NICAI Update
CA Raj Chawla
Quote of the day:
1. To those who see with Loving Eyes, Life is Beautiful. To those who speak with Tender Voice, Life is Peaceful. To those who Help with Gentle Hands, Life is Full. And to those who Care with Compassionate Heart, Life is Good beyond all Measure.
2. Respect is not in the words Spoken to you in your presence, But It's some special words spoken "For You" in your Absence.
NICAI Update:
1. Income Tax Section 12A Registration Cannot Be Cancelled on Suspicion over Donor’s Source of Funds: ITAT Chandigarh Case Name: Maharaja Jagat Singh Vs CIT (Exemptions).
2. Calcutta High Court in the matter of PCIT Vs Express Tradelink Pvt. Ltd This appeal was filed by the Revenue under Section 260A of the Income Tax Act, 1961, challenging the order of the Income Tax Appellate Tribunal (ITAT), Kolkata, dated 8 February 2024 for Assessment Year 2009-10. The dispute concerned deletion of an addition of ₹7,26,50,000 made by the Assessing Officer under Section 68 on account of alleged unexplained share capital and share premium.
3. Reserve Bank of India released the final guidelines on external commercial borrowings (ECBs), rationalizing fundraising through the route. “The amended regulations have rationalized the ECB framework by expansion of eligible borrowers and recognized lender base, rationalization of borrowing limits and restrictions on average maturity period, removal of restrictions on the cost of borrowing for ECBs, review of end-use restrictions and simplification of reporting requirements,” the RBI said.
4. The regulator had issued the draft guidelines regarding the same on October 3. Under the new guidelines, companies can raise ECBs of up to $1 billion or 300% of net worth, whichever is higher, compared to the prior $750-million annual cap. The RBI also mandates that eligible borrowers raise ECBs with a minimum average maturity period of three years. Manufacturing sector borrowers are allowed to raise ECBs with a 1-3 year average maturity, provided the outstanding amount does not exceed $150 million.
5. The Institute of Chartered Accountants of India (ICAI) has introduced significant updates to the UDIN portal, impacting tax audit assignments. Here's what you need to know.
(a) Field-Level Validation for Section 44AB: The ICAI has implemented field-level validation for all sub-categories under Section 44AB (clauses a to e) during UDIN generation under the "GST and Tax Audit" category.
(b) This validation ensures compliance with statutory thresholds, including: - Turnover limits: Ensure accurate turnover details to avoid rejection or mismatch.
- Gross receipts thresholds: Verify gross receipts criteria to ensure smooth UDIN generation.
- Cash transaction percentages: Comply with cash transaction limits to avoid issues.
- Presumptive taxation eligibility: Ensure accurate selection of applicable clauses and particulars.
(c) 60 Tax Audit UDIN Limit per Partner:
- A ceiling of 60 Tax Audit UDINs per partner will be applicable from April 1, 2026, for the following audit reports:
- Form 3CA: 3rd proviso to Section 44AB
- Form 3CB: Section 44AB (a) and 44AB (b)
- Form 3CB (Combined): under Section 44AB
- This limit applies partner-wise, and firms should plan audit allocation and signing responsibilities accordingly to ensure compliance.
(d) Action Items for Members:
- Ensure accurate data entry while generating UDINs.
- Review statutory thresholds carefully before accepting audit assignments.
- Monitor audit count before accepting assignments for FY 2025-26 onward.
- Plan assignments in advance to avoid last-minute UDIN constraints during the audit season.
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With best regards
CA (Dr) Raj Chawla
B.Com (Hons), FCA, FCS, FCMA, LLB
MIMA, DISA, MICA, Phd, ASA (Aust), CMP (USA)
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