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Step 1:

Identify nature of Amalgamation: If the six conditions of amalgamation in nature of merger not satisfied then it is treated as amalgamation in nature of purchase. If the information provided in the question is not sufficient to decide the nature of amalgamation or question is silent on the nature of amalgamation then it is better to assume the nature of amalgamation as purchase.

Step 2:

Method of accounting: After identifying the nature of amalgamation the method of accounting is determined, it may be as follows:

Nature of Amalgamation	Method of Accounting
Merger	Pooling of Interest Method
Purchase	Purchase Method

Step 3:

Purchase consideration: Purchase consideration is amount payable by transferee company (purchasing accompany) to transferor company (selling company) at the event of amalgamation. The payment may be in the mode of shares, debentures and cash. The purchase consideration may be in lump sum payment or based on net assets of selling company. 

Lump Sum Payment/Payment Method	Net Assets Method
Aggregate of consideration paid to share holder (equity and preference) in various forms	Aggregate of assets taken over at fair value                                    XXX Less: Liabilities taken over at agreed  amounts                                XXX Net assets                            xxxx

Note: In case of pooling of interest method the 90% shareholders of selling company will get consideration in the form of equity shares. The consideration paid by the purchase company may be in following cases:

Particular	Merger nature	Purchase nature
Case 1	Consideration paid is more than paid up capital of selling company	Consideration paid is more than net assets of selling company
Case 2	Consideration paid is less than paid up capital of selling company	Consideration paid is less than net assets of selling company

Step 4:

Discharge of purchase consideratio: Purchase consideration is discharged by transferee company(purchasing co) in various forms. After computation of purchase consideration it is discharged in the forms of shares at different values, It may be issued by debentures and by cash etc.

Step 5:

Accounting in the books of transferor company (Selling company). The selling company has to close all accounts by transferring to realization account except shareholders account. The shareholders account is prepaid and closed after passing necessary entries. Journal entries for the same can be find in part – 2 of amalgamation article.

Note: Before attempting the question just clarify whether there is any requirement of passing journal entries in the books of transferor(Selling Co)

Step 6:

Computation of Profit / loss in case of amalgamation for transferee company(Purchasing co)

As accounting standard 14 the profit or loss should be recognized in the following way:

Particular	Amalgamation in the nature of merger		Profit or Loss
Case 1	Consideration paid is morethan paid up capital of selling company		It is loss for the purchasing company and the same should be adjusted against free reserves of selling company and purchasing company
Case 2	Consideration paid is lessthan paid up capital of selling company		It is Profit for the purchasing company and the same should be treated as capital reserve in the books of purchasing company

 

Particular	Amalgamation in nature of purchase		Profit or Loss
Case 1	Consideration paid is morethan net assets of selling company		It is loss for the purchasing company and the same should be treated as goodwill in the books of purchasing company
Case 2	Consideration paid is lessthan net assets of selling company		It is Profit for the purchasing company and the same should be treated as capital reserve in the books of purchasing company

Step 7:

Accounting in the books of transferee (purchasing company). Transferee company (Purchasing company) has to merge all assets and liabilities taken over at fair value

Note: Before attempting the question just clarify whether there is any requirement of passing journal entries in the books of transferee(Purchasing Co).

In the most of the questions they will ask to prepare balance sheet after amalgamation.

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Goods and Service Tax (GST) as the name suggest is a one single tax on the supply of goods and services, right from the Manufacturing to the ultimate delivery to customer. Credits of input tax paid at each stage will be available in the subsequent stage of value addition, which makes GST essentially a tax only on value addition at each stage and thus avoiding cascading effect. The final consumer will thus bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages.

Taxes to be merged into GST:

At the Central level, the following taxes shall be replaced by GST:

• Central Excise Duty,
• Additional Excise Duty,
• Service Tax,
• Additional Customs Duty commonly known as Countervailing Duty, and
• Special Additional Duty of Customs.

At the State level, the following taxes shall be replaced by GST:

• State Value Added Tax/Sales Tax, commonly known as VAT,
• Entertainment Tax (other than the tax levied by the local bodies) i.e. tax levied by the local bodies will continue,
• Central Sales Tax (levied by the Centre and collected by the States) i.e. CST,
• Octroi and Entry tax,
• Purchase Tax,
• Luxury tax, and
• Taxes on lottery, betting and gambling

i. How would GST be administered in India:

The GST shall have two components – One levied by the Centre i.e. Central GST (CGST) and the other levied by the State i.e. State GST (SGST). Both Centre and States will simultaneously levy GST across the value chain. Tax will be levied on every supply of goods and services. Centre would levy and collect Central Goods and Services Tax (CGST), and States would levy and collect the State Goods and Services Tax (SGST) on all transactions within a State. The input tax credit of CGST would be available for discharging the CGST liability on the output at each stage. Similarly, the credit of SGST paid on inputs would be allowed for paying the SGST on output. No cross utilization of credit between CGST and SGST would be permitted.

ii. Transaction of goods and services to be taxed simultaneously under Central GST (CGST) and State GST (SGST):

The Central GST and the State GST would be levied simultaneously on every transaction of supply of goods and services except on exempted goods and services, goods which are outside the purview of GST and the transactions which are below the prescribed threshold limits. Further, both would be levied on the same price or value unlike State VAT which is levied on the value of the goods inclusive of Central Excise. Let us understand this with the help of an Example:In our example we presume the rate of SGST to be 10% while rate of CGST to be 15%. Here Supplier A is the Manufacturer in the state of Maharashtra, sells goods to supplier B within State which cost him Rs 10000/-. Now on this he won’t charge excise duty, VAT, etc. but would charge SGST and CGST simultaneously.

Total Amount paid by Supplier B to Supplier A (Manufacturer) is Rs 12500/- which includes SGST of Rs 1000/- and CGST of Rs 1500/- available as Input Tax Credit (ITC). Now Supplier B does Value Addition of Rs 2500/- and sells to Ultimate Customer for Rs 15625/- including SGST of Rs 1250/- and CGST of Rs 1875/-. Here supplier B Can avail Input Tax Credit (ITC) of SGST and CGST paid by him to Supplier A (Manufacturer) and can set off Output tax to be paid by him to such an extent.

Hence Supplier B shall be liable to Pay SGST of Rs 250/- and CGST of Rs 375/- only on the amount of value addition done by him. While the Ultimate Customer pays the total SGST of Rs 1250/- and CGST of Rs 1875/- avoiding cascading effect in the value chain.

iii. Cross utilization of credits between goods and services be allowed under GST regime:

Cross utilization of credit of CGST between goods and services would be allowed. Similarly, the facility of cross utilization of credit will be available in case of SGST. However, the cross utilization of CGST and SGST would not be allowed except in the case of inter-State supply of goods and services under the IGST model.

iv. Inter-State Transactions of Goods and Services be taxed under GST in terms of IGST method:

In case of inter-State transactions, the Centre would levy and collect the Integrated Goods and Services Tax (IGST) on all inter-State supplies of goods and services under Article 269A (1) of the Constitution. The IGST would roughly be equal to CGST plus SGST. The IGST mechanism has been designed to ensure seamless flow of input tax credit from one State to another. The inter-State seller would pay IGST on the sale of his goods to the Central Government after adjusting credit of IGST, CGST and SGST on his purchases (in that order). The exporting State will transfer to the Centre the credit of SGST used in payment of IGST. The importing dealer will claim credit of IGST while discharging his output tax liability (both CGST and SGST) in his own State. The Centre will transfer to the importing State the credit of IGST used in payment of SGST. Since GST is a destination-based tax, all SGST on the final product will ordinarily accrue to the consuming State.

Example:  Here we presume IGST to be 25% while SGST is 10% and CGST is 15%. Again Supplier A is the Manufacturer in the state of Maharashtra, sells goods to supplier B within State which cost him Rs 10000/-. In turn Supplier B sells it to Supplier C in Rajasthan for Rs 12500/-. While Supplier C sells it to Ultimate Customer. Here Supplier B will charge IGST instead of SGST and CGST as it is an inter-state sale. However, he will be allowed Credit of CGST and SGST while paying IGST.

Now Suppose Supplier C sells it to Ultimate Customer in Rajasthan for Rs 15000/- and charges SGST and CGST of 10% & 15% respectively. The SGST will be 1500/- and CGST will be Rs 2250/-. Supplier C will be allowed credit of IGST paid (3125/-) on purchase while discharging his liability of both CGST and SGST. Centre will transfer the credit of IGST to the State to the extent used in payment of SGST.

v. Major features of the proposed registration procedures under GST:

The major features of the proposed registration procedures under GST are as follows:

• Existing dealers: Existing VAT/Central excise/Service Tax payers will not have to apply afresh for registration under GST.
• New dealers: Single application to be filed online for registration under GST.
• The registration number will be PAN based and will serve the purpose for Centre and State.
• Unified application to both tax authorities.
• Each dealer to be given unique ID GSTIN.
• Deemed approval within three days.
• Post registration verification in risk based cases only.

vi. Major features of the proposed returns filing procedures under GST:

The major features of the proposed returns filing procedures under GST are as follows:

• Common return would serve the purpose of both Centre and State Government.
• There are eight forms provided for in the GST business processes for filing for returns. Most of the average tax payers would be using only four forms for filing their returns. These are return for supplies, return for purchases, monthly returns and annual return.
• Small taxpayers: Small taxpayers who have opted composition scheme shall have to file return on quarterly basis.
• Filing of returns shall be completely online. All taxes can also be paid online.

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i. Who will prepare the Consociated Financial Statement?

As stated in Section 129 It is duty of the Parent Company (Management) to prepare the consolidated financial statement of the company and laid the same before the Annual General Meeting along with Stand alone financial statement.

 

ii. What are the provisions in relation to audit of the consolidated Financial Statement of the Company?

As stated in Section 129 the provisions of this Act relating to audit applicable on holding company shall, mutatis mutandis, apply to the consolidated financial statements of the Company. Therefore, all the provision of Audit applicable to stand alone financial statement will be applicable on audit of consolidated financial statements.

In determining control, whether potential equity shares (eg option, convertible bonds, debentures etc) need to be considered?

The potential equity shares of the investee held by the investor should not be taken into account for determining the voting power of investor.

 

iii. Who will audit the consolidated Financial Statement of the Company?

There could be two situations in an audit of consolidated financial statements- when the parent’s auditor is also the auditor of all the components to be included in the consolidated financial statements and when the parent’s auditor is not the auditor of one or more subsidiaries and therefore uses the work of other auditor in the audit.

The Auditor of the consolidated financial statements may not necessarily be the auditor of the separate financial statements of the parent or one or more of the components included in the consolidated financial statement.

If a Company have more than one Subsidiary then whether both the Parent Company will consolidate the account of Subsidiary?

A Company can be subsidiary of two Companies. If more than 50% of paid up share capital is hold by one Company and another Company control the composition of Board of Directors.

In such cases, both parents to consolidate the same subsidiary, if Company (A) is subsidiary of another Company (B) on 29.03.2014 but not the subsidiary as on 31.03.2015 whether for the financial year ended 31.03.2015 Company (B) consolidate the account of Company (A)?

For the purpose of consolidate of financial statement relation of holding and subsidiary will be considered as on 31.03.2015. In the above situation A is not subsidiary on 31.03.2015 therefore there is no need to prepare consolidated financial statement.

 

iv. Whether need to consolidate account of LLP?

First Situation: LLP as Joint Venture:

A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity, which is subject to joint control.

If a Company enters into a joint venture agreement with a LLP in which Company control more than 20% of business decision. Such Joint venture LLP shall be consider as associate as per definition of Section 2(6) of CA, 2013.

As a joint venture or associate there is need to consolidate the accounts of such LLP with the Company.

Second Situation: LLP as Subsidiary:

i. As per clause 87 of section 2 of CA, 2013 “subsidiary company” or “subsidiary”, in relation to any other company (that is to say the holding company), means a company in which the holding company exercises or controls more than one-half of the total share capital either at its own or together with one or more of its subsidiary companies.

ii. As per explanation of this definition: the expression “company” includes anybody corporate.

iii. As per section 3 of LLP Act, LLP is Body Corporate.

Therefore, LLP as a Body Corporate fall under the definition of Subsidiary. Therefore, Company required consolidating the accounts of LLP.

(i)Whether a company H ltd is required to consolidate its subsidiary which is a Limited Liability Partnership (LLP) or a partnership firm?

(ii) Would the answer be different if LLP is an associate or joint venture of H Ltd?

(i) As per rule 6 of Companies (Accounts) Rules, 2014, under the heading ‘Manner of consolidation of accounts’ it is provided that consolidation of financial statements of a company shall be done in accordance with the provisions of Schedule III to the Companies Act, 2013 and the applicable Accounting Standards.

It is noted that relevant Indian Accounting Standard i.e., Ind AS 110, Consolidated Financial Statements provides that where an entity has control on one or more other entities, the controlling entity is required to consolidate all the controlled entities. Since, the word ‘entity’ includes a company as well as any other form of entity, therefore, LLPs and partnership firms are required to be consolidated. Similarly, under Accounting Standard (AS) 21, as per the definition of subsidiary, an enterprise controlled by the parent is required to be consolidated. The term ‘enterprise’ includes a company and any enterprise other than a company. Therefore, under AS also, LLPs and partnership firms are required to be consolidated.

Accordingly, in the given case, H ltd is required to consolidate its subsidiary which is an LLP or a partnership firm.

(ii) If LLP or a partnership firm is an associate or joint venture of H ltd, even then the LLP and the partnership firm need to be consolidated in accordance with the requirements of applicable Accounting Standards.

If Company A hold 35% Equity Shares and 75% preference share capital of Company B, then Whether Company B shall be Subsidiary of Company A?

Definition of Subsidiary: “subsidiary company” or “subsidiary”, in relation to any other company (that is to say the holding company), means a company in which the holding company exercises or controls more than one-half of the total share capital either at its own or together with one or more of its subsidiary companies.

As per Definition holding will be determine on the basis of total share capital (equity + preference). According to this Company B will be consider as subsidiary of Company A and because of holding of 75% of preference share capital Company A required to prepare the consolidate financial statement including Company B.

 

v. What is the time period for filing of CSF with the ROC?

As stated in section 137(1) A copy of the financial statements, including consolidated financial statement, if any, along with all the documents which are required to be or attached to such financial statements under this Act, duly adopted at the annual general meeting of the company, shall be filed with the Registrar within thirty days of the date of annual general meeting.

A Company H ltd has no subsidiaries, but has investment in an associate and a joint venture. Whether H Ltd. is required to prepare consolidated financial statements for the year ending March 31, 2016, in the context of Companies (Accounting Standards) Rules, 2006.

Section 129 (3) of the Companies Act, 2013 provides that where a company has one or more subsidiaries, it shall prepare a consolidated financial statement of the company and of all the subsidiaries. Further, an Explanation to this sub section provides that the word “subsidiary” shall include associate company and joint venture.

In view of the above, in the given case, though H ltd does not have any subsidiary, it is required to prepare consolidated financial statements for its associate and joint venture in accordance with the applicable Accounting Standards, viz, AS 23, Accounting for Investments in Associates in Consolidated Financial Statements and AS 27,Financial Reporting of Interests in Joint Ventures, respectively.

 

vi. Some Practical questions:

1) D has 3 wholly-owned subsidiary who hold 30% each in P, but D has no holding in P. How should P be consolidated?

D exercise control over more than 50% of total voting power of P, indirectly through D’s wholly-owned subsidiaries. Therefore, irrespective of whether or not A exercises any direct control over the operations of P, D would have to consolidate P directly as a subsidiary, in preparing its CFS.

2) A Limited is controlled by two enterprises; one control by virtue of ownership of majority of the voting power and the other controls, by virtue of an agreement, the composition of the Board of directors so as to obtain economic benefits from its activities. Who should consolidate the accounts of A Limited?

In such rare cases, both the controlling enterprises should consolidate the financial statements of A Limited. Because A limited is subsidiary Company of both the controlling enterprises.

3) If Company A holds 50% shares of Company B. One another shareholder of Company B grants a power of attorney to Company A for exercising voting power on his behalf at AGM. Whether Company A required consolidating financial statement of Company B.

No, the power of attorney doesn’t result in Company A controlling the ownership, directly or indirectly through subsidiary (ies).

4) If P is holding 60% in Q and Q is holding 60% in R and R is holding 25% in S then whether P and Q will consolidate the accounts of S.

As per Act R will consolidate account of S, Q will consolidate the accounts of R (which already include S) and P will consolidate accounts of Q (which already include Q,R,S). I am in favour that one has to look at the group as one entity, since group is consolidated, S should be consolidate.

5) A has an 90% interest in subsidiary B. A holds direct interest of 25% of C and B holds a 30% interest in entity C. All shares have equal voting rights. Is company C a subsidiary or an associate Company of A.

Company C is subsidiary of Company A. Company A controls entity B and therefore, it controls (90%*30)= 27% voting power that B hold over C. in addition, A itself has a 25% direct interest and relating voting power, in entity C. Entity A’s total voting power in C is (25%+27%=52%). Company A controls C and should therefore consolidate C as a Subsidiary.

 

vii. Effective of Companies bill, 2016 on Consolidation of Accounts:

I. Effect of Change in Definition of Subsidiary Company:

Definition of Subsidiary: “subsidiary company” or “subsidiary”, in relation to any other company (that is to say the holding company), means a company in which the holding company exercises or controls more than one-half of the total share capital either at its own or together with one or more of its subsidiary companies.

Bill: The Bill recommended that the term “Total Share Capital” be replaced with the term ‘Total Voting Power’, as equity share capital should be the basis for determining holding/ subsidiary status.

Effect: This would also prevent the occurrence of such a situation in which a preference shareholder becomes the holding company under the Act, however, during consolidation, the equity shareholder would show it as its subsidiary in its books of accounts.

II. Effect of Change in Section 129(3):

Language of Section: Where a company has one or more subsidiaries, it shall, in addition to financial statements provided under sub-section (2), prepare a consolidated financial statement of the company. Explanation.—for the purposes of this sub-section, the word “subsidiary” shall include associate company and joint venture.

Bill: The following shall be substituted: Where a company has one or more subsidiaries or associate companies, it shall, in addition to financial statements provided under sub-section (2), prepare a consolidated financial statement of the company

Effect: According to the substitution joint ventures will be excluding from the ambit of subsidiary for the purpose of consolidation of accounts. But it will not effect that much because joint venture are still include in the associate Company.

III. Effect of Change in Section 134(1) (Signing of Financial Statement):

Language of Section: The financial statement, including consolidated financial statement, if any, shall be approved by the Board of Directors before they are signed on behalf of the Board at least by the chairperson of the company where he is authorized by the Board or by two directors out of which one shall be managing director and the Chief Executive Officer, if he is a director in the company, the Chief Financial Officer and the company secretary of the company, wherever they are appointed, or in the case of a One Person Company, only by one director, for submission to the auditor for his report thereon

Bill: The following shall be substituted: The financial statement, including consolidated financial statement, if any, shall be approved by the Board of Directors before they are signed on behalf of the Board at least by the chairperson of the company where he is authorized by the Board or by two directors out of which one shall be managing director, if any, and the Chief Executive Officer, if he is a director in the company, the Chief Financial Officer and the company secretary of the company, wherever they are appointed,

Effect: As per the Bill, 2016, the CEO shall sign the financial statements including the Consolidated Financial Statements irrespective of the fact whether such CEO is also a director or not.

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For dealers having turnover above Rs 5 crores, it is said that 4 digits of HSN code are to be mandatorily mentioned in the invoice. Since the code is of 8 digits, could you please tell me which 4 digits are supposed to be mentioned? The first 4 or the last 4?

In order to remove any doubt regarding HSN code, let us understand the structure of the Harmonised System of Nomenclature.

At the aggregate level, the HS nomenclature consists of 21 sections (1- XXI), which contain 99 chapters. However, the effective number of chapters are only 96 as Chapter 77 is reserved for future use in the HS and the Chapters 98 and 99 are reserved for special uses by the contracting parties (WTO, 2005; GOI, 1992; Antweiler, 1995).

The basic and mandatory six-digit code (for example: 1234.56) of the HS has three parts.

• Chapter: The first two digits (12) identify the chapter number in which the goods are classified.
• Heading: The next two digits (34) denote broad commodity groupings within that chapter.
• Sub-Heading: The last two digits (56) beyond this four-digit level represent more specific classification for any given commodity.

Beyond this point, every country using the HS is allowed to assign its own coding system for further disaggregation (Tariff Item).

Hence, when the Government asks for 4 digits of the HSN code, it wants to be led to the particular Heading of a particular Chapter in which your goods fall, i.e. the First 4 Digits.

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Brief Intro: Introduction of Goods and Services Tax (GST) will indeed be an important perfection and the next logical step towards a widespread indirect tax reforms in India. As per, First Discussion Paper released by the Empowered Committee of the State Finance Ministers on 10.11.2009, it has been made clear that there would be a “Dual GST” in India, i.e. taxation power lies with both by the Centre and the State to levy the taxes on the Goods and Services.

The scheme was supposed to be implemented in India from 1st April 2016, however it may get delayed since the NDA government does not have majority in Rajya sabha (‘The upper house of parliament’ or ‘the house of states’).

Further, Punjab and Haryana were reluctant to give up purchase tax, Maharashtra was unwilling to give up octroi, and all states wanted to keep petroleum and alcohol out of the ambit of GST. Gujarat and Maharashtra want the additional one per cent levy extended beyond the proposed two years, and raised to two per cent. Punjab wants purchase tax outside GST.

Constitutional Amendment: While the Centre is empowered to tax services and goods upto the production stage, the States have the power to tax sale of goods. The States do not have the powers to levy a tax on supply of services while the Centre does not have power to levy tax on the sale of goods. Thus, the Constitution does not vest express power either in the Central or State Government to levy a tax on the ‘supply of goods and services’. Moreover, the Constitution also does not empower the States to impose tax on imports. Therefore, it is essential to have Constitutional Amendments for empowering the Centre to levy tax on sale of goods and States for levy of service tax and tax on imports and other consequential issue.

What is GST?

‘G’: Goods

‘S’: Services

‘T’: Tax

“Goods and Service Tax" (GST) is a comprehensive tax levy on manufacture, sale and consumption of goods and service at a national level under which no distinction is made between goods and services for levying of tax. It will mostly substitute all indirect taxes levied on goods and services by the Central and State governments in India.

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SPECIAL EVENTS IN PARTNERSHIP

• Admission
• Retirement
• Death
• Change in Ratio
• Combination

When a New partner is admitted what are the changes occur?

    What are the things unavoidable changes?

• Can a partnership firm decide can the partner not have revaluation in the event of admission? Can they do so?
• Can the partner decide NOT to consider Goodwill? is it possible?
• Can a partner a decide need not bring capital
• CAN the partners decide not to distributed profits - NO?

Out of all these changes the unavoidable change is change in the profit sharing ratio.

ISSUES IN COMPUTATION OF PROFIT SHARING RATIO

• New Ratio
• Sacrificing ratio
• Gaining Ratio
• For Face2 Face classes : CA PRASHANTH REDDY

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Types of Financing 

Bridge Financing

•  Bridge finance refers to loans taken by a company normally from commercial banks for a short   period because of pending disbursement of loans sanctioned by financial institutions.
• The bridge loans are repaid/ adjusted out of the term loans as and when disbursed by the concerned institutions.
•  Bridge loans are normally secured by hypothecating movable assets, personal guarantees and   demand promissory notes. Generally, the rate of interest on bridge finance is higher as compared   with that on term loans.

Venture Capital Financing 

The venture capital financing refers to financing of new high risky venture promoted by qualified entrepreneurs who lack experience and funds to give shape to their ideas. 

In broad sense, under venture capital financing venture capitalist make investment to purchase equity or debt securities from inexperienced entrepreneurs who undertake highly risky ventures with a potential of success.

 
Some of the characteristics of Venture Capital Funding are:-

(i) It is basically a equity finance in new companies. 

(ii) It can be viewed as a long term investment in growth-oriented small/medium firms. 

(iii) Apart from providing funds, the investor also provides support in form of sales strategy, business networking and management expertise, enabling the growth of the entrepreneur. 

 

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Central Tax Notifications:

Composition Scheme- Notification 3 & 8/2017:

Composition scheme threshold has been notified to be 75 lakhs (earlier recommended only). This will be beneficial to small businesses.

Notification 3 contains the composition scheme rules which had been issued ealrier on 17th May.

Reverse Charge- Notification 5/2017:

The persons who only supply goods/services on which reverse charge applies, are exempted from registering under GST registration.

For example, For example, Ola Cabs enlist drivers to ply their cars. Drivers are providing chauffeur/driving services to Ola and Ola is the service receiver.

Ola pays GST on the drivers’ services on reverse charge basis. Drivers are not required to register under GST thus removing the burden of tax compliance from individuals with limited resources (drivers) to large companies (Ola) with enough resources.

Sections coming into force-Notification 1 & 9/2017:

With the Notification of 19^th June and 28^th June, most of the CGST Act is now in force. Only sections 51 & 52 (TDS & TCS respectively) are not applicable as the government has relaxed TDS & TCS provisions for the time being to give more time to the e-commerce sellers.

Sections 42(9) & 43(9) are not applicable.

These clauses say that if the output tax liability is reduced (or input tax credit is increased) due to a debit note (or a credit note) [mismatch of invoices reconciliation] then such amount shall be refunded by crediting electronic ledger. This is not applicable right now as there will not be any reconciliation for 2 months.

Rules-Notification 10/2017:

CBEC has issued the rules on valutation, transisition, refunds etc. in a 247 page document.

HSN Codes-Notification 12/2017:

Every registered person with turnover more than 1.5 crores must mention the HSN Codes in each and every invoice.

However, the numbers of digits to be mentioned in the Invoice depends on the annual turnover in the preceding financial year.

This is effective from 1^st July, i.e., all invoices from 1^st July must be GST compliant and have details of HSN codes.

The same notifications have also been made under IGST (notification 5).

Rates of interest-Notification 13/2017:

The rates of interest are same as mentioned in the Act. The notification ratifies the rates.

This notification shall come into force from the 1st day of July, 2017

The same notification has also been made under IGST (notification 6).

Common Portal- Notification 4 /2017:

It is notified that the website of the Common Portal is  www.gst.gov.in managed by  Goods and Services Tax Network.

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A refrigerator is marked for sale at Rs. 17600 inclusive of sales tax at the rate of 10%. Calculate the sales tax on the refrigerator? read less

Let the price of the refrigerator without sales tax = P. Here, the selling price S = 17600 and the rate of sales tax i.e., r = 10 S = P(1 + r/100) 1700= P(1 + 10/100) P * 11/10 = Rs. 17600 Therefore, P = 17600 × 11/10 = 1600 × 10 = Rs. 16000 Therefore, the sale tax = Selling price - Printed price = 17600 - 16000 = Rs. 1600 read less