A big announcement for MNREGA

Goyal announced to allocate ₹60,000 crore for MNREGA in the year 2019-20. He also announced 143 million LED bulbs to provide illumination to all houses and save electricity. Mr. Goyal promises to provide a home to all by 2022.

Farmers will be given 6,000 rupees in their accounts.

The Finance Minister announced in parliament a direct support ₹6,000 per hectare in farmer’s bank accounts directly. Prior to the election, ₹2,000 will be given as the first installment. This money will go into the accounts who own up to 2 hectares of land. This will benefit the families of 12 crore farmers. The scheme, which will be applicable from 01st December 2018 and will cost about ₹75,000 crore to our government. Also, interest on the loans given for animal husbandry and fishery care will be given 2% discount.

₹750 crore will be spent on Kamdhenu Scheme

The finance minister said during the presentation that our government always works for Gaw Sewa. ₹750 crore will be spent on Kamdhenu scheme.

Gratuity limit has been increased from ₹10 lakh to ₹30 lakh

Goyal announced “Gratuity limit has been increased from ₹10 lakh to ₹30 lakh. Prime Minister Shram Yogi Mudan (Mega Pension Scheme) has been started to give pension to people in the unorganized sector, contributing only 100 rupees per month. After giving the work, workers will get a pension of ₹3,000 after the age of 60. This will benefit 10 million workers in the unorganized sector. India will become the largest pension plan in the world of the unorganized sector”.

Estimates of the fiscal deficit this year will be 3.4 percent of GDP

The fiscal deficit in the current financial year 2018-19 will be 3.4% of the GDP. The current account deficit will be around two and a half percent of GDP this year. The last five years the country has received FDI worth $239 Billion.

Tax assessment processes will be modified

The Finance Minister said today “Do not go to offices for tax assessment now. IT returns will be processed in 24 hours.
If any notice comes manually to the assessee, he can write to department & officials to ask the information only through online mode which will result in the big opportunity for CAs to save time and manpower.
Within almost two years, almost all assessment and verification of IT returns will be done electronically by an anonymized tax system without any intervention by tax officials.

Income Tax free up to ₹5 lakh

The limit of income tax exemption has been increased from ₹2.5 lakh to ₹5 lakh. Now tax will not be levied to the income of five lakh rupees. No tax will be required to invest ₹1.5 lakh the in the provident fund or equity. If so, if a person’s income is ₹6.5 lakh and he invests ₹1.5 lakh rupees then he will not have to pay any kind of tax. Assessee must be clear that Income Slab has not changed. Rebate under section 87A has only been changed from ₹2,500/- to ₹12,500/-.
Simultaneously, standard deduction has been increased from ₹40,000 to ₹50,000 for salaried class people.

TDS limit on interest income increased to ₹40,000

Interim Finance Minister Piyush Goyal on Friday announced to increase the tax deduction limit on the income from interest of ₹10,000 to ₹40,000 per year. In case of senior citizens, the limit has been increased to ₹50,000. Presenting the Budget 2019-20 in the Lok Sabha, he said it will benefit the senior people and the small depositors who depend on the interests of deposits of banks and post offices. So, these depositors could demand a refund of tax deducted at interest income up to ₹10,000 per year.

Few more points to be highlighted from the Budget 2019

● There will be a single window for approval for Indian filmmakers. Anti-camcording provision to be introduced to the Cinematography Act to combat film privacy.

● The vision for 5 lakh digital villages in next 5 years.

● More than ₹3 lakh crore has been announced for the defense sector.

● Those MSMEs who are registered with GST will get 2% interest relief.

● 26 weeks of maternity leave to empower women has been granted in this budget.

● Goyal said our government has delivered 6 crores free LPG connections under Ujjwala Scheme.

● PCA restriction has abolished from 3 major banks namely, BoI, BoM and OBC.

● 22nd AIIMS has to built-in Goyal’s home state Haryana.

● GST has been continuously reduced, resulting in relief of ₹80,000 crores to consumers; most items of daily use for the poor and middle class are now in the 0%-5% tax bracket.

● Benefits under Sec 80(i)BA being extended for one more year, for all housing projects approved till the end of 2019-2020.

● Businesses with less than ₹5 crore annual turnover, comprising over 90% of GST payers, will be allowed to return quarterly returns.

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You should be clear from the very beginning, about your plans for which all subjects you want to take classes and which all subjects you are doing with self-studies.

Proper planning and a good routine will help you to overcome these problems.

If you are doing graduation from regular college, then, in that case, it is advisable to give one group at a time according to your preparation.

All The Best

Work Hard and Stay Motivated

(And always remember that there is NO SUBSTITUTE FOR HARD WORK)

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There was a very cautious man

Who never laughed or played

He never risked, he never tried,

He never sang or prayed.

And when he one day passed away,

His insurance was denied,

For since he never really lived,

They claimed he never really died.

Okay, to begin with, I have to say the poem is nothing to do with what we will be talking about, this was just enough to break the ice.

Robert Shiller stated, Portfolio Management is an alternative to Insurance.

The basic idea about insurance or getting insured to minimize the losses incurred in case of happening of an uncertain event.

A portfolio is pretty much the same idea, it is the diversification of ownership. It’s an idea of managing risk not through purchasing of insurance policy, but through diversification (owning a variety of asset).

A risk is inherent in investing, thus we diversify the investment by buying different assets and not putting “all our eggs in one basket”. I guess you have heard a lot of times about that phrase, but I like the history of thought, so I tried to find out when was this phrase used at the earliest, the best I could find that it itself was used by Alexander Crump in 1874, in his book on how to invest, where he wrote, “It is an old saying that is unwise to put all your eggs in one basket”.

A later insight –

If all people are like me, thinking the same thing and trying to hold the same kind of portfolio, then still why is it different from one person to another? The core insight of the theory is, you know what, even if I calculate the optimal portfolio, the best-diversified portfolio, then how is it different from others?

Well, you could be different from others because you might be more risk-averse than others. You might have a greater or lesser risk tolerance. But that tolerance to risk could be adjusted by leveraging your portfolio up and down.

I have a rather interesting explanation for leverage though! So a lever is something used to move things, and leverage is how you move people. Imagine, if  I was in need of money, and then I go to a bank for a loan, then the bank will have leverage over me and the will charge me with high-interest rates. Similarly, before 2010 when there was no Obamacare policy in the US, only people who were sick or who knew they were going to be sick, bought health insurance and thus the insurers had leverage over them and they charged high rates. Same is with your portfolio, you get leverage over the risk. If you are a rational economic person, you will have portfolio management so that you don’t have to worry about a stock going down, it’s the total that matters to you.

Conclusively, if we compare portfolio management and insurance it’s basically the same idea to minimize the risk. Investors do it by diversification, and insurance companies do it with what they call as risk-pooling, where insurance companies come together to form a pool, which can provide protection to insurance companies against catastrophic risks such as floods or earthquakes.

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~BENJAMIN GRAHAM~

New development such as the rapid development of conglomerate companies, franchise operations, and other relative novelties in business and finance, which include a number of tricky devices such as the letter stock, proliferation of stock-option warrants, misleading names, use of foreign banks, and others have been there since the 1960s.

Our recent reading what brought this upon was the enigma of why the US Securities and Exchange Commission (SEC) brought down a private transaction and is now no longer of concern to the investors. Quite engrossing isn’t it?

“Letter Stock” is a stock not registered for sale with the Securities and Exchange Commission for which the buyer supplies a letter stating the purchase was for investment. But this isn’t the same now. As said earlier it is now no longer of concern to investors. So as of now “Letter Stock” is known as ‘Restricted Stock’ or ‘Section 1244 Stock’. Restricted stock is used as a form of employee compensation, in which case it typically becomes transferrable (“vests”) upon the satisfaction of certain conditions, such as continued employment for a period of time or the achievement of particular product-development milestones, earning per share goals or other financial targets. It typically becomes available for sale under a graded vesting schedule that lasts several years.

These are unregistered shares of ownership in a corporation that are issued to corporate affiliates, such as executives and directors. Restricted stock is non-transferable and must be traded in compliance with special Securities and Exchange Commission (SEC) regulations.

Restricted stock became more popular in the mid-2000s as companies were required to expense stock option grants. Insiders are given restricted stock after merger and acquisition activity, underwriting activity, and affiliate ownership in order to prevent premature selling that might adversely affect the company. An executive may have to forfeit restricted stock if he leaves the company, fails to meet corporate or personal performance goals, or runs afoul of SEC trading restrictions. The SEC regulations that govern the trading of restricted stock are outlined under SEC Rule 144, which describes the registration and public trading of restricted stock and the limits on holding periods and volume.

But this information can be availed from anywhere, why are we reading this?

During the mid- 1960s, the mutual funds bought the “Letter Stock” in a private transaction, then immediately revalued these shares at a higher price. This enabled these “go-go” funds to report unsustainably high returns in the mid-1960s. The U.S. Securities and Exchange Commission cracked down on this abuse in 1969 and brought upon some regulations and restrictions making it no longer a concern for fund investors.

Let us understand the enigma how these privately placed shares were giving such unsustainably higher returns.

Earlier, In case of letter stocks, the companies had the sole discretion in the method adopted for valuing the shares. Therefore, in order to inflate return the companies used to value their shares at a price substantially lower than the market value of the share. For e.g. a company declares dividend of INR100,000 and the market price of share is 1,000 then Return on Investment will be 100% , However in case of letter stock where the valuation is done by the company, and the shares are valued at INR500, then Return on Investment takes a stride to reach 200%, indicating erroneously high return by the company. The agenda behind this false defalcation has been only lure investors to infuse capital, for their future ventures.

Following is the one of the prominent cases arose during that period:

In June 1969, the Commission established an administrative proceeding against Frederic S. Mates (“Mates”), Mates Financial Services, Among other matters, it was alleged that, contrary to representations to Fund shareholders, Mates caused the Fund (a) to possess a considerable amounts of restricted securities, (b) to impede its shareholders’ right to redemption, and (c) to obtain from banks loans of more than $7 million secured by a lien on the Fund’s entire portfolio.

It was further alleged that Mates inflated the restricted securities and defalcated Fund of shareholders and clients, as well as prospective clients of Mates Financial Services subsequently, leads to an increase in the net asset value per share.

Security Exchange Commission came into notice of this fact and in order to curb this scenario of false returns, the Commission made a conscious effort of studying the valuation of restricted securities by investment companies, giving attention also to the correlated problems of liquidity and restraint of investment judgment which may arise when open-end companies acquire restricted securities. Consequent to the end of the fiscal year, the Commission issued a statement setting onward its views regarding the issues integral in the acquisition of restricted securities by investment companies.

Henceforth, we can settle with the fact that even in the financial history of the world there have been instances to deceive investors, but in one or other way, whether it is SEBI/RBI/NCLAT in India or the SEC in the US, find its way to fill up the breaks, in order to strengthen the pillar and  at times, warrant the financial security of the depositors.

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Source:

 https://www.sec.gov/about/annual_report/1969.pdf

Investopedia

The Intelligent Investor – Benjamin Graham

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3. No Negative Marking

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• The act came into force on the First day of September 1872
• It applies to the whole of India except the state of Jammu and Kashmir.
• It’s 1^st Article on Indian contract act and here we are going to learn about NATURE OF CONTRACTS

[I] Agreement {SEC 2(E) } : OFFER / PROPOSAL + ACCEPTANCE

Example: Mr. A told to Mr. B will you sell your house for Rs. 10 lakhs, This is an offer.

If Mr. B says YES to Mr. A, Then this is acceptance and combinedly they form AGREEMENT.

Every promise or set of promise forming consideration to each other is called an agreement .

NOTE: It may be expressed (writing or oral) or implied.

[II] Contract {SEC (H) } : Accepted Proposal + Enforceability by law

NOTE: Enforceable by law = If one party denies performing his promise, the other party may file suit in the court and court will force him not to deny.

It comes from intention of party to create legal obligation

“ Every contract is an agreement but every agreement is not a contract”

ESSENTIAL ELEMENTS OF A VALID CONTRACT

1. I. Proper offer and proper acceptance to create legal obligation
2. II. Lawful consideration and lawful object: Consideration is Quid pro quo ( I.e Something in return ). It may be cash or something of the kind.

3. III. Capacity to contract: Following person doesn’t have the capacity to contract (a) Minor (b) Unsound mind ( c) Person expressly disqualified.
4. IV. Free consent of parties: There must be consensus-ad-idem (same sense, same time). Free consent missing means it may be the case of coercion, undue influence, fraud or misrepresentation.
5. V. The agreement should not be declared void by law.
6. VI. The meaning of agreement must be certain.
7. VII. There must be possibility of work
8. VIII. Must complete necessary formalities – Writing, attestation, registration otherwise unenforceable.

TYPES OF CONTRACTS

[I] On the basis of validity

{a} Valid contract

{b} Void contract

{c} Voidable contract

{d} Illegal contract

{e} Unenforceable contract

[II] On the basis of formation

{a} Express contract

{b} Implied Contract

{c} Quasi contract

{d} Tacit contract

[III] On the basis of performance

{a} Executed contract

{b} Executory Contract

{c} Unilateral contract

{d} Bilateral contract

 ON THE BASIS OF VALIDITY

[1] Valid contract: An agreement which is binding and enforceable, which contains all essential elements of valid contract

[2] Void contract: A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable

[3] Voidable contract: An agreement which is enforceable at the option of one party but not at the option of the other party. Such contract is affected due to coercion, undue influence, fraud or misrepresentation.

[4] Illegal contract: An agreement for an act which is either forbidden by law or punishable

Note: Collateral contract with the illegal contract also becomes void.

[5] Unenforceable contract: A contract is good in substance but becomes unenforceable in court ‘due to some technical hitch.

ON THE BASIS OF FORMATION

[1] Express contract: A contract which is made either in written or oral form.

[2] Tacit contract: By conduct offer and acceptance is made

Example: auction sale – fall of a hammer

[3] Implied contract: When party do not contract to each other, but due to the operation of law they have to perform

NOTE: Here parties don’t have any intention to create a contract.

[4] Quasi contract: Not an actual contract but it resembles to be a contract {will explain about it in the last unit of contract act }

ON THE BASIS OF PERFORMANCE

[1] Executed contract: When both the party has given these considerations it becomes executed contract

Act already performed

Example: Mr A supplied sugar to Mr B and Mr B paid 1000 to Mr A this is an executed contract.

[2] Executory contract: Contract yet to be performed also known as a bilateral contract.

Example: Mr A will supply sugar to Mr B in next month and Mr B will pay for that after 15 days it is a bilateral contract

[3] Unilateral contract: Only one party has yet to perform.

FORMAL CONTRACTS

• * Not applicable in India.
• * Applicable in U.K

[a] Contract of record: due to the order of court parties has to perform.

[b] Contract of seal: Due to an agreement in writing, sealed and delivered, also known as a deed or specially contracted.

OFFER

• * Also known as proposal
• * When one person signifies to another his willingness to do or to abstain from doing something with a view to obtaining the assent of other, it is said to be Proposal.
• * Offer may be a positive act or negative act.

NOTE: The person who is making the offer is called ‘offeror’ OR ‘promisor’

The person who is accepting is called ‘offeree’ OR ‘promisee’.

CLASSIFICATION OF OFFER

• * GENERAL OFFER: Anyone can accept from public

The offeree is not definite.

• * SPECIAL OFFER: Offer to a definite person or can be accepted only by the person to whom it is made.
• * CROSS OFFER: the Second offer on same term or identical offer is made in ignorance

Example: Mr A made an offer to sell his house for Rs. 1 lakh and after some days Mr B asked Mr A will you sell your house for Rs. 1 lakh

• * COUNTER OFFER: Second offer made on changed terms.

Example: If in above example Mr A replied will you purchase my house for Rs. 2 lakhs.

Now terms are changed this is known as the counter offer.

• * STANDING / OPEN / CONTINUING OFFER: When an offer remains open for acceptance over a period of time or up to happening of some event.

RULES REGARDING VALID OFFER

[1]Capable to create a legal obligation.

[2]Certain and not vague

[3]Express or implied

[4]Specific or general.

[5]Offer must be communicated.

[6]Made with the view to obtain the consent of offeree.

[7] Conditional

[8]Offer should not contain a term the non-compliance of which would amount to acceptance

[9]Offer and invitation to offer -> Anyadvertisementt to attract customer is not an offer it is only an invitation to offer

Note: An offer may lapse by

[a] notice of revocation

[b] lapse of time

[c] death or insanity

[d]non-fulfilment of the condition.

[e]counter offer.

ACCEPTANCE

When the person to whom the proposal is made signifies his assent thereto the proposal is said to be accepted When a proposal is accepted it becomes a promise.

Rules regarding valid acceptance

• Acceptance must be absolute and unconditional.
• Must be communicated to offer.
• Acceptance must be in the mode prescribed. {if no mode is prescribed it can be given in any mode}
• Must be at the reasonable time. {Reasonable time is prescribed as per circumstances}
• Mere silence is not acceptance.

[A] COMMUNICATION OF OFFER: It completes when it comes to the knowledge of offeree.

[B] COMMUNICATION OF ACCEPTANCE: When it is put in course of transmission in such a way so that it cannot be withdrawn.

[C] REVOCATION OF OFFER: An offer may be revoked before completion of communication of acceptance

[D] REVOCATION OF ACCEPTANCE: An acceptance may be revoked before completion of communication of acceptance.

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These type of headlines were there in almost all main newspapers of India, on the occasion of valentine day. What was the fraud? What is this LOU, SWIFT, and Buyers’ credit? And who is Nirav Modi? Read further to get the answers, and to understand the modus operandi of the fraud.

Nirav Modi is one of the richest Indians, a jewel businessman. He has opened stores on the prime locations such as the Old Bond Street in London, Hong Kong, and Macau.  Nirav Modi store in New York shares space with legendary brands such as Chanel, Hermes, Prada, and Gucci. The brand ambassadors include some eminent personality such as Kangana Ranaut, Priyanka Chopra.

Let’s understand LOU first.

Letter of Undertaking is a bank guarantee and is issued for overseas import payments. A bank, while issuing LoUs for a client (here Nirav Modi), agrees to repay the principal and interest on the client’s loan unconditionally. When an LOU is issued, it involves an issuing bank, a receiving bank, an importer and a beneficiary entity overseas. According to norms, the term of an LOU is 180 day and can be rolled over once for six months. Since LoUs are a form of lending, they are typically backed by security.

It began with diamond firms of Nirav Modi ( Diamonds R US, Solar Exports, and Stellar Diamonds) approaching PNB for seeking LoU for import of rough stones. It is a promise that PNB gives to foreign lender saying that it’s a good borrower if it defaults we’ll pay you back.

Once they receive the LoU the foreign bank approves buyers’ credit. Buyer credit is a short-term credit available to an importer (buyer) from overseas lenders such as banks and other financial institution for goods they are importing, rough diamonds in this case. Buyer’s credit helps local importers gain access to cheaper foreign funds as against local sources of funding which are more costly.

Through the buyers’ credit amount gets credited to PNBs nostro account (an account that a bank holds in a foreign currency in another bank). The money doesn’t reach to any of these borrowers, it remains in nostro account and eventually gets paid to the supplier.

The fraud is that when they received these LoUs they didn’t have required documents or sanction of credit. The company did not have any sanction limit from the bank neither any kind of deposit or long-term relationship with the bank which is required to sanction LoU.

But then how did the LoUs get sanctioned?

An internal probe by the bank then found that a few of its employees had fraudulently issued LoUs for Hong Kong branches of two Indian banks for and on behalf of Modi’s firms.

In January, when a couple of LoUs matured but the banks did not receive their payments, they approached PNB for repayment of the loans. Also, one fraudulent LoU was issued on January 16, 2018, for and on behalf of Modi’s firms, which allegedly presented a set of import documents to the branch, with a request to allow buyers’ credit for making payments to suppliers overseas. When bank officials requested the firms to furnish 100% cash margin for the LoU, the firms argued that they had availed this facility in the past as well, without paying any cash margin.

However, branch records did not have the details of any such facility having been granted to the firms. Why?

This was because these transactions were never recorded in the PNB’s Core Banking Services (CBS) software (the finnacle software used by banks).

When an LoU is issued, the message of credit transfer is conveyed to overseas banks through the Society for Worldwide Interbank Financial Telecommunication (SWIFT) system. This is a significant information as it gives the bank’s consent and guarantees. To issue SWIFT, an official has to log in and fill up confidential information such as the account number and SWIFT code. It generally has three layers of security – a maker, a checker and a verifier within the core banking system before it is issued.

The alleged bank employees, somehow, bypassed the CBS and transmitted the transaction through SWIFT. The transactions were initially routed through the CBS system but subsequently, changes were made in the LoUs by substantially increasing the amount and transmitted through SWIFT without reporting this to CBS.

According to PNB’s complaint to CBI, the LoUs were issued for the Hong Kong branches of Allahabad Bank and Axis Bank which have given money to the beneficiary entity on behalf of Modi’s firms. As a result, PNB will have to settle the LoUs with these branches according to the norms of the Hong Kong Monetary Authority.

The PNB is going to suffer from a very big loss, both in monetary and non-monetary terms. The market sentiments are already down. The PNB stock fell 9.81% on Wednesday to close at Rs 145.80 per share, and investors lost over Rs 3,000 crore in a single day.

The bank may have to set aside higher provisioning in the next few quarters if it unable to recover the money from the accused firms. Also, RBI has ordered the bank to pay for the deeds committed by its employees; to settle the transactions with other banks whose loans are maturing.

The post What Is PNB Scam? appeared first on Kailasha Foundation.

image source – pib

Mr. Arun Jaitley, Finance Minister presented the budget for the financial year 2018-19 in Parliament on 01^st February, 2018 which was to strengthen various sectors like agriculture, MSME, health and education. He further added a series of structural reforms which will push India forward among the fastest growing economies of the world. Country firmly on course to achieve over 8 % growth as manufacturing, services and exports back on good growth path.

Agriculture and Rural Economy

• Government proposed to raise volume of Institutional Farm Credit for agriculture sector to Rs.11 lakh crore for the year 2018-19 from 8.5 lakh crore in 2014-15.
• MSP for all unannounced kharif crops will be atleast one and half times of their production cost.
• Two New Funds with a total corpus of 10,000 crore announced for Fisheries and Animal Husbandary Sectors under the name of Fisheries and Aqua culture Infrastructure Development Fund (FAIDF) sector and an Animal Husbandry Infrastructure Development Fund (AHIDF).
• “Operation Green” (a new scheme) launched to address price fluctuations in potato, tomato and onion for benefit of farmers and consumers with a corpus of 500 crore.
• Proposition for developing existing 22,000 rural haats into Gramin Agricultural Markets (GrAMs) to protect the interests of 86% small and marginal farmers.
• Re-structured National Bamboo Mission (termed Bamboo as “Green Gold”) gets 1290 crore.
• Proposition has been made to extend the facility of Kisan Credit Cards to fisheries and animal husbandry farmers to help them meet their working capital needs.

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Air Transport

              hawaai chappal wale bhi hawa mein udenge..

image source – pib

• Proposition has been made to expand the airport capacity more than 5 times to handle a billion trips a year under a new initiative – NABH Nirman.
• Under the Regional connectivity scheme of UDAN (Ude Desh ka Aam Nagrik) initiated by the Government last year, 56 unserved airports and 31 unserved helipads would be connected.

Digital Economy

• NITI Aayog will initiate a national program to direct efforts in artificial intelligence.
• Department of Science & Technology will launch a Mission on Cyber Physical Systems to support establishment of centres of excellence for research, training and skilling in robotics, digital manufacturing, big data analysis, quantum communication and internet of things.

image source – pib

Defence

• Proposition has been made to develop two defence industrial production corridors recognizing the sacrifices made by the Armed Forces.

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Disinvestment

• The Finance Minister announced disinvestment target of 80,000 crore for 2018-19.
• 3 Public Sector Insurance companies- National Insurance Co. Ltd., United India Assurance Co. Ltd., and Oriental India insurance Co. Ltd., will be merged into a single insurance entity which will boost the insurance sector.
• Proposition to revise emoluments to 5 lakh, Rs. 4 lakh and Rs. 3.5 lakh per month for the President, the Vice President and to Governor respectively. These emoluments were last revised in 2006.

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Education, Health and Social Protection

• Estimated budgetary expenditure on health, education and social protection for 2018-19 is Rs.1.38 lakh crore against estimated expenditure of Rs.1.22 lakh crore in 2017-18.
• Tribal students to get Ekalavya Model Residential School with Navodaya Vidyalayas to provide the best quality education with special facilities for preserving local art and culture in each tribal block by 2022. Welfare fund for SCs gets a boost.
• Government would launch the Prime Minister’s Research Fellows (PMRF) scheme this year which would help 1,000 best B.Tech Students to avail the facilities to do Ph.D in IITs and IISc, with a handsome fellowship.
• World’s largest Health Protection Scheme covering over 10 crore poor and vulnerable families launched with a family limit upto 5 lakh rupees for secondary and tertiary treatment.

image source – pib

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Employment Generation

• Government will contribute 12% of the wages of the new employees in the EPF for all the sectors for next 3 years.
• Proposition to make amendments in the Employees Provident Fund and Miscellaneous Provisions Act, 1952 to reduce women employees’ contribution to 8% for first 3 years of their employment against existing rate of 12% or 10% with no change in employers’ contribution.
• To create more employment, deduction of 30% on emoluments paid to new employees under Section 80-JJAA to be relaxed to 150 days for footwear and leather industry.

Fiscal Management & Taxation

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• Fiscal Deficit of 3% of GDP for the year 2018-19 has been projected.
• Proposition to provide 100% deduction to companies registered as Farmer Producer Companies with an annual turnover upto 100 crore on profit derived from such activities, for a period of 5 years from financial year 2018-19 which will promote post harvest agriculture activities and also encourage “Operation Greens” announced earlier and would give a boost to the Sampada Yojana.
• Turning to the real estate sector, the Finance Minister has proposed that no adjustment shall be made in respect of transactions in immovable property, where the Circle Rate value does not exceed 5% of the consideration. This would minimize hardship in real estate transactions.
• No changes in Tax Rate of all persons except Companies.
• Education Cess is being increased from 3% to 4% to be known as Education and Health Cess.
• Long Term Capital Gain exemption allowed previously under section 10 (38) in respect of listed STT paid shares being withdrawn. However, capital gain upto 31^st January, 2018 shall not be taxed as cost of acquisition will be taken as Fair Market Value as on 31^st January, 2018.
• Tax on STT paidLong Term Capital Gain will be 10% under section 112A. Further such tax will be liable for TDS.
• Standard Deduction of Rs 40,000 for salaried employees. However, benefit of transport allowance of Rs 19,200 and Medical Reimbursement of Rs 15,000 under Section 17(2) are being withdrawn resulting into net benefit to salaried class only Rs 5,800.
• Provision of Section 43CA, 50C and 56(2)(x) being amended to allow 5% of sale consideration in variation vis a vis stamp duty value on account of location, disadvantage etc.
• Provision of section 40(ia), 40A(3) and 40A(3A) are being made applicable to Charitable Trust.
• Agriculture Commodity Derivates income /loss also not to be considered as speculative under section 43(5).
• Income Computation and Disclosure Standards(ICDS) being given statutory backing in view of decision of Delhi High Court decision. Marked to market loss computed as per ICDS to be allowed under section 36. Gain or loss in Foreign Exchange as per ICDS to be allowed under new section 43AA.
• Construction Contract income to be computed on percentage completion method as per ICDS.
• Valuation of Inventory including Securities to be as per ICDS.
• Conversion of stock in trade to capital asset to be charged as business income in the year of conversion on Fair Market value on the date of conversion.
• 54EC benefit of investment in Bonds to be restricted to Capital gain on land and building only. Further period of holding being increased from 3 years to 5 years.
• PAN to be obtained by all entities including HUF other than individuals in case aggregate of financial transaction in a year is Rs 2,50,000 or more. All directors, partners, members of such entities also to obtain PAN.
• All companies irrespective of income need to file income tax return and in case it is not filed, such companies will be liable for prosecution irrespective of the fact whether it has tax liability of Rs 3,000 or not.
• Assessments to be E-assessed under new section 143(3A). No adjustment under section 143(1) while processing on account of mismatch with 26AS and 16A.
• Deemed dividend to be taxed in the hands of the company itself as Dividend Distribution of tax @ 30%.
• Penalty for non filing financial return as required under section 285BA being increased to Rs 500 per day.

Relief to Senior Citizens has also been proposed. The proposals are :-

• Increase in deduction limit for medical expenditure for certain critical illness from 60,000 (in case of senior citizens) and from Rs. 80,000 (in case of very senior citizens) to Rs. 1 lakh for all senior citizens under section 80DDB.
• Hike in deduction limit for health insurance premium and/ or medical expenditure from 30,000 to Rs. 50,000 under section 80D.
• Exemption of interest income under section 80TTA on deposits with banks and post offices are proposed to be increased from 10,000 to Rs. 50,000. TDS shall not be required to be deducted under section 194A. Benefit will also be available for interest from all fixed deposit schemes and recurring deposit schemes.
• Concessions will give extra tax benefit of 4,000 crore to senior citizen. It is also proposed to extend the Pradhan Mantri Vaya Vandana Yojana up to March, 2020. The current investment limit is also proposed to be increased to Rs. 15 lakh from the existing limit of Rs. 7.5 lakh per senior citizen.

Medium, Small and Micro Enterprises (MSMEs) and Employment

• A corpus fund of 3794 crore has been provided for giving credit support, capital and interest subsidy and for innovations.
• Proposition of 3 lakh crore for lending under MUDRA Yojana for 2018-19 after having successfully exceeded the targets in all previous years. MUDRA Yojana launched in April, 2015 has led to sanction of Rs.4.6 lakh crore in credit from 10.38 crore MUDRA loans. 76% of loan accounts are of women and more than 50% belong to SCs, STs and OBCs.

image source – pib

Sources:

• PIB
• FM’s Budget Speech

<<<Check out last year’s Budget analysis here>>>

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The post UNION BUDGET 2018-19: RURAL, FARMERS & SENIOR CITIZENS appeared first on Kailasha Foundation.

The 25th GST Council Meeting was held at New Delhi on the 18th of January 2018. There was a higher rate, complexities & various other measures which made business difficult; so the committee has taken steps to improve ease of doing business. GST rates have also be reduced for various goods and services.

Amendment in GST rules & regulations are as under:

1. Penalty Reduction:

The penalty for late filing of GST returns has been further reduced by the 25th GST Council Meeting. Now, any business that failed to file GSTR1 return, GSTR5 return or GSTR5A return will only have to pay a penalty of Rs.50 per day of default. In case of failure to file NIL GST return, the penalty has been reduced to just Rs.20 per day. Nandan Nilekani made a detailed presentation on simplification of GST returns filing to avoid penalty on late filings. We can see his videos on GST website.

2. Cancellation of GST Registration obtained after 1^st July 2017:

Persons who registered voluntarily on GST Portal can now surrender their GST Registration. Previously they were barred from surrendering their GST registration before end of one year from date of registration. The rules have now been modified to allow cancellation of voluntary GST registration before 1 year.

3. Cancellation of Migrated GST Taxpayers:

Persons who obtained GST registration mandatorily due to migration from VAT or Service Tax or Central Excise can cancel their GST registration before 31^st March 2018.

4. Introduction of E-Way Bill:

The Government expects to roll out a nationwide GST e-way bill system for interstate movement of goods from 1sFebruaryry 2018. The Government expects to rollout eway bill system for intrastate movement of goods on later than 1st June 2018. However, no date has been announced by the Government mandating eway bill for intrastate movement of goods. 15 states have informed the Council that they will start intra-state the e-way bill from the same month.

The Government has begun rolling out the e-way bill mechanism on a trial basis through ewaybill.nic.in. Stakeholders can login to ewaybill.nic.in and generate, cancel or modify GST eway bill on a trial basis. Once the system is ready, the GST eway bill system will be made available on ewaybillgst.gov.in.

5. Rate Changes of Various Goods

The following are the GST rate changes for goods announced in the 25th GST Council Meeting:

6. Exemption of Various Services

• Exemption of supply of services by way of providing information under RTI Act, 2005.
• Exemption of legal services provided to Government, Local Authority, Governmental Authority and Government Entity.
• Exemption of services relating to admission to, or conduct of examination provided to all educational institutions, as defined in the notification.
• Exemption of services by educational institution by way of conduct of entrance examination against consideration in the form of entrance fee.
• Exemption of services by way of fumigation in a warehouse of agricultural produce.
• Exemption of subscription of online educational journals/periodicals by educational institutions who provide degree recognized by any law.
• Exemption of service provided by way of renting of transport vehicles provided to a person providing services of transportation of students, faculty and staff to an educational institution providing education upto higher secondary or equivalent.
• Exemption of services provided by and to FIFA and its subsidiaries directly or indirectly related to any of the events under FIFA U-20 World Cup in case the said event is hosted by India.
• To exempt government’s share of profit petroleum from GST and to clarify that cost petroleum is not taxable per se.
• Exemption of reinsurance services in respect of insurance schemes exempted under S. No. 35 and 36 of notification No. 12/2017-CT (Rate).
• Exemption of service by way of transportation of goods from India to a place outside India by air upto 30th September, 2018.
• Exemption of service by way of transportation of goods from India to a place outside India by sea and provide that value of such service may be excluded from the value of exempted services for the purpose of reversal of ITC upto 30th September, 2018.
• Exemption of services provided by the Naval Insurance Group Fund by way of Life Insurance to personnel of Coast Guard under the  Group Insurance Scheme of the Central Government retrospectively e.f. 01^st July, 2017.
• Exemption of IGST payable under section 5(1) of the IGST Act, 2017 on supply of services covered by item 5(c) of Schedule II of the CGST Act, 2017 to the extent of aggregate of the duties and taxes leviable under section 3(7) of the Customs Tariff Act, 1975 read with sections 5 & 7 of IGST Act, 2017 on part of consideration declared under section 14(1) of the Customs Act, 1962 towards royalty and license fee includible in transaction value as specified under Rule 10 (c) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007.
• Exemption of dollar denominated services provided by financial intermediaries located in IFSC SEZ, which have been deemed to be outside India under the various regulations by RBI, IRDAI, SEBI or any financial regulatory authority, to a person outside India.
• Exemption of

  (a) services provided by government or local authority to governmental authority or government entity, by way of lease of land, and

  (b) supply of land or undivided share of land by way of lease or sub lease where such supply is a part of specified composite supply of construction of flats etc. and   to carry out suitable amendment in the provision relating to valuation of construction service involving transfer of land or undivided share of land, so as to ensure that buyers pay the same effective  rate of GST on property built on leasehold and freehold land.

7. Rate Changes of Various Services

The following are the GST rate changes for Services announced in the 25th GST Council Meeting:

The post SUMMARY OF GST 25th COUNCIL MEETING appeared first on Kailasha Foundation.

NOW AS THE ICAI ITSELF HAS CONDUCTED TWO MOCKS AND AN ACTUAL EXAM IN MAY 2018, IT IS RELIEVING, BUT THE BEST THING IS THAT, ICAI’s PATTERN EXACTLY TALLIED WITH WHAT WE HAD GUESSED. THE FOLLOWING ARTICLE HAS BEEN UPDATED WITH THE LATEST RELEASES BY ICAI.

NOTE: This is only a student help portal and no kind of copyright infringement, fraudulent practices etc is/are intended. However, if any content is found suspicious, we request the honorary ICAI to please report to us we will immediately remove/modify/explain. Thanks!

<<TO JOIN OUR COURSE FOR FREE, WHATSAPP ON 8294600829>>

(Admission for November 2018 exam is now closed and the same for May 2019 will be open from 15 Nov 2019)

We, at Kailasha Foundation – Fun & Learn Portal believe in tutoring with devotion and that too FREE of cost. Here is the latest release of our publications: CA Foundation New Pattern Paper (Subjective) to help out the students.

Every student enrolled in CA Foundation fills exam form in February for May attempt and that in August for November attempt. They receive admit cards online two to four weeks before exam and there are four papers, viz. Paper 1, 2, 3 and 4. The examination is usually conducted in 2nd week of May/Nov.

Paper 1 and 2 will be the Subjective type and Paper 3 and 4 will be of Objective type. Subjective papers’ duration will be 3 hours each and Objective papers’ duration will be 2 hours each. All papers will commence 2:00 PM on respective exam days.

In today’s time, MCQs and objective questions are the things each and every student is aware of. No student needs special training to fill OMR sheets anymore. Those four options and one to choose. Everyone knows that. But a student can’t guess Subjective Pattern until he/she sees actually at least a mock or an actual exam. (However, now everyone has become aware as the first exam of May 2018 has already passed).  We are the first to bring you the most needed thing at the right time.

Since ICAI sets similar pattern papers for Intermediate and Final both stages and both are subjective, So our team, constituted of many Chartered Accountants was able to guess the most likely CA Foundation New Pattern.

GUESS WHAT! WE HAVE BROUGHT THE FORMAT OF ANSWER SHEETS TOO, WHICH WILL BE GIVEN TO YOU. 

Followings ARE THE SUBJECTIVE PAPERS AND SUBJECTIVE ANSWER SHEET FORMAT OF CA FOUNDATION NEW PATTERN which we had uploaded on 18th January 2018, the first ever pattern declaration across the country:

1. PAPER 1: PRINCIPLES AND PRACTICE OF ACCOUNTING
   (please wait for the file to load) If you want to download the file, Click here.
   CA Foundation Paper 1 Accounts a
   
2. PAPER 2: Business Laws and Business Correspondence and Reporting
   (please wait for the file to load) If you want to download the file, Click here.
   CA Foundation Paper 2 Law and English a
   
3. The format of Answer Sheet of Subjective Question Papers
   (please wait for the file to load) If you want to download the file, Click here.
   Answer Sheet Format a
   
4. The format of OMR Sheet for Objective Question Papers
   If you want to download the file, Click here.
   

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<<<FOLLOWING ARE OUR MOCK TEST LINKS>>>:

<<CLICK TO ACCESS MOCK 1 (HELD ON 11 MARCH 2018)>>

<<CLICK TO ACCESS MOCK 2 (HELD ON 18-20 MARCH 2018)>>

<<CLICK TO ACCESS MOCK 3 (HELD ON 1 APRIL 2018)>>

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MOCK BY ICAI 17-20 MARCH, 2018:

[Note: This paper was received from the students after the conduct of mock test and not before. If ICAI finds it unsuitable, we will be okay to remove the same from here. No fraudulent practice(s) or copyright infringement intended.]

1. PAPER 1: PRINCIPLES AND PRACTICE OF ACCOUNTING
   (please wait for the file to load) If you want to download the file, Click here.
   ICAI Accounts mock
   
   
2. PAPER 2: Business Laws and Business Correspondence and Reporting
   (please wait for the file to load) If you want to download the file, Click here.
   icai law english mock
   
3. PAPER 3: QUANTITATIVE APTITUDE
   (please wait for the file to load) If you want to download the file, Click here.
   ICAI Maths Stats Reasoning Mock
   
4. PAPER 4: Business Economics and Business and commercial knowledge
   (please wait for the file to load) If you want to download the file, Click here.
   icai eco bst mock
   
   

Links to other materials provided by ICAI:

1. ACCOUNTS RTP (CLICK TO ACCESS)
2. ACCOUNTS PRACTICE QUESTIONS (CLICK TO ACCESS)
3. LAW RTP (CLICK TO ACCESS)
4. LAW PRACTICE QUESTIONS (CLICK TO ACCESS)
5. ENGLISH RTP (CLICK TO ACCESS)
6. PRACTICE MATERIALS FROM CPT COURSE

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The post CA FOUNDATION NEW PATTERN SAMPLE PAPER AND ANS SHEET appeared first on Kailasha Foundation.