The weekly messenger | Edition 14.19

Accounting News

IFRS Convergence Status – 31 March 2019
The Institute of Chartered Accountants of India (ICAI) has published the convergence status of Indian Accounting Standards (Ind ASs) with the International Financial Reporting Standard (IFRS) as on 31 March 2019 which is as follows:
 

 
For more information, click here.
ICAI issues press release on newly introduced Ind AS 116 ‘Leases’ – 1 April 2019
 
The ICAI has issued a press release on the newly introduced Ind AS 116 ‘Leases’, which provides for the date from which the aforesaid standard would become applicable i.e accounting periods beginning on or after 1 April 2019 and also provides the key changes between the new and the erstwhile standard, some of which are as follows:

• Introduction of single lease accounting model by elimination of classification between operating and finance leases;
• In the new lease accounting model for lessees majority of leases will be recognised on balance sheet by recognising a lease liability with a corresponding ‘right-of use’ asset etc.

For more information, click here.

Auditing News

FAQs on UDIN for Bank Audit - 30 March 2019
The Unique Document Identification Number (UDIN) Monitoring Group of the ICAI has released certain Frequently Asked Questions (FAQs) on ‘UDIN for Bank Audits’, which inter-alia includes:

• Whether UDIN is mandatory for Statutory Bank Audit;
• Whether UDIN is to be generated for LFAR and / or other Bank Audit Reports;
• Whether UDIN is applicable to both Statutory Central Auditors (SCAs) and Statutory Branch Auditors (SBAs) and etc.

For more information, click here.

Regulatory News

Companies (Incorporation) Third Amendment Rule, 2019 – 29 March 2019

The Central Government (CG) has substituted the Companies (Incorporation) Rules, 2014 with the Companies (Incorporation) Third Amendment Rules, 2019, wherein the following changes have been made:

• A new rule i.e. Rule 38A, ‘Application for registration of Goods and Services Tax Identification Number (GSTIN), Employees’ State Insurance Corporation (ESIC) registration and Employees’ Provident Fund Organisation (EPFO) registration’ has been inserted which states that the application for incorporation of a company under Rule 38 ‘Simplified Proforma for Incorporating Company Electronically (SPICe)’ shall be accompanied by e-Form AGILE (INC-35) containing an application for registration of the following numbers, namely:

1. GSTIN with effect from 31 March 2019;
2. EPFO with effect from 8 April 2019;
3. ESIC with effect from 15 April 2019.

• A new e - form i.e. AGILE (INC-35) has also been inserted after form INC-34.

These rules shall come into force on the date of their publication in the official gazette.
For more information, click here.
Amendments to Companies (Ind AS) Rules – 30 March 2019 

The Ministry of Corporate Affairs (MCA) in order to keep the pace with the amendments being taking place in IFRS, has issued the following Amendment Rules:

• Companies (Ind AS) Amendment Rules, 2019 , which comprises of the following changes

1. Introduction of Ind AS 116 ‘Leases’;
2. Omission of Ind AS 17 ‘Leases’;
3. Consequential Amendments in various standards including, Ind AS 101, ‘First-time Adoption of  Indian Accounting Standards’; Ind AS 103, ‘Business Combinations’; Ind AS 107, ‘Financial Instruments: Disclosures’; Ind AS 115, ‘Revenue from Contracts with Customers’; Ind AS 16, ‘Property, Plant and Equipment’; Ind AS 40, ‘Investment Property’.

• Companies (Ind AS) Second Amendment Rules, 2019 comprising of:

1. Certain other independent amendments to various Ind ASs, including Ind AS 101, ‘First-time Adoption of Indian Accounting Standards’; Ind AS 103, ‘Business Combinations’; Ind AS 109, ‘Financial Instruments’; Ind AS 12, ‘Income Taxes’; Ind AS 19, ‘Employee Benefits’; etc.

The aforesaid rules shall come into force w.e.f. 1 April 2019.

For Companies (Ind AS) Amendment Rules, 2019, click here;

For Companies (Ind AS) Second Amendment Rules, 2019, click here.
SEBI Board Meeting – 27 March 2019
 
The Securities and Exchange Board of India (SEBI) met in Mumbai and took the following key decisions, namely:

• Approval of the proposal for undertaking a public consultation process to amend the SEBI (Self, Regulatory Organizations) Regulations, 2004;
• Effective date of Regulation 23(1A) of the SEBI (LODR) Regulations, 2015, which talks about the requirement of taking shareholder’s approval in case of making payment to related party for material transactions, has been deferred to 30 June 2019 from 1 April 2019.
• Budget Estimates for the Financial Year 2019 - 2020.

For more information, click here.
Procedure and formats for limited review / audit report of the listed entity and those entities whose accounts are to be consolidated with the listed entity – 29 March 2019
 
The SEBI has issued a circular prescribing the revised procedures/formats for Limited Review/Audit Reports of Listed Entities (including those entities whose accounts are to be consolidated with the listed entity).
 
The Circular shall come into force w.e.f. 1 April 2019.
 
For more information, click here.
 
Disclosure in the "Notes to Accounts" to the Financial Statements - Divergence in the asset classification and provisioning – 1 April 2019
 
The Reserve Bank of India (RBI) has observed that some banks, on account of low or negative net profit after tax, are required to disclose divergences even where the additional provisioning assessed by RBI is small, which is contrary to the regulatory intent that only material divergences should be disclosed. Therefore, the RBI has decided that banks should disclose divergences, if either or both of the following conditions are satisfied:

• the additional provisioning for NPAs assessed by RBI exceeds 10 % (earlier 15%) of the reported profit before provisions and contingencies for the reference period, and
•  the additional Gross NPAs identified by RBI exceed 15 % of the published incremental Gross NPAs for the reference period.

For more information, click here.
Report of the Working Group for Reinsurance Reporting Formats – 28 March 2019
 
The working Group for Re-insurance Reporting Formats constituted by Insurance Regulatory and Development Authority of India has submitted its report on the Re- insurance reporting formats along with its recommendations. The report, inter-alia, includes the following:

• Chapter 1, ‘Introduction, Objectives & Methodology’;
• Chapter 2, ‘Observations of subgroups’;
• Chapter 3, ‘Recommendations’ and
• Annexures.

For more information, click here.
 

Further GST Updates

The Central Board of Indirect Taxes and Customs has issued certain updates w.r.t. Goods and Services Tax (GST) whose links are as follows:

• For more information w.r.t clarification on issues in respect of transfer of input tax credit in case of death of sole proprietor, click here;
• For more information w.r.t clarification on verification for grant of new registration, click here;
• For more information w.r.t clarification on certain refund related issues under GST, click here;
• For more information w.r.t CGST (Second Amendment) Rules, 2019, click here;
• For more information w.r.t to extension of due date for furnishing of FORM GST ITC-04 for the period July 2017 to March 2019 till 30th June 2019, click here;    
• For more information w.r.t amendment to Notification no. 2/2019 - Central Tax (rate) and Union Territory Tax (rate) so as to provide for application of Composition rules to persons opting to pay tax under notification no. 2/2019 click Update 1, Update 2;
• For more information w.r.t amendment to Notification no. 1/2017- Central Tax (Rate) /Integrated Tax (Rate) / Union Territory Tax (Rate) so as to notify GST rate of certain goods as recommended by GST Council for real estate sector Update 1, Update 2 and Update 3;
• For more information w.r.t notification of services to be taxed under Reverse Charge Mechanism (RCM) under section 9(4) of CGST Act/ 5(4) of IGST Act / 7(4) of UTGST Act as recommended by GST Council for real estate sector, Update 1, Update 2 and Update 3;
• For more information w.r.t notification of certain class of persons by exercising powers conferred under section 148 of CGST Act, 2017 click Update 1, Update 2 and Update 3;
• For more information w.r.t amendment to notification no. 13/2017 – Central Tax (Rate) /Union Territory Tax (Rate) and notification no. 10/2017 – Integrated Tax (Rate) to specify services to be taxed under RCM as recommended by GST Council for real estate sector click Update 1, Update 2 and Update 3;
• For more information w.r.t exemption of services as recommended by GST Council for real estate sector click Update 1, Update 2 and Update 3;
• For more information w.r.t notification of GST rates of various services as recommended by GST Council for real estate sector click Update 1, Update 2 and Update 3; and
• For more information w.r.t removal of difficulty in case of supply of services covered by clause (b) of paragraph 5 of Schedule II of the CGST Act, 2017 click Update 1 and Update 2.