SBS-DIGEST-EJournal-Nov-2017

VVoolulummee-1-201 DNeocevmembbere-r2-0210617 PPaaggeess11-1-247SBS Interns’ For Private circulation only Digest An attempt to share knowledge By Interns of SBS and Company LLP

SBS Interns' Digest www.sbsandco.com/digestCONTENTSAUDIT................................................................................................................................................1UNDERSTANDING AND DOCUMENTATION OF A BUSINESS PROCESS FOR EFFECTIVE CONDUCT OF INTERNAL AUDIT.............................1PEER REVIEW ..........................................................................................................................................4DEA.................................................................................................................................................16START UP INDIA.......................................................................................................................................16GST..................................................................................................................................................22KNOW ABOUT GSTR 3B..............................................................................................................................22UPDATESCOMPANIES ACT, 2013.....................................................................................................................25RULES, CIRCULARS, NOTIFICATIONS AND ORDERS ISSUED DURING THE MONTH OF OCTOBER, 2017 ...........................................25

SBS Interns' Digest www.sbsandco.com/digestAUDITUNDERSTANDING AND DOCUMENTATION OF A BUSINESS PROCESS FOR EFFECTIVE CONDUCT OF INTERNAL AUDIT Contributed by Chandra Shekar & Vetted by CA Sandeep DasIntroduction:Internal Audit is a function, which involves a continuous and critical appraisal of the functioning ofsuggested improvements to entity with a view thereto and add value to and strengthen the overallgovernance mechanism of the entity, including the entity’s strategic risk management and internalcontrol system. Thus, Internal Audit needs validation of all the business processes subject to Audit, byconducting tests for ensuring the effectiveness of the internal controls and related operations of thebusiness. To conduct an effective and timely audit, it is necessary to gain see through understanding of allthe business processes subject to audit, thereby to achieve overall idea of business of the auditee.Objective:The objective of the study is to outline the significance and commands of understanding anddocumenting a business process to support for the effective conduct of audit.What is a Business Process?A business process is a sequence of activities which involves people, procedures and records. A typicalbusiness includes processes such as Sales, Purchases, Production, Marketing, Payroll, Taxation etc., Abusiness process can be divided into a series of sub processes. The illustration below is an example ofsales process of a trading business from which an auditor can see the overall sub processes involved in theprocess. Account Customer ing Order Dispatch Sale Order Creation Picking Invoicing Fig. 1.1: Sales process of a trading business1 |Page

SBS Interns' Digest www.sbsandco.com/digest UndersCtoamnpadniinesgAcatnd Documentation of a Business ProcessUnderstanding of a business process:Understanding of the business process of a company is required as per SA 315 “Identifying and Assessingthe Risks of Material Misstatements Through Understanding the Entity and Its Environment”. For betterunderstanding of a process the auditor must consider the following, thus to support for adequatedocumentation of the knowledge gained:a. Organization structure of the personnel involved in the processb. Internal policies and procedures concerned with the processc. Applicable Statutory governanced. Segregation of dutiese. Documentationf. Probable risks and controlsDocumentation of a business process:The auditor is required to document the understanding of an entity’s business process as per SA230“Audit Documentation”. A business process document shall contain full particulars of an operationalprocess under existence in the organization. At the go of documenting the process, it is officious that thebelow mentioned questions are addressed into,vWhat?vWho?vWhy?vWhere?vWhen?vHow?The illustration shown in Annexure-1 is an example of how an auditor can document details of a salesprocess of a trading business.Importance:The auditor’s understanding and documentation of a business process helps in each phase of audit, inplanning, execution, and completion:1. To plan the nature, timing and extent of audit procedures2. Risk assessment3. Performing walk through tests4. As an audit evidence in case of any non-compliance5. It helps in reporting the deviation within the process if any6. It serves for recurring audits2 |Page

Annexure-1Sl. Process Sub- Activity SummaNo Process What1 Receipt of Assistant Sales Executive shall receive Custo Customer customer orders from the customers Order Order over electronic mail and update the Customer Order in ERP2 S Sale Order Sales Executive shall verify the Sale Or Creation Customer Order in ERP and check for the availability of stock and approve a Sale Order for processing the sale3 Invoicing Sales Manager shall create a Sale Sale Invoice based on the Sale Order and Invoice l submit the invoice to Warehouse in- charge4 Picking of Based on the Sale invoice received, Goods e goods Warehouse in-charge shall load the material in the vehicle at staging area for dispatch followed by preparation of a packing list which shall be submitted s to Logistics Executive along with Sale invoice5 Dispatch of Logistics executive on receipt of Sale Goods goods invoice and packing list, shall dispatch the material and prepare a trip sheet which shall be submitted to Sales Manager6 Accounting Sales Manager post acknowledging the Accoun in books of trip sheet from Logistics executive shall accounts make journal entry for the sale in books of accounts3 |Page This article is contributed by Chandra Shekar, Intern of SBS and

ary When Why Where How Whomer Customer To initiate Electronic Electronically Assistant Requirement the sale mail Sales executiverder Post To process ERP Electronically Sales Executive updation of the sale Electronically Sales Customer Manager Order Post To Confirm ERPe approval of the quantity Sale Order to load Post creation To dispatch Staging area Manually Warehouse in-charge of Sale the material Invoice Post To fulfil the Premises Manually Logistics preparation customer Gate executive of Packing order listnting Post To recognize ERP Electronically Sales Manager preparation revenue of trip sheetCompany LLP. The author can be reached at [email protected]

SBS Interns' Digest www.sbsandco.com/digestAUDIT Contributed by Prudhvi & Vetted by CA Sandeep DasPEER REVIEWIntroduction: -üThe term \"Peer\" means a person of similar standing. The term \"review\" means conduct of re-examination or retrospective evaluation of the subject matter. In generality, for a professional, the term \"Peer review\" would mean review of work done by a professional by another professional of similar standing.üIt Means an examination and review of the systems and procedures to determine whether the same have been put in place by the practice unit (PU) for ensuring the quality of assurance services as envisaged by the Technical, Professional and Ethical Standards and whether the same were consistently applied in the period under review.Scope of Peer Review: -1. It is applicable to all assurances services provided by a practicing unit. Assurance Services shall not include: a. Management consultancy engagements b. Representations before various authorities c. Engagement to prepare tax returns or advising clients in taxation matters. d. Engagement for the compilation of financial statements. e. Engagement solely to assist the client in preparing, compiling or collating information other than financial statements f. Testifying as an expert witness. g. Engagement for due diligence2. Once a practicing unit is selected for review, its assurance engagement records pertaining to the peer review period shall be subjected to review.3. The reviewer shall also cover:a. Compliance with Technical, Professional and Ethical Standards.b. Quality of reporting.c. Systems and procedures for carrying out assurances services.d. Training Programs for Staff (Including articled and audit assistants) concerned will assurance functions, including of appropriate infrastructure.e. Compliance with directions and / or guidelines issued by the council to the members, including fee’s to be charged, number of audits undertaken, register for assurance engagements conducted during the year and such other related worksf. Compliance with directions and / or guidelines issued by the council relating to articled assistants and / or audit assistants, including attendance register, work diaries, stipend payments and such other related works.4 |Page

SBS Interns' Digest www.sbsandco.com/digest Peer RCeomvpieanwies ActObjective: -1. The primary objective is to ensure as well as improving the quality of 'Assurance Services' being rendered by the members in Practice and thereby enhancing the confidence of the various stakeholders.2. To ensure that in carrying out the assurance service agreements, the members of the Institute comply with technical, professional and ethical standards including other regulatory requirements thereto, and3. To ensure that such a member has in place proper system (including documentation system) to adequately demonstrate the quality of assurance services.Practice Unit: - means a firm of Chartered Accountants or a Member in Practice, practicing whether in anindividual name or a trade name or such other entity as recognized by the Institute of CharteredAccountants of India (ICAI) from time to time.Reviewer: - means a member duly approved and empanelled by the Board on fulfilling the qualificationsprescribed for a Reviewer.Peer Review Board: - Peer Review Board is a board or committee created by ICAI.PR board shall consist of a maximum 12 members of whom not less than 50% shall be CA (as per section 9of the chartered Accountants act ,1949) and 6 Are non-CA (i.e. commerce, finance, law, economics i.efrom reputed field).Applicability:Every practicing unit (PU) based on their category as determined below will be subject to peer review inaccordance with this statement.Level I practice units are generally required to be subjected to review once in three years. Level II once in 4years and level III once in 5 years.Level 1A practice unit which has under taken any of the under mentioned assurance services in the period underreview: üwhich are Central Statutory Auditors of Public Sector Banks, Private Sector Banks, Foreign Banks and Public Financial Institutions; üwhich are Central Statutory Auditors of Central and State Public Sector up capital Undertakings and Central Cooperative Societies based on criteria such as turnover or paid up capital etc. as may be decided by the Board; 5 |Page

SBS Interns' Digest www.sbsandco.com/digest Peer RCeomvpieanwies Actüwhich are Central Statutory Auditors of Insurance Companies;üStatutory Audit of asset management companies or mutual fundsüStatutory Audit of enterprises whose equity or debt securities are listed in India or abroadüStatutory Audit of Entities which have raised donations and / or contributions over Rs. Fifty Crores during the period under Review.üStatutory Audit of entities having Net Worth of more than Rs. Five Hundred Crores at anytime during the period under ReviewüStatutory Audit of Entities which have raised funds from public or banks or financial institutions of over Rs. Fifty Crores during the period under ReviewüStatutory Audit of entities which have been funded by Central and / or State Government(s)schemes of over Rs. Fifty Cores during the period under Reviewüwhich are conducting audits or rendering attestation functions for asset management companies and mutual funds schemes.Level 2A practice unit which has under taken any of the under mentioned assurance services in the period underreview:üBranches of Public Sector Banks;üBranches of Private Sector and Foreign Banks;üRegional Rural Banks/Co-operative Banks;üNon-Banking Financial Companies (NBFCs), based on such criteria as the Board may decide;üStatutory Audit of entities having Net Worth of over Rs. Five Crores or annual turnover(TO) of more than Rs. Fifty Crores during the period under ReviewLevel 3üThe practicing units which are other than Level 1 and Level 2 are level 3 firm’s.üThe implementation of this stage commenced from 1st April 2005 Peer review Board Practising Chartered Account (PCA) Level 1 Level 2 Level 3 Once in 3 years Once in 4 years Once in 5 Years6 |Page

SBS Interns' Digest www.sbsandco.com/digest Peer RCeomvpieanwies ActüHowever, if the board so decides or otherwise at the request of the practicing unit, peer review can be conducted at shorter intervals.üPractising units may Suo moto apply to the board for conduct of peer review to the Board for the conduct of its peer review, and the Board shall take due cognizance of such request. The Board shall act upon both within 30 days from the date of receipt of such requestüIt allows an auditee (client) to request the Board for conduct of peer review of its auditor (practice unit). The Board shall act upon both within 30 days from the date of receipt of such requestQualification of the Reviewer:Accordingly, an individual serving as a reviewer shall: -• Be a member of ICAI;• Possess at least ten/fifteen years' experience of audit; and• Be currently active in the practice of accounting and auditing.• Should have conducted audits of level 1 entities for at least 7 years to be eligible to conduct peer reviews of level 1 entities.• Should have signed the declaration of confidentiality.Note: 10/15 years’ audit experience need not be continuous but cumulative; but any block of lessthan 2 years’ experience in determining cumulative experience shall not be counted.Further note that Reviewers having 10 years or more audit experience but less than 15 years’audit experience are considered for allotment of reviews of practice units falling under other thanStage I of peer review only and reviewers having 15 years or more audit experience are consideredfor allotment of reviews of practice units falling under all Stages of peer review.A reviewer shall not accept any professional assignment from the practice unit for a period of 2years from the date of appointment.Qualified Assistant:• The reviewer may take the help of a qualified assistant while carrying out peer review. In this context, the board decided to clarify that a reviewer is permitted to take the assistance of only one assistant who is a chartered accountant and not disqualified under section 8 or section 21 of the Chartered Accountants act,1949.• The name of the Qualified assistant should be intimated to the Board as well as the Practicing unit.• The person chosen for assisting the reviewer shall be from the firm of the reviewer and should have been working with him for at least one year as a member in practice.7 |Page

SBS Interns' Digest www.sbsandco.com/digest Peer RCeomvpieanwies ActConfidentiality:• Confidentiality shall be maintained by all those involved in the peer review process and a declaration of confidentiality shall be signed by the persons who are involved in it.• Reviewer shall not make use of or disclose the contents of review report or any confidential information about the process of review unless as required by the board or council.• Noncompliance with the secrecy provisions in the above class shall amount to professional mis conduct as defined under 22 of the Chartered accountant act,1949.The name of the Qualified assistant should be intimated to the Board as well as the Practicing unit. (Annexure 'A') Selection of Execution Practice unit and appointment of reviewer Planning reporting Peer Review ProcessSelection of Practice unit and appointment of reviewer: • Upon receipt of the consent, the board shall intimate the Practicing unit that the reviewer has accepted the assignment to carry out the peer review. • Once a practice unit is selected, intimation shall be communicated by the board along with a) Statement of Peer review b) Questionnaire c) List of Reviewers. • The practice unit is required to select one out of these three reviewers and inform the board of its choice within 7 days of receipt of such information units. • The board shall inform selected reviewer of the choice made by the practicing unit and seek his consent within 7days to act as reviewer.8 |Page

SBS Interns' Digest www.sbsandco.com/digest Peer RCeomvpieanwies ActPlanningThe practice unit is then required to furnish the following information with in Fifteen (15) days to thereviewer.vQuestionnaire duly filledvComplete list of assurance service clients (with nature of service, fees charged and period under review).vA note on policies and procedures adopted by the practicing unit.Note: Information to be provided by the practice unit in response to the questionnaire should be for thehead office as well as all branches of the practicing unit.Branches of Practice Unit:• Where a practice unit has a head office at one location and branches or offices at other locations, it would be within the reviewer’s scope to examine the quality controls at all such locations.• Where a branch is located in different city/town, it is advised to visit if the respective turnover exceeds Rs.25,00,000/- (if the turnover is less than the Rs.25,00,000/- the reviewer can verify the documents at the head office)Sample selection:• The reviewer shall within 15 days of receipt of above said information from the PU (practice unit),has to select the samples.• After sample selection and before his visit to the practice unit’s office, the reviewer would intimate the practice unit of this selection. The reviewer shall give the practice unit at least 15 days’ time to keep ready the necessary records of the selected assurance services.• The reviewer and the practice unit shall mutually co-operate and ensure that the entire review process is completed within 90 days from the date of notifying the practice unit about its selection for review.Execution:• Peer review visits will be conducted at the practice unit’s head office or at branches or any other locations. The onsite review should not extend beyond seven (7) working days.Reporting:(i) Discussion or communication of findings:(a) After completion of onsite review, the reviewer before making his report to the Board shall communicate his findings in the preliminary report to the PU.(b) The practice unit shall within 15 days after the date of receipt of the findings, make any submissions or representations in writing to the reviewer.9 |Page

SBS Interns' Digest www.sbsandco.com/digest Peer RCeomvpieanwies Act(ii) Peer review report of reviewer:(a) If the reviewer is satisfied with the reply received from the PU, he shall submit a peer review report to the Board along with his initial findings. A copy of the report shall also be forwarded to the Practice unit.(b) In case if the reviewer is not satisfactory, the reviewer shall accordingly submit a modified report to the Board incorporating his reasons for the same.(c) In case of Modified report, the reviewer shall submit preliminary report, and the responses given by the PU for the preliminary report.(d) In case of Modified report, the Board shall order for a ‘Follow on’ review after a period of one year from the date of modified report.Note: If board may decide, the period of one year may be reduced but shall not be less than 6 months.Working PapersThe Reviewer shall document all his working papers and submit a copy of his working papers to theBoard, if called for by the Board within 12 months of completion of Review / submission of ReviewReport.Peer Review CertificateOn receipt of the Peer Review Report, the Board shall within three months, Issue a Peer ReviewCertificate to the Practice Unit mentioning the next due date for Review. Inform the Practice Unitthat a Peer Review certificate cannot be issued along with the reasons therefore as well inform thePractice Unit about the due date for conducting a follow on review.Referral of Disputes and Appeali. Where a dispute arises over the powers of Reviewer or the process of the Review or the conclusions reached therein or for any particular matter related to Review, the Practice Unit or the Reviewer or both may refer the dispute to the Board in prescribed Form, in duplicate, duly verified and signed by the Reviewer or Practice Unit or the partner / proprietor of the Practice Unit within 30 days from such event.ii. Where a dispute is referred to the Board, the same shall be disposed off within 60 days, after an opportunity of being heard is provided or receipt of written submission from the parties to the dispute and the Board shall communicate such decision to each of the parties to the dispute within 30 days of the Board meeting.iii. Where the Practice Unit or the Reviewer or both are not satisfied with the decision of the Board, it may refer the matter to the Council, in writing, in duplicate, within 60 days from the date of receipt of the decision of the Board. It should be duly verified and signed by the Reviewer or Practice Unit or the partner / proprietor of the Practice Unit10 | P a g e

SBS Interns' Digest www.sbsandco.com/digest Peer RCeomvpieanwies ActTotal revenue from Assurance service of Fees to be paid for the peer review (In Rs.)practice unitLess than 10 lacs 15,000From 10 lacs to 50 lacs 25,000From 50 lacs to 1 crore 40,000From 1 crore to 3 crores 60,000From 3 crores to 5 crores 75,000Above 5 crores 1,00,000The cost structure is however subject to change by the board from time to timeProvided further that if an auditee concern requests the Board for the conduct of peer review of its auditor(practice unit), the Board shall take due cognizance of such request and in that case the cost of the peerreview shall be borne by such auditee concern.11 | P a g e

SBS Interns' Digest www.sbsandco.com/digest Peer RCeomvpieanwies Act Stage- I Planning12 | P a g e

SBS Interns' Digest www.sbsandco.com/digest Peer RCeomvpieanwies Act Stage- II Execution13 | P a g e

SBS Interns' Digest www.sbsandco.com/digest Peer RCeomvpieanwies Act Stage-III: Reporting14 | P a g e

SBS Interns' Digest www.sbsandco.com/digest Peer RCeomvpieanwies Act Annexure 'A' Declaration of Confidentiality[In accordance with the Statement on Peer Review, this statement of confidentiality is to be individuallyfilled in by each of the persons who are responsible for the conduct of Peer Review i.e., Reviewer and hisqualified assistants. The Reviewer shall be responsible for taking this undertaking from all those personswho assist him or are likely to assist him in conducting Peer Reviews, and shall send the same to the Board.This statement of Confidentiality shall be filed by the Reviewer and his qualified assistants for eachReview undertaken by them.ToThe Chairman,Peer Review Board,The Institute of Chartered Accountants of IndiaNew DelhiSir,I, hereby declare that I am aware of the need for confidentiality in the conduct of Peer Reviews. Iundertake and promise that in so far as any or all of the following relate to me or are brought t myknowledge/attention, in any manner whatsoever and when so ever, I shall ensure that:a. Full Confidentiality of the Working papers shall always be maintained at all times so that unauthorized access is not gained by anyone.b. The Practice Unit's assurance services procedures shall not be disclosed to any third party except as provided under this Statement.c. Any information with regard to any matter coming to my knowledge in the performance or in assisting in the performance of any function during the conduct of Peer Reviews shall not be disclosed to any person except as provided under this Statement.d. Access shall not be given to any person other than as required under the Peer Review Statement, to any record, document or any other material, in any form which is in my possession, or under my control, by virtue of my being or having been so appointed or my having performed or having assisted any other person in the performance of such a function.e. I have no direct or indirect conflict, of interest with the Practice Unit. I understand that any breach of the provisions regarding confidentiality as contained in the Statement on Peer Review will be considered as gross negligence and make me liable to appropriate disciplinary action. Signature: Name: Designation: Membership No. Name of Practice Unit Reviewed: Date: Place:This article is contributed by Prudhvi, Intern of SBS and Company LLP. The author can be reachedat [email protected] 15 | P a g e

SBS Interns' Digest www.sbsandco.com/digest Contributed by Hemanth & Vetted by CA Rajesh DDEASTART UP INDIAWhat are Start-ups?A start-up refers to a young business organization which is yet to be developed. It can be a company,partnership, LLP, or proprietor involved in designing and implementation of the innovative process andresearch and development of the ideas set by the entrepreneur.These types of organizations offer such type of products or services which are not being offered elsewherein the market.According to Serial Entrepreneur and Silicon Valley legend Steve Blank, a start-up is a “temporaryorganization designed to search for a repeatable and scalable business model.”Start-ups can be involved in the following manner: • Using of remote control for opening car. • Use the phone as a remote control to turn ACs on, turn the geyser off, or change channels on a TV. • An online portal to connect music lovers. • An online portal to sell groceries. • A service to connect senior citizens with similar interests. • Home delivery service for diapers, tissues, and other baby products.The following are the Some of the leading start-ups in India: 1. Freshdesk 2. Jabong India 3. Myntra 4. Zomato 5. Olacabs 6. Book my show 7. Infibeam 8. Housing.com 9. Magzter 10. Couponraja16 | P a g e

SBS Interns' Digest www.sbsandco.com/digest Start UCpomIpnadniieas ActStart-up India Campaign:Start-upIndia campaign is based on action plan formed with the objective of providing banking financefor start-ups ventures to boost entrepreneurship and encourages start-ups with jobs creation. This wasfirst introduced by Prime Minister Narendra Modi in his 15 August, 2015 address from the Red Fort.Following conditions need to be satisfied to become a start-up:tIn existence for five years from the date of incorporation / registration,tIf its turnover for any financial years has exceeded Rs.25 crores andtIt is working towards innovation, development, deployment or commercialization of new products, process or services driven by technology or intellectual property.Additional Conditions:tA proprietor/ public company are not eligible for start-ups.tA one-person company being a private co. is eligible for Start-up Co.tAny existing company splitting or reconstructing a company shall not be called as Start-ups.tThe entity shall require get certificate of an eligible business from Inter – Ministerial Board.Objectives of Start-ups:tCreating job opportunities and encouraging the ideas of the small entrepreneurs or at initial stage.tEncouraging the small entrepreneurs by way of providing incentives and financial assistance.Note:The entities shall cease to be a \"Start-up\" on• Completion of five years from the date of its incorporation/ registration; OR• At the end of the financial year in which its turnover exceeds Rupees 25 crore.Recognition certificate is not issued by the Inter-Ministerial Board (IMB) and is not valid for availing Taxrelated benefits.17 | P a g e

SBS Interns' Digest www.sbsandco.com/digest Start UCpomIpnadniieas ActSEZ Units Benefits in India under Start-up India Campaign:tCustoms and excise benefits • Procurement of goods outside India or domestic sources, duty free, all their requirements for capital goods, raw materials, spares, consumables, etc. for implementation of the business in the SEZ without license and approval. • Duty free import and domestic procurement of goods for setting up for SEZ unit. • Goods imported or procured locally duty free could be utilized over the approval period of 5 years.tIncome tax benefits • Physical export benefit. • Start-ups will be exempted from income tax for 3 years provided they get a certification from Inter- Ministerial Board (IMB). • People investing their capital gains in the venture funds setup by government will get exemption from capital gains. This will help start-ups to attract more investors. • The government has also recently made provisions for an exemption of 20% capital gains tax. Capital gains tax is the tax charged on profits from sale of capital assets, such as stocks, bonds, etc. • Carry forward of losses. • Exemptions to start-ups for the investments made above the fair market value.tForeign Direct Investment (FDI) • 100% FDI under the automatic route is allowed in manufacturing sector SEZ except vArms and ammunitions vExplosive vAtomic substance vNarcotics and hazardous chemicals vDistillation & brewing of alcoholic drinks and cigarettes vCigars vManufactured tobacco substitutes • No gap on foreign investment for Small Scale Industries reserved items.tBanking, Insurance & External Commercial Borrowings• Setting up of offshore banking units is allowed in SEZs.• Freedom to bring in export proceeds without in any time limit.• External commercial borrowings by units up to $500 million a year allowed without any maturity restrictions.• OBUs allowed 100% income tax exemption on profit for 3 years and 50% for next 2 years.18 | P a g e

SBS Interns' Digest www.sbsandco.com/digest Start UCpomIpnadniieas Act• Flexibility to keep 100% of export proceeds in EEFC A/c (Exchange Earners Foreign Currency). Freedom to make overseas investment from it.• Commodities hedging permitted.• Exemption from the interest rate surcharge on import finance.• SEZ units allowed writing off unrealized export bills.tLicenses & Approvals • SEZs are permitted to have non – polluting industries in IT and facilities like golf courses, desalination plants, hotels and non – polluting service industries in the coastal regulation zone area. • Exempted from public hearing under Environment Impact Association Notification. (EIA) • Exempted from port restriction from Drug and Cosmetic Rules.Benefits given under Start-up Plan 2016:tCompliance Regime based on Self-Certification.tStart-up India Hub – a knowledge exchange.tRolling-out of Mobile App and Portal – to serve a single platform for start-ups.tLegal Support and Fast-tracking Patent Examination at lower costs.tRelaxed Norms of Public Procurement for Start-ups.tFaster Exit for Start-ups.tProviding Funding Support through a Fund with a Corpus of INR 10,000 crore.tCredit Guarantee Fund for Start-ups.tTax Exemption to Start-ups for 3 years.tTax Exemption on Investments Above Fair Market Value.tOrganizing Start-up Fests for Showcasing Innovation and providing a Collaboration Platform.tLaunch of Atal Innovation Mission (AIM) with Self-Employment and Talent Utilization (SETU) ProgramtHarnessing Private Sector Expertise for Incubator Setup.tBuilding Innovation Centres at National Institutes.tSetting up of 7 New Research Parks Modelled on the Research Park Setup at IIT Madras.tPromoting Start-ups in the Biotechnology Sector.tLaunching of Innovation Focused Programs for Students.tAnnual Incubator Grand Challenge.19 | P a g e

SBS Interns' Digest www.sbsandco.com/digest Start UCpomIpnadniieas ActSchemes/ Initiatives under Start-up India:1. Compliance regime based on self - certification?Objective: Reducing the burden regulatory formalities and keeping low compliance cost.?Start-ups are allowed to self-certify compliance for 9 labour and environmental laws through the Start-up mobile portal.?In case of labour laws, no inspection shall be conducted for 3 years.?In case of environment laws, Start-ups which fall under the ‘white category’ (as defined by the Central Pollution Control Board (CPCB))can self-certify compliance and only random checks would be carried out.2. Start-up India Hub?Objective: Creation of a single platform for all start-ups in exchange of knowledge among the entrepreneurs.?The Start-up India Hub will be their friend, mentor and guide to hold their hand to all young Indians who enter to an environment with risk.a. Work in a hub and spoke model and collaborate with Central & State governments, Indian and foreign VCs, angel networks, banks, incubators, legal partners, consultants, universities and R&D institutions.b. Assist start-ups through their lifecycle with specific focus on important aspects like obtaining financing, feasibility testing, business structuring advisory, and enhancement of marketing skills, technology commercialization and management evaluation.c. Organize mentorship programs in collaboration with government organizations, incubation centres, educational institutions and private organizations who aspire to foster innovation.3. Rollout of Mobile App and Portal?Objective: To serve as the single platform for start-ups for interacting with Government and Regulatory Institutions for all business needs and information exchange among various stakeholders.?The Government will introduce a Mobile App to provide on-the-go accessibility for:a. Registering start-ups with Ministry of Corporate Affairs and Registrar of Firmsb. Tracking the status of the registration application. A digital version of the final registration certificate shall be made available for downloading through the Mobile App.c. Filing for compliances and obtaining information on various clearances/ approvals/ registrations required.d. Collaborating with various Start-up ecosystem partners (venture funds, incubators, academia, mentors etc.)e. Applying for various schemes being undertaken under the Start-up India Action Plan.20 | P a g e

SBS Interns' Digest www.sbsandco.com/digest Start UCpomIpnadniieas Act 4. Legal Support and Fast-tracking Patent Examination at Lower Costs?Objective: The main objective of this is to protect the IPRs and commercialisation of IPRs which helps in facilitating and protecting by providing access to high quality intellectual property services and resources?By speeding the patent applications for Start-ups.?Start-ups to be provided with the 80% rebate of the fees in filing the patents.?Facilitation cost to be borne entirely by Government but the statutory fees to be entirely borne by the Start-ups.?Controller General of Patents, Designs and Trademarks to empanel ‘facilitators’ who shall assist start-ups in filling of the patent application.5. Faster exit for Start-upsObjective:• Speedy winding up process to be developed in line with the Insolvency and Bankruptcy Bill, a less as a 90-day period for complete winding up of start-ups with a simple debt structure or meeting specified criteria as proposed.Reasons for the failure of Start-ups in India:1. The main reason for the failure of the start-up companies due to lack of market for their products or lack of marketing skills due to limited availability of funds to the start-ups.2. Entrepreneurs of start-ups are optimistic and they feel that they can attract the customers by simply opening a website. In many cases the cost of acquiring the customers is more than the lifetime value of the customers.3. The management team are often very poor in setting strategies, lack in validating the ideas during the process of development and in execution of the plans which leads to production of low quality products/ services.4. The management of the company are unable to manage the funds available and reinvesting the available funds in a strategic manner.5. The entrepreneurs are unable to meet the market needs and check the feasibility of the product.6. Most of the people in India, misuse the benefits available from the campaign and they get the benefits and exit from the business organization.The banks are not supporting the start-ups at early stage but the interest from the venture capitalists andthe private equity is seen.Conclusion: There’s no doubt India will grow, the only question is how fast?India is a place that can be whatever you want it to be. It can be ideal for a small cash flow business or abillion-dollar empire. It’s true, building a company in India is full of friction, but less friction usually means10x the competition.This article is contributed by Hemanth, Intern of SBS and Company LLP. The author can be reachedat [email protected] 21 | P a g e

SBS Interns' Digest www.sbsandco.com/digestGSTKNOW ABOUT GSTR 3B Contributed by CA Sri Harsha & CA Manindar1. Need of GSTR 3B:GST law requires tax payers to file three returns for every month viz. GSTR-1 (Outward supply), GSTR-2 (Inward Supply) and GSTR-3 (Tax Assessment). The payment of tax has been linked to GSTR-3 requiring every tax payer to pay the tax dues before filing the said return which is due by 20th of next month. However, whenever the due dates of these three returns gets extended, law requires to file GSTR-3B declaring the summary details of outward supplies, inward supplies along with ITC claimed and tax dues by 20th of next month. The tax dues declared are also required to be paid before filing of this return. Thus, GSTR-3B is a simple return to ensure timely tax collection even though the due dates of regular returns are extended.2. Persons who are required to file GSTR-3B: Every tax payer other than the person paying tax under composition scheme and as non-resident taxable person is required to file this return. Further, input service distributors, tax deductors/collectors u/s 51 and 52 are not required to file this return as they are not tax payers per se.3. GSTR-3B for Transition Period: As stated GSTR 3B is applicable only when the due dates to file regular returns got extended. To provide ample time to tax payers for smooth adoption of GST law and to meet the technology challenges, the due dates for filling regular returns for the period July to December 2017 got extended. Therefore, it is required to file GSTR-3B for all these months.4. Requirement to file GSTR-3B regularly for SMEs: It has been decided by GST Council that Small and Medium Enterprises having turnover upto 1.5 crores are required to file GSTR-1, GSTR-2 ad GSTR-3 returns once in a quarter instead on monthly basis. This is applicable from the quarter October 2017 to December 2017 onwards. In view of this reason, it is stated that these units are required to compulsorily file GSTR-3B for every month.5. Details requiredto be filledin GSTR 3B: Basic details such as GSTIN, Legal Name of the tax payer, return period and status will be auto-populated.The other details to be submitted are tabulated as under;Table No of ParticularsGSTR-3B3.1 Details of outward supplies and alsoinward supplies liable to reverse charge3.2 Of the supplies shown in 3.1(a) above, details of inter-state supplies made to unregistered persons4 Eligible ITC5 Values of exempt, nil-rated and Non-GST inward supplies5.1 Interest and Late fee6 Payment of tax7 TDS/TCS CreditThe details to be filled in each of the tables mentioned above are discussed hereunder22 | P a g e

SBS Interns' Digest www.sbsandco.com/digest Know abCoomuptaGnieSsTARct 3B3.1 Details of outward supplies and inward supplies liable to reverse charge:(a) Outward taxable supplies (other than Zero rated, nil rated and exempted) –Under this row, the value ofoutward taxable supplies, other than nil rated, zero rated and exempted supplies are required to be provided. This would mean that all the outward supplies on which GST is payable are required to provided. The corresponding details of tax payable i.e. amount of CGST & SGST or IGST as the case may be along with cess if applicable shall also be shown.(b) Outward taxable supplies (Zero rated)- Export of goods or services and supplies to SEZ developer or unit are considered as zero-rated supplies on which no GST is required to be paid if bond/LUT is executed. Otherwise, IGST is required to be paid at the time of supplies which can be claimed as refund subsequently after submitting necessary documents. The value of Zero-rated supplies along with IGST if any paid shall be disclosed under this row.(c) Other outward supplies (Nil rated, Exempted)–The value of all outward NIL rated and exempted supplies are required be filled in this category.(d) Inward Supplies (liable to Reverse Charge) – The value of reverse charge supplies is disclosed under this row. Reverse charge under GST is of two types. One is reverse charge on notified supplies. Certain supplies are notified under Section 9(3) of CGST Act, 2017 for payment of GST by recipient under reverse charge even though the supplier is registered under GST. Supplies notified under this category are cashew nuts, not shelled or peeled, Bidi wrapper leaves (Tendu), Tobacco leaves, silk yarn, supply of Lottery, GTA services, Arbitral Tribunal services, an Insurance agent, a Recovery agent and a director of a company etc. The second type is provided under Section 9(4) of CGST Act, 2017 where any supplies of goods or services are received by a registered person from an unregistered person, the registered recipient is required to pay GST on such inward supplies under reverse charge. However, reverse charge under second type has been suspended with effect from 13.10.2017 till 31.03.2018. If there are supplies from unregistered persons prior to 13.10.2017, tax is payable and the same should be considered for disclosure under this row.(e) Non-GST outward Supplies – Supplies, which do not fall under GST net areto be treated as Non- GST Supplies, which means they are neither exempted nor nil rated. For example, any income generated by sale of land, buildings, petroleum products, alcohol would come under this category.3.2 Of the supplies shown in 3.1(a) above, details of inter-state supplies made to unregistered persons, composition taxable persons and UIN holders:Under this row, the details as to the amount of supplies made to unregistered person, composition taxable person and UIN holders in the course of inter-state supplies has to be disclosed separately.4. Eligible ITC: Details of all the inward supplies is required be furnished here irrespective of, whether theITCcan be claimed or not. The details that to be furnished are to be categorised under ‘Import of goods’, ‘Import of services’, ‘Inward supplies liable to reverse charge’, ‘Inward supplies from ISD’ and ‘All other ITC’The above captures the details of GST paid on all inward supplies for the given month. However, thevalue of ineligible portion of ITC shall be declared to arrive at eligible ITC that can be used for set-offwith outward GST payable.23 | P a g e

SBS Interns' Digest www.sbsandco.com/digest Know abCoomuptaGnieSsTARct 3B5. Values of Exempt, Nil-rated and Non-GST inward supplies: Apart from all the taxable inward supplies, those supplies on which GST is not charged, has to be furnished separately such as supplies from composition scheme, exempt, nil rated supply and non-GST supply.6. Payment of Tax: Under this part, details of the tax payment using cash and ITC for the respective month will be disclosed. The tax liability under reverse charge, interest, late fee and penalties if applicable shall be made through cash only without using ITC. The amount of ITC claimed as eligible under (5) above, will be credited to electronic credit ledger maintained in GST portal. This ITC can be used for payment of GST on outward supplies.ITC Comprises of IGST, CGST, SGST/UTGST. ITC of IGST shall first be utilized towards the payment ofIGST and if there any balance credit, then it can be adjusted against CGST and SGST. ITC of CGST shallfirst be utilized towards the payment of CGST if any excess credit is available, it can be adjustedagainst IGST. ITC of SGST shall first be utilized towards the payment of SGST, if any excess credit isavailable, it can be adjusted against IGST. In case of any excess credit after paying these taxes,it canbe carry forwarded to succeeding month. Tax under reverse charge mechanism shall be dischargedonly through debiting cash ledger.The balance of GST payable on outward supplies if any along with GST payable towards inwardsupplies under reverse charge, late fee, interest and penalties shall be made through cash. For thispurpose, sufficient amount of cash shall be deposited in the electronic cash ledger maintained inGST portal. The amount lying in this ledger shall be used for tax payment.Note: The “Payment of Tax” table gets enabled only when all other tables are duly filled in and thesaid information is submitted by clicking on the ‘submit’ button appearing at the bottom of thereturn. Upon successful filing of payment details, ‘Offset’ button should be clicked which will displaysuccess message upon successful offsetting the tax liability with the amounts in electronic cash andcredit ledgers. On successful offset of liability, “File” option will be enabled for filing the return.7. TCS/TDS Credit: As of now the provisions relating to TCS/TDS has not made effective. Hence, no details have to be mentioned in this section.This article is contributed by CA Sri Harsha Vardhan K & CA Manindar K Partners of SBS and Company LLP,Chartered Accountants. The authors can be reached at [email protected] & [email protected] | P a g e

SBS Interns' Digest www.sbsandco.com/digestCOMPANIES ACT, 2013RULES, CIRCULARS, NOTIFICATIONS AND ORDERS ISSUED DURING THE MONTH OF OCTOBER, 2017 RULESvThe Companies (Registered Valuers and Valuation)Rules, 2017, Dt: 18.10.2017.Vide the said rules, the Ministry has notified the Companies (Registered Valuers and Valuation)Rules, 2017, pursuant to the provisions of Section 247 of the Companies Act, 2013. The said rulescome into effect from the date of their publication in the Gazette.The rules provide for Eligibilitycriteria’s, Qualifications requirements and procedure forRegistrationof valuers, Valuation Standards, and other operational guidance relating to Valuers under the Act.http://mca.gov.in/Ministry/pdf/RegisteredValues_19102017.pdf CIRCULARvCircular No.12, Dt: 16.10.2017 - Transfer of Shares to IEPF Authority.The Ministry has further informed that the IEPF authority has opened Demat accounts with NSDLand CDSL through PNB and SBICAP Securities Limited, respectively for transfer of shares bycompanies held in dematerialised or physical form. The details of the Demat accounts and otherprocedural and operating aspects relating thereto are provided in the circular.It would be not out of place to mention that vide the Investor Education and Protection FundAuthority (Accounting, Audit, Transfer and Refund) Second Amendment Rules, 2017 Dt: 13.10.2017,the Ministry has provided 31.10.2017, as the due date for transfer of shares to IEPF by thecompanies whose period of seven years as provided under sub-section (5) of Section 124 iscompleted for Unpaid/Unclaimed dividends during 07.09.2016 to 31.10.2017.http://mca.gov.in/Ministry/pdf/GC12TranferofShares_16102017.pdfvCircular No.13, Dt: 26.10.2017 - Relaxation of Additional fees and extension of last date for filing of AOC-4 XBRL E-Forms using Ind AS.Vide the said circular, the Ministry hasprovided 31st March, 2018 as due date for filing financialstatements in XBRL formatrelating to the financial year 2016-17 for the companies who are requiredto prepare or voluntarily preparing their financial statements in accordance with Companies (IndianAccounting Standards) Rules, 2015. Ministry has further clarified that this extension is because ofdelay in development of tools necessary for deployment of the taxonomy for XBRL filing.http://mca.gov.in/Ministry/pdf/GeneralCircular13_26102017.pdf25 | P a g e

SBS Interns' Digest www.sbsandco.com/digest AdvanCcomepTaanixes ActvCircular No14, Dt: 27.10.2017 - Relaxation of Additional fees and extension of last date for filing of AOC-4 and AOC-4(XBRL non-Ind AS).Vide the said Circular, the Ministry has extended time for filing e-forms AOC-4 and AOC-4 (XBRL non-IndAS) and the corresponding AOC-4 CFSfor the financial year ended 31.03.2017, upto 28.11.2017,without any additional fees.http://mca.gov.in/Ministry/pdf/GeneralCircular14_28102017.pdf NOTIFICATIONSvThe Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Second Amendment Rules, 2017Dt: 13.10.2017.Vide the said Notification, the Ministry has amended some of the provisions inInvestor Educationand Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (hereinafterreferred to as principle rules). Click for the Amendment notification for the amendments.http://mca.gov.in/Ministry/pdf/IEPFNotification_13102017.pdfvCommencement of provisions of Section 247 of the Companies Act, 2013, Dt: 18.10.2017.Vide the said notification, the Ministry notified that provisions of Section 247 of the Companies Act2013 “Valuation by Registered Valuers” shall come into force with effect from 18.10.2017.http://mca.gov.in/Ministry/pdf/CommencementNotification_20102017.pdfvDelegation of powers under section 247 of Companies Act 2013 to Insolvency and Bankruptc Board of India, Dt: 23.10.2017.Vide the said notification, the Central Government had delegated the powers and functions vestedin it under the provisions of Section 247 of Companies Act, 2013 to Insolvency and Bankruptcy Boardof India (IBBI), subject to the condition that the central Government may revoke such delegation ofpowers or it may exercise the powers under the said section if in its opinion such a course of action isnecessary in the public interest.http://mca.gov.in/Ministry/pdf/delegationOfPowers_Section247_24102017.pdf ORDERSNo Orders were issued during the month.These updates are contributed by Arun and vetted by CS Phanindra of SBS and Company LLP,Chartered Accountants. For any queries, please reach at [email protected] 26 | P a g e

SBS Interns' Digest www.sbsandco.com/digestSATURDAY SESSIONS Event Date Speaker Venue S.No. SBS - Hyd SBS - Hyd1 Hotel industry Audit (Food and bevearges) 18/11/2017 Sarvani SBS - Hyd SBS - Hyd2 Meaning and scope of Supply Sukanya SBS - Hyd Sunil 25/11/20173 Remittance of Assets by Non-Residents4 Vouching of cash transactions Madhulika.G Varun 02/12/20175 Income from House PropertySESSIONTIMINGS: 2:30 to 4:30 PMFiling of Income Tax Returns - Madhulika Introduction to Bitcoin - Uday Kumar SEZ APR - Prudhvi27 | P a g e

SBS Interns' Digest www.sbsandco.com/digest By Team SBS© All Rights Reserved with SBS and Company LLPHyderabad: 6-3-900/6-9, #103 & 104, Veeru Castle, Durganagar Colony, Panjagutta, Hyderabad, TelanganaKurnool: No. 302, 3rd Floor, V V Complex, 40/838, R.S. Road, Near SBI Main Branch, Kurnool, Andhra PradeshNellore: 16-6-259, 1st Floor, Near Santi Sweets Opp: SBI ATM, Vijayamahal Centre, SPSR Nellore, Andhra PradeshTada: 8-3-425/2, Flat No. 202, 2nd Floor, Bigsun Avenue, Near SRICITY, TADA, SPSR Nellore Dist, Andhra PradeshVisakhapatnam: # 39-20-40/6, Flat No.7, Sai Yasoda Apartments, Madhavadhara,Visakhapatnam (Urban),Vizag, Andhra PradeshBengaluru: B104,RIRCO, Santosh Apartments, Wind Tunnel Road, Murugeshpalya, Old Airport Road, Bengaluru , Karnataka.Disclaimer:The articles contained in SBS Interns’ digest, are contributed by the respective resource persons and any opinion mentioned thereinis his/their personal opinion. SBS Interns’ digest is intended to be circulated among fellow professional and clients of the Firm, toprovide general information on a particular subject or subjects and is not an exhaustive treatment of such subject(s). Theinformation provided is not for solicitation of any kind of work and the Firm does not intend to advertise its services or solicit workthrough SBS Interns’ digest. The information is not intended to be relied upon as the sole basis for any decision. Before making anydecision or taking any action that might affect your personal finances or business, you should consult a qualified professionaladviser.SBS AND COMPANY LLP [Firm]does not endorse any of the content/opinion containedin any of the articles in SBS Interns’ digest,and shall not be responsible for any loss whatsoever sustained by any person who relies on the same.To unsubscribe, kindly drop us a mail at [email protected] with subject ‘unsubscribe’.