vol 25 NO.

10 pages 36 march 2022 50

 Contents
Board of Studies
(Academic) (2022-23)
INSIDE
Chairman
03 President’s Communication
CA. Dayaniwas Sharma
04 Vice-President’s Communication
Vice-Chairman
CA. Vishal Doshi
05 Chairman’s Communication

Members 06 President and Vice President’s Profiles

CA.(Dr.) Debashis Mitra, President (Ex-officio)
CA. Aniket Sunil Talati, Vice-President (Ex-officio)
07 Chairman and Vice Chairman’s Profiles
CA.(Dr.) Rajkumar Satyanarayan Adukia
08 Union Budget: 2022-23
CA. Chandrashekhar Vasant Chitale
CA. Durgesh Kumar Kabra 14 CA Final: Direct Tax Laws
CA. Mangesh Pandurang Kinare
CA. Umesh Sharma 26 CA Intermediate: Financial Management
CA. Sridhar Muppala
CA. Prasanna Kumar D 32 CA Foundation: Business Correspondence and Reporting
CA. Cotha S Srinivas
35 Toppers + Announcement
CA. Sripriya Kumar
CA. Ranjeet Kumar Agarwal
36 Crosswords
CA. Sushil Kumar Goyal
CA. Rohit Ruwatia President and Editor-in-Chief Chairman
CA. Abhay Chhajed CA. (Dr.) Debashis Mitra, Kolkata CA. Dayaniwas Sharma

CA. Anuj Goyal Vice President Vice-Chairman

CA. Gyan Chandra Misra CA. Aniket Sunil Talati CA. Vishal Doshi

CA. Prakash Sharma

CA. Kemisha Soni Director- Board of Studies Editorial Support
CA. Vandana D Nagpal Dr. Ruchi Agarwal, Deputy Secretary
CA. Pramod Jain
CA.(Dr.) Sanjeev Kumar Singhal Office
Board of Studies, The Institute of Chartered, Accountants of India, ICAI Bhawan,
Dr. P. C. Jain
A-29, Sector-62, Noida-201 309. Phone : 0120-3045907
Advocate Vijay Kumar Jhalani
Head Office
The Institute of Chartered Accountants of India, ICAI Bhawan, Indraprastha Marg,
Total Circulation: 3,01,574 New Delhi-110 104.
Check your Address: All students should
check their mailing address printed on back Editor: CA. Dayaniwas Sharma
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Cover Image Courtesy: www.shutterstock.com

Inside image: www.shutterstock.com SWACHH BHARAT - A STEP TOWARDS CLEANLINESS

02 March 2022 The Chartered Accountant Student

 PRESIDENT’S COMMUNICATION

Dear Students,

W
arm Greetings to all of you. I take immense pride partnering with the Government in various initiatives for the
and pleasure in communicating with you as the nation’s development and inclusive growth. We aim to achieve
70th President of our beloved Institute. I take this the objectives envisioned in our Vision 2030 and match the
opportunity to express my earnest gratitude to the Council of aspirations and expectations of the stakeholders and the
ICAI and CA fraternity for reposing their trust and confidence regulators. With this thought in mind Action Plan 2022-23 has
in me to shoulder this onerous responsibility and providing been developed which enumerates the primary focus areas for
opportunity to serve my alma mater. I am confident that together current year.
we all shall strive harder for the holistic growth and progress of I sincerely believe that this Action Plan would guide us in the
our profession. We at ICAI aspire to work with full dedication journey towards achieving our vision and the agenda of growth.
to take this coveted profession to greater heights of Excellence, The Action Plan 2022-23 has been divided in three segments. In
Independence and Integrity. It is our vision to nurture and the First segment, we take forward the legacy of the core virtues,
make Chartered Accountants the most trusted and valuable and principles of the profession. In the second segment, we list
professionals both nationally as well as globally. the existing endeavours of the Institute which need to be carried
forward with renewed vigour for successful completion. The
Way forward towards global recognition Third segment describes the vision for 2022-23 and enlists the
As an Institute, we are consistently working towards establishing endeavours which I believe need to be worked upon in the coming
outstanding benchmarks and standards for the accounting year with acute focus and dedication. These initiatives like multi-
profession to enhance its global recognition. The constitution of the disciplinary partnerships, fostering research, and advancing as
Committee for Review of Education and Training (CRET) during well as reorienting the Accountancy Education through CRET
the preceding year exhibits our commitment to provide the best will act as a catalyst to future growth of the profession.
education to the students of the course. The main objectives of This year, ICAI would be hosting the World Congress of
formation of CRET are as under: Accountants 2022- The Olympics of Accountancy Profession
• To align with the revolution in information technology which will not only be catapulting Indian CAs to global focus,
including emergence of artificial intelligence necessitating but will be an apt platform to showcase rich Indian culture,
changes in the expected skills of chartered accountants; heritage and diversity to global community.
• To adopt changes necessitated in the manner of imparting
education and conducting examination in the post COVID Results declared – Opportunities and Challenges
19 scenario; I would like to convey my heartiest congratulations to all the
• To make the curriculum globally relevant consequent to students who have come out with flying colours in the CA
launch of international curriculum; examinations held in December 2021. Remember, this is just the
• Incorporate changes due to implementation of National beginning of a long and gratifying professional journey which
Education Policy 2020; is full of responsibilities with opportunities, challenges and
• Increasing emphasis on corporate governance and business accomplishments. You are the future of this great profession and
ethics; and you must always believe in Integrity, Excellence and Transparency
• Opening up new avenues for the profession, such as carbon to carry forward the pristine glory that the profession has so
accounting, CSR accounting and auditing and environmental steadfastly built since inception. Feel proud to be a Partner in
reporting. Nation Building.
In the ensuing year, we envisage in developing a contemporary The students who have not succeeded this time should not
and comprehensive curriculum which is in consonance with feel dejected and discouraged. This is the time for you to self-
International Education Standards and global best practices. The retrospect and re-examining your strategy. Wherever required
new curriculum is being conceptualized to develop professionally you can talk to your seniors to analyse your strategy. Also work
competent chartered accountants for the new era, who would play on your weakness and hone your strong points with perseverance
an instrumental role as business leaders and strategic advisors and dedication. I am very hopeful that with your sincere efforts
beyond the traditional domains. and determination, you will be able to attain success in all
your endeavours. Just remember the words of Dr. A P J Abdul
Action Plan 2022-23 Kalam - Failure will never overtake me if my determination
“Reach high, for stars lie hidden in you. Dream deep, for every to succeed is strong enough.
dream precedes the goal.” - Rabindranath Tagore I convey my best wishes to you.
As our country celebrates the Amrit Mahotsav of its
independence, it is particularly apt to recapitulate and envision
the path to be followed ahead. It is important to identify the
broad forces and levers of growth for the profession and align CA. (Dr.) Debashis Mitra
them with the vision of a self–reliant India. ICAI has been PRESIDENT, ICAI

The Chartered Accountant Student March 2022 03

“All you need is the plan, the road map, and the courage to press on to your destination.” - Earl Nightingale
 VICE PRESIDENT’S COMMUNICATION

Dear Students,

I
t is indeed a matter of great pleasure for me to interact Journal since April 2017 have been compiled chapter-wise / topic-
with you as the Vice President of the Institute through this wise and uploaded in BoS Knowledge Portal on the Institute
communication. At the outset, I would like to express my website. These quick reference capsules serve as handy revision
heartfelt gratitude to all my Council colleagues and the CA notes for students before the examination as they explain the
fraternity for reposing confidence in me. I value this opportunity topics in an understandable pictorial manner.
to serve the profession and its members. I am confident that • ICAI BoS Mobile App
under the leadership of our charismatic and dynamic President, The ICAI Mobile App has emerged as one-stop solution for
CA. (Dr.) Debashish Mitra, I would sincerely discharge my all BoS publication material, live and recorded classes, online
responsibilities with utmost dedication and commitment. MCQ assessment, download notes and assignments, important
The stature and the reputation of the Indian Chartered announcements via push notification, etc. Recently, the Mobile
Accountants has risen globally by the virtue of the competence App has emerged with a new design, display of Live Classes
exhibited by them in the various domains. Post COVID, the and other events on the main page with stickers, hamburger
economy is recovering and the careers in finance and accounts menu, new dashboard of online MCQ assessment, etc. The
have gained tremendous traction. Chartered Accountancy is a updated version (v1.10) is available on the Google play store for
dynamic, challenging and rewarding profession. Today, Chartered downloading the same.
Accountants all over the globe occupy important strategic • Ask Your Query
positions in organizations of repute. The job profile of a Chartered The newly introduced feature named ‘ASK YOUR QUERY’
Accountant does not restrict itself to the preparation and audit feature has been made operational whereby the students may
of financial statements: rather, they need to have analytical skills, raise their queries for each subject such as the content discussed
which help in strategic decision-making at the highest level. We in the Study Material, MCQs in the Booklet on Case Scenarios &
need to keep up the goodwill earned and meet the expectations MCQs, Case Studies in the Case Study Digest, Q&A in the latest
of the stakeholders by striving to develop excellence in core Revision Test Paper (RTP), Q&A in the latest Mock Test Paper
subject areas and acquiring knowledge pertaining to the newer Series (MTP), etc. which are answered by the respective faculty/
technologies. BoS team within 72 hours of being submitted on the app.
Technology is going to reshape and restructure the way we I am extremely concerned, dedicated and determined to provide a
function and therefore, it is highly imperative that students equip conducive environment for the all-round growth of our students.
themselves adequately considering the newer requirements. The We aim to provide the best-in-class facilities for learning,
Institute is particularly committed towards going along with the training and collaboration which shall further be instrumental in
digital revolution and improving its services in line with the same. empowering you to become accomplished professionals. I advise
Some of the initiatives in the above regard worth mentioning are all of you to take advantage of all the resources and seek your
as below: support and suggestions for further improvements.
• Leveraging Technology I convey my heartiest congratulations to all the students who have
ICAI is leveraging technology to reach out to our students located passed in the December 2021, examinations. Those who could
in the remote interiors of the county enabling them to access not clear in this attempt, should not get disheartened but prepare
learning resources online through Virtual Coaching Classes, well in a thorough manner and cross the hurdle successfully in the
e-books, e-capsules, Mobile App, etc. next attempt. Stay motivated and study hard.
• e-Books Yours sincerely
The Digital Learning Hub at ICAI provides e-Books for all the
three levels of CA Course. These e-Books contain latest features
such as audio enabled text, built-in Wikipedia and facility of
highlighting and making notes which can be retained in their
login and available for exporting to PDF file.
• e-Capsules/ Quick Referencer capsules CA. ANIKET SUNIL TALATI
The subject-wise capsules published in the monthly Students’ VICE PRESIDENT, ICAI

04 March 2022 The Chartered Accountant Student

“What you get by achieving your goals is not as important as what you become by achieving your goals.” – Zig Ziglar
 CHAIRMAN’S COMMUNICATION

are able to obtain an insight about the topic. The purpose of

these recorded videos is to make the students comprehend the
usefulness of the topic while studying the topic in depth.
• ICAI BoS Mobile App
Currently, 2,00,000+ students have installed the mobile app,
which is a one-stop solution to get all learning, education
material with a single click, such as all BoS publication
materials, live and recorded classes, online MCQ assessment,
My Dear Students, download notes and assignments, important announcements
via push notification, etc. Recently, the mobile app has

I
t is my proud privilege, to communicate with all of you, as emerged with a new design and display of Live classes and
your new Chairman of the Board of Studies (Academic). At other events on the main page with stickers, hamburger menu,
the outset, I would like to express my sincere thanks and new dashboard of online MCQ assessment, etc. The updated
gratitude to our President, CA. (Dr.) Debashis Mitra, and version (v1.10) of App is available on the Google play store to
Vice President CA. Aniket Talati for posing faith and confidence update or download. Furthermore, through the feature “Ask
in me and entrusting me with the overall responsibility of the Your Query” in the Mobile app., almost 4000+ subject-specific
Board of Studies (Academic). academic queries of students at all the levels of CA curriculum
have been resolved by the Faculty of Board of Studies (A) and
As you are aware that the BoS(A) is the academic wing of the
overwhelming responses have been received for the same.
Institute that carries out a wide array of functions in nurturing
your overall development, I wish to ensure that with the active • Revision Test Papers (RTPs)
cooperation of my passionate Vice Chairman, CA. Vishal Doshi The RTPs of all the subjects for Foundation, Intermediate and
and all the other members of the BoS(A), we shall duly carry out Final level have been made available for the students on the
our responsibilities with utmost sincerity and allegiance to this Institute’s website. Students can refer to them for their revision
noble profession. We shall carry forward the initiatives taken by purpose and to assess their preparedness for the examination.
the Board in previous year(s) and take fresh initiatives for the • Mock Test Papers (MTPs)
overall benefit of our student fraternity in the year 2022-23. In order to assist students in their preparation for the
examination, the Bos(A) holds Mock Test Papers for all levels
Embracing new perspective of students. These MTPs provide our students a firsthand
As you all must be aware that December 2021 was the last exam opportunity to assess their preparation for examinations and
of Intermediate (IPC) course and Final course under the Old certainly help all our students in improving their performance
scheme. Therefore, students under Old scheme are required in the actual examinations. I strongly recommend all students
to convert themselves to Revised Scheme of Education and to appear for these tests as they will help you not only in
Training implemented w.e.f. 1st July 2017 to appear in May 2022 revising your entire syllabus but also to identify your weak
Examinations by 13th March 2022. For conversion from earlier areas which you can work upon to improve.
Scheme to Revised Scheme of Education and Training, the • Capsule Insights
students may visit Self Service Portal at https://eservices.icai.org/. The highlight of this issue are comprehensive Capsules based
Since “Change is the only constant in life”, we have initiated a step on Paper 7: Direct Tax Laws for CA Final, Paper 8A: Financial
to prepare ourselves to introduce our new scheme for education Management for CA Intermediate and Paper 2 Section B:
and training wherein emphasis would be more on development Business Correspondence and Reporting for CA Foundation.
of higher order skills of application, analysis, and interpretation These capsules comprise major concepts, concisely crafted and
amongst our aspirers. presented using illustrations, diagrams and flowcharts thus
making it a perfect single reference point for revision.
Incessant learning initiatives of BoS (A)
In order to qualify as a successful CA, it would require utmost Welcoming suggestions to remain dynamic
dedication, persistent efforts, positive bent of mind and above all Before I conclude, I urge our students to share their suggestions
a sound strategy devised to leverage your strengths and overcome continuously for betterment of learning for profession which is
your shortcomings. Following are the initiatives that will make very dynamic, demanding and rewarding.
your learning process more effective. Wishing you Happy Mahashivratri, Colorful Holi and all the best
• Video Lectures for your future endeavours!!
The BoS (A) is proposing to provide short sessions of around
15 minutes of renowned experts on each topic of subjects in
Final and Intermediate Courses, beginning with the Paper 1:
Financial Reporting of Final Course. The recorded sessions
would be prefixed before the relevant chapters/topics in the
e-Books available on ICAI Digital Learning Hub (DLH) so CA. Dayaniwas Sharma
CHAIRMAN, BOARD OF STUDIES (ACADEMIC)
that the students before reading and understanding the topic
The Chartered Accountant Student March 2022 05
“If my mind can conceive it, if my heart can believe it, then I can achieve it.” - Muhammad Ali
 PROFILE Our New President PROFILE Our New Vice President

A A
visionary with man of refined
strong academic t h o u g h t -
leaning and having process, quick
deep professional insight, understanding and sharp
CA. (Dr.) Debashis Mitra, vision, CA. Aniket Sunil
has been elected as the Talati has been elected
President of The Institute as the Vice-President of
of Chartered Accountants
of India (ICAI) for the year the Institute of Chartered
2022-23. Serving his third Accountants of India
term in the Council of for the term 2022-23.
ICAI, he has been serving Respected for his strong
CA. (Dr.) Debashis Mitra the accounting profession CA. Aniket Sunil Talati
organizational skills and
president, for last more than thirty- vice president, deep insight in the affairs
ICAI 2022-23 four years. Dr. Mitra, a ICAI 2022-23 of profession, CA. Aniket
senior practising member, Talati has contributed to
is also a Cost Accountant, Company Secretary, holds a Master’s the cause of profession from various professional perspectives.
degree in Commerce, Law graduate and a qualified Information
Systems Auditor. With keen interest in academic research, he is Being Bachelor of Commerce from Mumbai University and a Rank
a Ph.D. on the topic “A Critical Study of Select Indian GAAP, US holder from Gujarat University, CA. Aniket Talati further pursued
GAAP & IAS / IFRS”. Master of Commerce. He has led the cause of profession through
As President ICAI, CA.(Dr.) Debashis Mitra is now the Chairman various committees of the Branch & Regional Councils of ICAI. He
of all Standing Committees i.e. Executive, Finance and Examination has served as the Chairman of Ahmedabad Branch of ICAI for the
Committees, besides being the ex-officio member of all Non- year 2014-15 and as Secretary, WIRC for the year 2017-18.
Standing Committees and Editor of ICAI Journal, The Chartered He was the Chairman of Financial Reporting Review Board (FRRB),
Accountant. CA. Debashis Mitra is the Director of ICAI Registered Vice Chairman of CSR Committee and Convenor of Digital Re-
Valuers Organisation (RVO) and also the representative from ICAI Engineering & Learning Directorate of ICAI. He was also the
RVO on the “Committee to advise on Valuation matters” of MCA. Director of ICAI Accounting Research Foundation (ICAI ARF)
He is also Chairman of the ICAI Research wing, ICAI – Accounting
Research Foundation and Extensible Business Reporting Language and also the member of various other Committees, Boards and
(XBRL) India. He is also on the Board of Indian Institute of Directorates of ICAI. CA. Aniket Talati is at the forefront of Digital
Insolvency Professionals of ICAI. Transformation within ICAI and numerous digital Initiatives
CA. (Dr.) Debashis Mitra is a member on the Board of Chartered launched under him stand testimony to this fact.
Accountants Worldwide (CAW) as well as the South Asian CA. Aniket Talati has also been appointed as an advisor to the
Federation of Accountants (SAFA) and also Technical Advisor to board of International Federation of Accountants (IFAC). IFAC
the IFAC Board member. He, in his capacity as President ICAI, is a is the global organization for the accountancy profession. Founded
representative on International Integrated Reporting Council (IIRC) in 1977, IFAC has more than 175 members and associates in more
and representing ICAI in the Board meetings of PAFA and AFA. than 130 countries and jurisdictions, representing more than 3
CA.(Dr.) Debashis Mitra will now be representing ICAI in some million accountants employed in public practice, industry and
very important Committees constituted by the Indian government commerce, government, and academe. He has served as Executive
and Regulators that include Government Accounting Standards Committee Member of Gujarat Chamber of Commerce & Industry
Advisory Board (GASAB) and Audit Advisory Board- both
constituted by the C&AG of India. He is also Board Member of (GCCI) and is currently member of the Direct Tax Committee of
Insurance Regulatory & Development Authority (IRDA), Insurance GCCI.
Advisory Committee and Member of SEBI’s Primary Market A man of grass-root understanding of the matters and respected
Advisory Committee. for his down-to-earth approach to the issues at hand among his
A persuasive and intense trainer, he is renowned for his interactive professional colleagues, CA. Aniket Talati has a surpassing ability
deliberations in International Financial Reporting Standards (IFRS) to deal with a variety of difficult situations.
and Corporate Laws. He has trained many officials of several corporate Having an exceptional ability to bring out a range of alternative
and non-corporate entities as well as Central and State governmental
organizations. An avid speaker, he passionately shares his deep and solutions on the table in any given situation, he has to his credit
incisive knowledge in India & abroad at various events organised by successful closures of many a taskforce and time-bound non-
the ICAI, trade organisations and other reputed Institutes. standing groups and teams. Being thoroughly conversant with
As an accomplished professional having immense knowledge of the professional concerns and demands of his times, CA. Aniket
trade and industry, he has served as an active member of several Talati has authored relevant books, including ‘Treatise on RERA’
prestigious boards, forums and institutions in India, viz., Quality published by CA Association Ahmedabad.
Review Board established by Govt. of India, Board of Extensible An academic by temperament, CA. Aniket Talati has published
Business Reporting Language (XBRL) India and The Board of numerous articles in newspapers, magazines and professional
Governors of Assam Downtown University. He also represented newsletters and delivered lectures in about 250 seminars and
ICAI in Uday Kotak Committee on Corporate Governance set up conferences.
by SEBI as well as the Committee set up by Ministry of Corporate
Affairs for revision in CARO.
On the international front, he was the Chairman of Committee
on Education, Training and CPD of South Asian Federation of
Accountants (SAFA) and member of Audit Group of Confederation of
Asian and Pacific Accountants (CAPA). He has also served as member
of SAFA Committee on Auditing Standards and Quality Control. “If you talk about it, it's a dream, if you envision it,
Earlier, Dr. Mitra has also served the profession as Chairman of the it's possible, but if you schedule it, it's real.”
Eastern Indian Regional Council of ICAI as well as Guwahati Branch
of EIRC of ICAI. A seasoned strategist and leader to the core, he is - Anthony Robbins
the former President of Rotary Club of Calcutta, the oldest running
Rotary Club in Asia, as well as former National President of The
Institute of Internal Auditors (India).
06 March 2022 The Chartered Accountant Student
PROFILE Our New Chairman PROFILE Our New Vice Chairman

A C
man of great A. Vishal Doshi is
professional a Central Council
and academic Member of The
credentials, CA. Dayaniwas Institute of Chartered
Sharma qualified in 2005, Accountants of India
and is the Managing Partner
of Laxminiwas and Co., (ICAI) for 2022-25.
Chartered Accountants. He leads the Audit &
He is an Information Assurance practice of K.
System Auditor (ISA) C. Mehta & Co., Chartered
and Certified Forensic Accountants, Vadodara
Auditor, having completed and has more than 25 years
CA. Dayaniwas Sharma Diploma & Certification CA. Vishal Doshi of professional experience.
chairman, Course conducted by ICAI, Vice chairman,
He also possesses
ICAI 2022-23 ICAI 2022-23
respectively. Diplomas in Information
Armed with 23 years of
experience in the fields of auditing, accounting, corporate re- System Audit (ICAI) and Insurance and Risk Management
structuring valuations, due-diligence and transaction advisory (ICAI).
services and other related financial management services, CA. Vishal looks after the Assurance functions of listed companies,
Dayaniwas Sharma has overseen and managed audit engagements government companies, multinational companies & large
of large corporate entities from international, private and public corporates. He also specialises in convergence from Indian
sector undertakings. GAAP to Ind-AS / IFRS and has successfully led some very
After discharging his duties on multiple committees as Chairman,
prestigious Ind-AS implementation and convergence projects in
Vice-Chairman and Member, during his first term, he has been
re-elected for the second term to the Central Council of ICAI oil & gas, power, infrastructure and manufacturing sectors.
for the period 2022-25. Vishal is the Vice Chairman of Auditing & Assurance Standards
The list his contribution and involvement in last three years are- Board, Board of Studies (Academic) and Expert Advisory
• Technology: Self Service Portal (SSP), New ICAI website, Committee of ICAI and member of various Standing and Non-
Digital Learning Hub, UDIN, CA Connect Portal, Driving Standing Committees of ICAI for 2022-23.
the Finance and Tax Literacy Drive of ICAI with 11 languages
website, WE CARE portal for senior members and more. Vishal has been a Member of Western India Regional Council for
• Subjects: Introducing Forensics Standards to the world 2019-22 and also Vice Chairman of WIRC of ICAI for 2020-21.
of accounting profession nationally and internationally, He has been the Chairman of Baroda Branch of WIRC of ICAI
Introducing specialised Certification courses on ABCD of for 2005-06.
technology, Revamping Forensic Accounting and Information
System Audit courses which are accepted globally, revamping As a Regional Council Member, Vishal has been Chairman of
the entire Peer Review Process, working on New Networking Corporate & Allied Laws & Corporate Governance Committee,
Guidelines and more. Branch Co-ordination Committee, Ind AS, Accounting Standard
He continues to hold the Board membership of XBRL India, & IFRS Committee, Ethical Standards Board Committee and also
Quality Review Board (QRB), Peer Review Board (PRB), Financial Vice Chairman / member of several other committees. He has
Reporting Review Board (FRRB) in addition to Taxation Audit also been a Member of Regional Audit Committee of WIRC of
Quality Review Board (TAQRB). ICAI for 2019-20 & 2021-22.
Currently for the year 2022-23 he is the Chairman of
Board of Studies (Academics), Digital Re-engineering and Vishal has made presentations on Ind AS / IFRS, Accounting
Transformation Committee, Center of Excellence-Hyderabad, Standards, Standards on Auditing, ICAI Guidance Notes, Code of
Vice Chairman of Digital Accounting and Assurance Board Ethics, Practice Management for SMPs, AS vs. ICDS, Companies
(DAAB). He is also a member of 11 Technical Committees Act, Schedule III, CARO and host of technical and non-technical
and 10 Non-Technical Committees. subjects at various seminars, workshops, Certificate & Intensive
He is a member of Federation of Telengana Chamber of Courses of the ICAI, WIRC, its Branches and Study Circles and
Commerce and Industries (FTCCI), Indo American Chamber of other academic institutions. He has also been a visiting faculty to
Commerce (IACC), TIE – Hyderabad and CEO/ CFO Forum – Post Graduate Course at M. S. University, Baroda.
Hyderabad.
Prior to joining the profession of Chartered Accountancy, CA. Vishal is a Peer Reviewer for Peer Review Board, ICAI. He has
Dayaniwas Sharma was actively involved in ‘Stock Market been a Technical Evaluator of financial statements for ICAI
Activities’ from 1993 to 1998. He is also a qualified member of Awards for Excellence in Financial Reporting for Research
Association of Mutual Funds of India (AMFI) since 2004. Committee, ICAI and Member of Financial Reporting Review
Apart from these, CA. Dayaniwas Sharma has to his credit a Group – Baroda for Financial Reporting Review Board, ICAI.
plethora of other achievements:
• He has been instrumental in taking the firm into International To his credit Vishal has been awarded Rashtrapati Scout Award
arena and developed working relationship with different by Shri K. R. Narayanan, Hon’ble President of India. Presently,
countries and 5 cities nationally. Their group is one of its kind he is appointed Expert member on the Board of Studies in
to be called as ‘Indian Multinational Firms’ or Make in India Accounting & Financial Management (Faculty of Commerce) for
firm of Chartered Accountants. the term 2020-23 by the Maharaja Sayajirao University of Baroda.
• He has been covered by a coffee table book and recognised as
“Young India Visionary” by IMG Innovative Media Group in
whole of UAE.
• Continues to deliver lectures at ICAI and other educational
institutions on Audit, Taxation and Management topics. “You’ve got to get up every morning with
At ICAI, National and International Forums, he took sessions determination if you’re going to go to bed with
and seminars on 23+ topics including topics like, Practice
Management, Audit and Assurances, Taxation – Direct, and satisfaction.” - George Lorimer
Indirect, Company Law and Allied Laws.

The Chartered Accountant Student March 2022 07

 Union Budget 2022-23
SIGNIFICANT TAX PROPOSALS IN THE FINANCE BILL, 2022
DIRECT TAXes
Rates of Tax and Surcharge case. To maintain parity between Central and State government
employees, it is proposed to increase the permissible deduction
Rates of Tax
limit from 10% to 14% for State Government employees as well
In the Union Budget, 2022, there is no proposal for changing the
in respect of employer’s contribution to the NPS account.
rates of tax applicable for individuals or HUF or AOPs or BOIs
or artificial juridical persons or firms or co-operative societies
Condition for claiming deduction u/s 80DD liberalised
or companies. Therefore, tax rates applicable for such persons
Section 80DD provides for a deduction to an individual or
would remain unchanged for the A.Y. 2023-24. Likewise, the
HUF, who is a resident in India, in respect of, inter alia, amount
basic exemption limit of R2,50,000/ R3,00,000/ R5,00,000 would
paid to LIC or any other insurer or administrator or specified
continue to be the same for individuals/ HUF/ AOPs/ BOIs.
company in respect of a scheme for the maintenance of a
disabled dependant.
Alternate minimum tax rate to be reduced for co-operative
Further, deduction would be available to the individual or
societies
HUF only if the lump sum payment or annuity is available to
U/s 115JC, a co-operative society is required to pay alternate
the disabled dependant on the death of the individual or the
minimum tax @ 18.5% of adjusted total income, if the regular
member of HUF, being the subscriber.
income-tax payable is less than alternate minimum tax.
In case the dependant with disability, predeceases the individual
However, u/s 115JB, a company is required to pay the minimum
or the member of the HUF, the amount deposited in such
alternative tax @15%. To provide a level playing field between
scheme would be deemed to be the income of the assessee of the
co-operative societies and companies, it is proposed to reduce
previous year in which such amount is received by the assessee
alternate minimum tax rate for co-operative societies to 15%.
and shall accordingly be chargeable to tax as the income of that
previous year.
Withdrawal of enhanced surcharge of 25% or 37% on long
To remove the genuine hardship of differently abled dependants
term capital gains taxable u/s 112
who require annuity or lump sum amount during the lifetime of
For A.Y. 2022-23, long-term capital gains on listed equity
their parents/guardians, it is proposed to allow the deduction
shares, units of an equity-oriented fund or a unit of business
under the said section even if the lump sum payment or annuity
trust taxable u/s 112A are liable to surcharge of maximum 15%,
is available to the disabled dependant on attaining the age of
while long term capital gains taxable u/s 112 were subjected
60 years or more of the individual or the member of the HUF
to enhanced surcharge of 25% or 37%, where the total income
in whose name subscription to the scheme has been made and
exceeds R2 crores and R5 crores, respectively. It is proposed to
where payment or deposit has been discontinued.
restrict the maximum surcharge on tax payable on long term
Further, it is proposed that the deeming provisions would not
capital gains taxable u/s 112 also to 15%.
apply, to the amount received by the dependant, before his
death, by way of annuity or lump sum by application of the above
Reduced rate of surcharge for co-operatives societies
proposed condition.
Rate of surcharge is proposed to be reduced from 12% to 7% of
income-tax, in case the total income of a co-operative society
Exemption of amount received for medical treatment and on
exceeds R1 crore but does not exceed R10 crores from A.Y.
account of death due to COVID-19
2023-24. The existing rate of surcharge of 12% of income-tax
Section 56(2)(x), inter alia, provides that where any person
would continue to be levied in case of a co-operative society
receives from any person or persons any sum of money, without
having a total income exceeding R10 crores.
consideration, the aggregate value of which exceeds R50,000,
the whole of the aggregate value of such sum would become the
Cap of 15% surcharge in case of AOPs comprising of only
income of the person receiving such sum.
companies as its members
Section 17(2) provides the definition of “perquisite” which is the
For A.Y. 2022-23, the enhanced rate of surcharge of 25% or 37%,
extra benefit given to the employees in addition to the amount
as the case may be, is applicable to an AOP, if its total income
that may be legally due by way of contract for services rendered.
exceeds R2 crores or R5 crores, respectively. It is proposed to
However, certain exceptions have been provided which shall not
restrict the maximum rate of surcharge, in case of an association
be included as perquisites.
of persons consisting of only companies as its members, to 15%
In order to ensure that there would be no income-tax liability on
from A.Y. 2023-24.
the financial help received by the taxpayers from their employers
PERSONAL TAXATION or any person for medical treatment of Covid-19 and on account
of death due to Covid-19, it is proposed to amend section 17(2),
Deduction in respect of employer’s contribution to the retrospectively w.e.f. A.Y. 2020-21, by inserting an exception
extent of 14% of salary extended to State Government that any sum paid by the employer in respect of any expenditure
employees also actually incurred by the employee on his medical treatment or
The State Government can contribute towards National treatment of any member of his family in respect of any illness
Pension System (NPS) to the extent of 14% of the salary of its relating to COVID-19 subject to conditions notified by the
employees. Section 80CCD(2), however, provides for deduction Central Government, shall not be forming part of “perquisite”.
to the extent of 14% of the salary in case of Central Government Similarly, section 56(2)(x) is proposed to be amended,
employees only and to the extent of 10% of salary in any other
08 March 2022 The Chartered Accountant Student
 Union Budget 2022-23
retrospectively w.e.f. A.Y. 2020-21, to provide that the following Specified person would mean a person,
shall not be the income of the recipient - being an individual or HUF, whose total sales, gross
(i) any sum of money received by an individual, from any receipts or turnover from the business carried on by him
person, in respect of any expenditure actually incurred by or profession exercised by him does not exceed R1 crore (in
him on his medical treatment or treatment of any member case of business) or R50 lakhs (in case of profession) during
of his family, in respect of any illness related to COVID-19 the financial year immediately preceding the financial year
subject to conditions notified by the Central Government, in which such virtual digital asset is transferred;
(ii) any sum of money received by a member of the family of a - being an individual or HUF, having income under any head
deceased person, from the employer of the deceased person other than the head ‘Profits and gains of business or profession’.
(without limit), or from any other person or persons to the The provisions of section 203A related to TAN and 206AB
extent that such sum or aggregate of such sums does not related to higher rate of TDS in case of non-filers of income-
exceed R10 lakhs, where the cause of death of such person tax return would not be applicable in case of specified persons
is illness relating to COVID-19 and the payment is, received mentioned above.
within 12 months from the date of death of such person. Virtual digital asset would mean
(a) any information or code or number or token (not being
Extension in Terminal Dates Indian currency or foreign currency), generated through
Extension of terminal date for setting up of start-ups eligible cryptographic means or otherwise, by whatever name called,
for claiming deduction u/s 80-IAC providing a digital representation of value exchanged with or
An eligible start-up is required to be incorporated between without consideration, with the promise or representation
1.4.2016 and 31.3.2022 in order to be eligible for deduction u/s of having inherent value, or functions as a store of value or a
80-IAC. unit of account including its use in any financial transaction
In view of Covid Pandemic, the outer time limit for incorporation or investment, but not limited to investment scheme; and
of a start-up is proposed to be extended from 31.3.2022 to can be transferred, stored or traded electronically.
31.3.2023, to be eligible for deduction u/s 80-IAC. (b) a non-fungible token or any other token of similar nature, by
whatever name called.
Extension of terminal date for commencement of (c) any other digital asset, as the Central Government may, by
manufacturing or production of article or thing for notification in the Official Gazette specify.
companies eligible to claim concessional tax rate u/s 115BAB However, the Central Government may, by notification in the
To become eligible for a concessional tax regime u/s 115BAB Official Gazette, exclude any digital asset from the definition
providing for tax rate of 15%, a company is required to be of virtual digital asset subject to such conditions as may be
set up and registered on or after 1.10.2019 and commenced specified therein.
manufacturing or production of an article or thing on or Further, in order to tax gift of virtual digital asset in the hands of
before 31.3.2023. It is proposed to extend this last date for the recipient, it is also proposed to amend section 56 to include
commencement of manufacturing or production u/s 115BAB by virtual digital asset within the definition of property.
one year i.e., from 31st March, 2023 to 31st March, 2024.
Minimising Tax Litigations
Taxability of Virtual Digital Assets Voluntary tax compliance - Updated return
Scheme for taxation of virtual digital assets To provide an opportunity to taxpayers, who have committed
There has been a phenomenal increase in transactions in virtual omissions or mistakes in correctly estimating their income for
digital assets. Further, a market is emerging where payment tax payment, sub-section (8A) in section 139 is proposed to be
for the transfer of a virtual digital asset can be made through inserted to permit them to file an Updated Return on payment
another such asset. Accordingly, for the taxation of virtual of additional tax.
digital assets, a new scheme is proposed to be inserted w.e.f. Taxpayer could file an updated return of income, whether he has
A.Y. 2023-24. Proposed section 115BBH provides that any filed a return previously for the relevant assessment year or not,
income from transfer of any virtual digital asset would be taxed within 24 months from the end of the relevant assessment year.
@30%. However, no deduction in respect of any expenditure However, the updated return provisions would not be applicable
or allowance would be allowed while computing such income if the updated return
except cost of acquisition. Further, no set off of any loss is - is a return of loss; or
allowed from such income and vice versa. Such loss shall not be - has the effect of decreasing the total tax liability determined;
allowed to be carried forward to subsequent assessment years. or
Section 194S is proposed to be inserted, w.e.f. 1.7.2022, to - results in refund; or
provide for tax deduction at source on payment made to a - increases the refund due.
resident, in relation to transfer of virtual digital asset, @1% of The additional tax payable at the time of furnishing the updated
such consideration at the time of credit of such sum or payment, return would be 25% of aggregate of tax and interest payable,
whichever is earlier. if such return is furnished after expiry of the time available u/s
However, no tax would be required to be deducted in a case, 139(4)/(5) and before completion of period of 12 months from
where - the end of the relevant assessment year.
- the payer is a specified person and the value or the aggregate However, if such return is furnished after the expiry of 12
of such value of consideration to a resident does not exceed months from the end of the relevant assessment year but before
R50,000 during the financial year. completion of the period of 24 months from the end of the
- In any other case, such value of consideration to a resident relevant assessment year, the additional tax payable would be
does not exceed R10,000 during the financial year. 50% of aggregate of tax and interest payable.

The Chartered Accountant Student March 2022 09

 Union Budget 2022-23
Deferment of appeal by the Department in case of identical However, no tax is required to be deducted if the value or
question of law pending before HC/SC aggregate value of the benefit or perquisite paid or likely to be
At present, section 158AA provides that if any question of law paid to a resident does not exceed R20,000 during the financial
arising in the case of an assessee is identical with a question of year. Further, the provisions of the said section shall not apply
law arising in his case for another assessment year which is to an individual or a HUF, whose total sales, gross receipts
pending in appeal before the Supreme Court against an order of or turnover does not exceed R1 crore (in case of business) or
High Court which was in favour of assessee, the filing of further R50 lakhs (in case of profession) during the financial year
appeal would be deferred till such question of law is decided by immediately preceding the financial year in which such benefit
the Supreme Court, subject to the acceptance of the same by the or perquisite, as the case may be, is provided.
assessee that the question of law is identical.
To reduce the number of litigations on identical question of Provisions of sections 206AB and 206CCA rationalised
law, this principle could be applied to cases where a question of Section 206AB provides for deduction of tax at source at higher
law is common and where a decision of the jurisdictional High rate on any sum or income or amount paid or payable by a person
Court, on the same question of law is available. Accordingly, it is to a specified person. However, this provision is not applicable
proposed to insert a sunset clause in section 158AA and insert in case of tax deduction at source u/s 192, 192A, 194B, 194BB,
new section 158AB to provide that, if a question of law in the case 194LBC or 194N. Similarly, section 206CCA provides for
of an assessee is identical to a question of law which is pending tax collection at source at higher rate on any sum or amount
in appeal before the jurisdictional High Court or the Supreme received by a person from a specified person.
Court in his case for any other assessment year or in the case of Specified person means a person who has not filed the returns
any other assessee for any assessment year, the filing of further of income for both of the two assessment years relevant to the
appeal in the case of this assessee by the department shall be two previous years immediately prior to the previous year in
deferred till such question of law is decided by the jurisdictional which tax is required to be deducted or collected, for which
High Court or the Supreme Court. However, such deferment is the time limit of filing return of income u/s 139(1) has expired;
subject to acceptance by the assessee that the question of law in and the aggregate of tax deducted at source and tax collected
the other case is identical to that in the relevant case. at source in his case is R50,000 or more in each of these two
previous years.
Tax Deduction at Source In order to reduce the additional burden on individual and HUF
TDS on higher of actual consideration or stamp duty value liable to deduct tax u/s 194-IA, 194-IB and 194M, it is proposed
on transfer of immovable property that the provisions of section 206AB would not be applicable in
Section 194-IA provides for deduction of tax by any person case of tax deduction at source under the said sections.
responsible for paying to a resident any sum by way of To widen the tax base, it is proposed to reduce the requirement
consideration for transfer of immovable property, being land of 2 years to 1 year by substituting the definition of specified
(other than agricultural land) or any building or part of a person as a person who has not furnished the return of
building @1% of such sum. However, no deduction of tax is income for the assessment year relevant to the previous year
required to be made where the consideration for the transfer of immediately preceding the financial year in which tax is
an immovable property is less than R50 lakhs. required to be deducted, for which the time limit for furnishing
In order to remove inconsistency in section 43CA, 50C and the return of income u/s 139(1) has expired; and the aggregate
194-IA related to stamp duty value, it is proposed to amend of tax deducted at source and tax collected at source in his case
section 194-IA to provide that in case of transfer of an immovable is R50,000 or more in the said previous year.
property (other than agricultural land), tax is required to be
deducted @1% of such sum paid or credited to the resident or Clarificatory and Other Tax Proposals
the stamp duty value of such property, whichever is higher. Cess and surcharge not allowable as deduction
In case the consideration paid for the transfer of immovable Section 40(a)(ii) provides that any sum paid on account of
property and the stamp duty value of such property are both less any rate or tax levied on the profits or gains of any business
than R50 lakhs, then no tax is to be deducted u/s 194-IA. or profession shall not be deducted in computing the income
chargeable under the head “Profits and gains of business or
Deduction of tax at source on benefit or perquisite of a profession”. However, certain taxpayers are claiming deduction
business or profession on account of ‘cess’ or ‘surcharge’ u/s 40 claiming that ‘cess’
Section 28(iv) provides that the value of any benefit or perquisite, has not been specifically mentioned in section 40(a)(ii) and,
whether convertible into money or not, arising from business or therefore, cess is an allowable expenditure.
exercise of profession is chargeable to tax as business income in In order to make the intention of the legislation clear and to make
the hands of the recipient of such benefit or perquisite. it free from any misinterpretation, an Explanation is proposed to
In order to widen and deepen the tax base, a new section 194R be inserted, retrospectively w.e.f. A.Y. 2005-06, to clarify that for
is proposed to be inserted, w.e.f. 1.7.2022, to provide that the the purposes of this sub-clause, the term “tax” includes and shall
person responsible for providing to a resident, any benefit or be deemed to have always included any surcharge or cess, by
perquisite, whether convertible into money or not, arising from whatever name called, on such tax.
business or exercising of a profession by such resident, would,
before providing such benefit or perquisite, as the case may be, Conversion of interest into debentures not tantamount to
to such resident, ensure that tax has been deducted in respect actual payment
of such benefit or perquisite@10% of the value or aggregate of Section 43B provides for certain deductions to be allowed
value of such benefit or perquisite. only on actual payment. Explanation 3C, 3CA and 3D thereto
10 March 2022 The Chartered Accountant Student
 Union Budget 2022-23
provides that a deduction of any sum, being interest payable on Explanation 1 to section 37(1) provides that any expenditure
loan or borrowing from specified financial institution/NBFC/ incurred by an assessee for any purpose which is an offence
scheduled bank or a co-operative bank shall be allowed if such or which is prohibited by law shall not be deemed to have
interest has been actually paid and any interest which has been been incurred for the purpose of business or profession and
converted into a loan or borrowing or advance shall not be no deduction or allowance shall be made in respect of such
deemed to have been actually paid. expenditure.
However, certain taxpayers are claiming deduction u/s 43B on In order to clarify the legislative intent, an Explanation is
account of conversion of interest payable on an existing loan into proposed to be inserted, w.e.f. A.Y. 2022-23, to further clarify
a debenture on the ground that such conversion is a constructive that the expression “expenditure incurred by an assessee for
discharge of interest liability and, therefore, amounted to actual any purpose which is an offence or which is prohibited by law”,
payment. Such interpretation is, however, against the intent of shall include and shall be deemed to have always included the
legislation. expenditure incurred by an assessee, —
Accordingly, Explanation 3C, Explanation 3CA and Explanation (i) for any purpose which is an offence under, or which is
3D of section 43B proposed to be amended to provide that prohibited by, any law for the time being in force, in India
conversion of interest payable under clause (d), clause (da), and or outside India; or
clause (e) of section 43B, into debenture or any other instrument (ii) to provide any benefit or perquisite, in whatever form,
by which liability to pay is deferred to a future date, shall also to a person, whether or not carrying on a business or
not be deemed to have been actually paid, for the purpose of exercising a profession, and acceptance of such benefit or
section 43B. perquisite by such person is in violation of any law or rule
or regulation or guidelines, as the case may be, for the time
being in force, governing the conduct of such person; or
Withdrawal of concessional rate of 15% applicable on
(iii) to compound an offence under any law for the time being
dividend income received by an Indian company from a
in force, in India or outside India.
specified foreign company
Section 115BBD provides for a concessional rate of tax of 15%
on the dividend income received by an Indian company from a Additional onus of proof of the nature and source in the
specified foreign company, being a foreign company in which hands of creditor u/s 68, if the sum credited in the books
the said Indian company holds 26% or more in nominal value of consists of loan, borrowing or any other liability
equity shares. However, dividend received by an Indian company Section 68 provides that where any sum is found to be credited
from domestic companies is chargeable to tax at normal rates in the books of an assessee maintained for any previous year,
applicable to such company. and the assessee offers no explanation about the nature and
In order to provide parity in the tax treatment in case of source thereof or the explanation offered by him is not, in
dividends received by Indian companies from specified foreign the opinion of the Assessing Officer, satisfactory, the sum so
companies vis a vis dividend received from domestic companies, credited may be charged to income-tax as the income of the
it is proposed that concessional rates provided u/s 115BBD assessee of that previous year.
would not be applicable w.e.f. A.Y. 2023-24. The onus remains on the person in whose books such sum is
credited to offer satisfactory explanation of such credits. If
such person fails to offer an explanation or the explanation is
Disallowance u/s 14A in a case where no exempt income has
not found to be satisfactory then, the sum is added to the total
accrued during the relevant previous year
income of the person.
Section 14A provides that no deduction would be allowed in
Section 68 is proposed to be amended to provide that the where
respect of expenditure incurred by the assessee in relation to
the sum credited consists of loan or borrowing or any other
income that does not form part of the total income i.e., exempt
liability, any explanation offered by the assessee in whose books
income. CBDT issued Circular No. 5/2014, dated 11/02/2014,
such sum is credited shall not be deemed to be satisfactory,
clarifying that Rule 8D read with section 14A provides for
unless
disallowance of the expenditure even where taxpayer in a
- the person in whose name such credit is recorded in the
particular year has not earned any exempt income. However,
books of such assessee also offers an explanation about the
some courts have taken a view that if there is no exempt income
nature and source of such sum so credited; and
during a year, no disallowance u/s 14A can be made for that year.
- such explanation in the opinion of the Assessing Officer
In order to make the intention of the legislation clear, an
has been found to be satisfactory.
Explanation is proposed to be inserted w.e.f. A.Y. 2022-23 to
However, this additional onus of proof of would not apply if the
clarify that disallowance u/s 14A shall apply and shall be deemed
creditor is a Venture Capital Fund or Venture Capital Company
to have always applied in a case where exempt income has not
registered with SEBI.
accrued or arisen or has not been received during the previous
year relevant to an assessment year and the expenditure has
been incurred during the said previous year in relation to such No set off of losses permissible against undisclosed income
exempt income. consequent to search, requisition and survey
Currently, there is no provision to disallow set-off of losses and
unabsorbed depreciation against undisclosed income which is
Expenditure not allowable as deduction u/s 37
detected during the course of search or survey proceedings.
Section 37 provides for allowability of revenue and non-personal
Accordingly, a new section 79A is proposed to be inserted
expenditure laid out or expended wholly and exclusively for the
to provide that where consequent to a search u/s 132 or a
purposes of business or profession.

The Chartered Accountant Student March 2022 11

 Union Budget 2022-23
requisition u/s 132A or a survey conducted u/s 133A, other than (a) not been recorded on or before the date of search or
section 133A(2A), the total income of any previous year of an requisition or survey, in the books of account or other
assessee includes any undisclosed income, no set off, against documents maintained in the normal course relating to
such undisclosed income, of any loss, whether brought forward such previous year; or
or otherwise, or unabsorbed depreciation u/s 32(2) shall be (b) not been disclosed to the Principal Chief Commissioner
allowed to the assessee in computing his total income for such or Chief Commissioner or Principal Commissioner or
previous year. Commissioner before the date of search or requisition
The term “undisclosed income” is proposed to be defined as – or survey, or
(i) any income of the previous year represented, either wholly (ii) any income of the previous year represented, either wholly
or partly, by any money, bullion, jewellery or other valuable or partly, by any entry in respect of an expense recorded in
article or thing or any entry in the books of account or other the books of account or other documents maintained in the
documents or transactions found in the course of a search normal course relating to the previous year which is found
u/s 132 or a requisition made u/s 132A or a survey conducted to be false and would not have been found to be so, had the
u/s 133A, other than that conducted u/s 133A(2A), which search not been initiated or the survey not been conducted
has— or the requisition not been made.

INDIRECT TAXES

Goods and Services Tax

return filing;
Amendments proposed in the CGST Act, 2017
(iii) provide for an extended time upto 30th November of
To be effective from a date to be notified the following financial year for rectification of errors
♦ Amendments in Section 16 in respect of details of outward supplies;
A new clause (ba) to section 16(2) is proposed to be inserted (iv) provide for tax period-wise sequential filing of details
to provide that input tax credit with respect to a supply can of outward supplies.
be availed only if such credit has not been restricted in the ♦ Amendment in Sections 38, 47, 48 and 168
details communicated to the taxpayer under section 38. Section 38 is proposed to be substituted for prescribing
Further, section 16(4) is proposed to be amended so as to the manner as well as conditions and restrictions for
provide for an extended time for availment of input tax communication of details of inward supplies and input
credit by a registered person in respect of any invoice or tax credit to the recipient by means of an auto-generated
debit note pertaining to a financial year upto 30th November statement and to do away with two-way communication
of the following financial year. process in return filing. Consequential amendments have
♦ Amendment in Section 29 been made in sections 47, 48 and 168.
Clause (b) and (c) of section 29(2) are proposed to be ♦ Amendments in Section 39
amended so as to provide that the registration of a person is Section 39 is proposed to be amended so as to:
liable for cancellation, where – (i) provide that the non-resident taxable person shall
(i) a person paying tax under composition scheme has furnish the return for a month by 13th of the following
not furnished the return for a financial year beyond month;
3 months from the due date of furnishing of the said (ii) provide an option to the persons furnishing return
return; under QRMP scheme, to pay either the self-assessed
(ii) a person, other than those paying tax under tax or an amount that may be prescribed;
composition scheme, has not furnished returns for (iii) provide for an extended time upto 30th November of
such continuous tax period as may be prescribed. the following financial year, for rectification of errors
♦ Amendment in Section 34 in the return furnished under section 39;
Section 34(2) is proposed to be amended so as to provide (iv) provide for furnishing of details of outward supplies
for an extended time for issuance of credit notes in respect of a tax period as a condition for furnishing the return
of any supply made in a financial year upto 30th November under section 39 for the said tax period.
of the following financial year. ♦ Amendment in Section 41
♦ Amendments in Section 37 Section 41 is proposed to be substituted so as to do away
Section 37 is proposed to be amended so as to: with the concept of “claim” of eligible input tax credit on
(i) provide for prescribing conditions and restrictions a “provisional” basis and to provide for availment of self-
for furnishing the details of outward supply and for assessed input tax credit subject to such conditions and
communication of the details of such outward supplies restrictions as may be prescribed.
to concerned recipients. ♦ Omission of Sections 42, 43, 43A
(ii) do away with two-way communication process in Sections 42, 43 and 43A are proposed to be omitted so as

12 March 2022 The Chartered Accountant Student

 Union Budget 2022-23
to do away with two-way communication process in return ♦ Section 5 is proposed to be amended to rationalize the
filing. powers of the officers of Customs in view of the recent
♦ Amendment in Section 47 judgements of Court, launch of faceless assessment and
Section 47 is proposed to be amended so as to provide for other trade facilitation initiatives etc.
levy of late fee for delayed filing of return under section 52. ♦ Section 14 is proposed to be amended to include
♦ Amendments in Section 49 provisions for rules enabling the Board to specify the
Section 49 is proposed to be amended so as to: additional obligations of the importer in respect of a class
(i) provide for prescribing restrictions for utilizing the of imported goods whose value is not being declared
amount available in the electronic credit ledger; correctly, the criteria of selection of such goods, and the
(ii) allow transfer of amount available in electronic cash checks in respect of such goods so as to address the issue
ledger under the CGST Act of a registered person to of undervaluation in imports.
the electronic cash ledger under the said Act or the ♦ Section 28E is proposed to be amended so as to omit
IGST Act of a distinct person; the Explanation to clause (c) relating to expression ‘joint
(iii) provide for prescribing the maximum proportion of venture in India’ and also to omit clause (h) of the said
output tax liability which may be discharged through section.
the electronic credit ledger. ♦ Section 28H is proposed to be amended to make provisions
♦ Amendment in Section 50 for prescribing appropriate fees by Board relating to
Sub-section (3) of section 50 is proposed to be substituted application for advance Ruling and also give flexibility
retrospectively, with effect from the 01.07.2017, so as to to the applicant to withdraw his application at any time
provide for levy of interest on input tax credit wrongly before a ruling is pronounced from the current 30 days’
availed and utilized. time period. Consequently, the sub-section (3) is proposed
♦ Amendment in Section 52 to be omitted.
Section 52(6) is proposed to be amended so as to provide ♦ Sub-section (2) under section 28J is proposed to be
for an extended time upto 30th November of the following substituted so that advance ruling under sub-section (1)
financial year for rectification of errors in the TCS of section 28J is now valid for a period of 3 years or till
statement. there is a change in law or facts on the basis of which the
♦ Amendment in Section 54 advance ruling has been pronounced, whichever is earlier.
Section 54 is proposed to be amended so as to: ♦ Section 110AA is proposed to be inserted with a view
(i) explicitly provide that refund claim of any balance in to affirm the principle that, wherever, an original function
the electronic cash ledger shall be made in such form duly exercised by an officer of competent jurisdiction, is
and manner as may be prescribed; the subject matter of a subsequent inquiry, investigation
(ii) provide the time limit for claiming refund of tax paid , audit or any other specified purpose by any other
on inward supplies of goods or services or both under officer of customs, then, notwithstanding, such inquiry,
section 55 as 2 years from the last day of the quarter in investigation, audit or any other purpose, the officer, who
which the said supply was received; originally exercised such jurisdiction shall have the sole
(iii) extend the scope of withholding of or recovery from authority to exercise jurisdiction for further action like
refunds in respect of all types of refund; re- assessment, adjudications, etc. consequent to the
(iv) provide clarity regarding the relevant date for filing completion of such inquiry, investigation, audit or any
refund claim in respect of supplies made to a Special other purpose.
Economic Zone developer or a Special Economic Zone ♦ Section 135AA is proposed to be inserted to protect
unit. the import and export data submitted to Customs by
To be effective from the date of enactment of Finance importers or exporters in their declarations by making the
Bill, 2022 publishing of such information unless provided by the law,
♦ Amendment in notification issued under Section 50 as an offence under Customs Act.
Notification No. 13/2017 CT dated 28.06.2017, is proposed Amendments in the Customs (Import of goods at
to be amended retrospectively, w.e.f. 01.07.2017, so as to concessional rate of duty) Rules, 2017
notify rate of interest under subsection (3) of section 50 of
Above rules are amended to introduce end to end automation in
the CGST Act as 18%. Corresponding notifications issued
the entire process, to standardize and notify the various forms
under IGST Act and UTGST Act have also been accordingly
in which details are to be submitted electronically. In order to
modified.
leverage the advantage of such submissions electronically, the
need for any transaction-based permissions and intimations
Customs are done away with. Consequently, the procedure to claim the
notification benefit is simplified and automated. For effective
Amendments proposed in the Customs Act, monitoring of the use of goods for the intended purposes,
1962 a Monthly Statement is to be submitted by the importer on
Effective from the date of enactment of the Finance Bill the Common Portal. An option for voluntary payment of the
♦ Section 3 is proposed to be amended to specifically include necessary duties and interest, through the Common Portal is
the officers of DRI, Audit and Preventive formation in the provided to the importer.
class of Officers so as to remove any ambiguity as regards [Effective from 01.03.2022]
the class of officers of Customs.
The Chartered Accountant Student March 2022 13
 direct taxes
CA FINAL - PAPER 7 - DIRECT TAX LAWS AND INTERNATIONAL TAXATION
Direct Tax Laws is one of the dynamic subjects of the chartered accountancy course. Every year, substantial changes
brought in through the Annual Finance Act. In addition, notifications are issued from time to time by the CBDT to give
effect to the provisions of the Act and circulars are issued to clarify the provisions of the Act. For May, 2022 and November,
2022 examinations, the direct tax laws as amended by the Finance Act, 2021 is applicable; and the relevant assessment
year is A.Y.2022-23. This capsule on direct tax law gives an overview of select key topics, namely, deductions from gross
total income and special scheme for taxation of companies, business trusts, investment fund and securitisation trusts. For
detailed study, read the October, 2021 edition of the Study Material of Final Paper 7 Direct Tax Laws and International
Taxation.

Deductions from Gross Total Income – Chapter VI-A

I Deductions in respect of certain payments

Section Eligible Assessee Eligible Payments Permissible Deduction
80C Individual or HUF Contribution to PPF, Payment of LIC premium, etc.
Sums paid or deposited in the previous year by way of
- Life insurance premium
- Contribution to PPF/ SPF/ RPF and approved Sum paid or deposited, subject to a
superannuation fund maximum of R1,50,000
- Repayment of housing loan taken from Govt., bank,
LIC, specified employer etc.
- Tuition fees to any Indian university, college, school
for full-time education of any two children
- Term deposit for a fixed period of not less than 5 years
with schedule bank
- Subscription to notified bonds of NABARD
- Five year post office time deposit
- Senior Citizen’s Savings Scheme Account etc.
- Contribution by CG (Central Government) employee
to additional account (Tier II A/c) of NPS referred to
u/s 80CCD
80CCC Individual Contribution to certain pension funds Amt paid or deposited, subject to a
Any amt paid or deposited to keep in force a contract for maximum of R1,50,000
any annuity plan of LIC of India or any other insurer for
receiving pension from the fund.
80CCD Individuals employed Contribution to Pension Scheme of CG Employee’s Contribution/
by the CG or any other An individual employed by the CG on or after 1.1.2004 Individual’s Contribution
employer; Any other or any other employer or any other assessee, being In case of a salaried individual, dedn
individual assessee an individual, who has paid or deposited any amt inof own contribution u/s 80CCD(1) is
his account under a notified pension scheme [to hisrestricted to 10% of his salary.
individual pension account [Tier I A/c] under NPS & Atal
In any other case, dedn u/s
Pension Yojana] 80CCD(1) is restricted to 20% of
gross total income.
Further, additional dedn of upto
R50,000 is available u/s 80CCD(1B).
Employer’s Contribution
The entire employer’s contribution
would be included in the salary of the
employee. The dedn of employer’s
contribution u/s 80CCD(2) would
be restricted to 14% of salary, where
the employer is the CG; and 10%, in
case of any other employer.
Note – As per section 80CCE, maximum permissible dedn u/s 80C, 80CCC & 80CCD(1) is R1,50,000. However, the limit R1.50 lakh
u/s 80CCE does not apply to dedn u/s 80CCD(2) and 80CCD(1B).

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80D Individual or HUF Medical Insurance Premium
(1) Any premium paid, otherwise than by way of cash, to
keep in force an insurance on the health of –
Maximum R25,000 (R50,000, in
in case of an self, spouse and dependent case the individual or his or her
individual children spouse is a senior citizen)
in case of HUF family member
(2) In case of an individual contribution, otherwise than
by way of cash, to CGHS or any other scheme as
notified by CG.
(3) Any premium paid, otherwise than by way of cash, to Maximum R25,000 (R50,000,
keep in force an insurance on the health of parents, in case either or both of the
whether or not dependent on the individual. parents are senior citizen(s))
Notes:
(i) Any amt paid, otherwise than by way of cash, on Amt paid subject to a cap of
account of medical expd incurred on the health of R50,000 (in case one parent is a
the assessee or his spouse, dependent children or his senior citizen, in respect of whom
parent, who is a senior citizen and no amt has been insurance premium is paid, and the
paid to effect or to keep in force an insurance on the other is a senior citizen on whom
health of such person. medical expd is incurred, the total
dedn cannot exceed R50,000)

(ii) Payment, including cash payment, for preventive Amt paid subject to a cap of
health check up of himself, spouse, dependent R5,000, in aggregate (subject to the
children and parents. overall individual limits of R25,000/
R50,000, as the case may be)
80DD Resident Individual or Maintenance including medical treatment of a Flat deduction of R75,000. In case
HUF dependant disabled of severe disability (i.e., person with
Any amt incurred for the medical treatment (including 80% or more disability) the flat dedn
nursing), training and rehabilitation of a dependent shall be R1,25,000.
disabled
and / or
Any amt paid or deposited under the scheme framed
in this behalf by the LIC or any other insurer or
Administrator or Specified Company and approved by
Board.
Meaning of Dependant
(1) (2)
In case of Dependant
An individual Spouse, children, parents,
brothers, sisters
A HUF Any member
Persons mentioned in column (2) should be wholly
or mainly dependant on the person mentioned in
corresponding column (1) for support and maintenance.
Such persons should not have claimed dedn u/s 80U in
computing TI of that year.
80DDB Resident Individual or Dedn for medical treatment of specified diseases or Actual sum paid or R40,000
HUF ailments (R1,00,000, if the payment is for
Amt paid for specified diseases or ailment medical treatment of a senior
citizen), whichever is less,
Assessee Amount spent minus
An individual For himself or his dependant the amt received from the insurance
being spouse, children, parents, company or reimbursed by the
brothers or sisters wholly or mainly employer.
dependant on the individual for
support and maintenance
A HUF For any member
80E Individual Interest on loan taken for higher education The dedn is available for interest
Interest on loan taken from any financial institution (FI) payment in the initial A.Y (year of
or approved charitable institution. commencement of interest payment)
Such loan is taken for pursuing his higher education and seven A.Y. immediately
or higher education of his or her relative i.e., spouse or succeeding the initial A.Y.
children of the individual or the student for whom the (or)
individual is the legal guardian. until the interest is paid in full by the
assessee, whichever is earlier.

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 direct taxes
80EE Individual Dedn for interest on loan borrowed from any FI [bank/ Dedn of upto R50,000 would be
housing finance company (HFC)] for acquisition of allowed in respect of interest on loan
residential house property taken from a FI.
Conditions:
Loan should be sanctioned during
P.Y. 2016-17
Loan sanctioned ≤ R35 lakhs
Value of house ≤ R50 lakhs
The assessee should not own any
residential house on the date of
sanction of loan.
80EEA Individual Dedn in respect of interest payable on loan taken Dedn of upto R1,50,000 would
from a FI (bank or HFC) for acquisition of residential be allowed in respect of interest
house property payable on loan taken from a FI for
(In case the property is self-occupied, the dedn would be acquisition of house property.
over and above the dedn of R2 lakhs u/s 24) Conditions:
• Loan should be sanctioned by a
FI during the period between 1st
April 2019 to 31st March 2022.
• Stamp Duty Value of house
≤ R45 lakhs
• The individual should not own
any residential house on the date
of sanction of loan.
• The individual should not be
eligible to claim dedn u/s 80EE.
80EEB Individual Dedn in respect of interest payable on loan taken Dedn of upto R1,50,000 would
from a FI (bank or certain NBFCs) for purchase of be allowed in respect of interest
electric vehicle payable on loan taken for purchase
of electric vehicle.
Loan should be sanctioned by a FI
during the period from 1.4.2019 to
31.3.2023
80G All assessees Donations to certain funds, charitable institutions etc.
There are four categories of dedns –
Category Donee
(I) 100% dedn of amt donated, Prime Minister’s National Relief Fund, National
without any qualifying limit Children’s Fund, Swachh Bharat Kosh, National
Defence Fund, PM CARES Fund etc.
(II) 50% dedn of amt donated, without Prime Minister’s Drought Relief Fund, Jawaharlal
any qualifying limit Nehru Memorial Fund, Indira Gandhi Memorial
Trust, Rajiv Gandhi Foundation.
(III) 100% dedn of amt donated, Government or local authority, institution for
subject to qualifying limit promotion of family planning etc.
(IV) 50% dedn of amt donated, subject Government or any local authority to be used
to qualifying limit for charitable purpose, other than promotion
of family planning, notified temple, church,
gurudwara, mosque etc.
Calculation of Qualifying limit for Category III & IV donations:
Step 1: Compute adjusted total income, i.e., the gross total income as reduced by the following:
1. Dedns under Chapter VI-A, except u/s 80G
2. Short term capital gains taxable u/s 111A
3. Long term capital gains taxable u/s 112 & 112A
Step 2: Calculate 10% of adjusted total income.
Step 3: Calculate the actual donation, which is subject to qualifying limit
Step 4: Lower of Step 2 or Step 3 is the maximum permissible dedn.
Step 5: The said dedn is adjusted first against donations qualifying for 100% dedn (i.e., Category
III donations). Thereafter, 50% of balance qualifies for dedn u/s 80G.
Note - No dedn shall be allowed for donation in excess of R2,000, if paid in cash.
80GG Individual not in receipt of Rent paid for residential accommodation Least of the following is allowable as
house rent allowance dedn:
(1) 25% of total income;
(2) Rent paid – 10% of total income
(3) R5,000 p.m.
No dedn if any residential
accommodation is owned by the
assessee/ his spouse/ minor child/
HUF at the place where he ordinarily
resides or performs the duties of his
office or employment or carries on
his business or profession.
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 direct taxes
80GGA Assessee not having Donation made for scientific research or to National Urban Poverty Eradication Fund etc.
income chargeable under - any sum paid to a research association which has, as its object the undertaking of scientific research
the head “PGBP” or to a University/ college/ institution [approved u/s 35(1)(ii)] to be used for scientific research.
- any sum paid to a research association which has as its object the undertaking of research
in social science or statistical research or to a University/ college/ institution [approved u/s
35(1)(iii)] to be used for research in social science or statistical research.
- any sum paid to the National Urban Poverty Eradication Fund set up and notified by the CG
for the purposes of section 35CCA(1)(d).
Note - No dedn shall be allowed for donation in excess of R2,000, if paid in cash.
80GGB Indian company Contributions to political parties Actual Contribution (otherwise
Any sum contributed by it to a registered political party than by way of cash)
or an electoral trust.
80GGC Any person, other than Contributions to political parties Actual contribution (otherwise than
local authority and an Amt contributed to a registered political party or an by way of cash)
artificial juridical person electoral trust.
funded by the Govt.
II Deductions in respect of Certain Incomes
As per section 80AC, furnishing return of income on or before due date is mandatory for claiming deduction in respect of certain
incomes. Refer table no 2 for deduction under sections 80-IA to 80-IE.
Section Eligible Assessee Eligible Income Permissible Deduction
80JJA An assessee whose GTI Dedn in respect of profits and gains derived from the Dedn is allowable for an amt equal to
includes profits and business of collecting and processing or treating of bio- the whole of such profits and gains
gains derived from the degradable waste - for a period of 5 consecutive A.Ys.
business of collecting and (1) for generating power; or beginning with the A.Y. relevant
processing or treating bio- (2) producing bio-fertilizers, bio-pesticides or other to the P.Y. in which the business
degradable waste biological agents; or commences.
(3) for producing bio-gas; or
(4) making pellets or briquettes for fuel or organic manure.
80JJAA An assessee to whom Dedn in respect of employment of new employees 30% of additional employee cost
section 44AB applies, incurred in the P.Y.
whose Gross total income Dedn is allowable for 3 A.Ys.
includes profits and gains including A.Y. relevant to the P.Y. in
derived from business which such employment is provided.
Note: For conditions to be satisfied,
read Chapter 11 of Module 2 of the
Study Material.
80M A domestic company Dedn in respect of inter-corporate dividend Amt of dividend received from other
Any income by way of dividends received from any other domestic company or foreign company
domestic company or foreign company or a business or business trust or the amt of dividend
trust. distributed by such domestic company
on or before the due date i.e., one
month prior to the date of furnishing
return of income, whichever is less.
80QQB Resident individual, being Royalty income, etc., of authors of certain books other Income derived in the exercise of
an author than text books profession or R3,00,000, whichever is less.
Consideration for assignment or grant of any of his In respect of royalty or copyright
interests in the copyright of any book, being a work of fee received otherwise than by way
literary, artistic or scientific nature or royalty or copyright of lumpsum, income to be restricted
fee received as lumpsum or otherwise. to 15% of value of books sold during
the relevant P.Y.
80RRB Resident individual, being Royalty on patents Whole of such income or R3,00,000,
a patentee Any income by way of royalty on patents registered on whichever is less.
or after 1.4.2003
III Deductions in respect of Other Income
Section Eligible Assessee Eligible Income Permissible Deduction
80TTA Individual or HUF, other Interest on deposits in savings account Actual interest subject to a
than a resident senior Interest on deposits in a savings account with a bank, maximum of R10,000.
citizen a co-operative society or a post office (not being time
deposits, which are repayable on expiry of fixed periods)
80TTB Resident senior citizen (i.e. Interest on deposits Actual interest or R50,000,
an individual of the age of Interest on deposits (both fixed deposits and saving whichever is less.
60 years or more at any time accounts) with banking company, co-operative society
during the previous year) engaged in the business of banking or a post office.
IV Other Deductions
Section Eligible Assessee Condition for deduction Permissible Deduction
80U Resident Individual Dedn in case of a person with disability Flat dedn of R75,000, in case of a
Any person, who is certified by the medical authority to person with disability.
be a person with disability. Flat dedn of R1,25,000, in case of a
person with severe disability (80% or
more disability).
The Chartered Accountant Student March 2022 17
 direct taxes
Table no 2
Deductions under section 80-IA to 80-IE

Section Eligible Business Year of commencement of Period of Deduction Quantum of Deduction

eligible business
80-IA (1) (i) Developing; or On or after 1.4.1995 but Infrastructure Facility 100% of the profits and gains
(ii) Operating and not later than 1.4.2017 of road, or a bridge or a derived from such business for
maintaining; or rail system or a highway 10 consecutive A.Ys.
(iii) D e v e l o p i n g , project or a water supply
operating and project: 10 consecutive
maintaining A.Ys. out of 20 years
any infrastructure beginning from the year
facility in which the enterprise
develops or begins to
(2) (i) Develops; or Industrial parks: Notified
operate the eligible
(ii) Develops and by the CG for the period on
business.
operates; or or after 1.4.1997 & ending
(iii) Maintains and on 31.3.2011. Other eligible businesses:
operates 10 consecutive A.Ys. out
an industrial park of 15 years beginning
from the year in which
(3) Power undertakings Generation or Generation the enterprise develops
and distribution: Set up or begins to operate the
b/w 1.4.1993 & 31.3.2017. eligible business.
Transmission or
distribution: Start
transmission during the
period from 1.4.1999 &
31.3.2017.
Renovation and
modernisation of existing
network: Undertakes
substantial renovation and
modernisation during the
period on or after 1.4.2004
& ending on 31.3.2017.
(4) Undertaking owned by Company formed on or
an Indian Company set before 30.11.2005 and
up for Reconstruction begins to generate or
or revival of a power transmit or distribute
generating plant power before 31.3.2011 and
notified before 31.12.2005
by CG.
80-IAB Development of Special Develops SEZ, notified on 10 consecutive A.Ys. out 100% of the profits and gains
Economic Zones (SEZs) or after 1.4.2005 but before of 15 years beginning from derived from such business.
1.4.2017. the year in SEZ has been
notified.
80-IAC A business carried out by an The company or LLP is 3 consecutive A.Ys. out of 100% of the profits and gains
eligible start-up engaged in incorporated during the 10 years beginning from the derived from such business.
innovation, development or period 1.4.2016 - 31.3.2022 year in which company or
improvement of products LLP, incorporated.
or processes or services or Total turnover should not
a scalable business model exceed R100 crores in the
with a high potential of
employment generation or P.Y. relevant to the A.Y. for
wealth creation which dedn is claimed
80-IB (1) An industrial Begins to manufacture or Not exceeding 12 100% of the profits and gains
undertaking, being a production of any article consecutive A.Ys. derived from such industrial
co-operative society or thing or operate cold undertaking for the initial 5
including a small scale storage plant during the A.Ys. and thereafter 25% of
industrial undertaking period 1-4-1993 and 31-3- such profits and gains.
(SSI) in Jammu and 2012.
Kashmir

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 direct taxes
(2) C o m m e r c i a l Commercial production 7 consecutive A.Ys. 100% of the profits and gains
production of mineral of mineral oil: On or after including the initial A.Y. from such business
oil or commercial 1.4.1997 but not later than
production of natural 31.3.2017
gas in licensed blocks Commercial production
of natural gas: On or after
1.4.2009 but not later than
31.3.2017
(3) P r o c e s s i n g , Processing, preservation 10 consecutive A.Ys. 100% of the profits and gains
preservation and and packaging of meat beginning with the initial derived from such business
packaging of fruits or meat products or A.Y. for 5 A.Ys. beginning with the
or vegetables or meat poultry or marine or initial A.Y.
and meat products or dairy products: On or after 25% (30% in case of company)
poultry or marine or 1.4.2009 for remaining 5 years
dairy products or from
the integrated business Other eligible businesses:
of handling, storage On or after 1.4.2001
and transportation of
foodgrains
80-IBA Developing and building Housing Project referred 100% of the profits and gains
(i) housing projects u/s 80-IBA(1) is approved - derived from such housing
[Section 80-IBA(1)]; or after 1.6.2016 but on or project.
(ii) rental housing project before 31.3.2022 and the
[Section 80-IBA(1A)] project is completed within
notified by the CG on 5 years from the date of
or before 31.3.2022 and approval by the competent
fulfilling the specified authority
conditions
80-IE Undertaking begun or between 1.4.2007 and 10 consecutive A.Ys. 100% of the profits and gains
begins, in any of the North- ending before 1.4.2017 commencing with the initial derived from such business
Eastern States (i.e., the A.Y.
States of Arunachal Pradesh,
Assam, Manipur, Meghalaya,
Mizoram, Nagaland, Sikkim
and Tripura) -
(1) to manufacture or
produce any eligible
article or thing;
(2) to undertake substantial
expansion to manufacture
or produce any eligible
article or thing;
(3) to carry on any eligible
business.

Concessional rate of tax in respect of certain domestic companies

Sections 115BAB and 115BAA provides for concessional rates of tax and exemption from minimum alternate tax (MAT) in respect of certain
domestic companies. The provisions of these two sections are tabulated hereunder -
(1) (2) (3) (4)
S.No. Particulars Section 115BAB Section 115BAA
(1) Applicability Domestic manufacturing Co./ Electricity generation Co. Any domestic Co.
(2) Rate of tax 15% 22%
(3) Rate of surcharge 10% 10%
(4) Effective rate of tax 17.16% 25.168%
(including surcharge & [Tax@15% (+) [Tax@22% (+)
HEC) Surcharge@10% (+) Surcharge@10% (+)
HEC@4%] HEC@4%]
(5) Applicability of MAT Not applicable Not applicable
(6) Manner of computation of tax liability
Income on which The rate of tax (i.e., 17.16%) would be applicable The rate of tax (i.e., 25.168%) is
concessional rate of tax in respect of income derived from or incidental to notwithstanding anything contained
is applicable manufacturing or production of an article or thing or in the Income-tax Act, 1961, but
generation of electricity. subject to the provisions of Chapter
[Read with point no. 11 below, wherein the rate of XII, other than section 115BA and
34.32% (i.e., Tax@30% + surcharge@10% + HEC@4%) 115BAB.
would be applicable in specified circumstance]

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 direct taxes
(1) (2) (3) (4)
S.No. Particulars Section 115BAB Section 115BAA
Rate of tax on income Such income would be subject to tax at the rates Such income would be subject
covered under Chapter mentioned in the said sections in Chapter XII. to tax at the rates mentioned in
XII [For example, LTCG Surcharge@10% would be levied on tax computed on the said sections in Chapter XII.
chargeable to tax u/s such income. HEC@4% would be levied on the income- Surcharge@10% is leviable on
112 and 112A, STCG tax plus surcharge. tax computed on such income.
chargeable to tax u/s HEC@4% would be levied on the
111A] income-tax plus surcharge.
Rate of tax on other The applicable tax rate is 25.168% (i.e., tax@22%, The applicable tax rate is
income in respect of plus surcharge @10% plus HEC@4%), if such income 25.168% (i.e., tax@22% plus
which no specific rate has neither been derived from nor is incidental to surcharge@10% plus HEC@4%).
of tax is provided in manufacturing or production of an article or thing or There is, however, no restriction
Chapter XII generating electricity (For example, income from house regarding claim of any deduction
property and income from other sources). or allowance permissible under the
In respect of such income, no deduction or allowance relevant provisions of the Act.
in respect of any expenditure or allowance shall be
allowed in computing such income.
Rate of tax on STCG The applicable rate of tax is 25.168% (i.e., tax@22%, The applicable rate of tax is 25.168%
derived from transfer plus surcharge@10% plus HEC@4%). i.e., tax @22%, plus surcharge
of a capital asset on There is, however, no restriction regarding claiming of @10% plus cess@4%.
which no depreciation is dedn or allowance in this regard. There is no restriction regarding
allowable under the Act claiming of dedn or allowance in
this regard.
(7) Conditions to be fulfilled for availing concessional rate of tax and exemption from MAT
Conditions to be fulfilled (i) The Co. should be set-up and registered on or No time limit specified. Both existing
for availing concessional after 1.10.2019. Cos and new Cos can avail benefit.
rate of tax and exemption
(ii) It should commence manufacturing or Need not be a manufacturing or a
from MAT
production of an article or thing or business of production Co.
generating electricity on or before 31.3.2023.
(iii) It should not be formed by splitting up or the No similar condition has been
reconstruction of a business already in existence prescribed.
(except in case of a Co., business of which is formed
as a result of the re-establishment, reconstruction or
revival by the person of the business of any undertaking
referred to in section 33B in the circumstances and
within the period specified therein).
(iv) It does not use any P or M previously used for any No similar condition has been
purpose [Refer Note at the end] prescribed
(v) It does not use any building previously used as a No similar condition has been
hotel or a convention centre [meanings assigned in prescribed
section 80-ID(6)] in respect of which dedn u/s 80-
ID has been claimed and allowed.
(vi) It should not be engaged in any business other No similar condition has been
than the business of manufacture or production of prescribed
any article or thing and research in relation to, or
distribution of, such article or thing manufactured
or produced by it.
Note – Business of manufacture or production of any
article or thing does not include business of
(1) Development of computer software in any form
or in any media
(2) Mining
(3) Conversion of marble blocks or similar items
into slabs
(4) Bottling of gas into cylinder
(5) Printing of books or production of
cinematograph films
(6) Any other business as may be notified by the
CG in this behalf.
Note - If difficulty arises regarding fulfilment of conditions
listed in (iv) to (vi) above, the CBDT may, with the approval
of the Central Govt, issue guidelines for the purpose of
removing difficulty and to promote manufacturing or
production of article or thing using new P & M.
Every guideline issued by the CBDT has to be laid before
each House of Parliament, and shall be binding on the
person, and the income-tax authorities subordinate to it.

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(1) (2) (3) (4)
S.No. Particulars Section 115BAB Section 115BAA
(8) Common conditions for In case of a Co. opting for either section 115BAA or 115BAB, the total income should be
both sections for availing computed -
the concessional rate of (i) without providing for deduction under any of the following sections:
tax and exemption from Section Provision
MAT
10AA Exemption of profits and gains derived from export of articles or things or from
services by an assessee, being an entrepreneur from his Unit in SEZ.
32(1)(iia) Additional depreciation @20%, as the case may be, of actual cost of new P & M
acquired and installed by manufacturing undertakings.
33AB Dedn@40% of profits and gains of business of growing and manufacturing tea,
coffee or rubber in India, to the extent deposited with NABARD in accordance
with scheme approved by the Tea/Coffee/ Rubber Board.
33ABA Dedn@20% of the profits of a business of prospecting for, or extraction or
production of, petroleum or natural gas or both in India, to the extent deposited
with SBI in an approved scheme or deposited in Site Restoration Account.
35(1)(ii)/ Dedn for payment to any research association, co., university etc. for
(iia)/(iii) undertaking scientific research or social science or statistical research.
35(2AA) Dedn of payment to a National Laboratory or University or IIT or approved
specified person for scientific research
35(2AB) Dedn of in-house scientific research expenditure incurred by a co. engaged in
the business of bio-technology or in the business of manufacture or production
of an article or thing.
35AD Investment-linked tax deduction for specified businesses.
35CCC Dedn of expenditure incurred on notified agricultural extension project
35CCD Dedn of expenditure incurred by a co. on notified skill development project.
80C to 80U Dedns from GTI under Chapter VI-A other than the provisions of section
80JJAA or section 80M.
(ii) without set-off of any loss or allowance for unabsorbed depreciation deemed so u/s 72A,
where such loss or depreciation is attributable to any of the dedns listed in (i) above [Such
loss and depreciation would be deemed to have been already given effect to and no further
dedn for such loss shall be allowed for any subsequent year]
(iii) by claiming depreciation u/s 32 determined in the prescribed manner (i.e., in respect of
depreciation of any block of assets entitled to more than 40% shall be restricted to 40% on the
WDV of such block of assets). However, additional depreciation u/s 32(1)(iia) cannot be claimed.
Notes – Additional points relevant in the context of section 115BAA:
(1) In case of a Co. opting for section 115BAA, total income should be computed without set-
off of any loss c/f or depreciation from any earlier A.Y., where such loss or depreciation is
attributable to any of the dedns listed in (i) above [Such loss and depreciation would be
deemed to have been already given effect to and no further dedn for such loss or depreciation
shall be allowed for any subsequent year].
(2) In the case of a person having a Unit in the IFSC, referred to in section 80LA(1A), which has
exercised option for section 115BAA, dedn u/s 80LA would be allowed subject to fulfilment of
the conditions specified in that section.
(3) Since there is no time line within which option u/s 115BAA can be exercised, a domestic
co. having b/f losses and depreciation on account of dedns listed in (i) above may, if it so
desires, postpone exercise the option u/s 115BAA to a later A.Y., after set off of the losses and
depreciation so accumulated.
(9) Failure to satisfy On failure to satisfy the conditions mentioned in point On failure to satisfy the conditions
conditions no. (7) and (8) above in any P.Y., the option exercised mentioned in point no. (8) above in
would be invalid in respect of the A.Y. to that P.Y. and any P.Y., the option exercised would
subsequent A.Ys.; be invalid in respect of the A.Y.
Consequently, the other provisions of the Act would apply relevant to that P.Y. and subsequent
to the person as if the option had not been exercised for A.Ys.;
the A.Y. relevant to that P.Y. and subsequent A.Ys. Consequently, the other provisions
of the Act would apply to the
Note – Where option exercised u/s 115BAB is rendered person as if the option had not been
invalid due to violation of conditions stipulated in point exercised for the A.Y. relevant to
no.7 [(iv) to (vi)] above, such person may exercise option that P.Y. and subsequent A.Ys.
u/s 115BAA.
(10) Availability of set-off Since it is a new Co., there would be no b/f MAT credit B/f MAT credit cannot be set-off
of MAT credit b/f from against income u/s 115BAA.
earlier years Note - If a Co. has b/f MAT credit, it
can first exhaust the MAT credit, and
thereafter opt for section 115BAA in
a subsequent P.Y.

The Chartered Accountant Student March 2022 21

 direct taxes
(1) (2) (3) (4)
S.No. Particulars Section 115BAB Section 115BAA
(11) Adjustments forIf the A.O. opines that the course of business b/w the Co. No such requirement to make any
transactions withand any other person having close connection therewith adjustment
persons having close is so arranged that the business transacted b/w them
connection produces more than the ordinary profits to the Co., he
is empowered to take into a/c the amt of profits as may
be reasonably deemed to have been derived therefrom,
while computing profits and gains of such company.
In case the arrangement referred above involves a specified
domestic transaction referred to in section 92BA, then, the
amt of profits from such transaction would be determined
by considering the arm’s length price (ALP).
The amt, being profits in excess of the amt of the
profits determined by the A.O., shall be deemed to be
the income of the person.
The income-tax on the income so deemed shall be
subject to [email protected]%(i.e., tax@30% + surcharge
@10% +HEC@4%).
Note – The scope of “specified domestic transaction”
referred to in section 92BA has been expanded to include
within its ambit, any business transacted between such
persons with close connection, where one such person is a
company claiming benefit under section 115BAB.
(12) Exercise of option by The beneficial provisions of this section would apply The beneficial provisions of this
the company within the only if option is exercised in the prescribed manner on section would apply if option is
prescribed time or before the due date u/s 139(1) for furnishing the first exercised in the prescribed manner
of the returns of income for any P.Y. relevant to A.Y. or on or before the due date u/s 139(1)
any subsequent A.Y. for furnishing the return of income
Such option, once exercised, would apply to subsequent for any P.Y. relevant to A.Y. or any
A.Ys. subsequent A.Y.
Further, once the option has been exercised for any P.Y., Such option, once exercised, would
it cannot be subsequently withdrawn for the same or apply to subsequent A.Ys.
any other P.Y. Further, once the option has been
Notes – (1) The option has to be exercised at the time of exercised for any P.Y., it cannot be
furnishing the first of the returns of income for any P.Y. subsequently withdrawn for the
If a person fails to so exercise such option, it cannot be same or any other P.Y.
exercised thereafter for any subsequent P.Y. Note – The option can be exercised
(2) In case of amalgamation, the option exercised u/s even in a later year, but once exercised,
115BAB shall remain valid in the case of the amalgamated cannot be withdrawn subsequently.
company only and if the conditions mentioned in point Further, where the person exercises
no. (7) and (8) are continued to be satisfied by such co. option u/s 115BAA, the option u/s
115BA may be withdrawn.
Note - For the purpose of point no.7(iv) in column (3) of the above table in relation to a co. exercising option u/s 115BAB, any P & M which
was used outside India by any other person shall not be regarded as P & M previously used for any purpose, if all the following conditions are
fulfilled, namely:—
(a) such P & M was not, at any time previous to the date of the installation, used in India;
(b) such P & M is imported into India from any country outside India;
(c) no dedn on a/c of depreciation in respect of such P & M has been allowed or is allowable under the provisions of the Income-tax Act, 1961
in computing the total income of any person for any period prior to the date of installation of the machinery or plant by the person.
Further, where in the case of a person, any P & M or any part thereof previously used for any purpose is put to use by the Co. and the total value
of the P & M or part so transferred does not exceed 20% of the total value of the P & M used by the Co., then, the condition specified that the Co.
does not use any P & M previously used for any purpose would be deemed to have been complied with.

Scheme for Taxation of Business Trust

The scheme of taxability of income in the hands of the business trust, unit holders, sponsors etc. is briefed in the table given hereunder –

Transaction Section Tax and TDS implications

(1) Trf of listed units of the Tax implications in the hands of unit holders:
business trust by the unit STT leviable on trading of listed units on a RSE;
holders
2(42A)  The period of holding of units of business trust to qualify as “long-
term capital assets” is “more than 36 months”;
112A  LTCG upto R1 lakh would be exempt in the hands of the unit
holders; LTCG exceeding R1 lakh would be taxable @10% plus
surcharge, if applicable, and health and education cess @4%.
111A  STCG would be subject to concessional rate of tax@15% (plus
surcharge, if applicable, and cess@4%).

22 March 2022 The Chartered Accountant Student

 direct taxes
Transaction Section Tax and TDS implications
(2) Exchange of shares in Tax implications in the hands of the sponsor:
SPV by sponsor for units
of Business Trust 47(xvii)  Such exchange is not treated as a trf. Hence, taxability of capital
gains on such trf deferred to the time of disposal of units by the
sponsor;
112A & 111A  The sponsor would get the same tax treatment on offloading of
units under an Initial offer on listing of units as it would have been
available had he offloaded the underlying shareholding through an
IPO. STT shall be levied on sale of such units of business trust
which are acquired in lieu of shares of SPV, under an initial offer at
the time of listing of units of business trust in the like manner as in
the case of sale of unlisted equity shares under an IPO. The benefit
of concessional tax regime of tax @15% on STCG and @10% on
LTCG exceeding R1 lakh u/s 112A shall be available to the sponsor
on sale of units received in lieu of shares of SPV subject to levy of
STT.
49(2AC)  For computing capital gains in the hands of the sponsor, cost of
acquisition of units would be deemed to be the cost of acquisition
of shares to the sponsor;
2(42A)  For computing capital gains in the hands of the sponsor, the period
of holding of units to include the period of holding of shares for
determining whether the capital gains are long-term or short-
term.
(3) Interest income of Tax implications in the hands of the business trust & unit holders and TDS implications
business trust from SPV in the hands of the SPV & business trust:
10(23FC) Pass-through status for interest recd by business trust from SPV
 Interest income is not taxable in the hands of the business trust;
and
194A(3)(xi)  SPV is not required to deduct tax at source on interest paid to
business trust.
115UA(3)  Tax consequences on distribution of such income by the business
trust to the unit holders:
The distributed income or any part thereof, recd by a unit holder
from the REIT, which is in the nature of interest recd or receivable
from a SPV is deemed as income of unit holder.
115A(1)(a)(iiac)  Interest income taxable in the hands of the unit holders –
 @5%, in case of unit holders, being non-corporate non-resident
(NCNR) or foreign companies; and
 at normal rates of tax, in case of resident unit holders.
194LBA  Business trust to deduct tax at source on interest component of
income distributed to unit holders at the time of payment or credit
of income to the account of the unit holder, whichever is earlier:
 @5%, in case of unit holders, being NCNR or foreign
companies; and
 @10%, in case of resident unit holders.
(4) Interest payments to TDS implications in the hands of business trust:
non-resident lenders on 194LC  A business trust paying interest income to a NCNR or to a foreign
ECBs by the business company is liable to deduct TDS@5% [Such interest would attract
trust tax in the hands of the non-resident lenders @5% as per section
115A].
 The above concessional rate of TDS@5% is applicable to interest
in respect of money borrowed by the business trust in foreign
currency from a source outside India –
(i) Under a loan agreement b/w 1.7.2012 and 30.6.2023.
(ii) By issuing long term infra bonds between 1.7.2012 to
1.10.2014.
(iii) By issuing long term bond including long term infra bonds
b/w 1.10.2014 and 30.6.2023.
(iv) By way of issue of RDB on or before 30.6.2023.
 However, tax is required to be deducted @4% in respect of
monies borrowed by it from a source outside India by way of
issue of any long-term bond or RDB b/w 1.4.2020 and 30.6.2023,
which is listed only on a RSE located in any IFSC [Such interest
would attract tax in the hands of the non-resident lenders @4%
as per section 115A].

The Chartered Accountant Student March 2022 23

 direct taxes
Transaction Section Tax and TDS implications
(5) Dividend received by the Tax implications in the hands of the SPV, business trust and unit holders and TDS
business trust from SPV implications in the hands of the SPV & business trust:
10(23FC)(b)  Pass-through status for dividend recd by business trust from SPV:
- Dividend recd or receivable from a SPV, by the business trust
would be exempt in its hands;
- Consequently, SPV is not required to deduct tax at source on
interest paid to business trust.
115UA(3)  Tax consequences on distribution of such income by the business
trust to the unit holders:
The distributed income or any part thereof, recd by a unit holder
from the REIT, which is in the nature of dividend recd or receivable
from a SPV, which has exercised option u/s 115BAA, is deemed as
income of unit holder.
10(23FD)  Dividend income taxable in the hands of the unit holders –
 @10%, in case of unit holders, being NCNR or foreign
115A(1)(a)(iiac) companies; and
 at normal rates of tax, in case of resident unit holders.
(However, in case where SPV has not exercised option u/s 115BAA,
dividend income distributed by the business trust would be exempt
in the hands of the unit holders)
194LBA  Business trust to deduct tax at source on dividend component of
income distributed to unit holders at the time of payment or credit
of income to the account of the unit holder, whichever is earlier,
where SPV has exercised option u/s 115BAA:
 @ 10%, in case of unit holders, being NCNR or foreign
companies; and
 @10%, in case of resident unit holders.
(However, in a case where SPV has not exercised option u/s
115BAA, no tax is required to be deducted at source by the business
trust on dividend income distributed by it to the unit holders)
(6) Capital gains on disposal Tax implications in the hands of the Business Trust and Unit holders:
of assets by the Business 115UA(2)  Capital gains is chargeable at the applicable rates in the hands of
Trust
the Business Trust:
 In case of LTCG, the provisions of section 112 would apply;
 In case of STCG on sale of listed shares, the provisions of
section 111A would apply;
 Short-term capital gains, other than the gains subject to tax
u/s 111A, would be subject to MMR.
10(23FD)  If such capital gains are further distributed to unit holders, the
component attributable to capital gains would be exempt in the
hands of the unit holders.
(7) Rental income arising 10(23FCA)  Rental income of REIT from directly owned real estate asset
to REIT from real estate Any income of a business trust, being a REIT, by way of renting or
property directly held leasing or letting out any real estate asset owned directly by such
by it business trust is exempt in the hands of the business trust.

194-I  Rental income received or credited to a REIT

Where the income by way of rent is credited or paid to a business
trust, being a REIT, in respect of any real estate asset, owned
directly by such business trust, tax is not deductible at source
115UA(3)  Distributed income received by unit holder
The distributed income or any part thereof, received by a unit
holder from the REIT, which is in the nature of income by way of
renting or leasing or letting out any real estate asset owned directly
by such REIT is deemed as income of unit holder.
194LBA  Distribution by REIT to unit holders of rental income from real
estate assets directly owned by it
 TDS@10% in case of distribution to a resident unit holder
 TDS at rates in force in case of distribution to a non-resident
unit holder.

24 March 2022 The Chartered Accountant Student

 direct taxes
Transaction Section Tax and TDS implications
(8) Income of business trust Tax implication in the hands of the Business Trust and Unit holders:
[Other than interest
115UA(2)  LTCG chargeable to tax u/s 112 – 20%
and dividend from SPV,
 STCG chargeable to tax u/s 111A – 15%
rental income from real
 Any other income of the trust is chargeable to tax at the MMR (i.e.,
estate property]
@42.744%).
10(23FD)  The above income distributed to unit holders would be exempt in
their hands

Scheme for Taxation of Investment Fund

The scheme of taxability of income in the hands of the Investment Fund and its unit holders is briefed in the table given hereunder –

Particulars Investment Fund Unit holder

(i) Income under the head “Profits and Taxable Exempt u/s 10(23FBB)
gains of business or profession” of the - @25%/30%, as the case may be, for a
Investment Fund company and @30% for firm
- At MMR in any other case.
(ii) Income, other than profits and gains of Exempt in the hands of investment fund u/s Taxable u/s 115UB, as if he had
business or profession 10(23FBA). directly made the investment.
Tax to be deducted u/s 194LBB on such
income distributed to unit holders by
investment fund
- @10%, in case of resident unit holder
- at rates in force in case of NCNR or foreign
company
Where total income of the investment fund is a loss under any head of income and such loss cannot be wholly set off against income
under any other head of income, then
(iii) out of such loss, there is a loss under the To be carried forward for set-off as per Chapter Not passed on to investors
head “Profits and gains of business or VI at the Fund level
profession” incurred by the investment
fund
(iv) loss (other than loss referred to in (iii) The Act is silent relating to the permissibility or Not allowed to be carried forward
above) where such loss has arisen in otherwise of carry forward of these losses in the by the unit holder. He cannot set-off
respect of unit which has not been held by hands of investment funds. such losses against his income.
the unit holder for a period of at-least
12 months
(v) losses (other than losses referred to in (iii) Not allowed to be carried forward for set-off by Unit-holder can carry forward
and (iv) above) the Investment Fund and set-off such losses against his
income as per Chapter VI
Notes - (1) Losses, other than business losses, accumulated at the level of the investment fund as on 31.3.2019 would be deemed to be the loss of
the unit holder who held the unit as on 31.3.2019 in respect of the investments made by him in the investment fund, in the same manner as it were
the loss incurred by him had he made such investments directly. Such loss can be c/f by the unit holder for the remaining period calculated from
the year in which the loss had occurred for the first time taking that year as the first year. Accordingly, he can set-off such loss in accordance with
the provisions of Chapter VI. The loss so deemed to be the loss of the unit holder shall not be available to the investment fund on or after 1.4.2019.

(2) If income accruing or arising to, or received by, an investment fund, during a P.Y. is not paid or credited to the unit holders, deemed to have
been credited to the account of the unit-holder on the last day of the P.Y. in the same proportion in which such person would have been entitled
to receive the income had it been paid in the P.Y.

Scheme for Taxation of Securitisation Trust

The scheme of taxability of income in the hands of the securitisation trust and its investors is briefed in the table given hereunder –

Particulars Securitisation Trust Investors

Income from the activity of Exempt in the hands of securitisation trust u/s Taxable u/s 115TCA, as if he had directly made
Securitisation 10(23DA). the investment.
If income accruing or arising to, or received by,
Tax to be deducted u/s 194LBC on such income a securitisation trust, during a P.Y. is not paid or
distributed to investors by securitization trust credited to the investors, deemed to have been
- @25%, in case of investor, being resident credited to the account of the investors on the last
individuals and HUF day of the P.Y. in the same proportion in which
- @30%, in case of investor, being resident other such person would have been entitled to receive
individual and HUF the income had it been paid in the P.Y.
- at rates in force in case of NCNR or foreign
company

The Chartered Accountant Student March 2022 25

 FINANCIAL MANAGEMENT
CA INTERMEDIATE - PAPER 8A - FINANCIAL MANAGEMENT
Major task of a Finance Manager is to procure funds and effectively utilize them while maximizing wealth. He/She is
required to select such capital structure in which shareholders’ wealth is maximum. For this purpose, first he/she needs to
calculate cost of various sources of finance. This cost is the return expected by the providers of capital as a compensation
for their contribution.
Afterwards, the source and quantum of capital is decided keeping in mind the cost, risk and returns involved. However,
practically it is difficult to achieve this together, hence a finance manager has to make a balance among these. So, before
working on the capital structure decision, a finance manager needs to determine the cost of capital of various sources, the
brief of which has been discussed below in this edition of capsule of Financial Management covering topic ‘Cost of Capital’.
Students are advised to meticulously go through the concept and practice examples given for better understanding.

COST OF CAPITAL
Points of Discussion

Cost of
Cost of Debt Equity
Combination
Weighted
Cost of of Cost and
Average Cost
Weight of
Capital of Capital
each sources
Cost of (WACC)
of Capital
Preference Cost of
Share Retained
Earning

Meaning of Cost of Capital TO CALCULATE COST

Identify various cash flows

Cost of • Return expected by the providers of capital
Capital (i.e. shareholders, lenders and the debt-
holders) Like:
• Inflow of amount received at the beginning.
• Outflow of payment of interest, dividend,
redemption amount etc.
• Inflow of tax benefit on interest or Outflow
of payment of dividend tax.
Significance of Cost of Capital

THEREAFTER, use trial & error method to arrive at a rate

Evaluation of investment options where present value of outflows is equal to present value of
inflows which is basically IRR.

Financing Decision Cost of LONG-TERM DEBT (Kd)

• Do not confers ownership to the providers

Designing of optimum of finance.
credit policy Long-term • Debt providers do not participate in the
Debt affairs of the company.
• They get charge on the profit before taxes in
the form of interest

Determination of Cost of Capital Cost of Irredeemable Debt

Cost of long
Cost is not the amount which the company plans to pay or term Debt
actually pays, rather it is the expectation of stakeholders Cost of Redeemable Debt

26 March 2022 The Chartered Accountant Student

 FINANCIAL MANAGEMENT
Cost of Irredeemable Debentures STEPS TO CALCULATE RELEVANT CASH FLOWS

Kd =
Step-1: Identify the cash flows.

Where,
Kd = Cost of debt after tax Step-2: Calculate NPVs of cash
I = Annual interest payment flows as identified above using two
NP = Net proceeds of debentures* (new debentures) discount rates.
or Current market price (existing debentures)
t = Tax rate
*Net proceeds means issue price less issue expenses or floatation cost Step-3: Calculate IRR

Cost of Redeemable Debentures Step-1: Identify the cash flows.

The relevant cash flows are as follows:

Year Cash flows

Using Approximation method: 0 Net proceeds in case of new issue/ Current
market price in case of existing debt (NP or P0)
1 to n Interest net of tax [I(1-t)]
#
Kd =
n Redemption value (RV)

Step-2: Calculate NPVs of cash flows as identified above using two

Where, discount rates (guessing) to get each a positive NPV (lower rate) and
I = Interest payment a negative NPV (higher rate).
NP = Net proceeds (new) or Current market price
(existing) Step-3: Calculate IRR.
RV = Redemption value of debentures NPVL
t = Tax rate applicable to the company IRR = L + (H-L)
NPVL-NPVH
n = Remaining life of debentures
#
This formula is used where only interest on debt is tax deductible. Sometime, [Here, H and L stands for higher discount rate and lower discount
debts are issued at discount and/ or redeemed at a premium. If such discount rate respectively. It is to be noted that higher the difference between
on issue and/ or premium on redemption are tax deductible, the following H and L, lower the accuracy of answer.]
formula can be used:

Example: A company issued 10,000, 10% debentures of R100 each

on 01.04.2021 to be matured on 01.04.2026. The company wants to
know the current cost of its existing debt if the market price of the
Kd = debentures is R80, considering 35% tax rate.
Step-1: Identification of relevant cash flows
Year Cash flows
0 Current market price (P0) = R80
Using Present value method [Yield to
maturity (YTM) approach]: 1 to 5 Interest net of tax [I(1-t)] = 10% of R100 (1-0.35)
= R6.5
5 Redemption value (RV) = Face value i.e. R100

Step- 2: Calculation of NPVs at two discount rates

Year Cash Discount Present Discount Present
YTM- An internal rate of return at which flows factor @ Value (R) factor @ Value (R)
current price of a debt equals to the (R) 10% (L) 15% (H)
present value of all cash-flows. 0 80 1.000 (80.00) 1.000 (80.00)
1 to 6.5 3.791 24.64 3.352 21.79
5
5 100 0.621 62.10 0.497 49.70
NPV +6.74 -8.51
Step- 3: Calculation of IRR
NPVL 6.74
IRR = L + (H-L) = 10% + (15%-10%)=12.21%
NPVL-NPVH 6.74-(-8.51)

The Chartered Accountant Student March 2022 27

 FINANCIAL MANAGEMENT
Amortisation of Bond Cost of Redeemable Preference Shares

In such a situation,
A bond may be the principal will Kp =
amortised every go down with
year i.e., principal annual payments Cash flows will be
is repaid every and interest will uneven. Where,
year rather than at be computed on
maturity. the outstanding PD = Annual preference dividend
amount. RV = Redemption value of preference shares
NP = Net proceeds from issue of preference shares
n = Remaining life of preference shares

Value of Bond VB =
Cost of EQUITY SHARE CAPITAL (Ke)

VB = • It is the expectation of equity shareholders.

Equity • Value is performance divided by expectations.
Share • Performance means amount paid by
Capital company to investors, like interest, dividend,
redemption price etc. which is uncertain in
Cost of Convertible Debentures case of equity.

Option to either get the debentures redeemed into

cash or get specified numbers of company’s shares. Dividend Price Approach

While determining redemption value, it is assumed Earning Price Approach

that all the debenture holders will choose the option
which has the higher value i.e. beneficial to the Methods to
holder. compute Cost
Growth Approach
of Equity
Share Capital

Realized Yield Approach

Cost of PREFERENCE SHARE CAPITAL (Kp)
Capital Asset Pricing
• Paid dividend at a specified rate on face Model (CAPM)
value.
Preference • Dividend treated as an appropriation of after-
Share
Capital tax profit. Dividend Price Approach
• Does not reduce the tax liability of the
company. This approach assumes that the dividend per share is expected
to remain constant forever.

Cost of Irredeemable
Preference Share Capital Ke =
Cost of
Preference
Share Capital Cost of Redeemable Where,
Preference Share Capital D = Expected dividend (also written as D1)
P0 = Market price of equity (ex- dividend)

Earnings Price Approach

Cost of Irredeemable Preference Shares
This approach co-relate the earnings of the company
Kp = with the market price of its share.

Ke =
Where,
PD = Annual preference dividend
Where,
P0 = Net proceeds $ from issue of preference shares
E = Current earnings per share
P = Market price per share
$
Net proceeds means issue price less issue expenses or floatation cost

28 March 2022 The Chartered Accountant Student

 FINANCIAL MANAGEMENT
Growth Approach or Gordon’s Model Example: The current dividend (D0) is R16.10 and the dividend 5
year ago was R10. The growth rate in the dividend can found out
as follows:
Rate of dividend growth remains constant. Earnings,
dividends and equity share price all grow at the same rate. Step-I: Divide D0 by Dn i.e. R16.10 ÷ R10 = 1.61
Step-II: Find out the result found at Step-I i.e. 1.61 in corresponding
year’s row i.e. 5th year.
Ke = Step-III: See the interest rate for the corresponding column which
is 10%. Therefore, growth rate (g) is 10%.

Where, (ii) Gordon’s Growth Model

D1 = [D0 (1+ g)] i.e. next expected dividend
P0 = Current Market price per share This model attempts to derive a future growth rate.
g = Constant Growth Rate of Dividend
In case of newly issued equity shares where floatation cost is Growth (g) = b × r
incurred,
Where,
b = earnings retention rate*
Ke = r = rate of return on fund invested
*Proportion of earnings available to equity shareholders which is not
Where, distributed as dividend.
F = Flotation cost per share

Example: A company has paid dividend of R1 per share (of face Realised Yield Approach
value of R10 each) last year and it is expected to grow @ 10% every
year. The market price of share is R55. Average rate of return realised in the past few years historically
regarded as ‘expected return’ in future.
Ke = = = 0.12 or 12% Computes cost of equity based on the past records of dividends
actually realised.

Example: Mr. X had purchased a share of ABC Limited for R1,000

Estimation of Growth Rate and received dividend for five years @ 10%. At the end of the fifth
year, he sold the share for R1,128. The cost of equity as per realised
yield approach would be as follows:
It would be the discount rate which equates the present value of
Estimation of Growth
Rate the dividends received in the past five years plus the present value
of sale price of R1,128 to the purchase price of R1,000.
The discount rate which equalises these two is 12% (approx..)
Year Dividend Sale Discount Present
(R) Proceeds (R) Factor @ Value (R)
12%
Average Method Gordon’s Growth
Model 1 100 - 0.893 89.3
2 100 - 0.797 79.7
3 100 - 0.712 71.2
(i) Average Method
4 100 - 0.636 63.6
Current Dividend (D0) =Dn(1+g)n 5 100 - 0.567 56.7
or
Growth rate = 6 Beginning 1,128 0.567 639.576
1,000.076
Where,
D0 = Current dividend,
Dn = Dividend in n years ago
Capital Asset Pricing Model (CAPM)
Other ways: Approach
• Divide D0 by Dn, find out the result, then refer the FVIF Diversifiable or Unsystematic risk (related with the company’s
Step-I table. performance) can be eliminated by an investor through
diversification.
• Find out the result found at Step-I in corresponding year’s
Step-II row.

However, non-diversifiable or systematic risk (macro-economic

• See the interest rate for the corresponding column. This is or market specific risk) is the risk which cannot be eliminated;
Step-III the growth rate. thus, a business should be concerned as per CAPM method, solely
with non-diversifiable risk.

The Chartered Accountant Student March 2022 29

 FINANCIAL MANAGEMENT
Cost of Equity under CAPM = Risk free rate + Risk premium Weighted Average Cost Of Capital (WACC)
Required
return
• A company makes a mix of various sources of
finance.
SML WACC
• Cost of total capital will be equal to WAC of
Ke=Rf + (Rm-Rf) β individual sources of finance.
Risk premium
(Rm - Rf) β
Steps to calculate WACC:

Rf • Calculate the total capital from all the sources of

capital.
Step 1 • Eg. Long-term debt capital + Pref. Share Capital +
Equity Share Capital + Retained Earnings

Risk (β) • Calculate the proportion (or %) of each source of

capital to the total capital.
Step 2 • [Equity Share Capital (for example)/Total Capital (as
Ke= Rf + ß (Rm − Rf) calculated in Step1 above)]

Where,
• Multiply the proportion as calculated in Step 2
Ke = Cost of equity capital
above with the respective cost of capital.
Rf = Risk free rate of return
Step 3 • (Ke × Proportion (%) of equity share capital (for
ß = Beta coefficient (represents systematic risk)
example) calculated in Step 2 above)
Rm = Rate of return on market portfolio
(Rm – Rf) = Market risk premium
• Aggregate the cost of capital as calculated in Step 3
Risk Return relationship of various securities above. This is the WACC.
Step 4 • (Ke + Kd + Kp + Ks as calculated in Step 3 above)

Choice of Weights

Book Value (BV)

Operationally easy and Market Value (MV)

convenient.
Reserves such as share More correct and represent a firm’s
Example: The risk-free rate of return equals 10%. The company’s premium and retained capital structure.
beta equals 1.75 and the return on the market portfolio equals to profits are included in Preferable to use MV weights for the
15%. Thus, the cost of equity capital of the company would be: the BV of equity. equity.
Ke = Rf + ß (Rm − Rf)
Reserves such as share premium and
Ke = 0.10 + 1.75 (0.15 − 0.10) = 0.1875 or 18.75% retained profits are ignored as they are
in effect incorporated into the value of
equity.
Cost of Retained Earnings (Kr) No separate MV for retained earnings.

Retained • It is the opportunity cost of dividends Example: The capital structure of the company is as under:
Earnings foregone by shareholders.
(R)
10% Debentures with 10 years maturity (R100 per 5,00,000
Formulas used for calculation of cost of retained earnings are debenture)
same as formulas used for calculation of cost of equity. 5% Preference shares with 10 years maturity (R100 5,00,000
per share)
D
Dividend Price method: Kr = Equity shares (R10 per share) 10,00,000
P
20,00,000
EPS
Earning Price method: Kr = The market prices of these securities are:
P
D1 Debentures R105 per debenture
Growth method: Kr = +g Preference shares R110 per preference share
P0
Equity shares R24 per equity share
For Ke : P = net proceeds realized i.e. issue price less floatation After tax Cost of Capital: Equity = 10%, Debt = 6.89% and
cost. But for Kr : P = current market price. However, sometimes Preference shares = 4.08%
issue price may also be used ignoring Floatation cost.
30 March 2022 The Chartered Accountant Student
 FINANCIAL MANAGEMENT
The WACC applying BV and MV would be as follows:
Form-IV (See Rule 8)
(a) Calculation of WACC using BV weights 1. Place of Publication : New Delhi
Source of Book Weights After tax WACC 2. Periodicity of the Publication : Monthly
capital Value cost of (Ko) 3. Printer’s Name : CA. Vandana D Nagpal
capital Whether citizen of India? : Yes
(If foreigner, state the country of origin)
(R) (a) (b) (c) = Address : Director, Board of Studies
(a)×(b) The Institute of Chartered
10% 5,00,000 0.25 0.0689 0.01723 Accountants of India,
Debentures Post Box. No.7100,
Indraprastha Marg,
5% 5,00,000 0.25 0.0408 0.0102 New Delhi-110104
Preference 4. Publisher’s Name : CA. Vandana D Nagpal
shares Whether citizen of India? : Yes
Equity shares 10,00,000 0.50 0.10 0.05000 (If foreigner, state the country of origin)
Address : Director, Board of Studies
20,00,000 1.00 0.07743
The Institute of Chartered
WACC (Ko) = 0.07743 or 7.74% Accountants of India,
Post Box. No.7100,
(b) Calculation of WACC using MV weights Indraprastha Marg,
Source of Market Weights After tax WACC New Delhi-110104
capital Value cost of (Ko) 5. Editor’s Name : CA. Dayaniwas Sharma
capital Whether citizen of India? Yes
(If foreigner, state the country of origin)
(R) (a) (b) (c) = Address : Chairman, Board of Studies
(a)×(b) (Academic), The Institute of
Chartered Accountants of
10% 5,25,000 0.151 0.0689 0.0104
India,
Debentures
Post Box. No.7100,
(R105× 5,000) Indraprastha Marg,
5% Preference 5,50,000 0.158 0.0408 0.0064 New Delhi-110104
shares 6. Name and Addresses of individuals : Council of the Institute of
who own the newspapers and Chartered
(R110× 5,000) partners or the shareholders Accountants of India
Equity shares 24,00,000 0.691 0.10 0.0691 holding more than one percent constituted under
(Act xxxVIII of 1949) the Chartered Accountants
(R24×
of the total Capital Act, 1949
1,00,000) There is no share capital
34,75,000 1.000 0.0859 I, CA. Vandana D Nagpal, hereby declare that the particulars
WACC (Ko) = 0.0859 or 8.59% given above are true to the best of my knowledge and belief.
Dated: February 26, 2022
Sd/-
Signature of Publisher

CROSSWORD SOLUTION – February 2022

D
1 2
I E
3 4
S L 5
O 6
W 7
L Y 8
I 9
R
10
I P P O 11
W H I 12
R M E
13
V L F F 14
N O B 15
A F A

E 16
T 17
T E 18
O 19
F M L
20
S 21
L O W E R 22
R D 23
I
24
T O 25
A L S 26
E B

W 27
R C H 28
P 29
I X E 30
L
31
W 32
C E O I 33
R B P E
34
O M R 35
P 36
R I M E D

R 37
R 38
I L 39
I N 40
N S G
41
M 42
T M 43
I C C S E
44
E N T E R P R E N E U R

The Chartered Accountant Student March 2022 31

 business correspondence and reporting
CA FOUNDATION - PAPER 2B - BUSINESS CORRESPONDENCE AND REPORTING
Board of Studies has been catering the learning and requirement needs by providing a wide array of content to help
students not just to prepare but also to revise concepts for upcoming examination. Keeping the objective in mind it
has been decided to bring a crisp and concise capsule on the topics Introduction to Basics of writing and Precis writing
of Foundation Course Paper 2B: Business Correspondence and Reporting. These topics has been presented through
pictorial representation to enable students to understand the topic and improve the writing skills. Although this capsule
facilitates in enduring quick revision, but under no circumstances such revision can substitute the detailed study of the
material provided by the Board of Studies.

Chapter 6: Introduction to Basics of Writing

A child first listens to conversations around him/her, and then repeats Steps for writing
the sounds and words which have been learnt from the environment.
Writing is a process that has 7 steps which must be followed every
Thus, the next step is learning to speak. Thereafter, the child begins to
time you write something substantial and important.
recognise alphabets and words and starts to read. The last skill to be
learnt is that of writing. Selecting topic
Theme, issue or idea that would create a base to write
Writing as a skill is a complex activity that requires years to
master Brainstorming
Points of discussion/ thoughts/ ideas, and research well about the topic

Organising the content

Knowledge List the relevant points and decide the sequence of the points
of
vocabulary Writing
Choose words /structure for meaningful sentences; catchy
beginning; divide the paragraphs logically and sequentially
Thoughtful & Varied
meaningful sentence
content structures Revising
Read; rearrange the words/ paraphrase if required / add or delete the
information
Writing
skill Editing and proofreading
requires Check for correct sentence, grammar, spelling, capitalization and
punctuation; replace overused words
Sequential Correct
series of grammar Publishing and printing
events usage Once it's ready, publish it and send out for printing to journals/
magazines/websites.

Logical Multiple areas of brain are used in creating text, organising

presentation words and sentences sequentially so that they make sense to
of content
the reader.
Let’s understand how one starts to write in the following diagram.

Alphabet
After the recognition of sounds, one learns to write alphabet.

Significance of learning writing skill Words

Next step in learning is about the formation and usage of words
Important medium of official communication along with the meanings
Essential for content development
Permanent documentation of records Sentences
Creative writing Words come together to form sentences. Next Step is to learn
Source of earning a livelihood about different sentences, stuctures and its connotations.
Helps in recruitment as it is the need of the hour Paragraphs
Sentences build together to form paragraphs. Structing sentences
to create meaningful paragraphs.

Production
Finally, one can produce a relevant writing packed with vocabulary,
purposeful sentences and consequential writing.

32 March 2022 The Chartered Accountant Student

 business correspondence and reporting
Organisation of the collected information based on relevance, logic and in sequence is essential.
To learn to organize your thoughts, there are various patterns that one can choose from as per the subject and writing style. The
organisation of thoughts is more effective when done graphically.

Sequential/chronological form Comparison & Contrast

• Effective if describing a process, • Effective while analysing
series of actions or telling a and evaluating two or more
story concepts/products
• For e.g.: used for fiction texts, • For e.g.: used for writing about
biography, etc. any two options/products/
concepts, etc.

Organising Patterns

Problem and solution Cause and Effect

• Analysing and identifying a • Effective while stating the cause
problem and suggesting one or and discussing the effect of a
more solutions topic.
• For e.g.: used for topics like • For e.g.: used for topics like
pollution, obesity, etc. demonetisation, Covid, etc.

Chapter 7: Precis writing

An abstract of a text, in one’s own words, is known as a précis. The ‘Precis vis-à-vis Summary.’
term is derived from the French word précis meaning ‘precise’. Thus,
a précis gives an accurate and brief description (or the main idea) • brief piece of writing.
contained in the text without losing its meaning and essence. Precis • order & proportion are followed.
Précis writing is a useful exercise as it helps to develop a habit of • states only thought of the original text.
careful reading and builds capacity to differentiate between the
essential and the non-essential content.
• short account of long pieces.
• writer is free to change order & proportion.
Summary
• free to interpret the material and comment in
their own words.

Characteristics of a good precis

Clarity Correctness Completeness

• convey meaning
in possible fewer
words
• be unbiased and • ideas should have (no fact should
purely based on text connection be omitted)

• be clear and • ensure facts, • include all

comprehensible grammar and important facts
sentences are and relevant
• use simple flawless details
language and
structure Objectivity Coherence Conciseness

The Chartered Accountant Student March 2022 33

 business correspondence and reporting
Precis writing procedure Directives of precise writing

Read
Dos Don'ts
Understand the
text and extract its
main idea Refrain from writing
Start with main idea personal opinion,
itself
Prepare Final Draft Decide criticism or remarks
Ensure that the main About inclusion of
idea is expressed and important facts or
retained ideas
Message should be Never insert any fact
clear and written in taken from internet
Select suitable title original flow
Read the Draft Choose title according
Make necessary to the main idea of
changes text
Essential to mention
Never ask questions
First Draft purpose of writing
Reduce orignal text to
its one-third length

Retain keywords and No abbreviation

Features of a good precis writing keep a check on word should be used (Use
count full forms of words)

Written in Brief and

summarised easy to read Ensure it's not too
manner Use past tense for long but short and
historical facts crisp.

Sentences are Sentences

connected should be in Always use the third
in logical chronological person, reported
manner order speech

Important No complex
points are figurative
easier language to
to find be used

NEWS UPDATES
ECONOMIC UPDATES
• On the basis of an assessment of the current and supply-side reforms and easing of regulations, robust
evolving macroeconomic situation, the Monetary Policy export growth, and availability of fiscal space to ramp
Committee (MPC) at its meeting (February 8-10, 2022) up capital spending. The union minister for Finance &
decided to continue with the accommodative stance Corporate Affairs Smt Nirmala Sitharaman tabled the
as long as necessary to revive and sustain growth on a Economic Survey 2021-22 in Parliament.
durable basis and continue to mitigate the impact of COVI S o u r ce : h t t p s : / / p ib . g o v. in / P r e s s Re l e a s e Pa g e .
Source: https://rbi.org.in/Scripts/BS_ aspx?PRID=1793826
PressReleaseDisplay.aspx?prid=53247 • The global economy enters 2022 in a weaker position than
• he Union Budget seeks to complement macro-economic previously expected. As the new Omicron COVID-19
level growth with a focus on micro-economic level all- variant spreads, countries have reimposed mobility
inclusive welfare. The union minister for Finance & restrictions. The ongoing retrenchment of China’s real
Corporate Affairs, Smt Nirmala Sitharaman tabled the estate sector and slower-than-expected recovery of private
Union Budget 2022-23 in Parliament. consumption also have limited growth prospects.
S o u r c e : h t t p s : / / p i b . g o v. i n / P r e s s R e l e a s e P a g e . Source: https://www.imf.org/en/Publications/WEO/
aspx?PRID=1794165 Issues/2022/01/25/world-economic-outlook-update-
• India to witness GDP growth of 8.0-8.5 per cent in 2022- january-2022
23, supported by widespread vaccine coverage, gains from

34 March 2022 The Chartered Accountant Student

 toppers

TOPPERS OF CHARTERED ACCOUNTANTS

FINAL-(NEW SCHEME) EXAMINATION-2021
final New Scheme

AIR-1 AIR-2 AIR-3

RADHIKA CHAUTHMAL BERIWALA NITIN JAIN NIVEDITA N

SURAT KHATAULI CHENNAI

ANNOUNCEMENT
The Next Advanced ICITSS - Adv. IT Test – Computer Based Test (CBT) will be conducted as per following date.

Test Dates 20-Mar-2022 23-Apr-2022

Eligibility Criteria i.e., Advanced ICITSS – Advanced IT course to be completed on/before 20-Feb-2022 23-Mar-2022

Commencement of submission of examination application forms 28-Feb-2022 05-Apr-2022

Last date for submission of online examination application forms: 04-Mar-2022 09-Apr-2022

The test will be conducted both for AICITSS – IT Old and New Course.

Please visit https://resource.cdn.icai.org/69376exam210222.pdf for further details.

Additional Secretary (Examinations)

The Chartered Accountant Student March 2022 35

RNI No. 66180/1997
Postal Registration: DL(C)-01/1280/2021-23, License To Post Without Prepayment,
WPP Licence No.: MR/Tech/WPP-247/DL(C)/2022-23 Posted at Patrika Channel Sorting Office, Mumbai - 400001
Posting Date: Last Three Days of Advance Month and first four days of current month days/ dates only
Date of publication: 26th of previous month

Crossword - March 2022

20. A global consulting firm that partners with
1 2 3 4 5 6 7 8 leaders in business and society to tackle their
most important challenges.
9 10
21. A ____ is someone who has an important
presence in someone’s life.
11 12
22. _____is commonly expressed as a percentage of
13 14 15 16
the total cost.
23. First person singular present of be.
17 18 24. At the present time or moment.
25. An amount that has to be paid or spent to buy or
19 20 21 obtain something.
26. The outside limit of an object, area, or surface.
22 23 24 25 26 27 31. A short sentence or phrase chosen as
encapsulating the beliefs or ideals of an
28 29 individual, family, or institution.
32. An electronic method of transferring funds,
30 31 32 33 employed primarily for overseas wire
transactions.
34 35 36 37 36. Abbre : National Council of Youth.
37. The highest-ranking executive of a firm.
38 39 40 41
38. A highlighted picture of one person on social
media or other internet chat profile to represent
42 43
his visual identity.
39. A diagnostic imaging test used to create detailed
Across 42. Age of applicants for life insurance and images of internal organs, bones, soft tissue and
1. The data 1, 2, 4, 8, 16 are in ______________ premium of insurance Correlation is---- blood vessels.
Progression. -------- 40. The number π is a mathematical constant.
7. An abbreviation for the Latin phrase nota 43. An Indian multinational OTA, homes
bene, meaning “note well.” and living spaces.
9. The mode is the value that appears most
often in a set of data values. DOWNWARD
10. An open-source decentralized blockchain 1. A legal agreement between many
decentralized application platform founded countries, whose overall purpose was to
in 2014 by Da Hong Fei and Erik Zhang. promote international trade by reducing
11. ______is the secondary defence force of the or eliminating trade barriers such as
country after the official army of India. tariffs or quotas.
12. A national network of Fair-Trading 2. The administration of business practices
Organization in Nepal. to create the highest level of efficiency
13. A group of independent market participants possible within an organisation.
who collude with each other in order to 3. For ordering shoes for various sizes for
improve their profits and dominate the resale, a ____________ size will be more
market. appropriate.
16. A very small amount. 4. A law enforcement agency and economic
17. A religious group held together by a intelligence agency responsible for
dominant, often charismatic individual, or enforcing economic laws and fighting
by the worship of a divinity, an idol, or some economic crime in India.
other object. 5. _____Connectivity is an American Swiss-
18. The extra cost incurred when one extra unit domiciled technology company that
of output is produced. designs and manufactures connectors
19. _____ involves overlaying visual, auditory, or and sensors for several industries.
other sensory information onto the world in 6. _________curve depicts the set of all
order to enhance one’s experience. levels of interest rates and output (GDP)
20. An effort or attempt to achieve. at which total investment (I) equals total
22. The square of the standard deviation is saving (S).
known as ______. 7. In case of ‘sale of woollen garments and
27. Abbre: Commercial Vehicle Operations. day temperature’ correlation is _______
28. A state or quality of feeling at a particular 8. A --------represents a promise by a
time. borrower to pay a lender their principal
29. _____is a written abbreviation for General. and usually interest on a loan
30. ______are four fictional teenaged superhero 10. A Japanese telecommunications
anthropomorphic mutant turtles. company headquartered in Tokyo,
33. A global professional services network of 13. Belonging to the present time.
independent firms who represent their own 14. A Russian state-controlled international
individual client. television network funded by the federal
34. _______refers to any streaming service that tax budget of the Russian government.
delivers content over the internet. 15. ______curve gives the combinations of
35. ______is one that has business operations in income and the interest rate for which
two or more countries. the demand for money (or desired
38. An extremely bearish technical reversal liquidity) equals the money supply and
pattern that forms after an asset reaches a hence for which the domestic economy
high price two consecutive times with a is in asset or stock equilibrium.
moderate decline between the two highs. 17. ______provides citizenship on the basis If undelivered, please return to: The
39. A problem that affects muscle tone, of religion to six undocumented non-
movement, and coordination. Muslim communities from Pakistan, Institute of Chartered Accountants of
41. _____ is one of the year notations used for Afghanistan and Bangladesh who India, ICAI Bhawan, Indraprastha Marg,
the Gregorian calendar the world’s most entered India on or before December 31, New Delhi-110104
widely used calendar era. 2014.

36