TAX Base as per IND AS-12

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TAX Base as per IND AS-12

Suggestion That can change the Assurance Services Future

 

Idea to Change the shape of the CA profession with respect to assurance services

Disclaimer: The idea will not be acceptable to the established and well reputed CA firms and Chartered Accountants

 

Objectives:

1.       Increasing the real level of Independence

2.       Eliminating back-end solicitation

3.       Equal Opportunity to every Chartered Accountant

4.       Uniform Audit Pricing with no scope for undercutting

5.       Better reporting and statutory compliance

6.       Establishing the reputation of the profession

Method to be used for Auditor Appointment:

Blind Appointment Method where neither the auditor or the appointor does not know each other till the appointment materializes.

 

Procedure to apply the method:

1.      Website: Create a website for appointment of statutory auditors for all audits mentioned in any Act like companies act, income tax act, gst act etc.

2.      Database of Auditors: Maintain a database of the Auditors in that website. The data may be extracted from the MEF

3.       Application by the Appointor for appointment of auditor:

a.      Any person requiring an auditor should require to submit a request for such appointment within a given time period. The time period may be different for each type of audit or based on the category of the Appointor.

b.      Fine should be levied on the Appointor if it fails to submit request within a given period.

c.       The Appointor should provide its various address throughout the world in that form

d.      The Appointor should mention its important financial information like Revenue, Profit, Stock, Fixed Assets, Net worth etc. in that form

e.      The Appointor should mention one unique thing to differentiate it from others like PAN, CIN etc.

f.   The appointor should mention the MRN/FRN of the Chartered Accounts who are already associated with the appointor so as to exclude those Chartered Accountants as auditor of that entity.

4.      Auto calculation of Audit Fees:

a.      Based on the address and financial information submitted by the Appointor an audit fees before taxes would be displayed to the Appointor

b.      The Fees once displayed it is non negotiable and should be accepted by the Appointor before final submission of the request form.

 

5.      Communication to Auditor:

a.      Based on the data submitted by the Appointor an artificial intelligence will decide the Auditor

b.      Basic things to be remember while choosing the auditor is local auditor should be given priority so as to minimize the cost and each auditor in the data base should be given an opportunity to do the audit.

c.       While running the Artificial Intelligence biased things like the auditor should have prior audit experience in those like companies should be avoided, so as to give opportunity to the newcomer.

d.      At the time of communication to the auditor the auditor should only know the area and fees for the audit and not the client’s name.

e.      The auditor should accept or reject each list of audits submitted to him

6.      Final Acceptance by the Appointor:

a.      After the acceptance by the auditor the Appointor should be prompted to deposit the audit fees

b.      After depositing the audit fees the name of the client and auditor will be communicated to each other. Prepayment of audit fees will remove the chances of undercutting and increase the level of independence.

c.       Once done the appointment should be valid for 3,4,5 years as may be suitable

7.      Maintenance of the server:

a.      A fee should be collected both from the Appointor and auditor for the maintenance of the server based on the audit fees

b.      The server should also be required to be audited so as to check its effectiveness

 

Whether to deduct TDS or collect TCS on payment made to " Foreign Tour Operators" in Income Tax for Overseas Tour Packages

 TCS on payment to Foreign Tour Operators for Overseas Tour Packages under Section 206C(1G)(b)

> The Seller/Tour Operator should collect TCS @ 5%

> If PAN/AADHAR of buyer is not available TCS @ 10% as per Section 206CC

> No minimum threshold, meaning, TCS will be applicable irrespective of the value of the tour package

TDS on payment to Foreign Tour Operators for Overseas Tour Packages under Section 194C

> The payer should collect TDS @ 1% or 2% based on the payee category

> If PAN/AADHAR of buyer is not available TCS @ 10% as per Section 206AA

> If payment likely to exceed Rs.1,00,000/- during the current financial year deduct TDS

Now question arises whether the buyer should deduct TDS U/s 194C or Seller should Collect TCS U/s 206C(1G)(b)? For answer it is the TDS which overrides the TCS provisions, meaning, TDS U/s 194C will be applicable in that case as per Section 206C(1G)(b) 5th Proviso which reads as under:

"Provided also that the provisions of this sub-section shall not apply, if the buyer is,—

 (i)  liable to deduct tax at source under any other provision of this Act and has deducted such amount;"

Decoding the above proviso:

> Is the buyer liable to deduct TDS? meaning, check the applicability of TDS U/s 194C

> The buyer must have deducted TDS. Meaning, the word used in the proviso is " and" so if the buyer not deducted TDS it is the responsibility of the seller to collect TCS

Important Point to remember 

      The buyer should deduct TDS based on the above provisions as otherwise the buyer will lose the benefit of claiming expenditure as otherwise available to him in accordance with the Income Tax Act further he may face the penalty in accordance with law. So, it is the onus of the buyer to deduct TDS and if he fails to deduct TDS it is the onus of the seller to collect TCS

Thanking You:

CA Kanhu Charan Samal