The weekly messenger | Edition 15.18

Accounting News

ITFG Clarification Bulletin 15 – 4 April 2018

The Indian Accounting Standards (Ind AS) Transition Facilitation Group (ITFG) of Ind AS (IFRS) Implementation Committee has been constituted to provide clarification on various issues related to applicability and/or implementation of Ind AS under the Companies (Ind AS) Rules, 2015, raised by preparers, users and other stakeholders. Recently, ITFG has issued the fifteenth set of clarifications. This bulletin contains clarifications on following significant matters:

• Computation of the rate of interest at which the liability portion of the Foreign Currency Convertible Bonds (FCCB) be discounted to determine the present value of financial liability at initial recognition;
• Accounting Treatment of the non-cumulative compulsorily redeemable preference shares and dividends which are at the discretion of the company and not yet been declared;
• Clarification on whether the incentives receivable from government will fall under the definition of financial instruments under Ind AS 109;
• Applicability of Ind AS in different scenarios;
• Clarification on preparation of financial statements as per Ind AS by a listed company which is registered as Non-Banking Financial Company (NBFC) but applied for termination of its membership to the exchange;
• Clarification on applicability of requirements of Appendix C to Ind AS 103, Business combinations of entities under common control on the date of transition to Ind AS;
• Clarification on whether interest free refundable security deposits given by an entity are required to be discounted as per the principles of Ind AS;
• Recognition of income in respect of lease premium collected by the company at the time of execution of lease deed be recognised as per Ind AS;
• Accounting Treatment of outstanding retired partners’ capital balances and discounting of the same.

For more information, click here.

Regulatory News

Notification regarding amendments in the notification number S.O. 529(E) – 3 April 2018

The Central Government (CG) vide its notification no. S.O. 529(E), dated 5th February 2018 had given exemption to certain specified class of Government Companies under section 129(6) of Companies Act, 2013 from the application of AS-22/Ind AS-12 relating to deferred tax asset (DTA)/ deferred tax liability (DTL) for seven years with effect from the 1st April, 2017. Now, the CG has amended the aforesaid notification wherein the CG has deleted the words ‘seven years’ as per which now such specified class of government companies would be exempt from application of AS-22/Ind AS-12 relating to DTA/ DTL forever w.e.f. 1st April, 2017.

For more information, click here.

Report of the Insolvency Law committee – 3 April 2018

The Insolvency Law Committee set up on 16 November 2017 has recently issued a report in order to make recommendations to the Government on issues arising from the implementation of the Insolvency and Bankruptcy Code, 2016 as well as on the recommendations received from various stakeholders.

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Constitution of Steering Committee on CSR to review the functioning of CSR enforcement & to recommend a uniform approach for its enforcement – 4 April 2018

The Ministry of Corporate Affairs has constituted the Steering Committee on Corporate Social Responsibility (CSR) in order to review the functioning of the CSR enforcement and to recommend a uniform approach for its enforcement. The functions of the CSR Committee will include the following:

• To revisit schedule VII of the Companies Act, 2013 on the basis of references received from various stakeholders;
• To revisit the guidelines for enforcement of CSR provisions and basis including structure of Centralised Scrutiny and Prosecution Mechanism;
• To examine the role and function of National Foundation for CSR (NFCSR) under Indian Institute of Corporate Affairs (IICA) etc.

The Steering Committee has been also asked to finalise and submit their report within 60 days to the Ministry from the date of its constitution.

For more information, click here.

Process to be followed for registration as Registered Valuer with IBBI of India under the Companies (Registered Valuers and Valuation) Rules, 2017 – 5 April 2018

The Insolvency and Bankruptcy Board of India (IBBI) has released the process for the registration of the valuers as a registered valuer with the IBBI. This process has been prescribed for both individuals and for entities i.e. partnership firms, LLP and companies.

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Monitoring of Foreign investment limits in listed Indian companies – 5 April 2018

The Foreign Exchange Management Act (FEMA) regulates the foreign investment in India wherein it prescribes various foreign investment limits. As per FEMA, the onus to comply with the various foreign investment limits rests on the Indian company. In order to ensure compliance of the listed Indian companies with the various foreign investment limits, the Securities and Exchange Board of India in consultation with the Reserve Bank of India (RBI) has decided to put in place a new system for monitoring the foreign investment limits.
This new system for monitoring foreign investment limits in listed Indian companies shall be made operational w.e.f. 1 May 2018 and the existing mechanism for monitoring the foreign investment limits shall be done away with.

For more information, click here.

Prudential Norms for Classification, Valuation and Operation of Investment Portfolio by Banks – Spreading of MTM losses and creation of IFR – 2 April 2018

The RBI has issued the Prudential Norms for Classification, Valuation and Operation of Investment Portfolio by Banks – Spreading of Mark to Market (MTM) losses and creation of Investment Fluctuation Reserve (IFR) wherein the RBI in order to address the systemic impact of sharp increase in the yields on Government Securities has decided to grant banks the option to spread provisioning for MTM losses on investments held in Available for Sale (AFS) and Held for Trading (HFT) for the quarters ended December 31, 2017 and March 31, 2018.

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Deferment of Ind AS implementation for Banks by one year – 5 April 2018

The RBI vide its press release dated 5 April 2018 has issued a ‘Statement on Development and Regulatory Policies’ wherein it has set out various developmental and regulatory policy measures in order to strengthen the regulation and supervision; broadening and deepening financial markets; improving currency management; promoting financial inclusion and literacy; and facilitating data management. One of the major development which has been made by the RBI through the medium of this Statement is the ‘Deferment of Ind AS’ wherein the RBI has deferred the implementation of the Ind AS for Scheduled Commercial Banks (excluding Regional Rural Banks (RRBs)) by one year i.e. now such banks would be required to implement the same w.e.f. 1 April 2019 with comparatives for the periods ending 31 March 2019.

For more information, click here.

Further GST Updates

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

• For information w.r.t. Smooth roll out of e-way Bill system from 1st April, 2018, click here;
• For information w.r.t. E-way Bill in Union Territory of Andaman and Nicobar Islands, click here;
• For information w.r.t. e-way Bill in Union Territory of Chandigarh, click here;
• For information w.r.t. e-way Bill in Union Territory of Dadra and Nagar Haveli, click here;
• For information w.r.t. e-way Bill in Union Territory of Daman and Diu, click here;
• For information w.r.t. e-way Bill in Union Territory of Lakshadweep, click here;
• For information w.r.t. setting up of an IT Grievance Redressal Mechanism to address the grievances of taxpayers due to technical glitches on GST Portal-reg., click here;
• For information w.r.t. IT grievance redressal mechanism, click here;
• For information w.r.t. Uniform rate of GST to apply in all railway catering services in trains or on stations, click here; and
• For Clarification w.r.t. issues related to furnishing of Bond/Letter of Undertaking for exports – Reg., click here.