The weekly messenger | Edition 30.17

Accounting News

ITFG Clarification Bulletin 11 - 1 August 2017

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 eleventh set of clarifications. This bulletin contains clarifications on following significant matters:  

• Consideration of ESOP Reserve while computing net worth of a company to assess applicability of Ind AS on the company;
• Treatment of deferred tax in case of tax holidays under section 80-IA and 80-IB of the Income Tax Act, 1961 under Ind AS regime;
• Presentation of Earning Per Share in case of a subsidiary company;
• Measurement of investment in case of subsidiary which has opted for deemed cost exemption as per para D15 of Ind AS 101;
• Treatment of grant in the nature of exemption of custom duty on capital goods with certain conditions related to export of goods under Export Promotion Capital Goods (EPCG) scheme under Ind AS 20 ;
• Method of computing the depreciation of Property, Plant and Equipment (PPE) in the consolidated financial statements if the parent and the subsidiary are using different methods of depreciation in their standalone financial statements;
• Applicability of Ind AS on partnership firm constituted by two companies whereby one of the company is a Ind AS compliant companies;
• Capitalisation of expenditure incurred on certain items of PPE which it has constructed for the purpose of facilitating the construction of the refinery and its operations;
• Disclosure of sitting fees paid to independent director and Non-executive director in the financial statements as per Ind AS. 

For more information, click here 

Regulatory News

Disclosures by listed entities of defaults on payment of interest/repayment of principal amount on loans from banks/financial institutions, debt securities, etc. – 4 August 2017

Currently, the Securities Exchange Board of India (SEBI) (Listing Obligations and Disclosure Requirements (LODR)) Regulations, 2015 require specific disclosure w.r.t. delay/default in payment of interest/principal on debt securities, including listed Non-Convertible Debentures, listed Non-Convertible Redeemable Preference Shares, Foreign Currency Convertible Bonds (FCCBs) etc. However, similar disclosures are not stipulated for loans from banks and financial institutions.
 
Therefore, SEBI, considering the fact that corporates in India are primarily dependent on loans from the banking sector and many banks are presently under considerable stress on account of large loans to the corporate sector turning into stressed assets and non-performing assets (NPAs), has issued a circular wherein it has directed the listed companies to disclose the defaults on loan repayments within one working day from the date of default at the first instance of default in a specified format.
 
This circular shall come into effect with effect from 1 October 2017.
 
For more information, click here 

Clarification regarding IRDAI (Other Forms of Capital) Regulations, 2015- 4 August 2017

Certain insurers who have issued debentures in order to raise capital pursuant to the Insurance Regulatory and Development Authority of India (IRDAI) (Other Forms of Capital) Regulations, 2015 have approached IRDAI to seek clarification on whether they are required to create Debenture Redemption Reserve (DRR) as envisaged in Section 71 of the Companies Act, 2013. 
In this regard the IRDAI has advised that: 

• Such insurers shall create a DRR in terms of the Companies Act, 2013 and Rules made thereunder as per which a DRR of 25% of the value of outstanding debentures shall be adequate.
• However, the DRR shall be ignored and not considered as a liability for the purpose of computation of solvency margin and ratio. 

For more information, click here 

Further GST Updates

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

• For reduction/exemption of tax rates under GST for small businesses, click here;
• For government sets up two call centers to cater the queries relating to GST, click here;
• For constitution of Sectoral groups on GST, click here;

For recommendation of GST Council to increase in Maximum Ceiling of Cess Leviable on Motor Vehicles, click here

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