December 2017

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Raju and Prasad Chartered Accountants
Raju and Prasad Chartered Accountants
`
December 2017 Volume 4, Issue 10
FOCAL POINT
Newsletter from Raju and Prasad Chartered Accountants
Contact us:
Email : hyderabad@rajuandprasad.com
Website: www.rajuandprasad.com

Page 1Raju and Prasad Chartered Accountants
Dear Reader,
Our editorial comments for this month are on “ Financial Resolotion and
Deposit Insurance Bill, 2017”.
This month we have covered “Banking Industry” in our Industry Review.
Please give your views and also send this newsletter to your friends.
We wish all the readers “Happy Christmas” and “New Year”
Regards
For Raju & Prasad
Chartered Accountants
M Siva Ram Prasad
Partner

Happy Christmas and New Year to all

Contents
Contents..................................................................................................................................................................................................3
Editorial....................................................................................................................................................................................................4
Depositors Beware.................................................................................................................................................. 4
Industry Review ........................................................................................................... 6
Banking Industry ..................................................................................................................................................... 6
Ancient and Medieval Period............................................................................................................................................................................ 6
Modern age..................................................................................................................................................................................................................... 7
Post Independence Era......................................................................................................................................................................................... 8
Regulatory Mechanism.......................................................................................................................................................................................... 9
Legislative Support ................................................................................................................................................................................................12
Banking Network: ...................................................................................................................................................................................................12
Other Banks.................................................................................................................................................................................................................14
Specialised Financial Institutions ...............................................................................................................................................................15
Banking Reforms......................................................................................................................................................................................................15
Present status ............................................................................................................................................................................................................16
Technology in Banking Sector ......................................................................................................................................................................17
The Challenges:........................................................................................................................................................................................................17
Policy Watch......................................................................................................................................................................................19
Indirect Taxes..........................................................................................................................................................19
Extension of filing of GSTR 3B upto March 2018. ........................................................................................................................19
Exemption of payment of tax on advances received in case of supply of goods ...............................................19
Due dates for filing of form GSTR 01......................................................................................................................................................19
Limiting the late fee payment for delay in filing of GSTR 3B..............................................................................................19
Direct Tax...................................................................................................................................................................20
Extension of date for linking of Aadhar with PAN:.......................................................................................................................20
RBI .................................................................................................................................................................................20
Settlement period of Over the Counter (OTC) Government Securities Transaction by Foreign
Portfolio Investors (FPIs)..................................................................................................................................................................................20
SEBI...............................................................................................................................................................................20
Enhancing the fund governance for Mutual Funds:....................................................................................................................20
Verdicts.................................................................................................................................................................................................21
Direct Tax...................................................................................................................................................................21
Deduction under Section 80 IB of the Income Tax Act, 1961 can be denied when it ceases to be a
small scale industry..............................................................................................................................................................................................21
When CBDT issues instructions to reduce the litigations by revising monetary limits for filing of
appeals by department,it would apply even to the pending litigations......................................................................21
When the modernization and Renovation had brought a substantial improvement in the functioning
of the establishment, deduction under Section 80IA is to be allowed if the amount so spent was
over 50% of the existing net book value of the establishment.......................................................................................21
Receipt of Compensation amount on account of breach of a contract is to be treated as capital
receipt...............................................................................................................................................................................................................................21
►►► PHOTOGRAPH OF THE MONTH............................................................................................................................22
Pair of Ibis and Spoonbill at Ranganathittu.......................................................................................................................................22

Editorial
Depositors Beware
n the Winter Session of Parliament, the Bill on
Resolution Corporation and Deposit
Insurance Guarantee will be likely taken up.
This is an outcome of the report submitted by a
committee to create a framework on resolution
of financial firms.
The Bill Proposes to bring a resolution on Banks
and financial institutions. Resolution is to resolve
and/or restoration. In the wake of New
Insolvency and Bankruptcy Code (IBC),
Government of India is thinking on similar lines
even for the Banking Sector.
So far the Banks have not faced such situation
in India.
State Bank of India under Section 45 of the SBI
Act, can’t be liquidated unless the Central
Government decides. Now the proposed bill
supercedes SBI Act and provides for its
liquidation.
The Banking Regulation Act, 1949 provides for
Forced Mergers, Acquisition of the undertaking,
winding up in case of a court order in distress
situations. So far In India, weak Banks are
I
Why not 100% Deposit Insurance even at
the cost of the Depositors?

merged with strong banks. But banks were not
liquidated. To resolve the crisis situations, the
new law is envisaged for a faster solution.But
the provisions of the bill have elaborated more
on the liquidation than restoration. Liquidation
of banks is not a solution.
The Bill Provides for Deposit Insurance which
was in force since 1961. Presently the insurance
covers only upto Rs 1 Lakh of Deposit which was
fixed 55 years ago, which has no Value Today.
The Bill has not mentioned anything on
quantum of Individual Deposit to be covered
under Insurance.
If the government is envisaging a risk coverage
for depositors, why not 100% Deposit Insurance
even at the cost of the Depositors?
The Bill has jurisdiction over Banking Companies
under Banking Regulation Act, 1949, Co-
operative banks (which can be liquidated by
state governments), multi state Co-operative
Banks, Regional Rural Banks under RRB act,
1976 and SBI.
The Bill brings under its provisions financial
service providers defined as per Section 3(17)
of IBC.
By winding up of DIGC and taking over the
insurance functions by new corporation does
not give any additional comfort unless 100%
insurance covers the deposits.
The Sovereign Guarantee for depositors should
not be shirked just because the banks
shareholding are diluted by public issue of
shares. If that is the thinking, the purpose of
economic reforms is defeated. While we
appreciate the anxiety of the government to
hasten resolution of weak
banks, the depositors money to be converted
to one of the instruments to Bail in the Bank only
raises doubts in the minds of the public and
shakes the confidence in Banking Institutions.
Why should a depositor bail in for the losses of
banks due to losses caused by defaulters of
loans? Post Sub Prime crisis in 2008 in USA, the
financial stability board (FSB) created by G7
countries and adopted by G20 countries
advised all members to adopt this law, but
those countries do not have Indian way of
lending.
 We have to think whether our banks are so
weak. The NPAs are only about 10 lakh Crores
whereas the capital and Reserves also stood
at about 10 lakh Crores, after making
adequate provision for NPAs.
 The words “Bail-in” is not elaborated and
whether the bail in works as bail out for the
defaulters and making the taxpayers to bear
these losses, in the name of resolution in
negative situations.
 Indian Banking system is highly regulated and
monitored by RBI. What would be the Role of
RBI as regulator, if this law is made?
 Whether, including Co-operative Banks under
this law will take away the powers of the State
Governments?
 Whether there will be run on private banks or
the growth in deposits will be hampered.
It is a sensitive situation and it should be carefully
handled instead of following the Financial
Stability Board Dictum in word without the spirit.
-M Siva Ram Prasad
Will there be a run on private banks ?
Depositors money to be converted to one of
the instruments to bail in only raises doubts
Should a depoistor need to bear the lossess of
Banks?

Industry Review
Banking Industry
Ancient and Medieval Period:
Banking in India was known even in the
ancient times. Though the barter system
prevailed, after the coinage, exchange of
currency started. Money lending and
interest rates were discussed in the
Dharma Sastras, Manusmriti, and later
Arthasastra of Chanakya. Banking started
with lending by rich men and traders.
Money was being deposited in temples for
safety and the financial transactions were
taking place in temples according to
certain sources. Coinage in various
periods had not only promoted internal
but also external trade.
According to Reserve Bank of India,
Coinage in India was one of the oldest in
the world. Punched mark coins were in use

around 6th and 7th Century B.C and 1st
Century AD. These punched coins were
issued by guilds of traders and also by
states (Janapadas). Mauryan period is
said to be the age when coinage
stabilised. Various dynasties like
Satavahanas (Andhras) (220 B.C to 30
B.C.), Sakas (35 to 405 A.D), Kushan (First to
Second Century A.D.), Guptas (600 to 1200
A.D), Vijayanagara Empire (1336 to 1565),
Mughals (1526 to 1857), Marathas (1674 to
1818) and Awadh (1722 to 1856) had
issued their coins. In post Gupta period
Kalachuri dynasty, Cheras, Cholas, and
Hoyasalas and princely states like
Hyderabad (1724 to 1948), Mysore (1399 to
1947) and Udaipur also issued their coins.
Roman coins were found abundantly in
Krishna River mouth areas in Andhra
Pradesh to evidence the trade links of
Andhra Dynasties with Rome and
flourishing Buddhism in the region. History
records that Mohammed Bin Tughlaq
issued leather coins in place of metallic
coins.
Sher Shah Sur (1472 to 1545) is said to have
adopted Rupaiya and Paisa as a
denomination. Paper Currency was issued
in 18th century in India.
Modern age:
In the modern age the merchants of
foreign origin started lending through their
managing agencies and the first bank was
established in the year 1770 (Hindustan
Bank). In the year 1786, General Bank of
India was established and it went into
liquidation in 1791. Bank of Calcutta (1806)
(renamed as Bank of Bengal in 1809), Bank
of Bombay (1840) and Bank of Madras
(1843) were started and they are also
known as Presidency Banks and were
mainly controlled by East India Company.
The presidency banks were merged to
become Imperial Bank of India in the year

1921.Interestingly the Imperial Bank was a
bank operating as a commercial bank
and also discharging the functions of
Central Bank.
Allahabad Bank, established in 1865 is the
longest surviving bank and the oldest Bank
Started in India. Punjab National Bank was
started in Lahore in the year 1894. In the
first decade of 20th Century, other banks
like Bank of India, Central Bank of India,
Bank of Baroda, Canara Bank and Indian
Bank were established.
After the reforms introduced by the British
in 1920, Major Princes started Banks in their
states like Mysore, Jaipur, Hyderabad,
Bikaner, Indore, Travancore, Patiala and
Saurashtra. These eight Banks became
subsidiaries of State Bank of India in 1960.
Some the great personalities who have
started banks are Mokshagundam
Pattabhi Sitaramayya
Visvesvaraya (State Bank of Mysore), Lala
Lajpat Rai (Punjab National Bank),
A.Subba Rao Pai (Canara Bank), Pattabhi
Sitaramayya (Andhra Bank), Balakrishna
Shetty (Vijaya Bank) etc.,
This concludes the pre independence era
of banking. There are three eras of
banking in India – i) Pre Independence Era,
ii) Post Independence Era and iii) Post
Liberalization.
Post Independence Era:
In post-independence era, Government
of India converted Imperial Bank of India
to State Bank of India under a separate
statute in the year 1955 and it became a
total government owned bank and was

functioning as a principal agent of Reserve
Bank of India. The number of banks as well
as branches were increased during 1947
to 1969.
Agriculture being a major contribution to
the GDP has not been adequately
financed by the banks during 1960’s. To
make the funds available to the
agriculture sector from an organised
sector, and to mobilise the savings of the
households especially in rural areas,
Government of India has nationalised the
private sector banks in two spells, First in
1969 (14 Banks with more than 50 crores
capital), second in 1980 (7 Banks with
deposits more than 200 crores). With this
91% of deposits of the banking sector
came under public sector.
Major developments during this phase
were:
Year Development
1969 The Lead Bank Scheme was introduced
with a view to mobilise the deposits on
a massive scale throughout the country.
1972 The concept of Priority sector was
formalised.
1973 The District Credit plans were initiated
1976 Maximum Lending rates was prescribed
in addition to minimum lending rate
1989 The CRR was increased to 15% (which
was 5% in 1973)
1991 SLR was raised to 38.5%
Regulatory Mechanism:
Indian Banking had its hiccups during the
World Wars I & II and post-world war
periods and some banks failed and got
liquidated.
On the recommendations of the Hilton
and Young Committee, a Central Bank to
supervise the overall Banking activities, to
stabilize the economy and to monitor the
monetary health of the country, RBI was
established in 1935 and came under the
control of Government of India in the year
1949.

In addition to RBI, Other regulator Banks
National Bank for Agriculture & Rural
Development (NABARD), National Housing
Bank (N.H.B) and Small Industries
Development Bank of India (S.I.D.B.I) were
also started. These regulators also finance
the respective activities and also
refinance the banks and other financial
institutions.
Other regulators:
National Bank for Agriculture and Rural
Development (NABARD) was established
Monetary
Policy
Regulation and
Supervision
Debt and Cash
Management
for
Governements
Forex
Management
Bankers
Bank
Currency
Management
Developmental
Role
Reserach and
Statistics

in the year 1982, under the National Bank
for Agriculture and Rural Development Act
1981 on the recommendations of
“Committee to Review Arrangements for
Institutional Credit for Agriculture and Rural
Development”. It is as an Apex institution
at the national level, for providing credit
for the promotion of agriculture, small
scale industries, cottage and village
industries, handicrafts, and other allied
economic activities in rural areas. Prior to
setting up of NABARD, Agriculture Credit
Department of RBI was discharging those
functions through Banks.
National Housing Bank (NHB) was set up in
July 1988, under the National Housing Bank
Act, 1987. NHB is wholly owned subsidiary
of RBI. Apart from being a refinancing
institution, it is also the regulator and
supervisor of housing finance companies.
Its primary responsibility is to promote and
develop specialized housing finance
institutions for mobilizing resources and
extending credit for housing. It has even
powers to grant loans and advances and
provides other financial support to housing
finance institutions, Housing Boards and
scheduled banks.
Small Industries Development Bank of India
(SIDBI) was set up in the year 1990 under
an Act of Parliament (SIDBI Act, 1989) as a
wholly owned subsidiary of IDBI. Now the
major shareholders of SIDBI are SBI,
Government of India, LIC, NABARD and
IDBI Bank. It is the principal financial
institution for the promotion, financing,
development and refinancing of Micro
Small and Medium Enterprises (MSME) and
for co-ordinating the functions of
institutions like State Financial
Corporations, State Industrial
Development Corporations engaged in
similar activities.

Legislative Support:
To Manage, Control and Regulate the
Banking Sector the following acts were
enacted in India.
 Negotiable Instruments Act 1881
 Reserve Bank of India Act, 1934
 Banking Companies Act (Banking
Regulation Act 1949)
 The State Financial Corporations Act,
1951
 State Bank of India Act 1955
 Deposit Insurance and Credit
Guarantee Corporation, 1961
 Banking Companies (Acquisition and
Transfer of Undertakings) Act, 1970
 The Securitisation and Reconstruction
of Financial Assets and Enforcement of
Security Interest Act, 2002 (SARFAESI
Act)
 Prevention of Money Laundering Act,
2002
 Debt Recovery Tribunal (D.R.T)
Banking Network:
India being a densely populated country,
mainly dependent on agriculture. Farmers
were borrowing money from money
lenders for their needs. An organised
Banking Sector was needed to support as
well as mop up the savings in the country,
regulate the credit, money supply, and
lending rates. This made organised
banking an absolute need for the society
at large. Banking in India started with as
many as 8 banks having a paid up share
capital and free reserves amounting to Rs
374 lakhs and deposits of Rs 1263 lakhs. The
Co-operative banking movement started
in 1900’s.
Today Indian Banking system has massive
network of Banks regulated by regulators.
The Total Banking Sector is divided into i)
Banks and ii) Financial Institutions
There are 188 Banks divided into Public
Sector Banks, Private Sector Banks, Foreign
Banks, Co-Operative Banks and Regional
Rural Banks.

Banks which are listed in the second
Schedule to the Reserve Bank of India Act
1934 are scheduled Banks and this can be
majorly categorized into Scheduled
Commercial Banks and Scheduled Co-
operative Banks.
Scheduled Commercial Banks can be
further classified into-
 Public Sector Banks (SBI, Nationalized
and Other Public Sector Banks)
 Private Banks
 Foreign Banks
 Regional Rural Banks
Public Sector Banks are banks where the
majority stake or equity (more than 50%) is
held by the government. Existence of
Public Sector banks in India can be seen
only after the nationalization of banks in
1969 and 1980. After the merger of State
Bank associates with State Bank of India,
there are 21 public Sector banks (including
S.B.I) in 2017.
Private Banks are those banks whose stake
is held by private shareholders. Old Private
sector banks were established before
Independence and new private sector
banks were established after 1993.
Presently there are 21 Private Sector Banks
in India. Some of the private sector banks
to mention are ICICI Bank, HDFC Bank, Axis
Bank, Yes Bank, City Union Bank, Federal
Bank, Lakshmi Vilas Bank etc.,
Foreign Banks are banks of foreign origin
operating through branches in India. At
Present, there are 43 foreign banks in India.
Some of the foreign banks to mention are
Standard Chartered Bank, HSBC, Deutsche
Bank etc.
Regional Rural Banks (RRB) or Grameena
banks came into existence from the year
1975, based on the recommendations of
Banks in India
(188)
SBI
Public
Sector
Banks (20)
Private
Sector(21)
Local
Area
Banks
(3)
Small
Finance
Banks
(9)
Payments
Banks (4)
Foreign
Banks
(43)
State
Co-op
Banks
(31)
Regional
Rural
Banks (56)

the “Narasimham Working Group” to
ensure the sufficient institutional credit for
agriculture and other rural sectors, with
three shareholders, namely Government
of India (50%), Sponsor Bank (35%) and
State Government (15%). At present, there
are 56 regional rural banks in our country.
Co-operative Banks in India have history
of more than 100 years, which operate on
“NO Profit and NO loss” basis. These banks
were created by the persons who have
common interests as a group like weavers,
agriculturists etc., It is registered under Co-
operative Societies act as well as
regulated by the Reserve Bank of India.
The banks which are not listed in the
second schedule to the Reserve Bank of
India act, 1934 due to specific exemption
or not meeting
the criteria of
Minimum capital
set by RBI are
called Non
Scheduled banks.
Other Banks:
 Local Area Banks (LAB): This concept
originated in the year 1996 to bridge the
gaps in credit availability and enhance
the institutional credit framework in the
rural and semi-urban areas. The area of
operation of LABs are restricted to a
maximum of three geographically
contiguous districts. At present there are
only three LABs operating in India. They
are Coastal Local Area Bank Limited
(Vijayawada), Krishna Bhima Samruddhi
Local Area Bank Limited
(Mahabubnagar), and Subhadra Local
Area Bank Limited (Kolhapur). This
Concept has not caught on.
 Small Finance Banks: Banks which are
established to provide the basic banking
activities such as acceptance of deposits
and lending, but in a limited area of
operation with a minimum paid up share
capital of Rs 100 Crores are called as Small
Finance Banks. There are 9 small finance
banks at present. Some of
them to mention are AU
Small Finance Bank Limited,
FINCARE Small Finance Bank
Limited, etc.,

 Payments Banks: This is a new concept
introduced by Reserve bank of India. To
accept the demand deposits (only Upto
Rs 1 lakh per individual customer), and
can provide the online payments and
remittance services
through various
channels. Some of the
payments banks to
mention are Airtel
Payments Bank,
Paytm Payments Bank
etc.,
Specialised Financial Institutions:
These Institutions finance certain lines of
activities like Industry, Exports,
Infrastructure etc., These Institutions are
term lending institutions giving long term
finance. The first FI to be established in
India was IFCI. It was established by a
statute in 1948 for the purpose of making
medium and long-term credit more readily
available to medium and large industrial
concerns in corporate and co-operative
sectors in India. Other long term financial
institutions like IDBI, ICICI converted
themselves into
commercial banks.
Presently the
financial institutions
that are operating
are Industrial
Investment Bank of
India Limited (IIBI), Export-Import Bank of
India (EXIM Bank), Indian Infrastructure
Finance Company Limited (IIFCL),
Industrial Finance Corporation of India
(IFCI), and Power Finance Corporation Ltd.
Banking Reforms:
A committee under the chairmanship of M.
Narasimham, Ex-Governor of RBI was set
up in 1991 to restore the financial health of
the commercial banks and make them
function efficiently. The committee had
recommended the Liberalisation measures
(Revision of Ratios like CRR, SLR, CRAR),
Prudential Norms (Asset Classification,
Provisioning requirement), Competition
directed measures (Opening doors for new

banks in private sector), Revision of the
legislations, Setting up Asset reconstruction
funds (ARFs), Deregulation of Interest rates
etc. Government of India had adopted
many of the above recommendations. To
review the implementation of reforms, a
committee was set up which was also set
up in 1998 again under the chairman ship
of M.Narasimham. This committee focused
on measures to be taken for strengthening
the foundations of banking systems,
technology and Human Resource
Development, and also making certain
Structural Changes in the system.
The Reforms helped the banking sector in
bringing out Capital Adequacy norms,
Deregulation of interest rates, Allowing
banks to raise the capital from public,
giving licences to the private sector for
encouraging the healthy competition,
Human resource development, and
making Banks technology driven. We may
also shortly see, number of banks being
reduced by merging with other banks
which is already seen in the case of State
Bank of India.
Present status:
The reach of Banks to rural areas and
credit availability to them has increased to
a greater extent. Banks have been
regulated strictly by RBI and Various laws.
The Banks have gained confidence of
public as it provides security to their
deposits. The Number of branches of
scheduled commercial banks is increased
from 8262 branches in 1969 to 138245
branches in 2017. The branches in rural
areas account for 35% of the total
branches in the country. The Capital and
reserves of Scheduled Commercial banks
(Excluding Regional Rural Banks) has stood
at 10 lakh crores in 2015-16, while the
deposits and advances stood as 109 lakh
crores and 80 lakh crores respectively by
the end of second quarter of 2017.
Number of employees employed in
scheduled commercial banks stood at 13,
00,934 in the year 2015-16. The NPAs in
Banks is amounting to Rs 10 lakh crores.
The Key Ratios like Cash Reserve Ratio 4%,
Statutory Liquidity Ratio 19.5%, repo rate

6%, Reverse Repo Rate 5.75% are
regulated by RBI and reviewed bi-monthly.
POPULATION GROUP-WISE NUMBER OF BRANCHES OF SCHEDULED COMMERCIAL BANKS
Year Rural Semi-urban Urban Metropolitan Total
1969 1833 3342 1584 1503 8262
1980 15105 8122 5178 4014 32419
1990 34791 11324 8042 5595 59752
1991 35206 11344 8046 5624 60220
1992 35269 11356 8279 5666 60570
1998 32878 13980 9597 7763 64218
2013 39199 29163 19874 18348 106584
2014 44676 32216 21515 19589 117996
2015 48140 34526 23098 20879 126643
2016 50561 36455 24395 22088 133499
2017 48806 38201 24574 26478 138059
Source: Handbook of Statistics on Indian Economy, Reserve Bank of India
Technology in Banking Sector:
With the advent of the technology in
banking sector, banking became easy.
Various Banking Products can be
accessed at our finger tips, from our
places, at our convenient time. The
Internet Banking, ATMs, Mobile Banking,
Tele Banking, Payment systems, are the
major technological outcomes in this
sector.
The Challenges:
 The Growth of Banking is well spread, but
only 8% of villages are covered under
banking operations, with branch network.
 The Sector suffers from the Non-performing
Assets, which is on increase due to its
exposure to long term finance. The asset
quality is impacted due to such financing.
 Capital adequacy though matching the
Basel Norms, the sector should concentrate
on Debt equity norms of the borrowers and
be clear about lending large scale
financing which will impact the capital
adequacy.
 An efficient system of appraisal of credit
needs should be developed specially for
industries which are exposed to global
competition

 Monitoring of credit need to be done at the
three stages during the implementation of
the project, Project Overruns, and results
after implementation. And special teams
must be made for monitoring giving
additional funding on time.
 Sharing the risk in case of big projects by
consortium of Bankers lack close
monitoring and reviews due to many
lenders joining and ultimately the loan is like
nobody’s baby.
 Banks are getting short term deposits in
general and exposing the funds for long
term lending which will create mismatch of
Asset Liability management.
 Financial institutions for term lending and
banks for working capital lending would be
ideal and co-ordination between these
two are required for health of the
economy.
 Forex exposure to borrowers who have no
forex earnings should be done carefully
 Maintaining liquidity coverage ratio and
high quality liquid assets to meet net cash
outflows is a regular challenge.
Banking is the backbone of the economy
and considering the complexities of
requirements of various sectors like
Agriculture, Industry, Trade, Exports etc.,
the system should be regulated with past
experience and global scenario.
-Team at Raju and Prasad

Policy Watch
Indirect Taxes
Extension of filing of GSTR 3B upto
March 2018.
The Central Board of Excise and Customs
vide Notification No 56/2017 dated 15th
November 2017 has extended the filing of
return in Form GSTR 3B upto the month of
March, 2018 as below:
S.No Month Last date of filing of
GSTR 3B
1 January,
2018
20th February 2018
2 February,
2018
20th March 2018
3 March,
2018
20th April 2018
https://cbec-gst.gov.in/pdf/central-
tax/notfctn-56-central-tax-english.pdf
Exemption of payment of tax on
advances received in case of
supply of goods
November 2017 has exempted the
payment of GST on advances received
from the customers in case of supply of
goods.
Due dates for filing of form GSTR 01
vide Notification No 57/2017 and 58/2017
dated 15th November 2017 has notified the
due dates of filing Form GSTR 1 for FY 2017-
18, which are as follows:
Period
Turnover
Upto 1.5
Crores
Quarterly
Return
Turnover
above 1.5
Crores
Monthly
Return
July to
September
2017
31.12.2017 31.12.2017
October 2017
15.02.2018
31.12.2017
November
2017
10.01.2018
December
2017
10.02.2018
January 2018
30.04.2018
10.03.2018
February 2018 10.04.2018
March 2018 10.05.2018
Limiting the late fee payment for
delay in filing of GSTR 3B
November 2017 has limited the late fee on
account of not filing the GST Return in Form

GSTR 3B from the month October 2017 as
follows:
S.No Particulars Late Fee
1 For Normal
Return
Rs 25 for
every day of
delay
2 For NIL Return Rs 10 for
every day of
delay
http://www.cbec.gov.in/resources//htdocs-
cbec/gst/notfctn-64-central-tax-english.pdf
Direct Tax
Extension of date for linking of
Aadhar with PAN:
The Central Board of Direct Taxes vide
Press Release dated 8th December 2017
has extended the time of linking Aadhar
with PAN till 31.03.2018, which is to be done
as per Section 139AA of the Income tax
act,1961
https://www.taxmann.com/filecontent.aspx?
Page=CIRNO&id=104010000000053409&isxml
=N&search=&tophead=true&tophead=true
RBI
Settlement period of Over the
Counter (OTC) Government
Securities Transaction by Foreign
Portfolio Investors (FPIs)
Reserve Bank of India Vide Notification No
97/2017-18 dated 16th November 2017 has
decided to permit the foreign Portfolio
investors to settle the Over the counter
(OTC) secondary market government
securities either on T+1 or T+2 basis.
https://rbidocs.rbi.org.in/rdocs/notification/P
DFs/NOTI9769C78154C4364FF295ECD892C9F5
AAF4.PDF
SEBI
Enhancing the fund governance for
Mutual Funds:
Securities and Exchange Board of India
Vide Circular No 125/2017 dated 30th
November 2017 has decided to
implement the following in order to
strengthen the governance structure for
Mutual Funds:
S.N
o
Particulars Independent
Trustees or
Directors
Auditors
(Firm or
LLP)
1 Term or
Tenure
10 Consecutive Years
2 Cooling
Period
3 Years 5 Years
3 Transition:
For those
who are
Holding
Office for
less than 9
years
For those
who are
Holding
Office for
More than
9 years
Can Continue the
office for max 10 total
years
Can Continue the
office for max 1 year
further
http://www.sebi.gov.in/legal/circulars/oct-
2017/investments-by-fpis-in-government-
securities_36165.html

Verdicts
Direct Tax
Deduction under Section 80 IB of the
Income Tax Act, 1961 can be denied when
it ceases to be a small scale industry.
-Vide Decision of Supreme Court of India vide
Deputy Commissioner of Income Tax, Circle 11(1),
Bangalore Vs. Ace Multi Axes Systems Ltd
The Honorable Supreme Court of India Vide
Deputy Commissioner of Income Tax, Circle
11(1), Bangalore Vs. Ace Multi Axes Systems
Ltd held that When once the eligible business
of an assessee is given the benefit of
deduction under Section 80 IB on the
assessee satisfying the conditions mentioned
in sub-sec. (2) of Section 80 IB, the revenue
can deny the benefit of the said deduction
on the ground that during the any
assessment year of 10 consecutive years, it
ceases to be a small scale industry,
prospectively
https://www.taxmann.com/filecontent.aspx?Pag
e=CASELAWS&id=101010000000177987&isxml=Y
When CBDT issues instructions to reduce
the litigations by revising monetary limits
for filing of appeals by department,it
would apply even to the pending
litigations
-Vide Decision of Supreme Court of India Vide
Director of Income Tax, Circle 26(1), New Delhi Vs.
S.R.M.B Dairy Farming (P.) Ltd
The Honorable Supreme Court of India Vide
Director of Income Tax, Circle 26(1), New
Delhi Vs. S.R.M.B Dairy Farming (P.) Ltd When
CBDT issues instructions to reduce the
litigations by revising monetary limits from
4 lakhs to 10 lakhs for filing of appeals by
department,would apply even to the
pending litigations
When the modernization and Renovation
had brought a substantial improvement in
the functioning of the establishment,
deduction under Section 80IA is to be
allowed if the amount so spent was over
50% of the existing net book value of the
establishment.
- Vide Decision of High Court of Kerala Vide
Kanan Devan Hills Plantations Co. P Ltd Vs.
Assistant Commissioner of Income Tax Circle-
1(2), Kochi
The Honorable High Court of Kerala Kanan
Devan Hills Plantations Co. P Ltd Vs. Assistant
Commissioner of Income Tax Circle-1(2),
Kochi held that When the modernization and
Renovation had brought a substantial
improvement in the functioning of the
establishment, deduction under Section 80IA
is to be allowed if the amount so spent was
over 50% of the existing net book value of the
establishment, even though the asset is a
second hand machinery.
Receipt of Compensation amount on
account of breach of a contract is to be
treated as capital receipt
-Vide Decision of High Court of Bombay Vide
Commissioner of Income Tax 8, Mumbai Vs. Parle
Soft Drinks
The Honorable High Court of Bombay vide
Commissioner of Income Tax 8, Mumbai Vs.
Parle Soft Drinks held that on account of
breach of contract of sale of right, the
compensation amount received is to be
treated as capital receipt and it will be
taxable under the head Income from other
sources, not as a “Capital Gains”
Disclaimer
Information in this Newsletter, charts, articles, or
any other statements regarding market or any
other financial information, is obtained from the
sources, which we feel reliable. We do not
warrant or guarantee the timeliness or accuracy
of the information. The reader shall not take any
decision based on the facts or figures of the
newsletter without professional advice.

►►► PHOTOGRAPH OF THE MONTH
Pair of Ibis and Spoonbill at Ranganathittu
- Clicked by M Siva Ram Prasad
Please visit http://www.rajuandprasad.com/newsletter.php for earlier issues

December 2017

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