Bad loan crisis: Crackdown by banks sends borrowers scrambling to offer solutions

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Tough stance taken by govt, RBI makes borrowers cautious

Indian banks are beginning to spot a welcome change in their customers’ behaviour: borrowers who have seen their accounts classified as stressed or non-performing are approaching the lenders with proposals to resolve such accounts in a time-bound manner.

The tough stance taken by the central government and the Reserve Bank of India to end the festering bad loan crisis in the Indian banking sector has caught many borrowers by surprise and they are scrambling to put together resolution plans to avoid harsher penalties including insolvency proceedings, bankers said. Even a couple of months ago, it was difficult to get these clients to the negotiation table.

“I can definitely say that we are in a much better position than even six months ago. We are seeing traction from a section of our borrowers to come up with proposals for resolution of stressed accounts,” said Rajkiran Rai G, managing director and CEO, Union Bank of India. “However, it is too early to say if this is the end of the problem. We will have to see how the discussions shape up,” he added.

Borrowers with outstanding amounts between Rs 500-1,500 crore are the most active in trying to resolve their stressed accounts, and they are looking at various options including scouting for investors and sale of non-core assets, two senior bankers with state-run banks said on conditions of anonymity. A large number of these borrowers are from the steel, power and telecom sectors. Some of the larger corporates with outstanding amounts between Rs 1,500-5,000 crore have also taken initiative to resolve their stressed accounts. On an average, these account for about 50% of the current gross non-performing assets of the banking system, the bankers said.

In June, the RBI’s Internal Advisory Committee (IAC) had said 12 accounts totaling about 25% of the current gross NPA of the banking system would qualify for immediate reference under the Insolvency and Bankruptcy Code (IBC). At present, proceedings against all the 12 accounts are on in various benches of the National Company Law Tribunal across the country. For accounts that do not qualify under the above criterion, IAC had recommended that banks should finalise a resolution plan within six months. “In cases where a viable resolution is not agreed upon within six months, banks should be required to file for insolvency proceedings under IBC,” the RBI had said.

Source: http://www.financialexpress.com/economy/bad-loan-crisis-crackdown-by-banks-sends-borrowers-scrambling-to-offer-solutions/769027/

GST spawns Rs 20,000 crore business for tax, tech consultants

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For decades, Sugal & Damani Group focused on lotteries before it entered the online bill payment business with Payworld.

Now, it has become a GST service provider (GSP), an entity that will help businesses register, upload electronic invoices and file on the technology platform, and plans to leverage its network.

Pune-based Vayana Network has been working with small and medium enterprises (SMEs) to arrange funds and has no experience of taxation, but it too has become a GSP and is eyeing business from companies, their vendors as well as standalone SMEs.

Besides GSPs, GST has given birth to another set of entities called ‘application service providers’ or ASPs that will use sales and purchase data from taxpayers and convert it into GST returns for filing online.GST is spawning a $2 billion-3 billion (Rs 13,000 crore-20,000 crore) industry comprising software service providers, ASPs and GSPs, chartered accountants and consulting firms as the entire industry is undergoing business process re-engineering.

SAP and Oracle, the big daddies of the ERP business, may mop up revenues of at least $1 billion (Rs 6,500 crore) over the next two years, industry players say.

Homegrown Tally Solutions, which has close to 11 lakh users of its accounting software, has already got around six lakh subscriptions from businesses, which entitles them to free upgrades and access to all information.

While the cost of software varies between Rs 18,000 and Rs 54,000, each annual subscription fetches the company Rs 3,600 (for a single user) to Rs 10,800 (multiple users).

With 10,000 melas planned in the next one month, the company is out to garner as much business as possible while helping businesses tackle GST, said Tally Systems executive director Tejas Goenka.

Even a smaller player like the newly set up Ginesys is eyeing a turnover of around Rs 100 crore in three years, said co-founder Ashish Mittal. Then, there are the likes of ClearTax, which was set up to file income tax returns. Sensing a huge business opportunity it has expanded into the GST arena with its software and tie-ups with around 10,000 chartered accountants, said ClearTax founder CEO Archit Gupta.

Not surprisingly, companies have hired big time to meet the required demand. SAP and its partners have around 500-600 people working on implementing ERP solutions, business filing, supply chain and the app for filing returns, said Neeraj Athalye, who leads the firm’s GST adoption drive. Cleartax has hired around 400 in the last one year or so.The big four accounting firms too have ramped up. Deloitte’s indirect tax team has around 250 new recruits, while PwC has expanded its pool of CAs and systems executives by 200-250. While the billing for large companies runs into crores, including consulting services, the smaller companies are banking on volumes with some charging a fee of as low as Rs 100-200 a month for filing returns.

High-value transactions by doctors, lawyers under income tax lens

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Salaried individuals are not required to file the newly introduced statement of financial transactions (SFT).

Senior tax officials are reaching out to chartered accountants and CFOs to drive home the point that by May 31 business establishments, various financial institutions and professionals, including doctors, lawyers and architects, will have to report a slew of high-value transactions such as cash deposit, credit card payments, share sale, property deals, debentures and mutual fund units among others.

Salaried individuals are not required to file the newly introduced statement of financial transactions (SFT). Entities that will have to report are banks, professionals, fund houses, forex dealers, post office, nidhis, non-banking finance companies, property registrars, companies issuing bonds and debentures, and listed companies buying back shares from specific persons.

“Many are not fully aware of the new requirement. Under the modified rules, the earlier requirement of filing annual information return (AIR) has now been replaced by SFT. The changes have created new classes of first time filers who have to file SFT of specified transactions for FY 2016-17,” said Jai Raj Kajla, Director of Income Tax (Intelligence & Criminal Investigation) while addressing tax practitioners here on Friday.

The nature of transactions includes cash payment for purchase of demand drafts or pay orders of Rs 10 lakh or more in a year; cash payment of Rs 10 lakh or more for purchase of pre-paid RBI instruments, cash deposit or withdrawal of Rs 50 lakh or more from current account; one-time deposit of Rs 10 lakh or more with banks, nidhis, NBFCs and post offices; payment of Rs 1 lakh or more in cash and Rs 10 lakh or more by other mode against credit card bill issued to a person during the year; and property registrars for deals worth Rs 30 lakh or more.

Kajla and his colleagues met close to 300 tax practitioners and corporate CFOs to explain the new rules, which would require the reporting entity to register online with the tax office. SFTs have to be filed in separate form and not along with the regular Income tax returns.

“The Directorate is conducting workshops to address various categories of reporting entities like bullion dealers, stock brokers, and dealers of automobiles and luxury goods,” said Anu Krishna Aggarwal, Additional Director of Income Tax (I&CI).

As per the new requirements, apart from specific filers like banks which used to file similar AIR returns, SFT regulations would cover any person who is liable to audit under Section 44AB of the Income Tax Act, 1961. The particular section relates to audit of businesses and professions.

The purpose of the workshops was to spell out the rules to the chartered accountants who in turn can assist taxpayers in ensuring timely and accurate SFT compliance.

Laxman Singh Gurjar, Manpreet Singh Duggal, and Aastha Madhur – all deputy directors of Income Tax – and Vishnu Agarwal, chairman of the western India council of ICAI, participated in the discussions which also dealt with the finer points of compliance ..For instance, while reporting an entity will have to take into account all the accounts of the same nature maintained in respect of a person during a financial year; also, while attributing the entire value of the transactions to all the persons in cases where the account is maintained or transactions recorded in the name of more than one person.

Filing of inaccurate information will attract penalty of Rs 50,000.

Source: http://economictimes.indiatimes.com/articleshow/58651349.cms

MEFICAI Empanelment/ Bank Branch Auditors Panel for FY 2016-17

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Multipurpose Empanelment Form of ICAI (MEF-ICAI) is an online application, which is meant for allotment of Bank/ Branch Audits to the ICAI Members/ CA Firms.

a) Final Bank Branch Auditors Panel for the FY 2016-17

The ICAI has prepared the “Final Bank Branch Auditors’ Panel of Chartered Accountants/ CA Firms (MEF) for the Financial Year 2016-17” and the same is hosted at MEFICAI website till 20 Jan. 2017. Thereafter the final panel is being sent to RBI.

To view your category and remarks thereof, if any, please click on the relevant interval, as below:

Final Panel

MEF00001-05000

MEF05001-10000 

MEF10001-15000 

MEF15001-20000 

MEF20001-25000 

MEF25001-30000 

MEF30001-35000 

MEF35001-40000

MEF40001-45000 

MEF45001-50000 

MEF50001-55000 

MEF55001-60000

MEF60001-73666

For any other query/ issue, please contact  ICAI’s PDC Secretariat on 011-30110444. Also, please visit MEFICAI website for updated/ official version of Draft/ Final Panel.

b) MEF-ICAI Multipurpose Empanelment Form 2016-17

MEF 2016-17 for empanelment of Bank Branch Auditors for FY 2016-17 is hosted at MEFICAI website. MEF 2016-17 is divided into three parts, i.e. i) Part A: For Bank Branch Auditor’s panel ; ii) Part B: For Additional information for Multipurpose Empanelment; and iii) Part C: For panel of Cooperative Societies and Cooperative Banks.

In line with ICAI Notification dt. 7 April, entities are being advised to avail the Multipurpose Empanelment data available with ICAI for allotting various assignments in response to tenders, including for Cooperative Societies. Accordingly PART B & PART C has been included in MEF 2016-17.

c) Other related items

View or Download PDF Copy:

 RBI Approved Audit Firms for appointment as CSA in Banks for 2015-16

 RBI Norms on Eligibility, Empanelment, Appointment of Branch Auditors 2015-16

 Revised MEFICAI Norms for Firm Category for Allocation of Bank Branch Audit

 RBI Norms for Appointment of Bank CSA from 2016-17 onwards

CAs, Merchant Bankers face fine if assessees file wrong tax information

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CBDT chairman Sushil Chandra addressing a CII interactive session on Union Budget 2017-18 in New Delhi on Monday.

From April 1, chartered accountants (CAs), merchant bankers and valuers can’t escape responsibility for filing of incorrect information in certificates or reports attached with income tax returns of assessees.

 

They will be fined Rs 10,000 for each such certificates or reports, according to a provision in the Budget for 2017-18.

 

For this purpose, the Budget has proposed to insert a new section, 271J, in the Income Tax Act.

 

“Under Section 271J… we have entrusted responsibility with chartered accountants, valuers and merchant bankers who files audit, valuation reports and other things…,” CBDT Chairman Sushil Chandra said at a post-Budget interaction with PHD Chamber of Commerce and Industry here. “So, if they file any incorrect information in the returns, they are also liable for a token penalty of Rs 10,000.”

 

The whole system is based on “a lot of faith on CAs and assessees and they have to be more responsible”, he said.

 

While there are many provisions to penalise the defaulting assessees, there was none to penalise CAs, merchant bankers and valuers.

 

A memorandum to the Finance Bill said: “In order to ensure that the person furnishing reports or certificates undertakes due diligence before making such certification, it is proposed to insert a new section (271J in the Act) so as to provide that if an accountant or a merchant banker or a registered valuer furnishes incorrect information in a report or certificate, the assessing officer or the commissioner (appeals) may direct him to pay a sum of Rs 10,000 for each such report or certificate by way of penalty.”

 

Chandra said the objective of the Budget was to improve tax compliance along with increasing tax base and improving ease of doing business.

 

Non-compliance level was high despite low tax, he said, adding that Indians named in various black money reports, including Panama Papers, were among the highest.

 

He pointed to high level of evasion of tax and tendency to export black money to foreign shores in spite of having global practices and standards, emphasising that this has to come down. “The department has done its bit, now it’s time for the taxpayers to show their respect to the law of land,” he said.

 

On long-term capital gains tax, he said the Budget has tried to plug gaps.

 

In the past few years, the tax department has detected Rs 80,000-crore sale consideration through the penny stock mechanism, the CBDT chief said, adding that this was used for conversion of black money into white.

 

However, “neither have we changed capital tax regime nor have we changed any law. So, whosoever was getting the benefit of long-term capital gains through ESOP, IPO and FPO is not going to change”.

 

Nothing is going to change except misuse, he clarified.

Delay in filing Income Tax returns will now attract fine up to Rs 10,000

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The Budget has proposed imposing a fine for not filing income tax returns within the due date. For income below Rs.5 lakh, filing returns after July will attract a fine of R1,000, while for income above Rs. 5 lakh it will be R5,000, if it is filed after the due date but on or before December 31 of the assessment year. It has also proposed a fee of R10,000 in any other case.

Since it is a fee, it has to be paid while filing tax returns along with any tax on any income and interest. “It is proposed to make consequential amendment in Section 140A to include that in case of delay in furnishing of return of income, along with the tax and interest payable, fee for delay in furnishing of return of income shall also be payable,” the Finance Bill 2017 underlines.

At a post-Budget event organised by the Institute of Chartered Accountants of India, Hasmukh Adhia, revenue secretary said that those who have an income of Rs. 5 lakh and above and file returns after July but till December will face a fine of R5,000. “This fine will be raised to R10,000 if the return is filled after December,” he said.

Time limit for filing revised return reduced

Under Section 139(5) of the Income Tax Act, an assessee can file revised return within two years from the end of the relevant fiscal year or before the completion of assessment by tax authorities, whichever is earlier. The Finance Bill proposes to reduce the time limit for filing such revised return to one year from the end of relevant fiscal year or before the completion of the assessment by tax authorities, whichever is earlier. This amendment shall be effective from fiscal year 2017-18.

A revised return can be filed if the assessee has filed the return within the due date. For filing the revised return, one has to enter the acknowledgement number and the date of filing of the original return in the revised form.

The Budget has also proposed to reduce the time limit for completion of assessment under Section 153 of the I-T Act. In assessment year 2018-19, it will be 18 months from the end of the assessment year. From assessment year 2019-20, it will be 12 months from the end of the assessment year. It has also reduced the time limit for completion of re-assessment. In respect of notices served under Section 148 of the I-T Act on or after April 1, 2019, the time limit for completion of assessment or re-assessment will be 12 months from the end of the financial year in which the notice is served.

Interest on refund

Under Section 244(A) of the I-T Act, an assessee is entitled to receive interest on refund because of excess payment of advance tax, tax deducted or collected at source. The assessee will, in addition to the refund amount, will receive simple interest on such refund at the rate of 1.5% for every month or part of a month from the date on which claim for refund is made in the returns or in case of an order passed in appeal, from the date on which the tax is paid to the date on which refund is granted.

Workflow boost for accountants, advisory firms

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Plans are afoot to train 20,000 chartered accountants by March 2017 in different aspects of the GST
Corporate India is just about getting started to get their businesses ready for the goods and services tax ( GST) regime. This has opened up a sizable business opportunity for tax experts, advisory firms, and law firms. What has come as a shot in the arm for chartered accountants and cost accountants is the mandatory need for tax audits for certain companies under the GST regime.
Under Section 42 ( 4) of the draft Model GST Law, businesses with to- be- prescribed turnover have to get their accounts audited by a chartered accountant or a cost accountant. Accordingly, the Institute of Chartered Accountants of India ( ICAI) is preparing to boost training for its members to enable them to make the most out of the opportunity. “ Plans are afoot to train 20,000 chartered accountants by March 2017 in different aspects of the GST for conducting impact studies and filing of GST returns,” says Madhukar N Hiregange, senior partner, Hiregange & Associates, and chairman of indirect tax committee at the ICAI. To start with, over the next two months, around 500 trainers will go through the GST programme.
In the coming months, some key areas of work for accountancy professionals would relate to conducting impact studies for clients, taking companies through GST registration and the transition process, filing taxes and getting tax refunds, ensuring there are no mismatches in the tax input- output chain. Even though the new indirect tax system will come into effect from April 2017, tax experts expect the transition opportunity to last for the next two years.
“Compliance will become a major area of practice for accountants,” says Hiregange. He expects many companies to outsource their tax compliance work to tax consultancies and chartered accountancy firms.
In the coming months, businesses would have to re- jig their IT systems and also make businesses of their suppliers, distributors and sellers GSTcompliant.
The challenge for small and mid- sized companies would be to come up to speed with technology requirements under the GST regime. “ Many companies would need hand- holding while interacting with the GST Network, the IT backbone, in filing tax returns and in claiming returns,” says Hiregange. That may spawn small firms specialising in GST- related compliance issues. The ICAI is also looking at revising its syllabus by November this year in keeping with the latest changes in the indirect tax system.
Sensing the business opportunity that is up for grabs, most corporate law firms are ramping up their indirect tax practice. For instance, Lakshmikumaran & Sridharan, a law firm that has been advising the GST Network, has put in place a special team of 20- odd tax experts to tackle GST- related issues. “ In addition, there are 150- 200 tax lawyers across the country taking up sector- specific indirect tax related issues,” says a spokesperson from the law firm.
Similarly, accounting and advisory firms, especially the ‘big four’, are betting big on the opportunity. EY, for instance, has a team of 800- odd tax and advisory professionals working on GST. “ This year, we anticipate an increase of 25 per cent in our current headcount for GST,” said a company spokesperson. Many of these professionals come with expertise in supply chain, analytics, technology and processes.
According to Nitin Atroley, partner and head of sales & markets at KPMG, the firm set up a special team with members from different countries like Malaysia, Singapore and Australia that have earlier gone through the process of adopting GST.
Prashant Raizada, partner, indirect tax, BDO India, feels the challenge to transition to the new tax regime would be most felt by small and mediumsized enterprises. “ In Tier2and – 3 cities, businesses may not be that well versed in use of technology,” said Raizada. It will be busy days ahead for tax experts, accountants and consultants, as well as their clients as they get up to speed with the GST regime.