental appeals may be filed on merits before Appellate Tribunal, High Courts and Supreme Court keeping in view the monetary limits and conditions specified below.

 

3. Henceforth appeals shall not be filed in cases where the tax effect does not exceed the monetary limits given hereunder:—

 

S. No.

Appeals in Income-tax matters

Monetary Limit (In Rs.)

1.

Appeal before Appellate Tribunal

3,00,000

2.

Appeal u/s 260A before High Court

10,00,000

3.

Appeal before Supreme Court

25,00,000

 

It is clarified that an appeal should not be filed merely because the tax effect in a case exceeds the monetary limits prescribed above. Filing of appeal in such cases is to be decided on merits of the case.

 

4. For this purpose, "tax effect" means the difference between the tax on the total income assessed and the tax that would have been chargeable had such total income been reduced by the amount of income in respect of the issues against which appeal is intended to be filed (hereinafter referred to as "disputed Issues"). However the tax will not include any interest thereon, except where chargeability of interest itself is in dispute. In case the chargeability of interest is the issue under dispute, the amount of interest shall be the tax effect. In cases where returned loss is reduced or assessed as income, the tax effect would include notional tax on disputed additions. In case of penalty orders, the tax effect will mean quantum of penalty deleted or reduced in the order to be appealed against.

 5. The Assessing Officer shall calculate the tax effect separately for every assessment year in respect of the disputed issues in the case of every assessee. If, in the case of an assessee, the disputed issues arise in more than one assessment year, appeal, can be filed in respect of such assessment year or years in which the tax effect in respect of the disputed issues exceeds the monetary limit specified in para 3. No appeal shall be filed in respect of an assessment year or years in which the tax effect is less than the monetary limit specified in para 3. In other words, henceforth, appeals can be filed only with reference to the tax effect in the relevant assessment year. However, in case of a composite order of any High Court or appellate authority, which involves more than one assessment year and common issues in more than one assessment year, appeal shall be filed in respect of all such assessment years even if the 'tax effect' is less than the prescribed monetary limits in any of the year(s), if it is decided to file appeal in respect of the year(s) in which 'tax effect' exceeds the monetary limit prescribed. In case where a composite order/judgment involves more than one assessee, each assessee shall be dealt with separately.

 

6. In a case where appeal before a Tribunal or a Court is not filed only on account of the tax effect being less than the monetary limit specified above, the Commissioner of Income-tax shall specifically record that "even though the decision is not acceptable, appeal is not being filed only on the consideration that the tax effect is less than the monetary limit specified in this instruction". Further, in such cases, there will be no presumption that the Income-tax Department has acquiesced in the decision on the disputed issues. The Income-tax Department shall not be precluded from filing an appeal against the disputed issues in the case of the same assessee for any other assessment year, or in the case of any other assessee for the same or any other assessment year, if the tax effect exceeds the specified monetary limits.

 

7. In the past, a number of instances have come to the notice of the Board, whereby an assessee has claimed relief from the Tribunal or the Court only on the ground that the Department has implicitly accepted the decision of the Tribunal or Court in the case of the assessee for any other assessment year or in the case of any other assessee for the same or any other assessment year, by not filing an appeal on the same disputed issues. The Departmental representatives/counsels must make every effort to bring to the notice of the Tribunal or the Court that the appeal in such cases was not filed or not admitted only for the reason of the tax effect being less than the specified monetary limit and, therefore, no inference should be drawn that the decisions rendered therein were acceptable to the Department. Accordingly, they should impress upon the Tribunal or the Court that such cases do not have any precedent value. As the evidence of not filing appeal due to this instruction may have to be produced in courts, the judicial folders in the office of CsIT must be maintained in a Systemic manner for easy retrieval.

 

8. Adverse judgments relating to the following issues should be contested on merits notwithstanding that the tax effect entailed is less than the monetary limits specified in para 3 above or there is no tax effect.

 

(a) Where the Constitutional validity of the provisions of an Act or Rule are under challenge, or

 

(b) Where Board's order, Notification, Instruction or Circular has been held to be illegal or ultra vires, or

 

(c) Where Revenue Audit objection in the case has been accepted by the Department.

 

9. The proposal for filing Special Leave Petition under Article 136 of the Constitution before the Supreme Court should, in all cases, be sent to the Directorate of Income-tax (Legal & Research), New Delhi and the decision to file Special Leave Petition shall be in consultation with the Ministry of Law and Justice.

 

10. The monetary limits specified in para 3 above shall not apply to writ matters and direct tax matters other than Income-tax, filing of appeals in other direct tax matters shall continue to be governed by relevant provisions of statute and rules. Further, filing of appeal in cases of Income-tax, where the tax effect is not quantifiable or not involved, such as the case of registration of trusts or institutions under section 12A of the IT Act, 1961, shall not be governed by the limits specified in para 3 above and decision to file appeal in such cases may be taken on merits of a particular case.

 

11. This instruction will apply to appeals filed on or after ……….. 2011. However, the cases where appeals have been filed before ………… 2011 will be governed by the instructions on this subject, operative at the time when such appeal was filed.

 

12. This issues under section 268A(1) of the Income-tax Act, 1961


 
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10 February 2011

Amendment to Sec 211

Press Note No. 2/2011 dated 8.2.2011 - General Exe...

Subject : Company Law
Circular Date : 8 Feb 11
Topic : Press Note No. 2/2011 dated 8.2.2011 - General Exemption under Section 211
Circular Details :

Government of India

Ministry of Corporate Affairs

Press Note No. 2/2011 dated 8.2.2011

General Exemption under Section 211

Section 211 of the Companies Act, 1956 requires that the balance sheet and profit and loss account of a company shall be in the form set out in Part I of Schedule VI or in such other form as may be approved by the Central Government either generally or in any particular case. The Ministry has been regularly receiving requests for exemption from various classes of companies from the disclosure of certain quantitative details required under Schedule VI. So far, these exemptions were being given on a case-by-case basis with certain conditions.

2.These requirements date back to the era when there was industrial licensing etc., and there was a regulatory purpose in monitoring quantitative aspects of production etc. Their relevance in the present economic and regulatory environment has been re-assessed. Such disclosures are not required in other countries. Indian companies have represented that such disclosure puts Indian companies at a competitive disadvantage where their details are known to foreign competitors, but they cannot get the details from the other side.

3.Accordingly, the Central Government has, by notification, issued a general exemption whereby the categories of companies in column (2) of the Table below will be exempted from the disclosures given in column 3:-

SN

Class of Companies

Exemptions from para(s) of Part-II of Schedule VI.

1.

Companies producing Defence Equipments including Space Research;

para 3(i)(a), 3(ii(a), 3(ii)(d), 4-C, 4-D (a) to (e) except (d).

2.

Export Oriented company (whose export is more than 20% of the turnover);

para 3(i)(a) 3(ii)(a), 3(ii)(b), 3(ii)(d).

3.

Shipping companies (Including Airlines);

para 4-D (a) to (e) except (d).

4.

Hotel companies (including Restaurants);

para 3(i)(a) and 3(ii)(d)

5.

Manufacturing companies/multi-product companies;

para 3(i)(a) and 3(ii)(a).

6

Trading companies;

para 3(i)(a) and 3(ii)(b)



--
Best Wishes

CA. V.M.V.SUBBA RAO
Chartered Accountant
Door No.24-2-1885,
I Floor, Flat No.5,
Siddivinayaka Residency, I Cross,
Central Avenue, MSR Nagar,
Magunta Layout,
Nellore-524 003
Andhra Pradesh
India
Mobile:+91 - 0 9390221100
           +91 - 0 9440278412
e-Mail: vmvsr@rediffmail.com
           vmvsr@yahoo.co.uk
http://pdicai.org/MyPage/203038.aspx

09 February 2011

Amendment to Schedule XIII

Ministry of Corporate Affairs08-February, 2011 16:53 IST
Schedul Xiii of the Companies Act 1956 Being Amended- Unlisted Companies Shall not Require Government Approval for Managerial Remuneration Where they have no Profits
The Ministry of Corporate Affairs issued today a notification on Managerial Remuneration in unlisted companies having no profits/inadequate profits. The notification reads as under:

Managerial Remuneration in unlisted companies having no profits/ inadequate profits

Companies are divided into private limited and public limited companies. Public limited companies are of two types – listed companies (whose shares are listed on a stock exchange) and unlisted companies. Normally, the general public does not hold shares in unlisted companies. Private limited companies are not subject to any limits on managerial remuneration. Public limited companies (listed and unlisted) with no profits/ inadequate profits are currently required to approach the Ministry for approval in those cases where the remuneration of Directors/ equivalent managerial personnel exceeds certain limits.

2. The matter has been re-examined in the light of the evolving economic and regulatory environment. The primary purpose of regulations over managerial remuneration is to protect stakeholders, particularly shareholders and creditors. Unlisted companies are in several respects similar to private limited companies. A substantial number of the applications coming to the Ministry fall under this category and the Ministry's limited manpower is disproportionately involved in this exercise. In the case of unlisted companies so long as the conditions specified in Schedule XIII, including special resolution of shareholders and absence of default on payment to creditors, are fulfilled approval will not be needed hereafter.

3. Accordingly, Schedule XIII of the Companies Act 1956 is being amended to provide that unlisted companies (which are not subsidiaries of listed companies) shall not require Government approval for managerial remuneration in cases where they have no profits/ inadequate profits, provided they meet the other conditions stipulated in the Schedule.

VLK/ska

(Release ID :69674)


--
Best Wishes

CA. V.M.V.SUBBA RAO
Chartered Accountant
Door No.24-2-1885,
I Floor, Flat No.5,
Siddivinayaka Residency, I Cross,
Central Avenue, MSR Nagar,
Magunta Layout,
Nellore-524 003
Andhra Pradesh
India
Mobile:+91 - 0 9390221100
           +91 - 0 9440278412
e-Mail: vmvsr@rediffmail.com
           vmvsr@yahoo.co.uk
http://pdicai.org/MyPage/203038.aspx

08 February 2011

IndianCAs: ICAI has signed historic arrangment with CICA Canadian Institute of CA

 

Dear Member,
 
ICAI has signed historic arrangment with CICA Canadian Institute of CA for membership recognition on 7th Feb., 2011.
Further arragments for the details shall be available on ICAI website shortly.


| Ashwin Nagar | FCA and SAP-FICO\SEM-BCS |
Success is not permanent and failure is not final
 
Twitter      : http://twitter.com/ashwinnagar

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