volume 70 no.

2 pages -132 AUGUST 2021 `100

JOU R NAL OF TH E I NSTITUTE OF CHARTE R E D ACCOUNTANTS OF I N D IA

Business
Responsibility
& Sustainability
Reporting

ICAI - set up by an act of parliament

Shri Narendra Modi, Hon’ble Prime Minister of India conveys Best Wishes
 Editorial
119

Sustainability Reporting – Promoting Transition

Towards Greener and Sustainable Economy
T he focus on sustainable growth and the expectations
of a wide group of stakeholders for much wider
and relevant disclosures encompassing a range of
this area by bringing together heads of state, climate experts
and campaigners for climate talks and agree on a coordinated
action to tackle climate change.
environmental, social and governance (ESG) factors
have increased manifold. However, the key to fostering Sustainable Development Agenda has transformed the
role of professional accountants as well. The present and
sustainable growth is to fund economic activities that
future accountants lead and assist the organizations
support the transition towards greener and sustainable
in understanding, demonstrating and achieving the
economies. Comprehensive, complete and timely corporate
efficiencies that organizations can gain from sustainable
level reporting, including non-financial information, is the
business practices. At the same time, increasing focus is
pre requisite to support investors’ evolving informational
placed on assurance and materiality of sustainability related
needs and improve the functioning of markets. Financial
information. The skills and procedures of the external audit
markets need clear and high-quality information for a
function vis-a-vis financial reporting are transferable to
comprehensive understanding of business performance,
sustainability information and reports. As assurance of
impacts and outcomes.
sustainability-related reporting continues to develop,
Over the past few years, momentum has been building assurance providers will need specialized guidance on
in both public and private sectors towards enhanced applying assurance procedures and finding ways by which
disclosures by promoting the implementation of a the concept of materiality will be applied to sustainability
global corporate sustainability reporting architecture. reporting. Professional Accountants should be able to
The global sustainability reporting architecture would face the related challenges and opportunities specific to
provide consistent and comparable sustainability related sustainability matters that are relevant to an industry/
information baseline across jurisdictions and allow sector/ organization.
flexibility for coordination on reporting requirements ICAI has a strong tradition of service to the country towards
that capture wider sustainability impacts. The present sustainable as well as economic development. ICAI through
concerns about fragmentation and lack of comparability Sustainability Reporting Standards Board (SRSB) is working
and reliability of the reported information, expressed by relentlessly to augment the culture of accurate and reliable
companies, investor groups and other stakeholders would non-financial reporting, develop reporting metrices for
be appropriately addressed. Regulators and standard setters Sustainable Development Goals (SDGs), benchmarking
are taking concrete steps for the creation of a coherent sustainability disclosures, and strengthening assurance
global system of interconnected corporate reporting, frameworks for non-financial information. The Institute
involving specialist standard-setting bodies on financial is taking proactive steps to not only identify and develop
and non-financial reporting and clear roles for corporate opportunities for Chartered Accountants in Sustainability
governance and assurance provider. Reporting but also to enhance knowledge, upskill and
Recently, IFRS Foundation trustees have proposed targeted train members by conducting workshops, seminars, and
amendments to the IFRS Foundation Constitution to courses, publish technical literature on various important
accommodate an International Sustainability Standards topics within the sustainability domain. Further, in its
Board (ISSB) to set IFRS sustainability standards. Against endeavour to promote sustainability reporting ecosystem
this backdrop, the International Organization of Securities in the country which would lead to greener low-carbon
Commissions (IOSCO) declared that it is committed to economy, the Institute is working on two crucial aspects.
helping advance the IFRS Foundation initiatives to set Firstly, to promote compliance with existing accounting and
standards that meet the needs of the capital markets. The sustainability related disclosure requirements. Secondly,
International Audit and Assurance Board (IAASB) has to strengthen assurance framework to build a solid bridge
issued guidance on Extended External Reporting Assurance between sustainability related risks and corporate financial
in April 2021 intended to assist practitioners in performing reporting. ICAI is partnering with SEBI, Niti Aayog,
assurance engagements in accordance with International MCA and additionally, with global bodies to enhance the
Standard on Assurance Engagements (ISAE) 3000 (Revised). quality of sustainability reporting and contributing towards
In addition, the IAASB has issued guidance on how auditors attainment of SDGs.
should consider climate-related risks in their audit of
Let’s build a healthier, happier and safer planet, together!!
financial statements. The 2021 United Nations Climate
Change Conference, also known as COP26, scheduled to be
-Editorial Board ICAI: Partner in Nation Building
held in November 2021 would further galvanize efforts in

www.icai.org THE CHARTERED ACCOUNTANT AUGUST 2021 3

 Contents
120

SUSTAINABILITY
VOLUME 70 NO. 2 PAGES -132 AUGUST 2021 `100

JOU R NAL OF TH E I N STITUTE OF CHARTE R E D ACCOU NTANTS OF I N D IA

143 SDG Agenda – Partnerships in

AUGUST 2021 the Decade of Action
IN THIS ISSUE... - Isha Gupta and
Business
Responsibility
& Sustainability
Dr. Nandita Mishra
Reporting

150 Aligning Corporate Social

Responsibility initiatives with
ICAI - SET UP BY AN ACT OF PARLIAMENT

Sustainable Development Goals

- S P Shukla

154 BRSR and its Disclosure

Challenges
- CA. Heman Sabharwal

159 Sustainability Reporting

Frameworks and SEBI Circular
VOICE on BRSR
119 Editorial - Naimish Upadhyay
Sustainability Reporting – Promoting Transition
166 Building Sustainability Reporting
Towards Greener and Sustainable Economy
Maturity – SRMM Version 1.0
122 From the President - CA. (Dr.) Sanjeev Kumar
Singhal
MEMBERS
128 Photographs 173 Sustainability & ESG: The next
135 Know Your Ethics frontier of Board Room action
137 Opinion - Measurement of residual value of Property, - Vishal Bhavsar
Plant and Equipment / Intangible Assets as a percentage
to ‘Original Cost’ as mentioned in the Companies Act vs.
‘Deemed Cost’ referred to in Ind AS 101
246 Classifieds AUDITING
178 ISRS 4400 (Revised), Agreed-Upon
CA DAY REPORT Procedures Engagements
130 ICAI celebrates 73rd Foundation Day - Remembering - Contributed by Secretariat,
the Glorious Existence and Envisioning the Future Auditing and Assurance Standards
Board of ICAI
183 Audit Quality Maturity Model –
Version 1.0 (AQMM v1.0)
- CA. Durgesh Kumar Kabra

TAXATION
188 Whither Tax Audit and
Presumptive Taxation
- CA Dindayal Dhandaria
BENEVOLENCE
134 Voluntary Contribution to the Chartered Accountants’
Benevolent Fund (CABF) 193 New Compliances & Re-Approval
process under 80G (An Incisive
Analysis)
UPDATES
- CA. Naresh Kumar Kabra
125 ICAI in Action
227 Accountant’s Browser 200 Section 115BAC of Income Tax
228 Legal Update Act, 1961: A step towards the
- Legal Decisions New-Normal
- Circulars and Notifications - CA. Saurav Somani

4 THE CHARTERED ACCOUNTANT AUGUST 2021 www.icai.org

 Contents
121

VOLUME 70 NO. 2 PAGES -132 AUGUST 2021 `100 EDITOR-IN-CHIEF CA. NIHAR N. JAMBUSARIA,
President

JOINT EDITOR CA. (DR.) DEBASHIS MITRA

Vice-President
MEMBERS CA. PRAFULLA P. CHHAJED
CA. NANDKISHORE C. HEGDE
CA. CHANDRASHEKHAR V. CHITALE
JOU R NAL OF TH E I N STITUTE OF CHARTE R E D ACCOU NTANTS OF I N D IA
CA. SHRINIWAS Y. JOSHI
CA. ANIKET S. TALATI
CA. DAYANIWAS SHARMA
CA. PRASANNA KUMAR D.
RISK MANAGEMENT

CA. RAJENDRA KUMAR P.
CA. MANU AGRAWAL
205 People Risk Management at CA. ANUJ GOYAL

Banking and Financial Institutions

CA. KEMISHA SONI
CA. SATISH KUMAR GUPTA
- Kirit Jain CA. ATUL KUMAR GUPTA
CA. PRAMOD JAIN
CA. (DR.) SANJEEV KUMAR SINGHAL

INTERNATIONAL TAXATION
CA. CHARANJOT SINGH NANDA
DR. P.C. JAIN

208 Practical Compliance Guideline on

CA. DILIP RODI
CA. MUKESH SINGH KUSHWAH
Intangibles by Australia – Lessons DEPUTY DIRECTOR SHALEEN SUNEJA
for India
ICAI EDITORIAL SUPPORT DR. NEETU SINGH
- CA. Sharad Goyal and S. P. Singh

THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA

ICAI Bhawan, Post Box No.7100, Indraprastha Marg,

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242
Printed and published by Mr. Rakesh Kumar Sehgal on behalf of
Announcement, Election 2021 The Institute of Chartered Accountants of India (ICAI)

243 ICAI International Sustainability Reporting Awards, Editor – CA. Nihar N. Jambusaria

2020-21 Published at The Institute of Chartered Accountants of India, I. P. Marg, New

Delhi - 110002 and printed at SAP Print Solutions Private Limited,
244 Hindi Version of Corporate Film - “Leading the Plot No-3 and Plot No-30 Sector II, The Vasai Taluka Industrial Co-op Estate
Ltd., Gauraipada, Vasai (E), District : Palghar - 401208
Transformation to a Healthier, Happier and Safer
Planet” The views and opinions expressed or implied in THE CHARTERED ACCOUNTANT are those of
the authors and do not necessarily reflect those of ICAI. Unsolicited articles and transparencies
are sent in at the owner’s risk and the publisher accepts no liability for loss or damage. Material in
this publication may not be reproduced, whether in part or in whole, without the consent of ICAI.

DISCLAIMER: The ICAI is not in any way responsible for the result of any action taken on the
ICAI IN MEDIA basis of the advertisements published in the Journal. The members, however, may bear in mind
the provisions of the Code of Ethics while responding to the advertisements.

245 ICAI in Media : Glimpses of June - TOTAL CIRCULATION : 98,809

July, 2021 Total No. of Pages: 132 including Covers
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www.icai.org THE CHARTERED ACCOUNTANT AUGUST 2021 5

 From the President
122

business and society to take a break and

redefine the path for sustainable growth
to have a clean and inclusive life without
damaging the overall environment.
Sustainability is not a tree huggers’ fantasy.
It is about the health and wellbeing of
all of us and bringing the right balance
between the environment, equity, and
economy. Sustainable practices are built
on the parameters that the resources are
finite, there are long-term priorities and
we should be mindful while using and
should be aware of the consequences of
their inappropriate use. Globally, more
than ever, organizations are addressing
the call for a responsible growth-based
economic model, commonly known as
the 2030 Global Agenda for Sustainable
Development, leading towards a new
path that creates sustainable as well as
equitable economies and societies. The
recent SEBI mandate of filing of Business
CA. Nihar N. Jambusaria Responsibility and Sustainability
President, ICAI Reporting (BRSR) for the top 1000 listed
companies (by market capitalization)
My Dear Professional Colleagues, with effect from the financial year 2022-2023 is
India’s response to the global call for national
For too long mankind, indiscriminately sustainable development strategies. The mandate
From the President

extricating natural resources has treated intends to motivate the business community to fill
nature as a limitless source for its needs. resource gaps, focus on both financial and non-
In the process, what nature took millions financial reporting and enhance the innovative
of years to create is being used up and capacities needed for the achievement of the 2030
destroyed in a flip in the geological Global Agenda.
lifetime of the earth. Global warming,
floods, droughts, avalanches, tsunamis, ICAI is emerging as a global leader in the field
and pandemics are often indicators of the with its Sustainability Reporting Standards
erosion that has already taken place and are Board taking various initiatives to benchmark
harbingers of the worse that may happen. The global best practices in Sustainability Reporting
effect of the global climate change issignificant and transparency of responsible business. The
on ecology with life threatening pollution, intense Institute as a part of various green initiatives
heat waves, shrinking glaciers, rising sea levels has started construction of its first ever Green
with severe impact on plant and animal life. Building at Rohini in Delhi with Five Star GRIHA
Rating whereby carbon footprints will be reduced
In the year 1974, the then ICAI President CA. S.K. significantly. ICAI strives to facilitate the adoption
Gupta, stated – “All of us no doubt work to keep of a model of engaging multiple stakeholders
our body and soul together as also of those who are across various sectors including MSME’s and
dependent on us. But we cannot be oblivious of the households among others, to develop action plans
environment in which we work or ignore the calls for promoting sustainable/responsible practices
of the society which provides us succour. We cannot in India. This special issue of ICAI Journal on
draw a wall around us and work in isolation”. About BRSR provides a platform for discussion on the
half a century later, it is the time for the leaders of evolving nature of the Sustainability Reporting

6 THE CHARTERED ACCOUNTANT AUGUST 2021 www.icai.org

 From the President
123

landscape and the related emerging issues and Signing of MoU with Qatar Financial
challenges. Centre (QFC)
ICAI celebrates 73rd Chartered The Institute signed a MoU with Qatar Financial
Accountants’ Day Centre (QFC), Qatar for export of accounting
services to Qatar and exploring professional and
The 73rd Chartered Accountants’ Day was business opportunities for ICAI members through
celebrated on 1st of July all across the country collaborative initiatives. The MoU is a stride
with great enthusiasm and zeal. On the occasion forward to work closely with each other by drawing
this year, a 3 day Virtual CA programme on the synergies from the professional expertise available
theme ‘Remembering the Glorious Existence and at either side especially in the areas of auditing,
Envisioning the Future’ was organized, from June assurance, financial services, taxation, and alike.
29 to July 1, 2021 comprising sessions by eminent
speakers sharing their rich experience that covered From the Qatar side, the MoU was signed by
the entire gamut of myriad contributions that the Mr. Yousuf Mohamed Al-Jaida, Chief Executive
profession is making towards the society. Mindful Officer, QFC who stated that “The signing of the
of the pandemic, the function was attended virtually agreement with one of the largest accountancy
by thousands of audience consisting of Chartered bodies of the World marks yet another important
Accountants, students, and other stakeholders. step in our efforts to strengthen human capital and
The event on July 1, was inaugurated by the Chief promote entrepreneurship in Qatar. Through this
Guest Shri (CA.) Piyush Goyal, Hon’ble Minister partnership, both QFC and ICAI will work towards
of Railways, Commerce & Industry, Consumer enabling entrepreneurs, investors, and innovators
Affairs and Food & Public Distribution. The from India to use our platform and set up their

From the President

Hon’ble Minister reiterated the words of Hon’ble ventures in Qatar to become part of Qatar’s
Prime Minister of India wherein CAs were referred robust market”. At the event, Dr. Deepak
to as “Gurus of the Finance World”. He reaffirmed Mittal, His Excellency Ambassador of
his confidence in CA profession and its abilities. India to the State of Qatar as Guest of
The Minister stated, “Chartered Accountants take Honour mentioned that “India and
care of the health of the economy. In the times of Qatar share cordial relations and the
COVID, CAs have worked diligently to keep the contributions of the Indian community in
wheels of the economy going” and urged all the Qatar have strengthened the deep-rooted
Chartered Accountants to work collectively with friendship of the two countries.” The signing of
sanctity and credibility so that the trust of the this MoU between ICAI and QFC has opened a
society on the Chartered Accountants is further wide range of opportunities for Indian Chartered
strengthened. Accountants in that part of the world and would
in turn be an impetus for growth of both the
Taking note of depletion of the green cover economies.
all across the world and consequent increase
in pollution, ICAI also launched a Mega Tree Virtual Inauguration of Mauritius (Port
Plantation Drive through the august hands of Shri Louis) Chapter of the ICAI
Arjun Ram Meghwal, Hon’ble Minister of State for I am happy to inform that the Mauritius (Port Louis)
Parliamentary Affairs, Heavy Industries and Public Chapter was inaugurated as the 43rd Overseas
Enterprises. The Institute through its regions Chapter of the ICAI at a virtual event on July 09,
and branches aims to plant ten lakh trees during 2021. We had the presence of H.E. Mr. Janesh Kain,
the year. On the occasion, ICAI also launched a Hon’ble Acting High Commissioner of India to
socially beneficial Financial & Tax Literacy Drive to Mauritius; CA. Mahaveer Singhvi, Joint Secretary,
educate the common man about financial planning Ministry of External Affairs, Government of India;
and tax related matters. A dedicated multilingual Mr. Vivek Gujadhar, Chairperson, Mauritius
portal “www.vitiyagyan.icai.org” was launched Institute of Professional Accountants and Dr.
in nine different languages. During the day, ICAI Yousouf Ismael, Secretary General, Mauritius
made several releases and launches for the benefit Chamber of Commerce and Industry, and other
of members and society. eminent guest speakers.

www.icai.org THE CHARTERED ACCOUNTANT AUGUST 2021 7

 From the President
124

ICAI Partnering MSMEs to bolster them review certificate shall be issued in continuation of
on the Global Map the previous certificate.

ICAI is receptive to the emerging challenges faced Concluding Remarks

by the Micro, Small and Medium Enterprises
(MSMEs) & Start-ups. To address the issues faced In contrast with several other courses, the Institute
by MSMEs & Start-ups, the ICAI will continue to offers an exhaustive term of three years during
undertake a number of initiatives to strengthen which aspiring professionals get an immersive
them in terms of competence and improve their practical learning experience in the form of
visibility amongst the business community. To articleship training to complement theoretical
enhance the capacity building of MSMEs & Start- education. Even in these pandemic times, ICAI is
ups, the ICAI has launched three very important using best of the technological tools to reach out
initiatives for them namely ICAI MSME Exchange, to the students and assist them in their learning
ICAI MSME Portal and Certificate course on efforts. The widespread adoption and use of
MSME on the occasion of International MSME mobile technologies have the potential to equip
Day observed on June 27, 2021. With the growth next generation with interactive learning and
of Indian economy and employment generation provide innovative ways to deliver quality services
capabilities, the MSMEs account for nearly half of to the students. To provide quality education to the
India’s total exports thereby becoming the backbone students, a mobile application has been launched by
of the nation’s economy even during the pandemic. ICAI which will enable linking of student fraternity
The MSME Sector is an important pillar to carry with the Institute. The application shall provide
forward the vision of ‘Atmanirbhar Bharat’ and interactive learning and coaching on a single
platform with a number of additional features to
From the President

face the economically challenging situation

posed by the COVID-19 pandemic. The cater to student’s need. Students will also be able to
Central and State Governments have access downloaded assignments, faculty notes and
launched many schemes to provide a study material offline.
much-needed impetus for the revival of Further, the practical training enables the students
the MSMEs. However, to reach the end to fortify their knowledge, thereby improving their
users, a simple and effective ecosystem chances and possibilities of professional success.
which can assist MSMEs to benefit in a most Chartered Accountants can motivate students to
optimized manner is necessary. ICAI believes go beyond the general areas of accounts, taxes,
that Chartered Accountants with close proximity financial reporting, financial management, audits,
to the business, industry and entrepreneurs can corporate and economic laws, and financial
work with the focus areas of MSMEs especially services to acquire social, ethical, leadership,
after being hit by the COVID-19 tsunami. communication and other soft skills for their
Validity of Peer Review Certificate overall personality development. Considering the
vital role of CAs in the financial and economic
Due to the ongoing effect of pandemic, several parts matters as well as dynamic global influences, the
of the country are still under partial lockdown and Institute provides an exclusive real world training
considering the requests received in this regard, the ground to the students and help them to succeed.
Peer Review Board has decided to grant relief to the Your support is important in honing the young
practice units by extending the expiry date of the minds and moulding them into real professionals.
peer review certificate having original expiry date
Stay safe, stay healthy. Best wishes.
falling anytime from 1st July 2021 to 31st July 2021
till 31st August 2021, i.e., cases where no extension
benefit has been availed as per any of the earlier
announcements of the Board. However, in case
where reviewer has already submitted the report
in respect of a Practice Unit falling in aforesaid CA. Nihar N. Jambusaria
category, which is considered by the Board and President, ICAI
found complete up to 31st August, 2021 the peer New Delhi, 25th July, 2021

8 THE CHARTERED ACCOUNTANT AUGUST 2021 www.icai.org

 Developments
125

ICAI in Action
Key developments vis-à-vis accountancy profession for the information of
members, students and other stakeholders
IFRS Practice Statement - Management Guidance Note on Accounting for Derivative
Commentary Contracts (Revised 2021)
Indian Accounting Standards (Ind AS) are based In 2015, the Guidance Note on Accounting for Derivative
on the IFRS Standards issued by the International Contracts to establish uniform accounting principles
Accounting Standards Board (IASB) of IFRS for accounting of derivative contracts has been revised
Foundation. The IASB, before issuing the new/ in view of global developments in respect of Interbank
amendments to IFRS Standards, issues consultative Offered Rates (IBORs). A report on “Reforming Major
documents (such as Discussion Paper (DP), Exposure Interest Rate Benchmarks” was issued by Financial
Draft (ED) etc) seeking public comments from across Stability Board (FSB). The objective of the Guidance Note
the globe. In this regard, it may be mentioned that is to provide guidance on recognition, measurement,
the IASB has issued the ED of revised IFRS Practice presentation and disclosure for derivative contracts so as
Statement - Management Commentary, which to bring uniformity in their accounting and presentation
is not mandatory in nature. The revised Practice in the financial statements. The Guidance Note also
Statement would supersede the existing Practice provides accounting treatment for such derivatives where
Statement, issued in year 2010. The purpose of this the hedged item is covered under notified Accounting
ED is to obtain feedback on the IASB’s proposals. Standards.
The Accounting Standards Board (ASB) of ICAI with For details, please visit – https://resource.cdn.icai.
the aim to provide an opportunity to the various org/65422asb060421.pdf.
stakeholders in India to raise their concerns at the
initial International Standard-setting stage itself, Technical Guide on Incorporation of Foreign
invites comments from public. The downloadable Companies in India
version of Exposure Draft and its Basis for
India, with its booming economy, abundant natural
Conclusion is available on ICAI website.
resources, fertile lands, cultural diversity and its more
For details, please visit – https://www.icai.org/post/ than 1.3 billion inhabitants, is seen as an irresistible
ifrs-practice-statement-management-commentary business destination. The Indian Government to further
encourage the foreign company start up in India has
Exposure Draft of Accounting Standards for taken various initiatives and the Ministry of Corporate
Public Comments Affairs (MCA) has duly supported the Central
Governments’ Ease of Doing Business initiatives
The Indian Accounting Standards (Ind AS), as and has simplified the process of incorporation of
notified by the Ministry of Corporate Affairs in companies. However, many of the foreign entities and
February 2015, and as amended from time to time the professional advisers are unaware of the simplified
are applicable to the specified class of companies procedures and legal framework to set up foreign
as per Ind AS Roadmap. Accounting Standards business in India. The Institute through its Corporate
notified under Companies (Accounting Standards) Laws & Corporate Governance Committee has brought
Rules, 2006 (replaced by Companies (Accounting out a “Technical Guide on Incorporation of Foreign
Standards) Rules, 2021) and those issued by the Companies in India” to provide detailed guidance on
ICAI are applicable to entities to whom Ind AS are the procedural aspects relating to incorporation of
not applicable. The ASB is working on the project of Foreign Companies in India.
revision of these standards which will be applicable For details, please visit – https://resource.cdn.icai.
to entities to whom Ind AS are not applicable. In this org/65422asb060421.pdf
direction, the Exposure Draft of AS 102, Share-based
Payments, has been issued by the ASB for comments Applicable date of certain deferred provisions
with the last date being August 7, 2021. of Volume-I of Revised Code of Ethics, 2019.
For details, please visit – https://www.icai.org/post/ The revised 12th edition of Code of Ethics has come
ed-revised-as-102-share-based-payments. into effect from 1st July, 2020. It may be recalled that

www.icai.org THE CHARTERED ACCOUNTANT AUGUST 2021 9

 Developments
126

the Council at its 393rd Meeting held on 30th June and For details, please visit – https://www.icai.org/post/
1st July, 2020 decided that considering the prevailing further-extensions-regarding-the-validity-of-peer-
situation due to Covid-19, the effective date of the review-certificate
following provisions of Volume-I of Code of Ethics,
2019 be deferred till further notification and an Last Date of updation of UDINs at e-filing
Announcement dated 1st July, 2020 was accordingly Portal
hosted on the Website of the Institute:
The CBDT has extended the last date for updating
1. Responding to Non-Compliance with Laws UDINs for all the IT forms at the e-filing portal to 31st
and Regulations (NOCLAR) [Sections 260 and August, 2021.
360]
Please visit – https://www.icai.org/post/last-date-of-
2. Fees - Relative Size [Paragraphs 410.3 to updation-of-udins-at-e-filing-portal
R410.6]
Release of the Audit Quality Maturity Model -
3. Tax Services to Audit Clients [Subsection 604] Version 1.0
The Council has recently decided that the provisions Audit quality is the hallmark of the audit profession.
namely, Responding to Non Compliance with Laws Today stakeholders have grown beyond shareholders
and Regulations (NOCLAR) (Sections 260 and 360), and business organizations, industry, and the
Fees-Relative Size (Paragraphs 410.3 to R410.6) and Government rely upon the assurance given by
Tax Services to Audit Clients (Sub-section 604) the Chartered Accountants for sound financial
contained in Volume-I of Code of Ethics, 2019, the accounting, reporting, and effective financial
applicability of which was deferred earlier, be made management. Audit Quality Maturity Model -
applicable and effective from 1st April, 2022. Version 1.0 (AQMM v1.0) is a comprehensive score-
based tool to help a firm to self-identify its audit
For details, please visit - https://www.icai.org/post/
quality maturity level.
esb-applicable-date-of-certain-deferred-provisions
For details, please visit – https://resource.cdn.icai.
Launch of Financial & Tax Literacy Drive org/65383caq-aqmm-v1.pdf
ICAI launched the Financial & Tax Literacy Drive to
Mitigating Challenges Faced by the students.
educate the common man about financial planning
and tax related matters. A dedicated multilingual In these challenging times, ICAI is taking a number
portal “vitiyagyan.icai.org”, Vitiyagyan – English – An of students and members friendly initiatives. It
ICAI Initiative was launched in 9 different languages. is observed that some of the Students/Articled
This portal will be a one stop destination for all the Assistants are still facing difficulties in online
digital e-learning resources for reference of the users
filing of prescribed applications forms for various
at large.
activities e.g. filing of Form 102/103 for registration
For details, please visit - https://vitiyagyan.icai.org/ of articleship due to non-availability of non-judicial
stamp papers for the execution of articleship deed,
Further extensions regarding the validity of Form 112 seeking permission to pursue another
Peer Review Certificate course due to closure of academic institutions, etc. It
is causing delay in online submission of application
The Peer Review Board has decided to grant relief to
forms inviting levy of condonation fees under the
the practice units by extending the expiry date of peer
review certificate having original expiry date falling relevant Regulatory provisions. Considering the
anytime from 1st July 2021 to 31st July 2021 till 31st difficulties being faced by such Students/Articled
August 2021, i.e., cases where no extension benefit has Assistants, it was decided to further extend the last
been availed as per any of the earlier announcements date of waiving–off Condonation Fees from 30th June,
of the Board. 2021 to 31st July, 2021. Students who had applied for
July, 2021 examinations were also given option to opt-
However, in case where reviewer has already out in view of COVID-19. Further, under specified
submitted the report in respect of a Practice Unit conditions the July 2021 examinations are not to be
falling in aforesaid category, which is considered treated as an attempt.
by the Board and found complete upto 31st August,
2021 the peer review certificate shall be issued in For details, please visit www.icai.org and https://
continuation of previous certificate. resource.cdn.icai.org/65346exam010721.pdf.

10 THE CHARTERED ACCOUNTANT AUGUST 2021 www.icai.org

 “e-Sahaayataa” – A Grievance
Resolution Mechanism of ICAI
‘e – Sahaayataa’ is the e-Channel for the entire base of Members and Students of the Institute and
other stakeholders of the profession where in their queries/ grievances pertaining to the day-to-day
working shall be resolved in a time-bound and transparent manner.
Objectives:
 To provide timely services to all the stakeholders of the profession throughout the globe
 To resolve the Query/ Complaint/ Grievance within 3 – 7 days from the date of submission of
the same
 To eliminate the operational bottlenecks and smoothen the flow of education process of
Chartered Accountancy
Features:
 Automatically sends the query/ complaint/ Grievance to the dashboard of the concerned
official as soon as the same is submitted.
 Complete history of Query/ Complaint/ Grievance can be checked.
 E Mail is sent to the user once the query/ complaint and grievance is resolved.
 Query/ Complaint/ Grievance can be reopened by the user in case the user is not satisfied.
 No query/ complaint/ grievance can be deleted from ‘e-Sahaayataa’
Scope:
‘e-Sahaayataa” caters only to the Queries/ Complaints/ Grievances pertaining to the day to day working
of the Institute which are general in nature. This is not meant for registering or making allegations,
personal observations, and personal comments. Kindly submit relevant Queries/ Complaints/
Grievances to help you better.
How to Access
The Services of “e-Sahaayataa” is available on the Institute Website and tickets can be raised by accessing
eservices.icai.org using SSP Portal credentials and by selecting option “Raise/ View Tickets”.

Raise/View Change Password Logout

Home ? Tickets Contact Us
 Photographs
128

ICAI President CA. Nihar N. Jambusaria and ICAI Vice-

President CA. (Dr.) Debashis Mitra along with Shri Prakash
Sharma, CCM virtually attending Bhoomi Poojan with
Foundation Laying Ceremony at the Kota Branch of CIRC at
the address of Shri Om Birla, Hon’ble Speaker of Lok Sabha.
(16.7.2021)

ICAI President CA. Nihar N. Jambusaria and ICAI Vice-

President CA. (Dr.) Debashis Mitra along with Member
of Parliament Shri (CA) Arun Singh at the Webcast on
Success Stories of Chartered Accountants as Civil Servants.
Also seen in picture Central Council Members CA. Babu
Abraham Kallivayalil and CA. (Dr) Sanjeev K. Singhal,
IAS- Shri Praveen Garg, Ms Ruchika Katyal and CA. Trilok
Chand Gupta (Retd.). (17.7.2021)

ICAI President CA. Nihar N. Jambusaria along with ICAI

Vice-President CA. (Dr.) Debashis Mitra planting a tree at
an event organised by Northern India Regional Council of
ICAI. Also seen in picture NIRC Chairman CA. Avinash
Gupta. (30.6.2021)

ICAI President CA. Nihar N. Jambusaria and ICAI Vice-

President CA. (Dr.) Debashis Mitra at the Bhoomi Poojan
of commencement of Construction of ICAI Bhawan in
Agra. Also Seen in picture Central Council Members -
CA. Anuj Goyal, Chairman Agra Branch, CA. Ashish Jain,
Manu Agrawal and CA. Satish Kumar Gupta. (2.7.2021)

12 THE CHARTERED ACCOUNTANT AUGUST 2021 www.icai.org

 Photographs
129

ICAI President CA. Nihar N. Jambusaria and ICAI Vice-

President CA. (Dr.) Debashis Mitra presenting a memento to
Hon’ble Minister of Commerce & Industry, Consumer Affairs
& Food & Public Distribution and Textiles, Government of
India Shri (CA) Piyush Goyal at the celebrations of CA Day.
(1.7.2021)

ICAI President CA. Nihar N. Jambusaria and ICAI Vice-

President CA. (Dr.) Debashis Mitra with Shri Arjun Ram
Meghwal, Hon’ble Minister of State for Parliamentary Affairs,
Heavy Industries and Public Enterprises on CA Day. Also Seen
in picture Central Council Members - CA. Hans Raj Chugh,
CA. (Dr) Sanjeev K. Singhal, CA. Anuj Goyal, ICAI Past
President CA. Prafulla P. Chhajed, CA. Durgesh Kabra, CA.
Pramod Jain, CA. Rajendra P Kumar, CA. Shriniwas Y. Joshi
and CA. Rajesh Sharma. (1.7.2021)

ICAI President CA. Nihar N. Jambusaria and ICAI Vice-

President CA. (Dr.) Debashis Mitra presenting a memento
to Shri Arjun Ram Meghwal, Hon’ble Minister of State for
Parliamentary Affairs, Heavy Industries and Public Enterprises
in the Council Hall of ICAI. Also seen in picture Central
Council Members - CA. P. Rajendra Kumar, CA. Anuj Goyal,
ICAI Past President CA. Prafulla P. Chhajed, CA. Satish K.
Gupta, CA. Rajesh Sharma, CA. Shriniwas Y. Joshi, CA. (Dr)
Sanjeev K. Singhal, CA. Durgesh Kabra and CA. Hans Raj
Chugh. (1.7.2021)

ICAI Vice-President CA. (Dr.) Debashis Mitra at the meeting

of Sub-Committee of the Committee of Parliament on Official
Language. Also seen in picture ICAI Acting Secretary CA. (Dr)
Jai Kumar Batra, Deputy Chairman, Committee of Parliament
on Official Language Shri Bhartruhari Mahtab, Convenor
of the First Sub-Committee Shri Ram Chander Jangra, Joint
Secretary in Ministry of Corporate Affairs, Sh. K.V.R. Murty
and Director in Ministry of Corporate Affairs Dr Balmiki
Prasad. (14.7.2021)

ICAI President CA. Nihar N. Jambusaria and Vice-President

CA. (Dr.) Debashis Mitra at the e-Inauguration of 43rd Chapter
of ICAI at Mauritius (Port Louis). (9.7.2021)

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Report

ICAI celebrates 73rd Foundation Day -

Remembering the Glorious Existence and
Envisioning the Future

Hon’ble Union Minister CA. Piyush Goyal lighting the auspicious lamp along with ICAI President CA. Nihar N.
Jambusaria, ICAI Vice-President CA. (Dr.) Debashis Mitra and ICAI Past President CA. Prafulla P. Chhajed.

T
he Institute of Chartered Accountants Glorious Existence and Envisioning the Future’ was
of India (ICAI) celebrated its 73rd organized, from June 29 to July 1, 2021 comprising
Foundation Day with great fervour, zest, sessions by eminent speakers sharing their rich
and enthusiasm on first of July, a day marked in the experience that covered the entire gamut of
Indian history with indelible ink. With the objective myriad contributions that the profession is making
of widespread of financial sustainability and towards the society.
capacity building, ICAI celebrated the remarkable
day across the country through the virtually mode On July 1, 2021, the 73rd Chartered Accountants’
amid the challenging pandemic times with the Day function was inaugurated by the Chief Guest
commitment to serve the society through thick Shri (CA.) Piyush Goyal, then Hon’ble Minister of
and thin. First of July is the day, when the future Railways, Commerce & Industry, Consumer Affairs
of Indian business and society was written in the and Food & Public Distribution (After recent
year 1949, as the Institute was set up to regulate cabinet reshuffle, Shri (CA.) Goyal is presently
the Profession of Chartered Accountancy in the Minister of Commerce and Industry, Consumer
country. To celebrate the occasion, a 3 day Virtual Affairs, Food and Public Distribution, Textiles)
CA programme on the theme ‘Remembering the in the presence of CA. Nihar N. Jambusaria,

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Report
President, CA. (Dr.) Debashis Mitra, Vice- Welcome Address
President, ICAI and Central & Regional Council
Members of ICAI. The function was attended ICAI Acting Secretary, CA.
virtually by thousands of Chartered Accountants, (Dr.) Jai Kumar Batra
students, and other stakeholders from all over welcomed the chief guest Shri
the world. (CA.) Piyush Goyal, Hon’ble
Minister of Commerce &
Taking note of the fact that rapid construction Industry, Consumer Affairs &
and mushrooming of housing colonies has led to Food & Public Distribution
depletion of the green covering the world, ICAI and Textiles , CA. Nihar N
also launched a Mega Tree Plantation Drive by Jambusaria, President, CA. (Dr.) Debashis Mitra,
the august hands of Shri Arjun Ram Meghwal, Vice-President, ICAI, Past Presidents of ICAI, all
Hon’ble Minister of State for Parliamentary council and regional council members, member
Affairs, Heavy Industries and Public Enterprises. and students of the institute. Dr. Batra said as the
(After recent cabinet reshuffle, Shri Meghwal second largest accounting professional body, the
is presently Minister of State for Parliamentary institute is contributing to the success of
Affairs, Culture). The Regional Councils and individuals, communities and economy globally.
While congratulating all on this very proud
Branches of ICAI from all over India also joined
moment, he elaborated the extensive network of
in the launching ceremony by planting trees at
ICAI, saying that the institute has now a pan-India
their respective place through virtual mode and
presence with 5 regional councils, 164 branches,
took a pledge to nurture the plants for a minimum
135 study circles, 42 oversees chapters and 26
period of three years. The Institute plans to plant
representative offices which spreads over 68 cities
10 lakh trees during the year with the support of its in 45 countries. Terming the profession as highly
Branches, Regional Councils, members, and the respected and globally recognised, he said that CA
students. qualification is the most appropriate qualification
for business, industry, and trade.
During the day, the Institute has launched a national
drive on Financial and Tax Literacy - Vitiya Gyan Presidential Address
– ICAI Ka Abhiyaan, to educate people on the
basics of tax laws, accounting and various aspects ICAI President CA. Nihar N
of the financial system in India and the ways to Jambusaria, celebrating the
manage personal finances, financial well-being momentous day, extended a
and tax compliances with the goal of increasing warm welcome to the Chief
compliance and reducing the knowledge gap in the Guest on the occasion.
society. Under the drive education will be imparted Highlighting the socially
in different vernacular languages using innovative committed approach of the
learning with experiential activities, financial ICAI, the President announced
calculators, and multilingual site and it shall go a that the Council has approved waiver of
long way towards educating people of all strata of complete registration fee for the CA Course (all
society. levels) for those students whose parents or any of
the parent has expired on account of Covid. This
The ICAI has also launched a nationwide facility will continue for a period of two years.
ICAI Sustainability Literacy Drive that Apart from this, he also informed that Ministry of
would make the process of sustainable Corporate Affairs has approved the Multi-
development more feasible and operational by Disciplinary partnership (MDP) guidelines of ICAI
establishing a common focus of various distinct which will pave way for CA Firms to partner with
stakeholders. members of other professions and offer varied

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Report
services under one roof. He further added, “ICAI is Expressing the commitment towards independence,
certain that with the approval of MDP guidelines, excellence and integrity, President stated that we
we would be able to work towards making the have set up a dedicated Committee on MSME and
dream of Hon’ble Prime Minister, of establishing various activities have been rolled out in the area
Global world class Audit Firms come true”. including training of chartered accountants who
would further guide MSMEs.
Through the process of multi-disciplinary
partnerships, ICAI will be able to popularise, Explaining the priorities on account of present
propagate and encourage Indian firms to challenging times and the ecological needs,
come together and grow big. He emphasised President stated that the continuous focus has
that networking of MDP alone is not enough been laid on sustainability. He explained that the
to grow big as there is need to build up an Hon’ble Prime Minister has been talking about
triple bottom line – profit, people, and planet
ecosystem and culture whereby the Indian
and accordingly last year, Sustainability Report
firms will be encouraged to come together, Standards Board was set up by ICAI. He said that
work together and grow through collaborative giving priority to climate change and health care
mechanism. issues is of prime importance today. This Board
has made its space in SEBI and Niti Aayog and
Terming the power of technology essentially in the ICAI is actively engaged in the activities of
covid times, President stated that the “Institute
sustainability.
started using technology to spread skills and
knowledge through webinars. Apart from He also informed that the institute has set up a
that, even functions like audit which we never Committee for Review of Education and Training
imagined can be done on virtual mode are being to ensure that all changes are incorporated in the
performed by our CA firms this year and last syllabus and in the training module well in time and
year on virtual mode. Our committee on Digital as per stated conditions. ICAI has also played an
Accounting and Assurance Board (DAAB) took important role in settling tax related issues. With
various steps to roll out programs on Artificial innovative ideas and skills, the Institute helped
Intelligence, block chain, data analytics, cyber the CBDT and Infosys to remove the glitches and
security and our members are taking full advantage issues in the new tax portal.
of it”.
Touching upon the humanitarian approach of
While talking about the quality of audit, ICAI the Institute on a professional front, President
president stated that the Institute established a informed that several applications were received
Centre for Audit Quality (CAQ). The centre, this from members for support during Covid period
year has come out with Audit Quality Indicators particularly for the medical assistance. Relating to
and Audit Quality Maturity Model. CA members their genuine issues, ICAI disbursed 4.72 crores for
will be able to take full advantage of this initiative. the benefit of members as financial assistance.
He informed that “ICAI is also coming out with
audit tools which generally large firms have the Address by Chief Guest
privilege to use to boost the capacity building and
Chief Guest Shri (CA.)
expertise of small and mid-size CA firms. Going
Piyush Goyal, Hon’ble Cabinet
forward, once these tools are out, even smaller firms Minister in government of
will be able to use these to ensure that the quality of India was delighted on being
services is further enhanced.” He also said that the part of the 73rd Chartered
Financial Reporting Review Board of ICAI is taking Accountants Day celebrations,
all steps to bring to the knowledge of members stated that “Over last 72 years,
what common mistakes in financial statements the CA profession has shown to
they make and create awareness to enhance the the world that how a well-
reliability and correctness. managed and organised professional body, i.e.,

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Report
ICAI can work independently with great degree technology, knowledge, and better practices.
of transparency and successfully steer the future Consistently raising the standards of the accounting
of CA profession to glorious heights”. He further profession is the key in present time.
reiterated the words of Hon’ble Prime Minister
of India wherein CAs were referred to as “Gurus Focusing on the new and evolved working patterns,
of the Finance World”. The Hon’ble Minister Shri (CA.) Piyush Goyal gave examples of work
reaffirmed his confidence in CA profession and its from home idea and said that, “Working from
abilities. He further added that the Hon'ble Prime home opens up large opportunities for us to export
Minister through his message in “Mann ki Baat” our capabilities and in the last fifteen months we
has reaffirmed his faith in CA profession and his
have all experienced as to how work from home can
desire to see CA profession prosper, to work as an
engine towards brighter future of India and take improve our efficiency manifold”. Urging chartered
India to surmountable heights globally. accountants to find solutions and properly guiding
clients, Union Minister said that the signature of a
Terming ICAI as a well-managed, organized, CA carries a lot of responsibility, and they should
professional and regulatory body, Hon’ble Minister be very much careful about it. Reemphasising
stated that “Chartered Accountants take care of Prime Minister Narendra Modi’s suggestion, he
the health of the economy. In the times of COVID, said “Your signature is more powerful than that of
the CAs have worked diligently to keep the wheels a prime minister. It is your moral responsibility to
of the economy going”. He urged all Chartered guide one towards righteous conduct and practice”.
Accountants to work collectively with sanctity &
credibility so that the trust of the society and world Vote of Thanks
on seal of the Chartered Accountants is further ICAI Vice President CA. (Dr.)
strengthened. Appreciating ICAI’s initiatives Debashis Mitra, delivering
during pandemic times, he said that by spending the Vote of Thanks addressed
4.72 Crores, ICAI is doing a praiseworthy efforts the special event stating that
and it should be continued with more liberty. “ICAI bears testimony to the
Addressing the gathering, Union Minister fact that strong foundations go
expressed his hope, that the Institute may also a long way in creating a unique
consider rolling out vaccination programs for and historic Institution”. ICAI
students, chartered accountants, tying up with is contributing to the nation’s growth path with a
some hospitals in remote parts of the country. model that defines “Excellence, Independence and
Referring the term Chartered Accountant, with Integrity”. With strong commitment, hard work
commitment and accountability, Hon’ble Minister and dedication, ICAI has emerged as one of the
expressed the trust that Chartered Accountants most revered institutions in the field of education
have with the competency to handle the challenges and professional excellence. In his address, he also
with highest level of transparency, integrity, said that the institute is pushing towards new
commitment, and intelligence. technology, artificial intelligence and block chain
and the Institute is trying hard to move away from
The Union Minister urged the professional the usual ways of doing things and taking suitable
members of CA community and leaders of the initiatives to evolve, innovate and grow.
profession to encourage more and more chartered
accountants to look at the possibilities of mergers, ICAI has achieved significant milestones in
acquisitions, partnerships as working in a larger the field of accountancy and is poised to play
networks truly can help in becoming a world class a greater role in changing the global landscape
institution. The minister expressed his confidence and strengthening the foundation of resurgent
saying that if we want to become ambassadors of India by taking the profession to the newer
India worldwide, we need to invest in research, zeniths.

www.icai.org THE CHARTERED ACCOUNTANT AUGUST 2021 17

134

Benevolence
Voluntary Contribution to the Chartered
Accountants’ Benevolent Fund (CABF)
The Chartered Accountants’ Benevolent Fund (CABF) was established in December, 1962 with the objective to provide financial assistance
for maintenance, and other similar purposes to needy members of our Institute, their wives, widows, children and dependent parent(s).
In these challenging pandemic times, hundreds of our members have lost their battle and many are struggling hard to pass through
this difficult time. The impact is deep and has certainly shattered their dreams. The Institute has tried to help our members in distress.
Financial assistance upto Rs.1,50,000/- is being granted to eligible members/widows/dependant parent(s) where gross total income of
family is less than Rs. 10 lacs. Financial Assistance is also considered for the remaining amount in the cases (including dependent) where
Member has received a partial claim from the insurance company. A considerable number of members/ family have been granted such
assistance. Members who voluntary contributed a sum of Rs 1,00,000 or more from June 2020 onwards to the CABF are:

Name CA. Kamlesh Shivji Name CA. Ajay Bahl

Vikamsey
Membership 080791
Membership 034025 No.
No.
Amount 1,00,000
Amount 2,00,000 Name CA. Ganesh B
Kanchan
Name CA. Nilesh Shivji Membership 200654
Vikamsey No.
Membership 037665 Amount 1,00,000
No. Name CA. Gopalakrishnan
B
Amount 2,00,000
Membership 018702
Name CA. Chidambaram No.
R Amount 1,00,000
Name CA. Mansukhlal
Membership 038654 Prabhudas
No. Khadawala
Membership 005796
Amount 2,00,000 No.
Amount 1,00,000

Firm / Trust
1. M/s. M R Narain & Co. 100,000 2. H T Kanabar Higher Education Trust 5,00,000

Many ICAI Chapters, Regional Councils and Branches also come forward to arrange for societal emergencies. Recently. India had been at
the epicentre of the global pandemic and the number of new recorded daily infections were exponentially rising. This second wave with
larger caseloads of infections required home isolation or hospitalization with many having lost their loved ones. Rising to the occasion,
our ICAI regional councils, branches and overseas chapters have come forward and donated generously in CABF and other social
organizations. ICAI Overseas Chapters have worked closely with the Indian Embassies in their jurisdiction and arranged to send necessary
assistance to Indians in need. Our Chapters have directly or indirectly supported us in fighting with the second wave.

ICAI Overseas Chapters

1. Abu Dhabi 10,00,000
2. Doha Chapter 2,00,000
3. Dubai Chapter 55 Oxygen Concentrators

Abu Dhabi Chapter of ICAI arranging contribution of 10 lakh rupees

Be a part of this Noble Mission - Contribute to CABF. Visit - cabf.icai.org

18 THE CHARTERED ACCOUNTANT AUGUST 2021 www.icai.org
 Know Your Ethics
135

FAQs on Communication and changes in Act, 2013, special notice should be given to the
professional appointments Company at least fourteen clear days before the
meeting in which the subject matter of the notice
Q. Whether a Chartered Accountant can accept is to be considered. The meeting contemplated in
an appointment as auditor of a company Section 115 undoubtedly is the original meeting.
without first ascertaining from it whether Where at any annual general meeting, no auditor
the requirements of the Companies Act, in is appointed or re-appointed, the existing auditor
respect of such appointment have been duly shall continue to be the auditor of the company
complied with? mentioned in Section 139 of Companies Act, 2013.
No, a Chartered Accountant in practice shall be
deemed to be guilty of professional misconduct Q. Can a company remove the auditor before
if he accepts an appointment as auditor of a the expiry of his term?
company without first ascertaining from it The Company can remove the auditor appointed
whether the requirements of sections 139 and under Section 139 of Companies Act, 2013,
140 of Companies Act, 2013 in respect of such before the expiry of his term of office only by a
appointment have been duly complied with. resolution passed at any General Meeting and
In this regard, the Council has laid down detailed after obtaining previous approval of the Central
guidelines that are appearing in Paragraph Government.
2.14.1.9(ii) to 2.14.1.9(xxxix) under Clause (9) Q. What would be recourse taken by the
of Part I of the First Schedule to the Chartered Incoming auditor in case of qualified Audit
Accountants Act, 1949 appearing in Volume II of Report by retiring auditor?
the Code of Ethics.
Q. Whether a statutory auditor of a company Incoming auditor may accept the audit if he is
can be appointed in the adjourned meeting satisfied that the attitude of the retiring auditor
in place of existing statutory auditor where was not proper and justified. If, on the other
no special notice for removal or replacement hand, he feels that the retiring auditor had
of the retiring auditor is received at the time qualified the report for good and valid reasons,
of the original meeting? he should refuse to accept the audit. There is no
rule, written or unwritten, which would prevent
No, if any annual general meeting is adjourned an auditor from accepting the appointment
without appointing an auditor, no special notice offered to him in these circumstances. However,
for removal or replacement of the retiring before accepting the audit, he should ascertain
auditor received after the adjournment can be the full facts of the case. For nothing will bring
taken note of and acted upon by the Company, the profession to disrepute so much as the
since in terms of Section 115 of the Companies knowledge amongst the public that if an auditor

Follow us on: www.esb.icai.org | esb@icai.in |@icaiesb

www.icai.org THE CHARTERED ACCOUNTANT AUGUST 2021 19

 Know Your Ethics
136

is found to be “inconvenient” by the client, he  Business Description

could readily be replaced by another who would
 Name of the Parent Company in case of
not displease the client and this point cannot be
Subsidiary
too over-emphasised.
 Copy of last Audited Financial Statement
Q. What are the duties of retiring auditor?
B. Engagement Information
On the request of the Incoming Auditor to the
retiring auditor for providing known information  Type of Engagement
regarding any facts or other information of C. Regulatory Information
which, in the opinion of the retiring auditor,
the Incoming auditor needs to be aware before  Company PAN No.
deciding whether to accept the engagement, the  Company Identification No.
retiring auditor shall provide the information
diligently.  Directors’ Names & Addresses
 Directors’ Identification No.
Further, the paragraph R 320.8 in Volume-I
of Code of Ethics provides that subject to 3. Where Client is a Non- Corporate Entity
provisions of Clause (8) of Part I of First Schedule A. General Information
of the Chartered Accountants Act, 1949, and
Council directions thereunder, the existing or  Name and Address of the Entity
predecessor accountant, when asked to respond  Copy of PAN No.
a communication from a proposed accountant,
shall provide the information honestly and  Business Description
unambiguously to the proposed accountant.  Partner’s Names & Addresses (with
Q. Whether there are any Know Your Client their PAN/Aadhar Card/DIN No.)
(KYC) Norms to be followed by members in  Copy of last Audited Financial Statement
practice?
B. Engagement Information
Yes, members in practice are required to follow
 Type of Engagement
Know Your Client (KYC) Norms, which are
mandatory w.e.f 1.1.2017. Explanation: “Attest Functions” for this
purpose will include services pertaining to
As per paragraph R320.3 A6 of Volume-I of Audit, Review, Agreed upon Procedures and
Code of Ethics, professional accountants while Compilation of Financial Statements.
accepting engagement of attest functions are
required to comply with the “Know Your client” Q. Whether the auditor should periodically
(KYC) Norms of the Institute, which are as review whether to continue with the
below:- recurring client engagement?
1. Where Client is an individual /proprietor
As per paragraph R320.9 of  Volume-I of Code
A. General Information of Ethics, for a recurring client engagement, a
professional accountant shall periodically review
 Name of the Individual whether to continue with the engagement.
 PAN No. or Aadhar Card No. of the
Individual In view of paragraph 320.9 A1, potential threats
to compliance with the fundamental principles
 Business Description might be created after acceptance which, had
 Copy of last Audited Financial Statement they been known earlier, would have caused
the professional accountant to decline the
B. Engagement Information engagement. For example, a self-interest threat to
compliance with the principle of integrity might
 Type of Engagement be created by improper earnings management or
balance sheet valuations.
2. Where Client is a Corporate Entity
A. General Information Members may like to access the Video on “FAQs
on Communication and changes in professional
 Name and Address of the Entity appointments” at http://esb.icai.org/esb-videos/

20 THE CHARTERED ACCOUNTANT AUGUST 2021 www.icai.org

 Opinion
137

Measurement of residual value of Property, Plant

and Equipment / Intangible Assets as a percentage
to ‘Original Cost’ as mentioned in the Companies
Act vs. ‘Deemed Cost’ referred to in Ind AS 101
A. Facts of the Case the previous year’s figure for the financial year
2015-16 under these Standards. By virtue of
1. A Company (hereinafter referred to as ‘the specific provision under Ind AS 101, First-
Company’) is a public limited company time adoption of Indian Accounting Standards
registered under the Companies Act, listed that permits exemptions during transition,
in Stock Exchanges and thereby governed the Company has availed the exemption to
under the relevant Regulations. It is a continue with the carrying value for all of its
Maharatna public sector undertaking under property, plant and equipment and intangible
the administrative Ministry of Petroleum assets as recognised in the financial statements
and Natural Gas, Government of India and as on the date of transition to Ind AS, i.e., 1st
is engaged in the business of refining and April, 2015.
marketing of petroleum products. By virtue of
its granted status as a Government Company, 4. As on March 31, 2015, the Company’s property,
its audited financial statements for a financial plant and equipment (PPE) and intangible
year are subjected to supplementary audit assets together, were stated at a cost of Rs.
under section 143(6) of the Companies Act, 48,175 crore and written down value of Rs.
2013 by the Comptroller and Auditor General 29,063 crore. By virtue of adopting ‘Deemed
of India (C&AG). Cost’ in reporting PPE/intangible assets in the
financial statements, the said written down
2. The querist has stated that during the value was considered to be deemed cost under
supplementary audit by the C&AG for the the transition provision as stated above. Over
financial year (F.Y.) 2019-20, the accounting the years, the Company has been consistently
treatment followed in the Company’s books estimating 5% of cost (original cost or historical
of account with respect to appropriateness cost) of assets as its residual value, unless
of consideration of ‘residual value’, more there are assets that could be considered even
particularly, with respect to linking of it to at a lower valuation. The carrying value of
‘Historical Cost’, in place of ‘Deemed Cost’ depreciable asset, being the cost of an asset
came up for audit scrutiny. In line with the less its residual value, is being depreciated over
assurance given to C&AG that the matter would the useful life of the assets.
be referred to Expert Advisory Committee of
Institute of Chartered Accountants of India, 5. In the financial year 2019-20, in case of
the querist has sought the extant opinion. ‘LPG Cylinders and Pressure Regulator’
(one of the PPE having a useful life of 15
3. Until the financial year 2015-16, the years), the ‘residual value’ was revised on
Company’s accounts had been prepared account of change in accounting estimate
under the then prevailing Generally Accepted by the management from the existing 5% of
Accounting Principles (IGAAP) and pursuant historical cost to 15% of historical cost. The
to introduction of Indian Accounting revision and consequential disclosure is in
Standards (Ind ASs), the Company’s books of compliance with the requirements of Schedule
account for financial year 2016-17 was drawn II of Companies Act, 2013 (As per Part A,
for the 1st time under Ind AS, duly recasting paragraph 3).

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6. In this regard, C&AG has expressed a view that a) The Accounting Standards Board
in the backdrop of the Company having adopted of the ICAI has issued a Frequently
deemed cost as cost pursuant to adoption of Ind Asked Question (FAQ) on deemed
AS, such residual value should have been fixed cost of Property, Plant and Equipment
by the Company as a percentage of deemed under Ind AS 101, First-time Adoption
cost of PPE. They have further stated that, by of Indian Accounting Standards;
virtue of the Company, continuing to keep
residual value as a percentage of historical cost b) The said FAQ contains following
of PPE, depreciation charge for the financial reference:
year 2019-20 has been understated.
“... As per the definition of deemed
7. According to the querist, the view of C&AG cost, it is the amount used as a
(i.e. residual value shall be a percentage of surrogate for the cost or depreciated
deemed cost of PPE) is considering inter alia, cost and for the purpose of subsequent
the following: depreciation or amortisation, deemed
cost becomes the cost as the starting
i. Under the provisions of Ind AS 101, a point…”
first-time Ind AS adopter was allowed to
elect to continue with the carrying value c) Accordingly, deemed cost is the cost
of all of its PPE as at the date of transition and drawing reference from the said
measured as per the previous GAAP and FAQ, Government Auditor’s view
use that as its deemed cost on the date of was that historical cost of PPE is no
transition. more relevant once ‘Deemed Cost’ is
adopted by the entity.
ii. The term deemed cost has been defined in
Appendix A of Ind AS 101 as an amount 8. The Company, however, is of the following
used as a surrogate for cost or depreciated view:
cost at a given date. Subsequent
depreciation or amortisation assumes that (i) The “residual value of an asset is the
the entity had initially recognised the asset estimated amount that an entity would
or liability at the given date and that its currently obtain from disposal of the asset…”
cost was equal to the deemed cost. (Paragraph 6 of Ind AS 16, Property, Plant
and Equipment). Thus, ‘residual value’ is an
iii. By virtue of having applied the transitional absolute value (amount) and need not have
provision during first time adoption, any nexus to the historical cost or deemed
the view of C&AG is that the change cost of the asset. Nevertheless, for ease of
in residual value should not have been measurement, it is linked as a percentage of
measured on the historical cost of the historical cost, which aspect finds support
‘cylinders & pressure regulators’ which in the Companies Act, 2013. Paragraph 51
was capitalised before Ind AS period, but of Notes to Schedule II of Companies Act,
should have been on deemed cost adopted 2013 states as under:
on the date of transition (1st April 2015)
to Ind AS. “5. Depreciable amount is the cost of an
asset, or other amount substituted for
iv. During discussions over the Provisional cost, less its residual value. Ordinarily,
Comments issued on the Company’s the residual value of an asset is often
financial statements for the year 2019-20, insignificant but it should generally be
a view was expressed by the Government not more than 5% of the original cost
Auditors that: of the asset.”
1
This was omitted wide Notification No. GSR 237(E) dated 31.03.2014.

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Further, paragraph 3(i)1 of Schedule II specifies as (v) If the Company were to fix residual value as a
follows: percentage of deemed cost for a portion of its
PPEs/intangible assets, the Company will also
“ (i) In case of such class of companies, as may be have to fix another residual value for the same
prescribed and whose financial statements class of assets, as a percentage of historical cost
comply with the accounting standards for the rest of PPE/intangible assets capitalised
prescribed for such class of companies under during Ind AS period. Whereas, having 2 sets
section 133, the useful life of an asset shall of residual value, one quantified as a percentage
not normally be different from the useful life of deemed cost (pre Ind AS assets) and another,
and the residual value shall not be different quantified as a percentage of historical cost (Ind
from that as indicated in Part C, provided AS period assets) is not envisaged in Companies
that if such a company uses a useful life or Act/Ind AS. It would also be an administrative
residual value which is different from the nightmare for implementation of the same in
useful life or residual value indicated therein, the Company’s ERP system besides leading
it shall disclose the justification for the same.” to multiple disclosures, thus complicating
the understanding of readers of the financial
(ii) It is brought to the attention of the Committee statements.
that management, having determined residual
value based on the actual realisation of similar (vi) The estimation of residual value of an asset need
assets, has linked the same as percentage of not have any nexus with the cost or deemed cost
original cost for ease of measurement which is for the purpose of requirement of Ind AS. The
in compliance with the Companies Act, 2013. oil marketing companies (OMCs) have fixed the
Further, having chosen residual value as a residual value of LPG cylinders and pressure
percentage of original cost, the same has been regulators, based on the actual realisation
adequately disclosed vide Note 3, sub-note 10 (historical data) of similar assets and for ease of
under Property, Plant and Equipment, as under: measurement and linked the same as percentage
to ‘Original Cost’ which is also well established in
“Includes reduction in depreciation for
Schedule II to Companies Act.
the year by 127.60 Crore (2018-19: NIL)
in respect of LPG cylinders and pressure
(vii) The querist has stated that to his best knowledge,
regulators, arising pursuant to change in
there are no explicit provisions in the Companies
accounting estimate over increase in residual
Act / Ind AS that warrants linkage of residual value
value from 5% to 15% of Original Cost
to deemed cost. Further in the management’s
effective 01.04.2019. The revised estimate is
view, as long as depreciation charge for the
based on historical data.”
period is computed in a manner whereby
(iii) Notwithstanding the contention that the manner systematic allocation of depreciable amounts
of accounting is correct and appropriate, over the useful life of the asset is ensured and the
even if the calculation of residual value were same is consistently followed, it is immaterial as
benchmarked to ‘Deemed Cost’, the quantum of to how residual value of an asset is measured, i.e.,
residual value of PPE, continuing to be the same, substance overriding form.
the percentage of residual value, as a factor of
‘deemed cost’ would only get revised. (viii) If the contention of Government auditors
were to be correct, then, linking residual value
(iv) The concept of deemed cost is in vogue since to deemed cost would not only be restricted
implementation of Ind AS, effective from to ‘LPG Cylinders and Pressure Regulators’
01/04/2015. Over the last 4 years, since then, (wherein management estimate of residual
the Company has been consistently computing value was changed during the financial year
the depreciation charge by reference to carrying 2019-20 from 5% to 15%), but on entire fixed
value of assets as reduced by residual value, which assets of the Company that are carried in the
is linked to original cost. Thus, there has not books at deemed cost. It may be noted that
been any change in the facts of the case except for the entity has been consistently computing the
revision in accounting estimate of residual value depreciation by systematically allocating the cost
of a particular class of PPE during the financial of assets less its residual value over the useful life
year 2019-20. of the asset.

2
This was substituted wide Notification No. GSR 237(E) dated 31.03.2014.

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(ix) Accordingly, it was replied by the Company v. Any other connected issues that EAC wishes
during issuance of Provisional Comments to add to the query and answer the same for
for the financial year 2019-20 that linking of better clarification.
residual value to a percentage of original cost
is appropriate and thus, depreciation and C. Points considered by the Committee
amortisation expenses for the year and profit for
the year have been correctly stated. 11. The Committee notes that the basic issue raised
in the query relates to whether for the purposes
(Emphasis supplied by the querist.) of requirements of Schedule II to the Companies
Act, 2013, historical cost or deemed cost should
9. At a conceptual level, this issue is common to be considered for change in residual value of the
other OMCs, who also have similar lines of ‘cylinders and pressure regulators’ which were
business and similar accounting practice followed capitalised before Ind AS period and when the
as that of the Company. Statutory auditors are Company has elected to measure its Property,
satisfied with the accounting treatment followed Plant and Equipment at deemed cost as per
by the Company. Ind AS 101. The Committee, has therefore,
considered only this issue and has not examined
B. Query any other issue that may arise from the Facts of
the Case, such as, other accounting aspects, such
10. In view of the above, the opinion of the Expert as depreciation, etc. for cylinders and pressure
Advisory Committee is sought on the following regulators, accounting treatment in respect of
issues: any other item of property, plant and equipment
or intangible asset, whether estimates of residual
i. Is there any specific provision, either under value, earlier (initial) and now (revised), have
Companies Act, 2013 or under Ind AS been determined appropriately, compliance
warranting fixation of residual value (in cases with the requirements of Ind AS 101 and other
where assets have been carried in books by Standards on transition to Ind ASs, accounting
following deemed cost under Ind AS 101) for change in estimates of residual value as per
by the entity, by linking it as a percentage of the requirements of Ind AS 8, 16 and 38, etc.
deemed cost? The Opinion expressed hereinafter is purely
from accounting perspective and not from the
ii. If reply to query (i) above is affirmative, perspective of legal interpretation of various
whether such prescription is the one and legal enactments including, in particular, the
only manner of measurement of residual Companies Act, 2013. Further, the accounting
value? Or else, whether the entity is free to standards referred hereinafter are Indian
estimate by linking residual value of asset Accounting Standards, notified under the
either to original cost or to deemed cost or Companies (Indian Accounting Standards)
in any other manner, as long as systematic Rules, 2015, as amended/revised from time to
allocation of cost of assets over useful life of
time.
the assets is ensured.
iii. If reply to 1st part of query (ii) above is 12. In the context of the issue raised, the Committee
affirmative, isn’t it true that the guiding notes the following definitions and requirements
principle under Companies Act, 2013, of Ind AS 16 and Ind AS 38 and the Schedule II
namely, residual value, should generally to the Companies Act, 2013, as follows:
be not more than 5% of the original cost
of the asset would be contrary to the said Ind AS 16
prescription?
“Cost is the amount of cash or cash
iv. In the event, opinion of EAC would be to equivalents paid or the fair value of the other
measure residual value as a percentage of consideration given to acquire an asset at
‘deemed cost’ only, would this opinion cover the time of its acquisition or construction
entire assets of the entity irrespective of or, where applicable, the amount attributed
whatever be the ‘percentage of residual value’ to that asset when initially recognised in
or else, would this requirement be applicable accordance with the specific requirements of
only when residual value as a percentage of other Indian Accounting Standards, e.g., Ind
original cost exceeds 5%? AS 102, Share-based Payment.”

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“The residual value of an asset is the estimated and has operated under conditions similar
amount that an entity would currently obtain to those in which the asset will be used. The
from disposal of the asset, after deducting residual value is reviewed at least at each
the estimated costs of disposal, if the asset financial year-end. A change in the asset’s
were already of the age and in the condition residual value is accounted for as a change in
expected at the end of its useful life.” an accounting estimate in accordance with
Ind AS 8, Accounting Policies, Changes in
“51 The residual value and the useful life of Accounting Estimates and Errors.
an asset shall be reviewed at least at each
financial year-end and, if expectations 103 The residual value of an intangible asset may
differ from previous estimates, the increase to an amount equal to or greater
change(s) shall be accounted for as a than the asset’s carrying amount. If it does,
change in an accounting estimate in the asset’s amortisation charge is zero unless
accordance with Ind AS 8, Accounting and until its residual value subsequently
Policies, Changes in Accounting Estimates decreases to an amount below the asset’s
and Errors.” carrying amount.”
“53 The depreciable amount of an asset is “121 Ind AS 8 requires an entity to disclose
determined after deducting its residual value. the nature and amount of a change in an
In practice, the residual value of an asset is accounting estimate that has a material
often insignificant and therefore immaterial effect in the current period or is expected
in the calculation of the depreciable amount. to have a material effect in subsequent
periods. Such disclosure may arise from
54 The residual value of an asset may increase changes in:
to an amount equal to or greater than the
asset’s carrying amount. If it does, the asset’s (a) the assessment of an intangible asset’s
depreciation charge is zero unless and until useful life;
its residual value subsequently decreases
to an amount below the asset’s carrying (b) the amortisation method; or
amount.”
(c) residual values.”
“76 In accordance with Ind AS 8 an entity
discloses the nature and effect of a change in Part A of Schedule II to the Companies Act:
an accounting estimate that has an effect in
the current period or is expected to have an “1. Depreciation is the systematic allocation of
effect in subsequent periods. For property, the depreciable amount of an asset over its
plant and equipment, such disclosure may useful life. The depreciable amount of an
arise from changes in estimates with respect asset is the cost of an asset or other amount
to: substituted for cost, less its residual value.
…”
(a) residual values;
“3. Without prejudice to the foregoing provisions
(b) …”
of paragraph 1,—
Ind AS 38 (i) The useful life of an asset shall not ordinarily
“The residual value of an intangible asset is the be different from the useful life specified in
estimated amount that an entity would currently Part C and the residual value of an asset shall
obtain from disposal of the asset, after deducting not be more than five percent of the original
the estimated costs of disposal, if the asset were cost of the asset:
already of the age and in the condition expected at Provided that where a company adopts a
the end of its useful life.” useful life different from what is specified
“102 An estimate of an asset’s residual value in Part C or uses a residual value different
is based on the amount recoverable from from the limit specified above, the financial
disposal using prices prevailing at the date statements shall disclose such difference
of the estimate for the sale of a similar asset and provide justification in this behalf duly
that has reached the end of its useful life supported by technical advice.”

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The Committee also notes the following requirements of an asset is often insignificant and immaterial.
of the Guidance Note on Accounting for Depreciation Further, as per the requirements of Schedule II to the
in Companies in the context of Schedule II to the Companies Act, 2013, it shall not be more than 5% of
Companies Act, 2013, issued by the ICAI as follows: the original cost of asset unless it is properly justified,
duly supported by technical advice and adequately
“Residual Value of an Asset
disclosed in the financial statements. Thus, for the
15. As mentioned above, paragraph 3(i) of Part purpose of compliance with the requirements of
A of Schedule II, inter alia, states that the Schedule II to the Companies Act, 2013, the Company
residual value of an asset shall not be more has to link it with the original cost (which is also
than five percent of the original cost of the sometimes termed as ‘historical cost’) so as to ensure
asset; provided that where a company uses that the residual value is not normally more than 5%
a residual value different from the limit of the original cost and in case, it is so, to provide
specified above, the financial statements adequate and appropriate disclosures considering the
shall disclose such difference and provide requirements of Schedule II.
justification in this behalf duly supported by
13. The Committee notes that the Schedule II
technical advice. The aforesaid proviso can uses the term ‘original cost’, which is normally
be taken to mean that the residual value of construed as the actual cost incurred by the
the asset is indicative in nature. Thus, where Company on an asset and which as per Ind AS
the estimate of the residual value of the asset 16 is the amount of cash or cash equivalents paid
is more than five percent of the original or the fair value of the other consideration given
cost of the asset, the company should use to acquire an asset at the time of its acquisition
that estimate of residual value provided it or construction or, where applicable, the amount
is supported by technical advice, external attributed to that asset when initially recognised
or internal, and disclosures in this regard in accordance with the specific requirements of
are made as recommended later in this other Indian Accounting Standards. Accordingly,
the Committee is of the view that as per the
Guidance Note. In case the residual value is
requirements of the Schedule II, the residual
estimated to be less than five percent of the value or any changes in such residual value are
original cost of the asset, the same should be linked or compared with/to original cost and not
used and it would not be necessary to make with the deemed cost.
a disclosure in such a case. ...”
D. Opinion
From the above, the Committee notes that residual
value is determined for the purpose of determining 14. On the basis of above, the Committee is of
the depreciable amount of an asset so as to allocate the following opinion on the issues raised in
that depreciable amount over the useful life of paragraph 10 above:
the asset in a systematic manner. Determination
of residual value of PPE or intangible asset is an i. The process of estimation of residual value
independent technical process of estimation based is an independent exercise and should not
be benchmarked with the cost of the asset
on the amount recoverable from disposal using prices
(historical/original or deemed). Further, as
prevailing at the date of the estimate for the sale of per the requirements of the Schedule II to
a similar asset that has reached the end of its useful the Companies Act, 2013, the residual value
life and has operated under conditions similar to or any changes in such residual value are
those in which the asset will be used. The Committee linked/compared with/to original cost and
is of the view that the residual value is estimated not with the deemed cost.
technically at the beginning of the useful life of
the asset and is assessed/reviewed periodically to (ii) to (iv) In view of (i) above, answer to these
determine whether there is any change in the original questions does not arise.
estimate or not. Thus, such process of estimation of
(v) The question raised by the querist is not any
residual value is an independent exercise and should specific issue; rather is a generic question.
not be benchmarked with the cost of the asset (either Therefore, this cannot be answered as the
historical or deemed). In practice, the residual value Committee answers only specific issues.

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Sustainability

SDG Agenda – Partnerships in the

Decade of Action
The target to achieve
the Sustainable
Development Goals
(SDGs) by 2030 Isha Gupta Dr. Nandita Mishra
requires all hands on The authors are experts in the area of sustainibility. They can be
reached at ishagupta74@gmail.com and saanvinandita@gmail.com
deck. We need a well-
integrated pooling of Introduction officially approved the 2030
resources, expertise Agenda for Sustainable
The historic Millennium
Development, a set of 17 SDGs
and actions from Declaration had been signed
replaced the MDGs and they
by leaders from 189 countries
different stakeholders gathered at the United Nations are universal, integrated, and
to achieve our 2030 headquarters in September transformative. From 2016
to 2030, the goals must be
Agenda. India needs 2000, in which they pledged to
meet a set of eight measurable implemented and achieved in
a multi-stakeholder goals by the year 2015, ranging every country. The Sustainable
partnership to attain from halving extreme poverty Development Goals (SDGs)1
the 17 entwined SDGs and hunger to promoting are an inter-governmental
gender equality and lowering set of aspirational goals with
and 169 targets. The
child mortality. After 2015, as 169 targets to alter the planet
outbreak of COVID-19 work on the new goals began, following the Millennium
has impacted the the legacy and accomplishments Development Goals (MDGs).
journey towards this of the MDGs give essential India is a signatory to the SDGs
insights and perspectives. In and has noble ambitions. All
goal and this article September 2015, the United SDGs are extremely important
focuses on India’s Nations General Assembly and relevant in India. In terms
initiative towards
attaining SDGs and
also discusses about
the impact of COVID
19 on scoreboard of
SDGs. Further, the
article focuses on what
initiatives stakeholders
have taken to achieve
the SDGs by 2030.
Read on…
1
Sustainable Development Goals. Retrieved from (https://www1.undp.org/content/oslo-governance-centre/en/home/sustainable-development-goals/
background.html) on 11/07/2021.

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Sustainability
of the Millennium Development very important step in attainment India also needs to focus on gender
Goals, India failed to meet the of the SDGs. Indian civil society equality, nutrition accomplishment,
targets on 8 out of 12 targets organizations which are an education at all levels, pollution
recognized as relevant from important stakeholder in the reduction and employment
India’s standpoint (Millennium attainment of SDGs have been generation. The SDG India Index
Development Goals India making incredible contributions is one of the most important steps
Country Report, 2015)2. through spreading awareness taken by the government which
and educating the society about measures the SDG progress at the
Because of the outbreak of the the framework. This gives a state level. The index also facilitates
COVID-19 pandemic, the world comprehensive society based to stimulate competition among
is lagging behind the schedule approach towards attainment of the states which eventually will
in terms of achieving the 2030 the SDGs. drive the achievement of the SDG
Agenda with ten years remaining. targets.
India is also not an exception Through this comprehensive
to this, but the position of India approach, India has been able As the world enters the “Decade
holds great importance in the to improve the education level, of Action”, India’s commitment
overall attainment of the SDGs. improve the infrastructural level, to the principles of SDGs can be
India is home to one-sixth of the reduce poverty and develop a attained with the help of Central
world’s population and accounts partnership for the attainment and State Governments, business
for 8% of global GDP, making of SDGs. Coverage of citizens houses, NGOs, community and
it imperative to the attainment by health insurance, covering society at large. The principle of
of the global SDGs. A decade more than 500 million citizens “Sabka Saath Sabka Vikas” with
of aggressive action is needed is one of the great achievements sustainability at its core should
to speed sustainable solutions of the government. “Swachh be our mantra to achieve the
to the world’s largest challenges Bharat Abhiyan” which SDGs. Harmony with the global
and help achieve these goals. emphasized on building millions community and efforts from each
This requires a multi-stakeholder of household toilets and 99% level of community in our country
approach, because the target electrification of our villages is the need of the hour.
can not be achieved without are some other achievements
the participation of all the which are worth mentioning. Multi-stakeholder
stakeholders. India has also improved in the Partnerships (MSP) -
India moving towards ‘Ease of doing business’ ranking Response to the pandemic
from 142 in 2014 to 63 in 2021.
attainment of SDGs
Also, the initiatives taken by Covid-19 has provoked an
India has adopted the UN SDG the government in the field of extraordinary multiple-sector—
framework and has aligned renewable power generation is quick response. Governments,
its priorities according to the exceedingly notable. Public sector, private sector,
global goals. The Government international organizations,
of India is taking all possible While India has been doing and society’s immediate
steps in fulfilling the framework, fairly well in accomplishing collaboration is required to
supervising the development, the SDGs, the task ahead is a accelerate the effort against
and bringing on board different grueling assignment. With huge Covid-19. Partnerships between
stakeholders in the voyage population size, diverse regions public and private sector, public
towards accomplishment of with different economic, social sector and society, and private
the targets. India is a large and cultural backgrounds this is sector and society are the desired
and diverse country and each a daunting challenge. COVID-19 ones for the accomplishment
region requires different ways has further pushed us back in of the SDGs. ACT Accelerator
of handling the accomplishment accomplishing the target and is one such example which has
of the SDGs. Government has created several challenges. given increased access to shared
taken many actions to localize Bringing the economy back to knowledge, technology, data and
the SDG goals. Indian business track and accomplishing the resources. Below is the summary
houses, being the most important SDGs targets is the most pressing of India’s SDGs performance
stakeholder has started adopting task which requires partnership and impact of Covid-19 on the
the Triple bottom line which is among different stakeholders. attainment of SDGs.
2
Millennium Development Goals, India Country Report 2015. Retrieved from: http://mospi.nic.in/sites/default/files/publication_reports/mdg_2july15_1.pdf

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Sustainability
Table 1– India SDGs scoreboard with indicator of performance
SDG Goals Improvement in Impact of COVID-19 on SDG Goals
Performance
SDG 1. COVID-19 is estimated to have pushed an additional 354
million people in below the poverty line (Kumar, 20203)
No Poverty bringing the overall poverty rate to 46.3 percent. It has also
boosted the rate of unemployment to 27.1 percent (Express
Healthcare, 20204) with informal labourers and small traders
accounting for more than three quarters.
SDG 2. Extreme food insecurity affects an estimated 16 million
people (8 percent of the total undernourished population).
Zero Hunger Due to the pause in mid-day meals, 97 million youngsters are
at risk of malnutrition (Business World, 20205).
SDG 3. While the pandemic has brought public health to the
forefront, with increased financing and policy attention, the
Good Heath and Well
focus on COVID-19 care has hampered the delivery of some
Being
critical health services, with 1 million children at danger of
missing immunization (Business Line, 20206).
SDG 4. Due to the COVID-19 lockdown, education of over 154 crore
students have been disrupted. This increases the gender gap
Quality Education in education as the girls are more at risk than the boys. The
dropout rate of girls is high at the secondary level (19.8%)
as compared to primary (6.3%), very few complete their
education till Class 12 (Sonawane, 2020)7.
SDG 5. Women have been disproportionately affected by COVID-19,
which has resulted in an increase in occurrences of violence
Gender Equality calls by 27 percent (Iyengar and Defterios, 2019)8.
SDG 6. Due to increased handwashing, COVID-19 has resulted in
a 20% increase in per capita water consumption. COVID-19
Clean Water and has become more prevalent in locations where there is a lack
Sanitization of clean water, inadequate sanitation, and long distances to
water sources (Aggarwal, 2019)9.
SDG 7. Affordable and In the first four months of the lockdown, COVID-19 had a
Clean Energy transient positive impact on energy usage, with per capita
power use falling by 13% (Parnell, 2020)10.

3
Kumar, S. (July 19, 2020). Opinion Impact of COVID 19 pandemic on food security of India. Economic Times. Retrieved from: (https://government.
economictimes.indiatimes.com/news/policy/opinon-impact-of-the-covid-19-pandemic-on-food-security-of-india/77048453) on 10/07/2021.
4
India’s Health system will witness the ripple effects of the COVID 19 pandemic (July 16, 2020). Express Healthcare. Retrieved from (https://www.
expresshealthcare.in/blogs/indias-health-sys-tem-will-witness-the-ripple-effects-of-covid-19/423343/) on 10/07/2021.
5
COVID-19 Pandemic Accelerated Pace of Broadband Penetration in India: (November 6, 2020). Business World. Retrieved from (http://www.businessworld.
in/article/COVID-19-pandemic-accelerated-pace-of-broadband-penetration-in-India- 06-11-2020-339934/) on 11/07/2021.
6
Fintech: Digital Payments got a COVID boost in 2020, Business Line (25 December,2020). Retrieved from (https://www.thehindubusinessline.com/money-
and-banking/digital-payments-got-a-covid-boost-in-2020/article33419349.ece ) on 10/07/2021.
7
Sonawane, S. (December 1, 2020). The Gendered Impact of COVID-19 on School Education. CBGA. Retrieved from ( https://www.cbgaindia.org/blog/
gendered-impact-covid-19-school-education/) on 14/07/2021.
8
Iyengar, R. and Defterios, J. (July 1, 2019). Women are bringing solar energy to thousands of Indian villages. CNN Business. Retrieved from (https://edition.
cnn.com/2019/07/01/business/india-solar-frontier-markets/index.html) on 09/07/2021.
9
Agarwal, R. (August 16, 2019). Auto slump to hit investors, Indian economy; Here’s what government needs to do. Financial Express. Retrieved from (https://
www.financialexpress.com/money/auto-slump-to-hit-investors-indian-economy-heres-what-government-needs-to-do/1677080/#:~:text=In%20the%20
Indian%20context%2C%20the,and%20services%20sector%2C%%2020including%20dealerships) on 09/07/2021.
10
Parnell, J. (January 14, 2020). WoodMac: Volkswagen will be world’s Biggest Electric Car maker by 2030. Greentech Media. Retrieved from (https://www.
greentechmedia.com/articles/read/volkswagen-will-be-worlds-biggest-ev-manufacturer-by-2030) on 10/07/2021.

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Sustainability
SDG 8. There has been a severe impact on economic growth, with
GDP contractions of -7.965 percent in 2020 and 14.8 percent
Decent work and expected in 2021 (Dave, 2020)11. This has had a cascading
Economic Growth effect on employment and per capita income.
SDG 9. The industrial sector took the brunt of the economic downturn,
with the Index of Industrial Production falling by 55 percent
Industry Innovation and (Press Information Bureau, 2020)12. Cost escalations and project
Infrastructure delays reports cost overruns of 4 lakh crores for 1682 projects
(Science Based Projects, 2020)13 in the infrastructure industry.
SDG 10. COVID-19 has expanded inequality, the wealth of billionaires
increased by 35% during the lockdown and by 90% since
Reduce Inequalities 2009. It would take an unskilled worker 10,000 years to
make what Mukesh Ambani made in an hour during the
pandemic and 3 years to make what he made in a second
(The Wire, 2021)14.
SDG 11. During the shutdown, 2.6 million migrants were stranded
across metropolitan India, highlighting the lack of inclusive
Sustainable Cities and cities (Patel, 2020)15. Furthermore, with more than three people
Communities per room, 42 percent of HHs in India are unsuitable for social
distancing, indicating a lack of progress toward sustainable
communities and affordable homes (UNDP, 2016)16.
SDG 12. NA During the lockdown, resource consumption fell by 44 percent
(although it has since recovered to pre-lockdown levels), while
Responsible Consumption minerals such as coal saw a decrease in demand (-16 percent in
and Production March). However, garbage creation grew, with India producing
18000 tonnes of COVID-19 waste (Business Roundtable, 2017)17.
SDG 13. NA COVID-19 had a favorable influence on climate change,
resulting in a 26 percent reduction in emissions during the
Climate Action lockdown period and an overall reduction of 8.2 percent in
2020. It has also attracted more attention to climate change and
the need to conserve to avoid future disasters (Shead, 2020)18.
SDG 14. NA It was expected that India will produce over 18000 tonnes
of COVID-19 trash by 2020, with a substantial percentage
Life Below water of that being plastics (gloves, masks, sanitizer bottles) and
medical waste tossed into inland lakes, rivers, and oceans,
exacerbating marine pollution. The COVID-19 shutdown has
had a negative impact on the fisheries industry, resulting in a
decrease in production and exports due to fishing restrictions
(Accenture and Global Compact Network India, 2021)19.
11
Dave, S. (August 11, 2020). India GDP to shrink by 4.5% in 2020 due to COVID 19 pandemic: Dun & Bradstreet Report. Retrieved from (https://
economictimes.indiatimes.com/news/economy/indicators/india-gdp-to-shrink-by-4-5-in-2020-due-to-covid-19-pandemic-dun-bradstreet-report/
articleshow/77483208.cms?from=mdr ) on 10/07/2021.
Launch of ‘Aatma Nirbhar Bharat Abhiyaan’ is a “Watershed” moment in the economic history of India: Raksha Mantri. PIB Delhi (December 14, 2020).
12

Retrieved from (https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1680603) on 11/07/2021.

13
Companies Taking Action. Science Based Targets. Retrieved From (https://sciencebasedtargets.Org/Companies-Taking-Action/) on 10/07/2021.
14
COVID-19 Sharpened Inequalities in India, Billionaires’ Wealth Increased by 35%: Report. The Wire (January 25, 2021). Retrieved from (https://thewire.in/
rights/covid-19-sharpened-inequalities-in-india-billionaires-wealth-increased-by-35-report ) on 11/07/2021.
15
Patel, C. (July 13, 2020). COVID-19: The Hidden Majority in India’s Migration Crisis. Chatham House. Retrieved from (https://www.chathamhouse.
org/2020/07/covid-19-hidden-majority-indias-migration-crisis) on 14/07/2021.
16
Mapping Mining to the SDGs: An Atlas. UNDP (2016). Retrieved from (https://www.undp.org/publications/mapping-mining-sdgs-atlas) on 10/07/2021.
17
Work in Progress. How CEOs are helping Close America’s skill gap. Business Roundtable 2017). Retrieved from (https://s3.amazonaws.com/brt.org/archive/
immigration_reports/BRT%20Work%20in%20Progress_0.pdf ) on 10/07/2021.
18
Shead, S. (July 16, 2020). Tesla plans to use Glencore cobalt in new Gigafactories. CNBC. Retrieved from (https://www.cnbc.com/2020/06/16/tesla-glencore-
cobalt-gigafactory.html) on 10/07/2021.
19
Raising India’s SDG Ambition-Pathways for sustainable recovery and growth, Accenture (2021). Retreived from https://www.globalcompact.in/uploads/
knowledge-center/1612422074raising-india-sdg-accenture-white-paper-15th-convention.pdf

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Sustainability
SDG 15. The COVID-19-related lockdown resulted in an increase in
urban wildlife appearances. Wildlife poaching, on the other
Life on Land hand, more than doubled during the COVID-19 lockdown,
with 88 incidents compared to 35 in the 2019 year (Mishra,
2021)20.
SDG 16. Peace, Justice COVID-19 had a major impact on judicial activity, with
and Strong Institutions a 95 percent drop in cases filed due to the courts’ inability
to function during the lockdown. Serious crime rates, on
the other hand, have dropped by 40 percent to 50 percent
(Business World, 2021)21.
SDG 17. Partnerships for NA COVID-19 sparked a surge in international cooperation
the Goals to achieve development goals, particularly in the field of
public health. A vast number of Indian companies, including
SII, Zydus, DRL, and Bharat Biotech, have partnered with
international organizations for R&D and manufacturing to
create a COVID-19 vaccine. In bilateral agreements, there
was also more traction on education, health, and economic
growth (Accenture and Global Compact Network India,
2021).
Note: Green shows improvement in performance, red shows decline in performance and blue shows no
change in improvement.
Pathways And variety of policies, programmes, a. In SDG 3, the focus area is
Realignment Opportunities and packages. Below are some “Telemedicine” which will
for Recovery and of the most promising initiatives include ICT to exchange
Development and major investments from patient information and
a business, societal, and provide healthcare services
When it comes to the environmental perspective in remote regions. Through
SDGs, various stakeholders that can help in accomplishing collaboration, NITI
(governments, private SDG targets. The realignment Aayog and the Ministry of
companies, NGOs, and civil strategy will state the focus area Health and Family Welfare
society) have already taken of each SDG, the initiatives (MoHFW) has released
the road to realize value and taken by Government and Telemedicine Practice
achieve shared success. By the investments made by Guidelines, which establish
aligning company strategy with stakeholders in achieving the the groundwork for
the SDGs, global concerns focus area. As per the points regulating remote clinical
can be turned into business listed below, the opportunities consultations. The National
opportunities while also helping to achieve SDG ambition has Health Stack (NHS) and
to make the world a better been categorized into three: National eHealth Authority
place. Businesses can use the (NeHA) have launched
SDGs as a strategic framework 1. Build a strong and a digital framework with
to track performance, create resilient economy: It the aim to compile digital
targets, and engage with covers SDG 3 (Good Health health records of all
diverse stakeholders in order to and well-being), SDG 4 citizens by 2022 to leverage
encourage private investment in (Quality Education) and benefits of telemedicine
important industries, the Indian SDG 11 (Sustainable Cities and e-health. The hospital
government has implemented a and Communities). mergers and acquisitions
20
Mishra, D. (September 21, 2021). Edtech funding jumps 4x to $1.5 billion this year. Times of India. Retrieved from (https://timesofindia.indiatimes.com/
business/india-busi-ness/edtech-funding-jumps-4x-to-1-5bn-this-yr/articleshow/78224787.
21
Mindspark in Rajasthan: Personalized Adaptive Learning Tools To Improve Learning Outcomes. Business World (July 12, 2021). Retrieved from (http://
www.businessworld.in/article/Mindspark-In-Rajas-than-Personalized-Adaptive-Learning-Tools-To-Improve-Learning-Outcomes/01-11-2019-178372/) on
10/07/2021.

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Sustainability
increased by 155 percent to (BDA) formulated the Working (Virtualization
INR 76.15 billion (US$1.09 “Policy on Housing for enablement)” which focuses
billion) in the fiscal year All in Urban Areas” as on work arrangement so
ended March 2019 (Cyrill, country’s first ever Public that employees need not
2020)22. Private Partnership (PPP) commute or travel to a
for Affordable Housing. physical place, rather they
b. In SDG 4, the focus can work remotely. Due to
area is “EdTech” which 2. Opportunities for COVID 19, the work-from-
targets to make education Equitable Business home mode has been going
easier with the use of Growth: It includes SDG on since the break of the
technology instruments. 1 (No poverty), SDG 8 pandemic. Over the course
The Government has (Decent work and Economic of a year, more than 10,000
developed SWAYAM (Study Growth) and SDG 9 vehicles could be removed
Webs of Active Learning (Industry, Innovation and from the roads reducing
for Young Aspiring Minds) Infrastructure). 29,000 metric tonnes of
which is a holistic platform CO2 emissions (Prasad,
that connects to various d. In SDG 1, the focus area
is “Financial Inclusion 2020)24.
online courses. Till date,
through Fintech” which
approximately 1.02 crore f. In SDG 9, the focus area is
encompasses inclusion
students have enrolled “E-Commerce and Delivery
of financial products and
under the 2769 MOOCs Services” supports that the
services to every person and
(Massive Open Online firm. Under the Pradhan rise of e-commerce and
Courses)23. The investment Mantri Jan-Dhan Yojana delivery services will be
in ed tech startup has 365 million accounts have able to assist entrepreneurs
increased to four times been opened and under in scaling up and reviving
from $409 million in 2019 the mission “The National our ailing economy. To
to $1.5 billion in 2020. Mission for Financial promote digitalization, the
Inclusion (NMFI), 2014” government established
c. In SDG 11, the focus area numerous programmes
over 35 crore people are
is “Affordable Housing” in such as Umang, Startup
introduced to the formal
which Provision of housing
banking system. FSS India Portal, Bharat
(that is deemed economical)
(Financial Software and Interface for Money
for persons with a median
Systems) has partnered up (BHIM), and others as
household income or
with India Post Payments part of the Digital India
less, as determined by
Bank (IPPB) to promote movement.
the government. The
financial inclusion using
Government is supporting 3. Opportunities to
the FSS’s Aadhaar-Enabled
cheaper home loan rates strengthen the Green
Payment System (AePS)
and framed the Public Economy: It includes
services to provide
Private Partnerships
customers across India with SDG 7 (Affordable and
for Affordable Housing’
cheap doorstep banking Clean Energy) and SDG 13
policy to attract private
services. (Climate Action).
developers. With the help
of IFC, the Bhubaneswar e. In SDG 8, the focus g. In SDG 7, “Clean Energy”
Development Authority area is “Remote is focused with the aim to
22
Cyrill, M. (October 22, 2021). India’s Healthcare Investment Outlook: A Brief Profile. Retrieved from (https://www.india-briefing.com/news/indias-
healthcare-investment-outlook-a-brief-profile-20757.html/) on 10/07/2021.
23
Press Information Bureau, Ministry of Education. Retrieved from ( Various initiatives have been taken to promote digital learning under ‘National Mission
on Education through Information and Communication Technology’ (NMEICT) (pib.gov.in)) on 10/07/2021.
Prasad, N.T. (August 31, 2020). India power demand is almost back to pre-covid levels: POSOCO Report. Retrieved from (India’s Power Demand is Almost
24

Back to Pre-COVID Levels: POSOCO Report - Mercom India) on 10/07/2021.

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accelerate the transition to The India Energy Storage of subnational progress on
renewable, zero-emission Alliance (IESA) expects to SDGs, have provided guidance
energy sources, as well as attract over $3 billion in to endeavors of subnational
energy conserved through investment to build four governments. But COVID-19
energy efficiency initiatives. “giga factories” in India. has shaken the growth rate
The Jawaharlal Nehru Bharat Heavy Electricals and has created a sea of tasks
National Solar Mission Limited (BHEL) is in the to be accomplished for the
is a Government of India talks to build India’s first 2030 agenda. A unified strong
project to promote solar Li-ion Gigafactory with a multiple- stakeholder partnership
energy in India. In 2018, the multi-national consortium. among the centre, states,
community, business and society
original aim of 20 GW of
i. In SDG 13, “Green Finance” is the answer to this massive
solar PV was exceeded, four
focuses on mobilizing and problem.
years ahead of schedule for
promoting sustainable
the 2022 deadline. By 2022, The shockwaves from the
funding to help India’s
the target was raised to 100 pandemic COVID 19 will
economy transition to
GW. In March 2018, ReNew further disrupt society’s socio-
sustainable growth. SIDBI
Power, one of India’s biggest has launched a new plan economic structure and harm
sustainable energy firms, called the Sustainable the natural environment unless
agreed to buy Ostro Energy Finance Scheme to finance decisive efforts are aimed at
for INR 60,000 million sustainable development achieving sustainable growth.
(USD 836 million). This initiatives such as renewable This is the decade for achieving
strategic investment will the Sustainable Development
energy projects, Bureau of
help the company realise its Goals, and leaders must commit
Energy Efficiency (BEE) star
aim of contributing to the to increase sustainability and
rating, green microfinance,
Government of India’s 175 accountability. A number of
green buildings, and eco-
stakeholders have begun to take
GW renewable energy goal friendly labelling, among
steps in this approach. The Indian
by 2022. others. In 2016, Hero Future
government has been aggressively
Energies released 300 crore
enacting laws to increase
h. In SDG 13, “Electric rupees in Climate Bonds renewable energy production
Mobility” focuses on certified green bonds. Yes and focus investments on clean
increasing the production Bank is the only commercial energy and electric mobility in
and use of electric vehicles bank from India which is a India. To foster start-up concepts
in India by creating a signatory to the Principles aiming at social innovation,
growth-friendly ecosystem. for Responsible Banking private investments are being
To minimize expenses, (PRB) and is a member of pooled. With the government’s
the Union Cabinet has UN Environment Finance increasing support and incentives,
recommended eliminating Initiative (UNEP FI). India is becoming an appealing
customs duties on certain destination for many big private
electric vehicle parts. Conclusion
companies’ sustainability-focused
Special policy measures With a vigorous SDG localisation products and services. An
include lowering the GST model which exemplifies environment like this is favorable
on electric vehicles to 5% our belief in cooperative and for appealing, sustainable, and
compared to 28%. Loans competitive federalism, buoyed implementable routes to recover
to buy electric vehicles are by evidence-based policy-making and expand in order to achieve
eligible for a tax exemption mechanisms, India has marched SDG goals. It is time to seize
of INR 1.5 lakh. Until ahead on multiple facades the emerging opportunities,
now, nearly a dozen states which are key to achieving capitalize on capabilities and
have adopted or proposed these Goals. The SDG India strengths, and reimagine a more
electric car rules, with Delhi Index and Dashboards – the equitable, inclusive, and greener
being the most recent. first government-led measure world. 

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Aligning Corporate Social Responsibility

Initiatives with Sustainable Development Goals
Corporate Social
Responsibility (CSR)
initiatives have become
an important plank for
businesses to position S P Shukla
themselves as good The author is Chairman, Group Sustainability Council,
corporate citizens. The Mahindra Group. He can be reached at eboard@icai.in
corporate sector is working
in collaboration with CSR as a measure to have on the society and the
government and individuals offset the social cost of environment. It is no longer
on social and environment doing business important for businesses to
causes beyond the policy just ‘do well’ but it has also
mandates and compliance Very often it is not realized that become important to ‘do good’.
requirements. For leading doing business extracts costs Therefore, companies all over
Indian companies, like beyond the economic costs the globe are making increased
their peers across globe, reported in the accounting efforts to demonstrate that
following sustainable statements prepared by they are committed towards
practices has become an the companies. In an ideal the social and environmental
integral aspect of doing scenario, businesses would be causes. In this context, CSR
business for the good of all adjusting their profits to net initiatives prove to be a useful
stakeholders – including out the impact of social and tool to demonstrate this
the society. The impact of environmental costs but the commitment with concrete
businesses on Sustainable difficulty in estimation and actionable initiatives.
Development Goals (SDGs) non-standardization of such
Corporate Social
is inextricably linked with an approach renders the idea
Responsibility Regulations
their CSR initiatives. The of accounting for such costs
SDGs provide universally untenable. These costs in an The CSR initiatives impact
accepted principles to economic sense are negative not only just the companies’
enable companies to externalities and stakeholders performance and brand
formulate their CSR have become more cognizant perception but it also has an
strategy in a holistic of the impact that businesses impact on the local
manner and provide well-
defined targets to enable
monitoring of the outcomes
of those strategies. Several
corporates are making
continued efforts in this
direction and are ably
supported by the accounting
professionals who play a key
role in the sustainability
reporting by the businesses.
Read on…

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Sustainability
communities, which in turn a broad list of activities which globe. This is substantiated by
impact the country as well. This business should undertake using the fact that more than 300 of
is the reason policymakers often CSR funds, leaving no scope for the Fortune 500 companies
make it a point to encourage ambiguity. This also helps the have set sustainability-related
these programs. businesses to align their CSR management targets on which
strategy with the key priorities they report regularly1. The
Many countries around the
of the nation including health, sustainability reporting and
world have enacted CSR
poverty alleviation, education, accountability practices in India
laws encouraging positive
clean and safe water etc. which are at par with global standards.
corporate citizenship. There
are de-facto part of the SDGs as
already are mandatory CSR In India, pioneering business
well.
reporting requirements in houses have done exemplary
several countries, including How Corporates work in terms of not only
UK, France, Sweden, Norway, contribute towards SDGs sustainability reporting
Australia etc. CSR is taken very but rather incorporating
seriously in India as well. In fact, Climate change risks are now a sustainability into the business
India is among few countries usual agenda item for discussion models and thereby creating
in the world to have rolled out in corporate boardrooms. With value for shareholders while
regulations mandating CSR the shifting focus on Sustainable simultaneously having a
spending. Section 135 on CSR practices, organization positive impact on society and
under the Companies Act performance is increasingly environment. For example:
2013, provides a framework considering the extent to which India grows around 300
to help companies to work Environment, Social, and million tonnes of food-grain
towards various development Governance (ESG) factors are on the same amount of land
challenges. It allows companies integrated into the long-term on which it used to grow 190
to proactively identify and value creation. Organizations million tonnes at the turn
implement projects to meet are witnessing increased of the century. One of the
the social and environmental expectations from both key factors behind this 50%
challenges. shareholders and consumers increase in productivity is
to work on sustainability farm mechanization. Tractor
The Act provides the criteria front and provide transparent penetration has increased
to demarcate companies which disclosures on their impact from 16 per 1000 ha. to
fall under the ambit of the law. on climate and put efforts for 35 per 1000 ha. The farm
It also prescribes the quantum making operations and products equipment industry has made
of the mandatory spends and sustainable in terms of impact a huge contribution to crop
on climate. productivity and therefore to
Reporting on rural prosperity and reduction
sustainable of inequalities.
practices Further, since independence,
together with the Per capita water availability
higher degree of has reduced to one-third
disclosures and today, which will head towards
accountability becoming a water scarce
has become country. Around 70% - 80% of
a common the fresh-water usage in the
practice among country is in farm irrigation
businesses and therefore it is a key lever to
across the increase water usage efficiency.
1
Pivot Goals, www.pivotgoals.com

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Sustainability
Use of Micro-irrigation can guidelines can be
reduce the water required for mapped to one
irrigation by up to 30%. The or more SDGs.
companies propagating the For example,
micro-irrigation technology CSR initiative
in India are therefore creating of contributions
economic value while to technology
simultaneously having a positive incubators located
impact on the water resources within Central
of the country. Government
approved
SDGs and their connect
academic
with CSR
institution is
The SDGs highlight a set of linked with SDG
large, chronic, inter-connected 9 (Industry,
and complex challenges Innovation, and
plaguing the world. The genesis Infrastructure).
of SDGs can also be linked with Similarly, CSR spends on Rural been difficult for companies
the concept of hidden social development projects would with cross-border business
and environmental costs. Since be inextricably linked to SDGs operations. Since SDGs are
Industrial revolution 1.0, the 1 (No Poverty), SDG 2 (Zero inherently universal, they can
model of development has Hunger), SDG 3 (Good Health serve as a framework to address
been to focus on the economic & Well-being) and SDG 4 cross-border CSR issues.
gains i.e. Profit and Loss, which (Quality Education). Another important connect
led to the economic growth comes from the requirement
while adversely affecting the In a nutshell, CSR regulations
for funding for SDGs. It has
Balance Sheet of natural assets provide a broad direction
been estimated that funding of
including air, water, soil, forests, for corporates to engage in
USD 5000 to 7000 Bn will be
etc. which are used to create activities which will lead to
required to achieve the SDGs
economic value. This practice is a sustainable future whereas
by 2030. The corresponding
clearly unsustainable and hence, SDGs help in defining tangible
estimates peg the spending
SDGs are in place to monitor well-defined targets to measure
needed in India at USD 960 Bn
progress on these aspects as the outcome of those activities.
of which more than USD 500
well. Given that both CSR and Global surveys by leading
Bn is the funding gap based on
SDGs have a similar genesis, consulting firms show growing
the current and planned public
it is no surprise that both are importance of the SDGs to
expenditures1. A significant
interlinked and together they business activity including
chunk of this gap is expected
have tremendous potential to the CSR strategies. Further,
to be bridged from private
provide a suitable model for focusing on the SDGs also
sector sources. The CSR spends
sustainable growth. allows multi-national companies
provide a possible way to fund
to address a significant
these requirements.
In fact, in the Indian context, challenge – how to devise an
the CSR activities mentioned effective CSR approach for Ways to align CSR
in the Schedule VII of the businesses spanning across strategies with SDGs
Companies Act, 2013 provides multiple geographies. Without Measuring social impact has
guidelines of the areas under common guiding principles in been an evolving effort for
which CSR initiatives can be place, developing a cohesive companies over the years. At
undertaken. Each of these CSR approach may have times, businesses prefer to
2
FICCI – TTC Report: Sustainable Development Goals – Linkages with Corporate Actions in India, 2018

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Sustainability
report efforts rather than impact youth by 2025. This would align with already existing CSR
and most of these disclosures have a major impact on job activities. This is a pragmatic
are those that are mandated creation in the country. and useful way for companies
by the government. However, to make the transition, paving
the pandemic has brought a  Similarly, in the financial way for a longer-term approach
sharp focus on the ‘S’ in ESG. services domain, a company through which they commit
Investors and businesses are with substantial rural holistically to working on
now getting a lot more serious presence is providing several SDGs through CSR
about their social metrics. They financing support to SMEs activities.
are looking for more measurable in these areas thereby
and meaningful disclosures for ensuring business growth Chartered accountants can
social reporting. and employment generation also play an important role
in rural India as well. in this process. CAs have
The SDGs cover a broad a visibility of company’s
spectrum of issues ranging  Corporates are also working compliance and reporting
from climate change, gender towards providing better
requirements along with its
inequality and the eradication access to healthcare
financial position. They can
of poverty. It is therefore facilities by providing
therefore help in advising
imperative for companies to mobile paramedical units to
the company to aim at CSR
map their line of work and then reach out to remote and less
accessible areas benefiting initiatives which have financial
take on goals that they can
lakhs of people. suitability and would also
contribute to and shape their
meet the statutory obligations.
CSR strategies accordingly.
 Several businesses have Also, while monitoring the
Some of the CSR initiatives regular tree plantation expenditure under the CSR
taken by leading Indian drives. Indian corporates head they can also monitor the
businesses, having impact on have planted millions of progress on these initiatives
several SDGs are substantiated trees under such drives and ensure that they are well
below - while maintaining a high on track towards meeting the
rate of survival of the organization’s stated social
 A leading auto major planted saplings. This objectives. Further, when in
has an ongoing flagship has resulted in dramatic leadership role, they can play
CSR initiative to provide changes in the ambient an even more proactive role by
opportunities for girl temperature and weather helping the corporates to work
children to attend school by conditions of these out strategies and initiatives
providing them economic locations. that serve both the business
and social support. This has
In a nutshell, businesses have as well as social goals. By
positively impacted the lives
tried to touch upon key SDG ensuring that highest levels
of 4 lakh girls in the country
targets in various ways through of corporate governance and
by enabling them to have
their CSR initiatives. These transparency of disclosures
quality education.
examples are for the purpose of and reporting are maintained,
 A renowned Indian illustrating how CSR initiatives they can ensure that the
conglomerate is working can align with SDGs. However, business goals and social
towards upskilling the youth it may be unrealistic to work out values align harmoniously.
in multiple sectors such as an all-encompassing strategy This would be perhaps one of
IT, hospitality, automotive, impacting all the 17 SDGs for the biggest contributions from
retail etc. and has set an most companies. A practical the community of accounting
ambitious commitment strategy is to focus on specific professionals towards the
to skill as many as 10 lakh targets, perhaps those which cause of SDGs. 

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Sustainability

BRSR and its Disclosure Challenges

With the global
Environmental, Social
and Governance (ESG)
reporting landscape
CA. Heman Sabharwal
changing rapidly, SEBI’s
The author is the member of the institute. He can be reached
Business Responsibility at eboard@icai.in
and Sustainability
Report (BRSR) is an Business Responsibility reporting scenario, several
and Sustainability Report countries have gone to the
upgrade over Business - An opportunity for extent of mandating non-
Responsibility Report companies financial disclosures. In April
(BRR) and is the next Context 2021, the Government of
step for Sustainability New Zealand announced the
The push towards climate
Reporting in India. introduction of legislation
change adaptation along with that would align climate-
The new format is responsible corporate behavior related disclosures with the
more comprehensive has thrusted the investors Recommendations of the
and is formulated and companies to embed Task-Force on Climate-related
after considering with ESG in their overall business Financial Disclosures (TCFD)
activities. Whilst the globally mandatory for certain financial
various international accepted voluntary frameworks/ services organizations, as well as
reporting standards/ standards such as Global all equity and debt issuers listed
frameworks. Though the Reporting Initiative (GRI), on the New Zealand’s Exchange.
transition from BRR Integrated Reporting (<IR>),
Sustainability Accounting India is not behind in this
to BRSR has its own context. The ESG reporting
Standards Board (SASB) are
short-term challenges, driving the sustainability started as early as 2009 in the
these developments
will benefit India Inc.’s
business sustainability
in the long run. As a
next step to reporting,
assurance of non-
financial information
is being widely
adopted globally for
ensuring credibility
of information,
however there are some
challenges associated
with it. Read on…

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Sustainability
country with the Ministry of the company such as BRSR circular also provides
of Corporate Affairs (MCA) name, year of incorporation, flexibility to companies already
issuing the ‘Voluntary office address, website, preparing sustainability
Guidelines on Corporate Social product information, reports based on international
Responsibility’. In 2012, SEBI operations, market served frameworks (such as GRI, SASB,
mandated the BRR for the by entity, employees, TCFD or <IR>) to cross-refer
top 100 companies by market turnover, CSR details etc. the information disclosed
capitalization. The mandate was under such frameworks with
then extended to 500 companies 2. Management and Process the BRSR, thus, avoiding
in 2015 and later to 1000 Disclosures - captures data duplication in reporting. It
companies in 2019. In the same on the policy and process also provides a Guidance
year The National Guideline on put in place by the company Note that shall help companies
Responsible Business Conduct and requires companies to interpret and understand
(NGRBC) was released. provide a web-link of the the requirements under each
policies that are on their section for better disclosures.
Recently, in May 2021, SEBI website. Additionally, it also
came out with a circular (‘SEBI requests for information on Advancements in BRSR
circular1’) introducing BRSR for Governance, leadership and
the top 1000 listed companies Overall, BRSR is an
oversight.
by market capitalization with improvement over the BRR.
a new prescribed format of 3. Principle-wise The structure of BRSR now
sustainability reporting on the Performance Disclosures incorporates Essential and
ESG parameters. - this is further divided into Leadership indicators with
Essential (mandatory) quantitative, in-depth questions
SEBI Circular and Leadership and granular level KPIs. BRSR
(voluntary) Indicators/ Key covers more KPIs under
The MCA Committee2 the three pillars of ESG as
Performance Indicators
(‘Committee’) examined the compared to the BRR, especially
(KPIs) which are taken
NGRBC-BRR framework around environmental KPIs
from the nine principles of
within the broader context such as energy, emissions, water
NGRBC. The indicators in
of UNGPs, SDGs, and other and waste, and health & safety
Principle-wise performance
widely accepted non-financial/ indicators. For instance, under
are aligned with the
sustainability reporting BRR, the KPIs under emissions
Sustainable Development
frameworks and refined/ included details on
Goals (SDGs).
enhanced the BRR to be called
the Business Responsibility
and Sustainability Report
(BRSR).
The SEBI circular mandates
BRSR for top 1000 companies
by market capitalization from
FY2022-23 onwards; keeping
it voluntary for FY2021-22.
The structure of BRSR format
consists of three sections-
1. General Disclosures - aims
to capture basic information Figure 1: Structure of BRSR
1
Available at: https://www.sebi.gov.in/legal/circulars/may-2021/business-responsibility-and-sustainability-reporting-by-listed-entities_50096.html
2
Available at: https://www.mca.gov.in/Ministry/pdf/BRR_11082020.pdf

www.icai.org THE CHARTERED ACCOUNTANT AUGUST 2021 39

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Sustainability
the emissions generated by the <IR> and SASB. Similarly, Paris agreement, societal cost of
company within the permissible the MCA’s committee report carbon, land use and ecological
limits given by CPCB/SPCB on BRSR framework draws sensitivity, societal value
for the financial year and if the inference from the globally generated etc.
company had undertaken any recognized Sustainability
Challenges in BRSR
initiatives for clean technology, Reporting frameworks - UNGC,
Disclosures
energy efficiency, renewable CDP, GRI, <IR> and ISO 26000.
energy or others (web link has As mentioned above, BRSR is a
to be provided, if it exists). The following figure is an new requirement and has come
KPIs on emissions under BRSR attempt to categorize some of into being in May 2021. While
include details on GHG Gas the BRSR indicators under the it is a positive move and a big
emissions and intensity; other 4 WEF pillars to understand if change over the current BRR,
emissions details such as NOx, BRSR broadly covers all the 4 but only time will tell how the
SOx, Particulate matter (PM), pillars of WEF. Figure 2 depicts India Inc. adopts or embraces
Persistent organic pollutants the same.
(POP), Volatile organic
compounds (VOC), Hazardous
air pollutants (HAP); details
on GHG reduction projects (if
existing). BRSR also requires
companies to disclose the
current and the previous year
data for certain KPIs. From this,
we can infer the granularity
expected from companies in
BRSR disclosures.
BRSR also incorporates
questions on value chain
partners in its disclosure
questionnaire such as training
programs conducted, details
on health & safety and working
condition assessments
conducted, corrective actions
undertaken, etc.
Semblance with the WEF
Metrics
Figure 2: Semblance of BRSR KPIs with WEF pillars
In 2020, World Economic
Forum (WEF) International BRSR partly covers the WEF the BRSR. Rather than viewing
Business Council3 (IBC) after metrics, there being areas as a compliance requirement, if
consultation with various that can be enhanced further corporates use introduction of
stakeholders came up with a in the framework such as the BRSR as an opportunity to
common set of metrics, based implementation of TCFD embed ESG aspects into their
on five voluntary frameworks- framework, disclosure on strategy and operations, it will
CDP, the Climate Disclosure whether the goals and targets be easier and more worthwhile
Standards Board (CDSB), GRI, set are in alignment with the to embrace BRSR.
3
Available at: http://www3.weforum.org/docs/WEF_IBC_Measuring_Stakeholder_Capitalism_Report_2020.pdf

40 THE CHARTERED ACCOUNTANT AUGUST 2021 www.icai.org

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Sustainability
Some of the challenges that KPIs that are to be reported provides an option to the
companies could face while upon. Being a regulatory companies to choose between
adopting and implementing BRSR compliance, it is anticipated 200,000 and 1,000,000 man-
are as follows: that companies will opt hours of work for calculating
to disclose only under different work-related injury
 Continued Challenges: the mandatory section. rates. However, the Loss
Though BRR was a very Companies may choose Time Injury Frequency Rate
simple format, companies not to disclose voluntary (LTFIR) indicator in Principle
found it challenging to indicators. 3 of BRSR is calculated
complete it, BRSR is much per 1,000,000 man-hours
comprehensive in that  Lack of Assurance of work. This may create a
manner. The question Guidelines: There is no problem for the companies
remains if companies can mention of third-party which are looking to map
adhere to the same. For assurance on the BRSR their BRSR indicators with
example, the National Stock disclosure data. Hence, the the GRI standards in their
Exchange - Stakeholder challenge lies in the fact that
Empowerment Services Sustainability Report.
it would be very difficult to
Report “ESG Analysis on authenticate the veracity Assurance of BRSR
50 listed companies in of information disclosed
India”4, pointed out several therein. Context
deficiencies in reporting for
various aspects in BRR. These  Common Template The growth in the number of
deficiencies are likely to Structure: BRSR provides companies disclosing their
reflect in the BRSR reporting a common template that non-financial data on ESG
due to the increase of both is to be followed by all the performance raises the question
qualitative and quantitative companies. Considering pertaining to the credibility
disclosures. that all the questions will of data being disclosed.
not be applicable to all the Sustainability reporting or
 Transition Process: The BRR sectors, hence inter-sectoral ESG reporting (as it now being
mandate was extended from comparability will be a called) always faces a challenge
top 500 listed companies to challenge, especially for the of consistent and accurate
top 1000 listed companies investors. disclosures which can be achieved
by market capitalization
through conducting non-financial
recently in 2019. While the  Not completely mapped data assurance. Also, investors
bottom 500 companies have with International are focusing on embedding ESG
relatively less experience and framework: A lot of aspects in the company’s strategy
were still getting to mature companies in India are and their alignment towards
with respect to the BRR already following some or the developing a low carbon future.
disclosures, BRSR poses other international reporting Assurance can help ensure the
a significant transitional framework. Considering reliability of the data that can help
challenge for these that companies will not strengthen the trustworthiness of
companies. want to stop publishing investors and stakeholders.
their sustainability reports
 Prescriptive Format:
following an international Further, assurance of non-
Considering that the BRSR
standard, completing the financial data can lead to
has a very specific format to
BRSR might be a burden to improved corporate governance
respond upon, companies
them. Though BRSR gives the practices, risk management
may find it restrictive and
option of cross-referencing process, improved reporting
may not be able to disclose
data points between definitions, scope and
information on all initiatives
Sustainability Reporting and methodologies. Also, rating
taken other than what the
BRSR, inconsistency between agencies such as CDP and Dow
format is requesting for.
the definitions of the KPIs Jones Sustainability index (DJSI)
 Accountable Disclosures: may lead to confusion. For provide a better score if the non-
BRSR structure comprises e.g., The GRI 403-9 Work financial data is assured by an
of mandatory and voluntary related Injuries indicator independent third-party.
Available at: https://www.sesgovernance.com/pdf/home-reports/1594458276_ESG-Analysis-on-50-Listed-Companies-in-India_2020.pdf
4

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Sustainability
Some of the prominent assurance  Limited guidance on looking and integrated with
standards used globally and in assurance: Sustainability defined boundaries and scope.
India are International Auditing assurance standards With BRSR replacing BRR, this
and Assurance Standards Boards sometimes lack preciseness requires corporates to disclose
(IAASB)’s International Standards when compared to financial accurate data in a more holistic
on Assurance Engagements audit standards, the latter manner. Hence, assurance of
(Revised) [ISAE 3000 (Revised5)], being more developed and BRSR should ideally be conducted
ISAE 3410, Account Ability’s in existence for a much to provide reliable and credible
AA1000 series of standards and longer period. Sustainability data for all the stakeholders.
in India ICAI’s Standards of Reporting Standards Board of
Assurance Engagements (SAE) ICAI is now taking significant Conclusion
3410 on Assurance Engagements efforts in bridging the gap. The post-COVID “new normal”
on Greenhouse Gas Statements6. narrative revolves around
 Possibility of indicators
material to business getting mainstreaming sustainability
As per ISAE 3000 (Revised),
left out: With the current into business practices. The
there are two types of assurance
practices for assurance, introduction of BRSR mandate
engagements –
companies may choose the is an inflection point in the
1) Reasonable Assurance, and 2) indicators under BRSR that Indian ESG reporting scenario
Limited Assurance. they want an assurance which provides an opportunity
based upon on their for the companies to embed
Since BRSR is a very important
reporting strategies, degree sustainability in their core
national sustainability reporting
of information provided and strategy. SEBI has attempted
tool, it is important that the data
management systems. This to benchmark it against some
presented in the same is also
may lead to selection of those of the leading global reporting
assured to ensure accuracy and
indicators for assurance frameworks, while keeping in
credibility. The guidance note on
which may not be material to mind the local sustainability
the BRSR can be used as a base
the business of the company. challenges. BRSR is an attempt
for providing assurance on BRSR. to standardize the ESG reporting
Challenges of BRSR Assurance  Tick in the Box: While BRSR landscape in India. As an overall
may have become mandatory, format, it tries to encompass KPIs
As mentioned earlier, while it is most companies have limited from all the three pillars of ESG.
yet to be seen how companies knowledge on the importance
adopt the BRSR, conducting an and usefulness of getting an On a closer look, though BRSR
assurance can help companies assurance upon the same. will have transitional and
in complementing their internal implementation challenges
processes and enhancing the  Lack of system in terms of disclosures, it will
credibility of information and improvement: Conducting pivot the organizations towards
data that are used to make an assurance leads the more exhaustive non-financial
decisions. corporates to realize the reporting practices, which will be
inadequacies and weaknesses a major contributor in India Inc.’s
However, assurance on BRSR in process/controls around corporate sustainability journey.
could have the following set of data capturing, collation
challenges - and reporting. As generally Assurance of BRSR will help
companies may not see companies to disclose reliable and
 Assurance not a mandatory
the need of conducting an provide credible data under BRSR.
compliance: Since assurance
assurance of BRSR, it hinders It will also help in maintaining
of BRSR is not mandated,
the scope of improvements transparency and aid all the
most companies may not see
of such processes and it may stakeholders (especially investors)
the need to invest in it. Even
also impact the accuracy of to make better decisions.
if they are in full compliance
of reporting and disclosing information being reported. Corporates, regulators and other
of sustainability/ESG related There has been a constant stakeholders are the key players
data under BRSR, without a development and evolution of who can exercise the need and
proper assurance, the data non-financial reporting. With importance of getting BRSR
lacks credibility. time, it has become more forward assured. 
5
Available at: https://www.ifac.org/system/files/publications/files/ISAE%203000%20Revised%20-%20for%20IAASB.pdf
6
Available at: https://resource.cdn.icai.org/62857srsb50843.pdf

42 THE CHARTERED ACCOUNTANT AUGUST 2021 www.icai.org

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Sustainability

Sustainability Reporting Frameworks and

SEBI Circular on BRSR
A growing realization
that non-financial
aspects are critical
to positive business Naimish Upadhyay
outcomes in the long The author is expert in the area of sustainibility. He can
term, coupled with rising be reached at naimishupadhyay@gmail.com

disclosure expectations Growing Focus on role they play in larger society

from investors and Corporate Sustainability and the planet. Together with
stakeholders on these As the COVID-19 pandemic
the growing urgency around
issues, has led to a climate change, natural
continues to test our societies resource constraints and social
proliferation of new and economies in drastic, inequities, the pandemic has
frameworks to support unforeseen ways, it has also served to sharply put the
brought an unprecedented shift
non-financial reporting spotlight back on several critical
in the business environment. issues around the triple bottom
among corporates. While Corporates are re-doubling lines of People, Planet and
several global coalitions efforts to strengthen their Profits. The Global Risk Report
and standards setting organizational purpose, chart 2021 released by the World
bodies have taken a out strategies to ensure long- Economic Forum strikingly
term resilience and redefine the captures the key risks arising
lead in this direction, metrics of success and value out of these issues.1
the launch of Business creation. This emergent crisis
Responsibility and has presented an opportunity All of these varied crises have
Sustainability Reporting for businesses to sharpen their accelerated the momentum
priorities and re-focus on the around corporate sustainability
(BRSR) framework
as well as the SEBI
mandate for BRSR
reporting for the top
listed companies signify
an important milestone
in propagating
sustainability and
business responsibility
principles among Indian
companies, through an
India-made and India-
centric framework. Read
on…
1
The Global Risk Report 2021, World Economic Forum, 2021, http://www3.weforum.org/docs/WEF_The_Global_Risks_Report_2021.pdf

www.icai.org THE CHARTERED ACCOUNTANT AUGUST 2021 43

160

Sustainability
and responsible business performance using ESG resilient business models.
conduct. Companies today factors. Recent Institutional Insightful reporting that
are expected to perform Investor Survey indicate that provides a clear understanding
well on a range of metrics ESG information has become of those models and
beyond financial performance, significantly important, with the communicates the company’s
underlining the realization majority of investors surveyed performance on a broad
among investors that (98%) signalling a move to a variety of metrics is becoming
Environmental, Social and more disciplined and rigorous critical for stakeholders while
Governance (ESG) factors approach to evaluating non- making informed decisions
often have a material outcome financial performance of on investment, procurement
on a company’s long-term companies. Specifically, 91% and other forms of business
growth and success. There is of respondents said that non- relationships. The need for
also growing awareness and financial performance played a sustainability information that
appreciation for the various pivotal role in their investment is consistent, high-quality,
forms of ‘values’ that a business decision-making. The call material and easily accessible
creates beyond what gets for action and demands for within the public domain was
reflected in traditional balance transparency on sustainability recently reemphasized by
sheets. Such non-financial value aspects is also being supported BlackRock CEO Larry Fink in
is often intangible and difficult by other stakeholder groups, his annual letter to CEOs in
to quantify, but can have far- including issue-driven civic 2021.3
reaching impacts beyond the society organizations, an
investors and shareholders of informed customer and A large number of reporting
a company. These emerging employee base, as well as standards and frameworks
concepts have aptly been activist media, all of whom are have emerged globally over
described under the moniker eager to commend positive the last decade in response
of ‘Stakeholder Capitalism’ by actions and call out failures in to the growing demand for
the World Economic Forum, the corporate world. non-financial information.
which describes it as a form of They help provide structure
capitalism in which companies Emergence of to the multitude of thematic
seek long-term value creation Sustainability Reporting areas and diversity of topics
by taking into account the needs Frameworks that constitute corporate
of all their stakeholders, and sustainability. These frameworks
society at large.2 As sustainability, corporate are most commonly developed
responsibility and ESG issues by standard setting bodies,
While organizations are continue to evolve as strategic not-for-profit bodies, investor-
internally recognizing that business imperatives, there backed coalitions and analyst
social and environmental is a greater demand from agencies. While some
responsibility can lead to companies to communicate frameworks have attempted to
positive business outcomes, more information pertaining comprehensively address the
investors are one of the key to their performance, material broad spectrum of sustainability
stakeholder groups driving risks and opportunities as and ESG topics, others are
momentum around ESG actions well as strategies around these more thematic and focussed on
and disclosures from the issues. Investors and other individual issues such as climate
outside. Institutional investors stakeholder groups are keen change. Some of the more
are raising the stakes when it to assess whether companies popular and globally accepted
comes to assessing company are adopting sustainable and reporting frameworks
2
World Economic Forum: What is Stakeholder Capitalism? https://www.weforum.org/agenda/2021/01/klaus-schwab-on-what-is-stakeholder-capitalism-
history-relevance/
3
Larry Fink’s 2021 letter to CEOs, 2021, https://www.blackrock.com/corporate/investor-relations/larry-fink-ceo-letter

44 THE CHARTERED ACCOUNTANT AUGUST 2021 www.icai.org

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Sustainability
are agnostic of geography, size applicable standards for 77 corporate reporting model
and nature of business, and different industry sectors, to equate natural capital
therefore are easier to adopt by identifying the minimal with financial capital. It
any company. A brief overview set of financially material has developed a framework
of six prominent global sustainability topics and for companies to report
frameworks for sustainability their associated metrics for environmental and climate
reporting is presented below: each sector. The standards change-related information
are explained in the form in their mainstream
I. Global Reporting of SASB’s Materiality Map, financial reporting, such
Initiative (GRI) and are intended to help as the annual report.
Standards: GRI, formed companies and investors This is aimed at ensuring
in 1997, developed the first analyse the material ESG the same rigour in the
and most widely used global issues likely to affect environmental information
standards for sustainability a company’s financial as financial information,
reporting useful to a performance.5 so as to provide investors
broad set of stakeholders. with decision-making
It covers a wide range of III. Taskforce on Climate information to ensure
topics under the triple Related Finance resilient capital markets.7
bottom line approach Disclosures (TCFD):
(Economic, Environmental Created by the Financial V. International Integrated
and Social performance), Stability Board to improve Reporting Council (IIRC):
with each topic individually and increase reporting of IIRC is a global coalition
comprising of a series of climate-related financial of regulators, investors,
quantitative and qualitative information, the TCFD companies, standard setters,
indicators. The principle
in 2017 released climate- the accounting profession,
of materiality guides the related financial disclosure academia and NGOs
reporting organizations in
recommendations designed that have come together
prioritizing those topics in
to help provide companies, to propagate integrated
their sustainability reports
banks and investors better thinking and integrated
which “have a direct or
indirect impact on an information to support reporting. Its IR Framework
organization’s ability to informed capital allocation. provides a principles-
create, preserve or erode These recommendations based approach that helps
economic, environmental are structured around companies communicate
and social value for itself, four thematic areas of the full range of factors that
its stakeholders and society governance, strategy, risk affect its ability to create
at large”.4 This framework management, metrics and value over time. Its value
is commonly adopted targets.6 creation model comprises
by companies used for of six forms of capitals
IV. Climate Disclosure (financial, manufactured,
preparing standalone
Standards Board (CDSB): intellectual, human, social
Sustainability Reports. CDSB is an international and relationship, and
II. Sustainability Accounting consortium of business natural) and is meant to
Standards Board (SASB): and environmental promote an understanding
First published in 2018, organizations committed of their interdependencies
the SASB Standards to advancing and aligning and inculcate integrated
comprises a set of globally the global mainstream thinking around value
4
GRI Standards, https://www.globalreporting.org/standards
5
SASB, https://www.sasb.org/standards/
6
TCFD, https://www.fsb-tcfd.org/
7
CDSB, https://www.cdsb.net/our-story

www.icai.org THE CHARTERED ACCOUNTANT AUGUST 2021 45

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Sustainability
creation. The IR Framework similar principles and topics. include developing joint market
is increasingly being This is predictably leading guidance for complementary
used by companies to to some level of duplication and additive way of applying
prepare integrated annual of efforts and repetition of the frameworks, a joint vision
reports, and is commonly information as reporting for complementarity with
used in conjunction with companies attempt to fulfil Financial GAAP and future
other indicators-based the information needs of comprehensive corporate
frameworks such as GRI to different stakeholder groups reporting system, and a joint
communicate performance preferring different frameworks. commitment to deepen
on non-financial matters.8 Hence, while individual the collaboration with each
frameworks keep evolving, other and other interested
VI. CDP: Formerly known as the broader stakeholder stakeholders towards this goal.10
the Carbon Disclosure community has understandably Furthermore, in June 2021, the
Project, CDP is an called for simplification IIRC and SASB officially merged
international non-profit and rationalization of the to form the Value Reporting
organization that helps sustainability reporting Foundation in order to
companies and cities landscape. In response, several encourage the complementary
disclose their environmental initial small steps in the use of both the frameworks.11
impact across the three direction of alignment and
focus areas of climate, Another significant step,
convergence are now being
water security and forests. which is likely going to impact
explored by organizations
It provides one of the the sustainability reporting
worldwide.
most comprehensive landscape of the future, is the
dataset of comparable A noteworthy development consultation carried out by the
metrics on these thematic in this direction is the coming Trustees of the International
areas globally. The together of five leading Financial Reporting Standards
annual collection of data independent global framework (IFRS) Foundation, which
through formalized survey and standard setters, namely confirmed an urgent need for
global sustainability reporting
questionnaires is supported CDP, CDSB, GRI, IIRC and
standards and support for the
by over 590 institutional SASB, who have shown a
Foundation to play a role in
investors with over US$110 commitment to working
their development. The Trustees
trillion in combined assets.9 towards comprehensive remain on track to make a final
corporate reporting system. determination on constitution
Although these and several Their joint commitment of Sustainability Reporting
other reporting frameworks was formally released in Standards Board in advance
have individually proven useful September 2020 in the form of the November 2021 United
for reporting organizations and of a ‘Statement of Intent Nations COP26 conference.12
their stakeholders, they have to Work Together Towards
also led to a crowded field of Comprehensive Corporate Background on Business
sustainability reporting, with Reporting’, an initiative Responsibility and
overlapping requirements and facilitated by the Impact Sustainability Reporting
multiple approaches towards Management Project. Key Growing stakeholder interest in
what are fundamentally near- elements of their commitment non-financial performance
8
IIRC, https://integratedreporting.org/the-iirc-2/
9
CDP, https://www.cdp.net/en/info/about-us/what-we-do
10
Statement of Intent to Work Together Towards Comprehensive Corporate Reporting, Impact Management Project, 2020, https://impactmanagementproject.
com/structured-network/statement-of-intent-to-work-together-towards-comprehensive-corporate-reporting/
11
Answering Your Questions about the Value Reporting Foundation, 2020, https://www.sasb.org/blog/answering-your-questions-about-the-value-reporting-
foundation/
12
IFRS Foundation Trustees announce strategic direction and further steps based on feedback to sustainability reporting consultation , 2021, https://www.ifrs.
org/news-and-events/news/2021/03/trustees-announce-strategic-direction-based-on-feedback-to-sustainability-reporting-consultation/

46 THE CHARTERED ACCOUNTANT AUGUST 2021 www.icai.org

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Sustainability
and the corresponding growth priorities and commitments but Principle 3: Businesses should
in sustainability disclosures also rooted in India’s socio- respect and promote the
by corporates are increasingly cultural context. The NVGs also well-being of all employees,
being witnessed in India too. served to provide further thrust including those in their value
Over the past decade, there to the Companies Act, 2013 chains.
has been a manifold growth which casts fiduciary duties on
in the number of companies the Directors of a Company, Principle 4: Businesses
voluntarily publishing such requiring them to “promote should respect the interests
disclosures, mainly in the form the objects of the company for of and be responsive to all its
of Sustainability Reports or the benefit of its members as a stakeholders.
Integrated Annual Reports, whole, and in the best interests
based on global frameworks. of the company, its employees, Principle 5: Businesses should
Participation of Indian the shareholders, the community respect and promote human
companies in industry-led and for the protection of rights.
sustainability coalitions as environment”. Subsequently, in Principle 6: Businesses should
well as investor driven ESG 2012, the NVGs became the respect and make efforts
assessments is also seeing basis for Business Responsibility to protect and restore the
an upswing. All of this has Report (BRR) requirement environment.
resulted in a greater volume mandated by the Securities and
of information available Exchange Board of India (SEBI) Principle 7: Businesses, when
publically on how companies for the top 100 listed companies engaging in influencing public
are addressing sustainability and by market capitalization. This and regulatory policy, should
ESG related priorities as well as BRR mandate has since been do so in a manner that is
creating long-term stakeholder gradually expanded to top 1000 responsible and transparent.
value. listed companies through SEBI’s
listing regulations. Principle 8: Businesses should
While the initial push for non- promote inclusive growth and
financial reporting in India In 2019, the nine principles equitable development.
may have been led by overseas of NVGs were revised and
investors and customers, the released in the form of ‘National Principle 9: Businesses should
year 2011 saw an important Guidelines on Responsible engage with and provide
national milestone when the Business Conduct’ (NGRBC) value to their consumers in a
Ministry of Corporate Affairs in order to align them with responsible manner.
(MCA) released the ‘National emerging global concerns and
Also, in 2018, the MCA
Voluntary Guidelines on priorities.14 The nine principles
constituted the Committee on
Social, Environmental and under NGRBC are -
Business Responsibility with an
Economic Responsibilities
Principle 1: Businesses should objective to study the lessons
of Business’ (NVGs).13 The
conduct and govern themselves learnt from several years of BRR
Guidelines represented the first
with integrity, and in a manner filing. The Committee, after
comprehensive effort of the
that is ethical, transparent, and holding extensive stakeholder
Indian government in defining
accountable. discussions on how to improve
expectations from companies
the quality and utility of BRR
with respect to responsibility
Principle 2: Businesses should disclosures, released its report
towards all stakeholders. The
provide goods and services in a in August 2020. The report
nine principles outlined in
manner that is sustainable and presented updated reporting
the NVGs are based on global
safe. formats for
National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business https://www.mca.gov.in/Ministry/latestnews/National_
13

Voluntary_Guidelines_2011_12jul2011.pdf
National Guidelines on Responsible Business Conduct, https://www.mca.gov.in/Ministry/pdf/NationalGuildeline_15032019.pdf
14

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Sustainability
listed and unlisted companies agencies and other stakeholders that several leading companies
in the form of Business in giving preference to are voluntarily publishing non-
Responsibility and Sustainability companies with demonstrated financial disclosures using global
Reporting (BRSR).15 It aligns responsible business conduct. frameworks, and the fact that the
growing alignment between BRSR
the existing BRR format to and such global frameworks may
global sustainability reporting SEBI Circular on BRSR
lead to duplication of reporting
frameworks and is intended In the light of the MCA by such companies.
to encourage companies in Committee report, SEBI released
taking up leadership role in a Consultation Paper in August Implications and Outlook
sustainability practices and 2020, seeking public comments of BRSR
on the proposal to make BRSR
disclosures. The Committee’s The BRSR reporting framework
applicable for the top 1000 listed
report recommended that is the culmination of extensive
entities in place of the existing
BRSR would be eventually industry dialogue and a
BRR reporting requirement.
made applicable for all comprehensive assessment
After holding several industry
of global frameworks on
companies including unlisted consultations, SEBI released
non-financial sustainability
entities. Attention has also a Circular on May 10th, 2021,
reporting. It heralds a new age
been paid to enable smaller notifying the new BRSR reporting
of corporate responsibility and
requirements for the top 1000
companies - who may have corporate transparency for
listed companies (by market
less experience in preparing India Inc., with the potential
capitalization). As per the
sustainability disclosures – by of putting Indian companies
Circular, filing of BRSR will be
way of proposing a separate at par with several leading
voluntary for FY 2021-22 and
jurisdictions globally with respect
format called Lite version, and mandatory from FY 2022-23 for
to disclosure norms. Although
also categorizing principle- these companies.16
rooted in our unique local
wise indicators as Essential and context of the nine principles of
Leadership Indicators, which The format for BRSR and the
responsible business conduct,
corresponding guidance notes
will enable a gradual and phase- have been published by SEBI as
the disclosure requirements
wise adoption. are in step with the global
part of the Circular. The reporting
frameworks that many overseas
requirements under each of
BRSR is meant to act as a investors and other stakeholders
the nine NGRBC principles
single source of sustainability may be better familiar with.
are divided into essential and
The recommendation by the
information among companies leadership indicators. The
MCA Committee to gradually
in India while also enhancing essential indicators are required
expand the BRSR reporting
comparability and consistency to be reported on a mandatory
requirements to all companies
of reporting, which will benefit basis while the reporting of
(listed and unlisted) is a welcome
leadership indicators is voluntary.
the users of information. In move towards strengthening
order to reduce duplication responsible business conduct
Further, the Circular states that across our country. Regular
and compliance efforts by listed entities already preparing
companies, an integration stock-take of global developments
and disclosing sustainability and evolving understanding
of BRSR filing with the reports based on internationally of corporate responsibility, in
MCA21 portal has also been accepted reporting frameworks addition to continual industry
recommended. The MCA (such as GRI, SASB, TCFD or feedback, will help ensure that
Committee has also envisioned IIRC) may cross-reference the the BRSR continues to be fit-for-
disclosures made under such purpose and best-in-class for the
that BRSR reporting may in framework to the disclosures
the future form the basis for a decades to come.
sought under the BRSR. This is a
potential BRSR Index, which welcome step and appears to be For the corporate sector, BRSR
can support public procurement an acknowledgement of the fact provides a locally developed
15
Report of the Committee on Business Responsibility Reporting, Ministry of Corporate Affairs, 2020, https://ies.gov.in/pdfs/Report-Committee-BRR.pdf
16
SEBI Circular on BRSR, https://www.sebi.gov.in/legal/circulars/may-2021/business-responsibility-and-sustainability-reporting-by-listed-entities_50096.
html

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Sustainability
yet globally relevant platform processes that underpin accurate organizations, local communities
for meaningfully engaging with and high-quality reporting, and regulators.
stakeholders on emerging priority including data management
topics. Companies responding systems and robust internal Specifically for the accountancy
to overseas investors, analysts controls, similar to those in profession, BRSR presents an
or customers are likely to find it financial reporting. exciting new opportunity to
easier to dovetail BRSR reporting widen the horizons beyond its
with other frameworks, thereby The investor community
and other users of corporate traditional role. It will encourage
reducing duplication of effort
information are expected to find them to assess company
in data management and report
preparation. For others, BRSR the future BRSR reports relevant performance on triple bottom
will be a useful stepping-stone to national and global priorities line and ESG issues, understand
to begin their journey of non- on which they wish to assess the different forms of “values’
financial reporting. Whereas company performance. BRSR that a company creates for
the top 1000 listed entities are will provide them with concise, its stakeholders, and open a
expected to find it easier to comparable data across topics window for future accounting
comply with the new reporting of impacts and outcomes across
ranging from climate change
format within a shorter-term, various non-financial facets
efforts to appropriately hand- and supply chain sustainability
to human rights and workforce of business responsibility and
hold and build capabilities for
diversity. The breadth of the sustainability. Accountants
other entities, including smaller,
nine principles of NGRBC are also well placed to support
unlisted companies and SMEs,
will be crucial for its broader will also ensure that the BRSR companies in strengthening
acceptance and use in true letter reporting remains relevant and the data management systems
and spirit. Companies will need useful for other stakeholder and enhancing the quality and
to focus on strengthening internal groups including civic society accuracy of BRSR reporting. 

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Sustainability

Building Sustainability Reporting Maturity –

SRMM Version 1.0
Disclosure of non-
financial information
provides an opportunity
for businesses to improve CA. (Dr.) Sanjeev Kumar Singhal
their communication with The author is the member of the Institute. He can be reached
at sanjeevsinghalca1997@gmail.com
regulators, employees
and other stakeholders
by integrating financial Introduction and push for more comprehensive
and non-financial drivers and uniform reporting on
The triple bottom line framework
sustainability efforts, pushing
of value creation into a to the concept of sustainability
major global businesses to make
sustainable business model. has gained momentum in
significant investments in their
Despite the existence of terms of increased business
ESG initiatives. This has led an
mandatory as well as sense and encompasses the
increasing number of businesses
voluntary disclosures vis-a- need for businesses to achieve
to not only integrate sustainability
vis sustainability reporting, a balance among its economic,
into their business, operational,
environmental and social bottom
sustainability reporting is an and developmental activities
lines. Global critical issues
evolving area for businesses. but also advance for consistent
such as climate change, gender
Very few businesses could diversity, energy management,
measurement and reporting
be seen at higher levels of of their sustainability related
water scarcity, and greenhouse
sustainability reporting attributes. Organisations are
gas emissions, among others,
maturity where there is a required to provide commentary
stress the fact that sustainability
on how their operations/
clear focus on Environment, will continue to be a priority for
activities are directed towards
Social and Governance (ESG) the foreseeable future. Leading
being more sustainable and
issues. It is rightly said that global investment entities
resilient. Such disclosures come
moving towards higher levels investing capital on behalf of
under the ambit of Sustainability
of maturity or entering the pension funds, large institutions
Reporting and are included in
domain of sustainability and individuals increasingly
Annual Reports or as separate
ask businesses about their
reporting needs not only Sustainability Reports.
environmental and social impact
the vision and motivation
towards the same but also a
model that would facilitate
it. Sustainability Reporting
Maturity Model (SRMM)
Version 1.0 is intended to
help businesses assess their
current capabilities and
conceptualize their progress
towards an ideal state of
sustainability reporting
maturity by providing a score
to sustainability disclosures.
Read on…

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Sustainability
Sustainability reporting is the 2. Difficulties of estimation importance of ESG issues, there
systematic presentation of and projections to capture has been a significant increase
sustainability data/ information the data around the entity’s in the number of companies
so that the present data can be environmental and social reporting on sustainability.
compared with the past and used performance/ impact. A 2020 study by the World
for measuring progress vis-a-vis Business Council for Sustainable
selected targets. It has become 3. The usage of the term Development (WBCSD) indicated
an important strategic tool for “materiality” in the context that sustainability reporting is
businesses with various internal of sustainability reporting improving with 78% of companies
and external motivations. The and identification of issues improving their overall scores and
relevant to stakeholders 26% improving their materiality
internal motivations include—
beyond investors. score.
access to better information,
improved risk management and India is increasingly seeking
performance as well as savings 4. Availability of limited
assurance frameworks and businesses to be responsible
of resources and money. The and sustainable towards their
external motivations include— the challenge of applying
the frameworks/ standards environment and society with
long-term value creation as increasing regulatory oversight
well as improved stakeholder of assurance and reporting.
and progressive market reforms.
communication, accountability Regulators have focused on
5. Lastly, lack of organisational
and transparency. making business disclosures
skills to provide a summary
of the business rationale comprehensive and going beyond
Sustainability reporting involves
for reporting and internal financial disclosures in the past
the disclosure of information
education on the value few years. The market regulator,
across various ESG parameters
of given frameworks/ the Securities and Exchange
for stakeholders of varied
standards of reporting. Board of India (SEBI) mandated
concerns/ interests. Sustainability
These challenges at the top 100 listed entities by
information can be both
times result in reactive market capitalisation to file
quantitative, such as tons (or
and tactical, rather than Business Responsibility Reports
units) of greenhouse gas, or
strategic, approaches to (BRR) as part of their annual
qualitative, such as governance
sustainability reporting. report, as per the disclosure
processes, the reputation
requirement emanating from the
of an organisation or the
Background “National Voluntary Guidelines
organisation’s impact on the state
on Social, Environmental and
of biodiversity. This is where the In the last three decades,
Economic Responsibilities of
task of report preparers becomes Sustainability Reporting has
Business” (NVGs) in 2012. The
important and challenging. evolved from the production
requirement for filing BRRs was
Challenges faced by preparers of of environmental reports to
later progressively extended to
sustainability reports include: broader reports that also cover
social issues. At the same time, the top 500 listed entities by
different reporting frameworks market capitalisation in 2015
1. Increased expectations
from different regulators/ and the top 1000 listed entities
for the level of detail in 2019. As a market-driven
and sophistication to be initiators have emerged which
call for mandatory or voluntary approach, integrated reporting
provided in the business has gained momentum after
disclosures. Such disclosure
communications on a wide requirements keep pace with SEBI soft law passed in 2017 on
range of sustainability the increasing investor focus voluntary adoption of Integrated
topics —everything from on sustainable investing as well Reporting by top 500 listed
climate change to human growing demands from other companies. In March 2019, the
rights, and privacy to labour stakeholders. In response to the NVGs were revised and released
standards. understanding of the increasing as the National Guidelines on

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Sustainability
Responsible Business Conduct steer the sustainability agenda and refer to a set of behaviours,
(NGRBCs). Later, in 2020 by structuring a strategy and processes, tools, and outcomes
the Committee on Business a roadmap covering all the that an organisation at that
Responsibility Reporting of the organisations resources. particular level of competency
Ministry of Corporate Affairs should demonstrate.
recommended that the Business Every organisation will have a
Responsibility Report may be unique way of crafting ESG issues “Sustainability Reporting
called the Business Responsibility and value creation at the centre Maturity Model (SRMM)
and Sustainability Report (BRSR) of business decision making. The Version 1.0” is an innovative
to better reflect the scope of Board needs to ensure that there solution for Indian corporates
the reporting requirements. are no disconnects between what to individually assess its
Recently, in May 2021, SEBI they believe is happening, and
position vis–a-vis various
mandated the filing of BRSR for what the reality is. They need to
sustainability reporting maturity
the top 1000 listed companies have a clear understanding of why
levels and achieve its vision
(by market capitalization) as per sustainability is a key boardroom
issue—is it an end in itself or does
of sustainable business. The
the prescribed formats and BRSR robust, practical, value adding
shall replace the existing BRR it form part of a wider, integrated
business strategy? They need to self-assessment tool is based
with effect from the financial
be able to measure progress on on Business Responsibility
year 2022-2023. However, filing
their sustainability journey. and Sustainability Reporting
of BRSR stands voluntary for the
(BRSR) formats issued by
financial year 2021-22.
In the nutshell, sustainability is the Committee on Business
a very broad subject area that Responsibility Reporting of
Sustainability measurement is
encompasses many diverse the Ministry of Corporate
prospective, positive and credible
issues. Businesses must adopt Affairs. With effect from the
assessment which correlates
a framework or model for financial year 2022-2023, filing
with all components that matter
sustainability reporting maturity of BRSR is mandatory for the
in the organisation. The top
that allows them to identify the top 1000 listed companies (by
management or Board vouches a
actions required to meet the market capitalization) as per
solid business case for pursuing
sustainability related needs of the formats prescribed by SEBI
a sustainability strategy. Boards
customers, employees, and other
aim to meet their obligations and BRSR shall replace the
stakeholders.
over sustainability and equally existing BRR. For the financial
see pressure coming from outside The Maturity Model year 2021-22, filing of BRSR is
the boardroom, with business voluntary.
leaders feeling that stakeholders Maturity models are the
are driving sustainability activity description of the development Presently, the non-existence
and policies. Business leaders of specific capabilities of a comprehensive scoring
rank sustainability second only within an organisation over tool limits Indian companies
to financial results in terms time. Maturity models for a from aligning their BRR/
of the top issues. There is an particular capability are built BRSR with the standardized
equally strong belief that the on empirical data derived international scale. The
sustainability principles and by studying information of rating agencies and assurance
intentions of their organisations various companies that display providers are thus unable
are delivered by effective business varying levels of the capability to compare the sustainable
policies and objectives. Boards of interest. Most frameworks nature of the Indian companies
can manage sustainability in for maturity models include with other international
several different ways, and four or five levels of maturity, companies. SRMM based
there no hard and fast rule with each level representing a on BRSR Scoring provides
over the right ways to do it greater degree of competency in a quantitative score to the
as long as it is managed. The the capability than the previous sustainability measurement by
Board is well positioned to one. All the levels are labelled converting qualitative

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Sustainability
information to a measurable and words, the model will help levels of sustainability reporting
machine-readable quantitative companies identify where their maturity to becoming a
data. The tool would also capabilities lie on a maturity sustainable and responsible
act as a basis for providing a continuum. Corporates can enterprise. Each maturity level
“comparability index”. self- evaluate their current level portrays the present level of
of maturity on the SRMM, sustainability reporting and
SRMM would also be used to identify areas where more focus where a new cycle of reporting
deploy an evolutionary path is required, and then develop starts towards a higher level
to help organisations increase a road map for upgrading to a of sustainability reporting.
the capability of their processes higher level of maturity. This The four levels of maturity of
through four consecutive stages would include formulation of sustainability reporting are –
or maturity levels. The model strategies for internal controls
offers the possibility for each and data collection to the
corporate complying with progress towards achievement
BRSR to individually assess of sustainable goals and thereby
its position vis-a-vis various moving to a higher level of
sustainability reporting maturity sustainable reporting.
levels and achieve its vision of The maturity continuum is
sustainable business. In other associated with four discrete
SUSTAINABILITY REPORTING MATURITY LEVELS

Level Level 1 Level 2 Level 3 Level 4

Stage Formative Stage Emerging Stage Established Stage Leading by Example
BRSR Score Up to 25% > 25% and Up to 50% > 50% and Up to 75% > 75%
(Percentage of
Grand Total
Score)
Explanation The organisations The organisations The organisations The organisations
are at the initial level realize the value of have established strive for more than
of reporting and are BRSR and responds formal functions/ compliance and
in the process of to it by setting up policies/ systems for work towards being a
identifying the need robust mechanism BRSR. market leader.
and responsibility for reporting, etc.
of BRSR.

The total score is 300 with The calculation of BRSR score across sectors, there may be some
leadership indicators given is percentage of Grand Total disclosure requirements that may
prominence by allocating a total Score. In other words, the total not be applicable to a particular
score of 75 for encouraging score obtained by the entity entity. Thus, it is suggested that
companies to target achievement from Section A, Section B and in case of non-applicability of
of the same. The balance score of Section C, shall be the numerator certain disclosure requirement(s)
225 belongs to disclosures as per and total score of 300 shall be to a particular entity, the entity
Section A, Section B and essential the denominator to calculate shall ignore that respective
indicators of Section C of the BRSR Score. The percentage requirement(s) and deduct its
BRSR Comprehensive Format. obtained should be considered for respective score from the grand
assessing the maturity level of the total score. Accordingly, the grand
The levels are defined based on corporate for the particular year. total score should be calculated
the BRSR score obtained by a considering only the applicable
corporate in a financial year as Since BRSR formats are generic disclosure requirements to a
per the BRSR scoring mechanism. which applies to all businesses particular entity.

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Sustainability
The below table provides details of the same -

Section Wise BRSR Scoring Essential Leadership Score

Indicators Score Indicators Score
Section A: General Disclosures 37
Section B: Management and Process Disclosures 20
Section C: Principle Wise Performance Disclosure 168 75 243
Total 300

Section C: Principle Wise Performance Disclosure Essential Leadership Total

Indicators Score Indicators Score
PRINCIPLE 1 Businesses should conduct and govern 18 7 25
themselves with integrity in a manner that is Ethical,
Transparent and Accountable
PRINCIPLE 2 Businesses should provide goods and services 22 13 35
in a manner that is sustainable and safe
PRINCIPLE 3 Businesses should respect and promote the 30 10 40
well-being of all employees, including those in their value
chains
PRINCIPLE 4: Businesses should respect the interests and 4 5 9
be responsive to all its stakeholders
PRINCIPLE 5: Businesses should respect and promote 11 4 15
human rights
PRINCIPLE 6: Businesses should respect and make efforts 40 19 59
to protect and restore the environment
PRINCIPLE 7: Businesses, when engaging in influencing 2 4 6
public and regulatory policy, should do so in a manner that
is responsible and transparent
PRINCIPLE 8: Businesses should promote inclusive growth 16 7 23
and equitable development
PRINCIPLE 9: Businesses should engage with and provide 25 6 31
value to their consumers in a responsible manner
Total 168 75 243

The model fits well within the can identify organisations in companies which are more
corporate reporting framework that require improvement in mature in terms of sustainability
and is helpful and useful for all sustainability reporting and reporting instead of those
stakeholders in identifying the measurement. Based on the which are immature. Last but
exact maturity level related to the model, investors will also be able not the least, the model obliges
sustainability of an organisation. to make appropriate decisions management to be proactive
The organisations would not only toward their current investments in implementing ESG focussed
know the present maturity level and potential future investments decisions as well as showcasing
of their sustainability reporting by identifying the maturity the stakeholder’s improvement
but would also be able to identify level of sustainability, as their in their overall score over a
and bridge their planning and decisions can be impacted by the period. SRMM Version 1.0 is the
operational gaps. The regulators level of maturity, for instance, beginning of a more effective
and other related organisations investors can be eager to invest sustainability reporting.

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Sustainability
Further versions would be initiatives, actions and outcomes BRSR formats are aligned to the
developed based on feedbacks towards achievement of SDGs. broader context of the SDGs
received and issues identified in Likewise, BRSR disclosures so that businesses may also
implementation of the same. provide a review against the be able to demonstrate their
SDGs of an organisation’s performance on SDG targets.
The BRSR Scoring and SRMM current policies and practices, The NGRBC-BRSR formats put
are critical to the survival and overall governance structure, together all relevant information
resilience of businesses. The initiatives, and gaps in relation on sustainability emanating
non-financial information to environment and social from the NGRBCs and further
disclosed in the BRSR provides parameters, such as—health depend on the principles of
valuable material information and safety, human rights, SDGs and UNGPs.
for business decision-making, stakeholder engagement, The nine principles of NGRBC-
action-planning and innovation sustainable and safe goods and BRSR framework are mapped
along with information on services, to name a few. The with 17 SDGs as under –

NGRBC Sustainable Development Goals (SDGs) which can be mapped

Principle
1 SDG 16, SDG 17
2 SDG 2, SDG 6, SDG 7, SDG 8, SDG 9, SDG 10, SDG 12, SDG 13, SDG 14, SDG 15
3 SDG 1, SDG 3, SDG 4, SDG 5, SDG 8, SDG 11, SDG 16
4 SDG 1, SDG 5, SDG 11, SDG 16
5 SDG 5, SDG 8, SDG 16
6 SDG 2, SDG 3, SDG 6, SDG 7, SDG 9, SDG 10, SDG 12, SDG 13, SDG 14, SDG 15
7 SDG 2, SDG 7, SDG 9, SDG 10, SDG 11, SDG 13, SDG 14, SDG 15, SDG 17
8 SDG 1, SDG 2, SDG 3, SDG 4, SDG 5, SDG 6, SDG 8, SDG 11, SDG 13, SDG 14, SDG 15,
SDG 16, SDG 17
9 SDG 2, SDG 4, SDG 12, SDG 14, SDG 15

The 2030 Global Agenda of Responsible consumption and global network of partnership
Sustainable Development production. and linkages with the best
comprising of 17 SDGs would of related institutions and
be broad and ambitious for Role of Chartered organisations on issues related
all businesses to contribute. Accountants to Sustainability Practices and
Organisations should consider In the present dynamic Disclosures and to propagate
how their activities are making environment where businesses the use of Sustainability
a material contribution to need to extend the boundaries Reporting Requirements and
(or conversely a negative of responsible business Assurance Standards both for
impact on) achieving the conduct, the accountancy general purpose reporting and/
SDGs. Regardless to say, profession needs to respond or specifically for a regulatory
by contributing to just one to the growing and enhanced requirement. Sustainability
SDG, other SDGs may be interest in sustainability Reporting Standards Board
strengthened by default. For and call for the contribution (SRSB) of ICAI is undertaking
example, significant progress of organisations towards several initiatives to strengthen
on SDG 1 - Poverty would sustainable development. ICAI the sustainability reporting
bring progress on SDG 8 - is emerging as a global leader ecosystem in the country,
Decent work and Economic in the domain of sustainability build capacity of chartered
growth (Goal 8) and SDG 12 - and working on creating a accountants and creating

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Sustainability
awareness of stakeholders and external auditors is as  Support benchmarking of
towards the environmental under - sustainability disclosures
and social issues through by providing credibility of
certificate courses for For internal accountants/
information via assurance
members, webinars for auditors
reports.
stakeholders, launching  Support in collecting and
sustainability literacy drive, to To conclude, participation
interpreting information, in policy formulation and
name a few.
monitoring, and controlling education of stakeholders
The Government of India market activities. will bring about the real
has permitted audit firms to required changes for business
transform themselves into
 Push and assist
transformations towards
multidisciplinary partnerships organisations increasingly
sustainability. Businesses need
(MDPs). Thus, Chartered towards assessing their
to recognise the impact of their
Accountant firms can now tie- sustainability reporting
activities on business value and
up with company secretaries, maturity levels via SRMM. sustainability with the support
actuaries, cost accountants, of accountants/auditors with
 Assist in designing and
engineers, lawyers and progressive importance on
monitoring of policies
architects to offer a whole the valid concerns of multiple
that address sustainability
bouquet of services. Chartered stakeholder groups.
Accountants can play a key issues, such as purchasing
role as internal accountants/ policies. References
auditors as well as external  Support the stakeholder
auditors in the sustainability
 Report of the Committee
engagement process with on Business Responsibility
domain. The small and
accessible and reliable Reporting, Ministry
medium firms can scale up of Corporate Affairs.
information.
and offer a variety of services Available at: http://www.
under one roof while building  Identify disclosure mca.gov.in/Ministry/pdf/
capacity in the industry. In standards / framework BRR_11082020.pdf
this regard, accountants need appropriate to the business
to gain working knowledge of and integrate the same with  SEBI Circular “Business
performance measurement responsibility and
the existing management
and reporting vis-a-vis specific sustainability reporting by
information system.
areas such as greenhouse gas listed entities”, No. SEBI/
emissions applicable to the  Support benchmarking by HO/CFD/CMD-2/P/
businesses with which they providing relevant, material CIR/2021/562 Dated May
are involved. However, they and reliable sustainability 10, 2021 Available at:
may refer to other area specific information in an coherent https://www.sebi.gov.in/
experts, where necessary. and transparent manner. legal/circulars/may-2021/
Many Chartered Accountants business-responsibility-and-
have up-skilled and specialised For external auditors sustainability-reporting-by-
in the sustainability domain, listed-entities_50096.html
for example in green audit,  Review the application and
environment audit, CSR audit results of the stakeholder  Sustainability Reporting
and the like. engagement process. Maturity Model (SRMM)
Version 1.0 is available
An illustrative list of ways that  Review the related on ICAI website at
are directly relevant to the role operating controls for https://resource.cdn.icai.
of chartered accountants as compliance with mandatory org/63191srsb51141.pdf
internal accountants/ auditors / voluntary code(s) adopted. 

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Sustainability

Sustainability & ESG: The Next Frontier of

Board Room Action
The coronavirus
pandemic has
highlighted the
importance of Vishal Bhavsar
financial market The author is expert in the area of sustainibility. He can be
risks that arise in the reached at vishal.bhavsar@gmail.com

changing landscape Looking at recent trends, ESG place in Glasgow in November,

including ESG regulations and expectations are 2021.
expectations from bound to rise. as is The interest
of stakeholders like customers, Similarly, several international
various stakeholders. investors, value chain partners, and regional policy and
The COVID-19 employees, civil organizations, regulatory initiatives have
crisis has brought regulators, and the media have also taken the same path. The
in ESG policies & practices that IFRS Foundation’s proposals
sustainability and have a positive impact on the around sustainability reporting
ESG focus to the center society. demonstrates an important
stage in board room international attempt to build
1.0 Which way is the wind further transparency and
discussions. There are blowing? coherency around disclosures.
stakeholders across There are several countries and The Network for Greening the
the globe to pushing to supervisory authorities in the Financial System is coordinating
move from measuring financial ecosystem that have best practices in the domain
enhanced focus on climate risk of financial supervision of
quarterly financial climate-related risks. There is
disclosures, and this will only
performance to long intensify transparency around a new sustainability disclosure
term value creation. climate in the buildup to the requirement for market
participants in the EU under the
As ESG moves from United Nations Climate Change
Sustainability Disclosures
Conference, or COP26, taking
‘good-to-have’ territory
to becoming core of
corporate thinking
– the board of the
company has got into
the driver’s seat to
guide the organization
on the ESG mandate
as well deliver results.
Read on…

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Sustainability
Regulation1 and the Taxonomy Stewardship code and Business 2.1 Key trends in ESG
have created new drivers Responsibility and Sustainability There has been tremendous
for better ESG information Reporting (BRSR). These momentum in the whole ESG
and data. The UK also has developments have influenced game plan and the summary of
announced that it will make the evolution of disclosures and key developments are captured as
TCFD reporting mandatory. ESG reporting in India. There below:
are various other framework
The response to ESG has not  Investment pace in ESG
like Global Reporting Initiative
been limited to regulators funds: ESG funds tapped in
(GRI), International Integrated excess of $ 50 billion in 2020
and governments. It had been Reporting Council (IIRC), and total assets with ESG
kick-started by the leaders SASB and CDP which Indian focus crossed more than $35
from large investors, asset companies have adopted. trillion in the same period.2
management companies and
corporates. The world’s biggest 2.0 What is ESG?  Green bonds have been of
asset management companies significant focus: The green
ESG is on the radar of several bonds market in 2020 crossed
are taking a proactive stance investors today. Focusing a major milestone of $ 1
on issues across the ESG on ESG issues can bring out trillion dollars.
spectrum, and that will continue risk and opportunities for
to propel discussions around the company’s ability for  Sustainability taxonomy on
high quality disclosure and data. sustainable value creation. The the rise: Key regions have
In his annual letter released already defined sustainability
key environmental aspects
early this year, BlackRock’s taxonomy for e.g. European
under consideration are climate Union (EU). Several other
Larry Fink urged companies change and natural resource countries / region are in
to disclose how they are scarcity. It covers social issues process of introducing
preparing for a “net zero world” like diversity and inclusivity, taxonomy related to
where net greenhouse gas labor practices, health & sustainability / ESG.
emissions are eliminated by safety, and cyber security.
2050. The pressure is not only There is greater emphasis on  Up next - Convergence of ESG
from investors but from other framework: IFRS launched an
governance aspect covering
stakeholders as well. One such important work to develop
topics like board diversity and single global reporting
example has been State Street independence, executive pay, standard on ESG.
announcement that it will start and tax transparency.
voting against the boards of
companies that underperform
their peers when it comes to
ESG standards.

The story is no different when Environmental Social Governance

we look at evolution of the ESG Climate change Employee development Board
landscape in our backyard. Independence
The Indian journey on ESG
started way back from 2007 and Water Diversity & inclusion Board diversity
there have been developments Waste generation Community Anti-Corruption &
like the MCA CSR guidelines, development Bribery
National Voluntary Guidelines Emissions Health & Safety Tax transparency
(NVGs), SEBI’s Green Bonds
guidelines and the very recent Biodiversity Customer Ethical conduct

1
https://gresb.com/eu-regulatory-environment-changes-sfdr-eu-taxonomy/
2
Source: Crisil ESG Compendium

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Sustainability
2.2 What do different framework followed by level of focus on board oversight
global frameworks talk companies, and each of these on ESG and sustainability
about the role of Board on frameworks have a component issues. A summary of the
ESG oversight? of governance focus on framework’s expectation of the
sustainability and ESG. The Board’s oversight on ESG topics
There are several global three major standards i.e., GRI, has been presented in the table
sustainability and ESG TCFD and CDP have a high below:

Global Reporting Initiative Task Force for Climate related Carbon Disclosure Project
(GRI)3 Financial Disclosure (TCFD)4 (CDP)5
Under the General Disclosure The Task Force’s CDP is a not-for-profit that
102, GRI has requirements of recommendations are structured runs the global disclosure
oversight of Board on economic, around four thematic areas system for investors,
environmental and social topics that are core elements of companies, cities, states
how organizations operate— and regions to manage their
governance, strategy, risk environmental impacts.
GRI Standard – 102-18 management, and metrics and
targets.

Companies are reporting to

Under the governance the
various CDP disclosures and
expectation is to “Disclose
the key one is the climate
the organization’s governance
disclosure.
around climate related risks and
opportunities.”
The CDP framework tries
to measure the involvement
The specific recommendation to
and oversight of the highest
be included in financial disclosure
governance body on climate
is:
change issues impacting the
business. The specific question
in the CDP questionnaire is
a) Describe the board’s
shown below:
oversight of climate-related risks
and opportunities.
C1.1b) Provide further details
on the board’s oversight of
climate-related issues
3.0 Board – the role of As administrators of risk and and enhancing their ESG
custodian stewards of long-term value positions. The trend that was in
creation, directors on Board have few geographies and sectors has
The Board of Directors represent a vital oversight role in evaluating become mainstream now. The
the best interests of stakeholders. the company’s environmental same trend has been observed in
As custodians, board directors and social impacts. Looking at India where the expectations on
are also usually involved with these factors and stakeholder ESG performance has become
building brand recognition. interest, boards are reimagining prominent, and one can
3
https://www.globalreporting.org/standards/
4
https://www.fsb-tcfd.org/
5
https://www.cdp.net/en

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Sustainability
foresee the role of Board as core For e.g. TERI - Industry Charter specialized financial products
influencer to make this transition. for Near Net Zero Emission like the Green, Social and
The recent introduction of the Ambition by 2050, Business Sustainability linked Bonds.
Stewardship code6 and BRSR7 by ambition for 1.5 °C by SBTi etc.
Traditional belief was that ESG
SEBI signals how important the
Assigning Responsibility was ‘good to have’ in the area of
role of the Board has become. business ethics, sustainability,
Consider assigning responsibility
3.1 Board’s first flight of for your ESG program to one diversity and community.
ESG journey person: CFO, head of investor However with the heightened
relations, Chief Sustainability interests from different
The Board of Directors recognizes Officer or Chief ESG Officer. stakeholders groups, directors
the need to narrow down realise that it is now moving
objectives the company stands Awareness / capacity building into the ‘must-to-have’ territory.
for maximizing shareholder Managing ESG issues requires The business case for ESG
value, which may prepare the change in outlook, where one generally begins with operational
company towards targeting ESG needs to consider the impact efficiency and risk reduction as
goals and in turn, create value for on the environment and society primary goals and then extends
stakeholders. along with profit maximization. to longer-term operational and
This may require awareness organizational resiliency and
The mix of right policies, process
building at all levels including sustainability. Boards recognize
and disclosure standards /
board members, executive the strong and direct link to
framework can set the tone for
committee, senior management build a profitable business with
the company in the ESG journey,
and across the organization. a strong focus on environmental
and the board should guide the
and social considerations. They
management to adopt these
3.2 Sustainable value also know that focus on E&S
requirements. Directors should
creation: Board agenda issues requires robust governance
emphasize that a well-articulated
practices which will fortify their
organizational purpose has Directors on board of the company’s portfolio as a strong
the power to rally employees, company admit that along with contender with investors and
and a company’s social and building a profitable business,
environmental contributions shareholders.
sustainable value creation as well
can help create a compelling as balancing the interest of all 3.3 Board oversight and
employee value proposition. The stakeholders is going to be key, investors’ expectations
Board would also get signals from going forward. The company’s
consumer behavior and they could Investors continue to expect
board that can generate value with
design the strategy to bring change increasing transparency from
a clear focus on ESG performance
in buying trends with a shift boards in how they oversee
would be protecting the interest of
towards companies and brand particular topics. ESG oversight
every stakeholder group.
those to contribute positively to is no exception. Boards can
the society. The key initiatives the The ESG performance and linked find different ways to provide
board could take are: ratings have begun to play an shareholders with the information
influencing role for companies they look for.
Activate Board level committee going to market to raise funds  Comprehensive disclosure
on ESG: There are several Board for future growth. The high ESG in the proxy statement
level committees that could play focus from investors, lenders describing the board’s
a pivotal role in mainstreaming and financial institution in the oversight efforts.
ESG agenda under the guidance recent times has reached the
of the full Board.  Updates to board committee
tipping point and have started to
Adopt charters: There are several impact the financing options for charters to address committee
important charters which the companies. Companies with high oversight responsibilities
company may adopt to set their ESG focus stand to get benefits related to ESG.
course in fast tracking their in the form of preferential /  More information about
response to ESG management. lower cost of debt or access to directors’ skills that enhance
6
https://www.sebi.gov.in/legal/circulars/dec-2019/stewardship-code-for-all-mutual-funds-and-all-categories-of-aifs-in-relation-to-their-investment-in-
listed-equities_45451.html
7
https://www.sebi.gov.in/media/press-releases/may-2021/sebi-issues-circular-on-business-responsibility-and-sustainability-reporting-by-listed-
entities-_50097.html

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Sustainability
their contribution to ESG  Reporting: What is and expertise to oversee ESG
oversight efforts. the best approach and risks and opportunities? Is
communication channel for the board is diverse enough
4.0 Mainstreaming ESG making disclosures on ESG? to deal with ESG issues?
into the Board committees Audit Committee  Capacity building: What
With respect to ESG oversight Oversight is the awareness level
matters, boards may choose to of the board about ESG
take on additional responsibility  Disclosures: Do the ESG importance to investors and
at the board level or delegate disclosures meet the investor stakeholders? Is the board
this responsibility to a dedicated grade for the company appropriately equipped to
sustainability committee. In the i.e., does the company
deal with ESG issues?
restructuring process by the meet investment criteria
Board on ESG issues, it is critical including ESG performance? 5.0 Conclusion
that the arrangement is effective, Which ESG framework is
comprehensive and adequately appropriate for the business Boards should be ready to
disclosed to its stakeholders. ESG and sector? engage on their ESG areas
should be part of a company’s  Processes and controls: ESG with priority on sustainability,
strategy, and boards should disclosures impacting the climate change, biodiversity,
prioritize ESG policy, execution financial performance of diversity, and other social
and disclosure. The board needs the organization. Does the responsibility themes to gain
accurate resources to understand organization have effective momentum. Investors in
the ESG risks and opportunities processes and controls that particular, insist publicly listed
to manage handling of these ensures ESG disclosures
issues. The Board should assess companies to provide more
are accurate, consistent and
the adequacy of its structure and comparable?
meaningful and comparable
oversight processes. Board must ESG reporting metrics, starting
understand expectations from  Assurance: Is there a need with climate-change.
various stakeholders and expand to conduct independent
the responsibilities of various Board assurance of ESG disclosures? Stakeholders now assess how
level committees by asking relevant Compensation Committee the company unlocks long
questions for these committees. Oversight
term business value creation by
using ESG at its core strategy.
Oversight  Accountability: How do the Companies will have to find
 Business strategy: Are ESG ESG goals and targets reflect the right approach to manage
risks and opportunities in executive compensation ESG depending on their sector,
integral part of long-term structure? organizational maturity and
business strategy? How does  Talent and culture: How well stakeholder focus. There is no
the organization measure and placed are the management one-size-fits-all solution.
review its progress, goals, and in terms of people and
target as part of the strategy? processes to execute the ESG ESG will be an integral
 Business context: Does strategy? Does the company component of board
ESG sit at the core of the have a culture which governance, as opposed to
company’s purpose and embraces ESG efforts? a “good to have” topic to
stakeholder interests? Nominating and governance be covered annually, if at
committee all. Ideally, ESG will be part
 Risk management: What is
the process of identification Oversight of company strategy and
of ESG/sustainability issues integrated into the work of the
 Engagement: Is the board and its core committees.
and integration of these
company’s ESG strategy
issues into the enterprise risk
being effectively Progressive companies value
management framework?
communicated to investors being a frontrunner on ESG
How does the board
and other stakeholders? issues because they see the
assess the enterprise risk
management (ERM) process  Board composition: Does the connection to the company’s
and its effectiveness? board have appropriate skills long-term success. 

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ISRS 4400 (Revised), Agreed-Upon

Procedures Engagements
ISRS 4400 (Revised) is effective clarify the practitioner’s
In April 2020, for agreed-upon procedures responsibilities in relation
the International engagements for which the to the various parties
Auditing and terms of engagement are agreed involved in an AUP
Assurance Standards on or after January 1, 2022. For engagement such as the
Board (IAASB) of engagements covering multiple engaging party, the intended
the International years, practitioners may wish to users of the AUP report and
update the terms of engagement the responsible party for the
Federation of so that the AUP engagement subject matter on which the
Accountants (IFAC) has will be conducted in accordance AUP are performed.
issued the International with ISRS 4400 (Revised).
Standard on Related  Provide clarity in the AUP
Outcomes that ISRS 4400
Services (ISRS) 4400 (Revised) is seeking to
report.
(Revised), “Agreed- achieve  Enhance consistency in
Upon Procedures the performance of AUP
 Respond to the needs of
Engagements”. ISRS stakeholders-The scope engagements- for example
4400 (Revised) will of ISRS 4400 (Revised) in relation to:
replace extant ISRS has been broadened to
4400, “Engagements to  Exercising professional
meet the demand for AUP
judgment in an AUP
Perform Agreed-Upon engagements on both
engagement.
Procedures regarding financial and non-financial
Financial Information” subject matters.  Considering acceptance
issued by IAASB. The  New requirements and and continuance
main reason for revision application material conditions.
of the standard is that
extant ISRS 4400 was
developed over 20
years ago and it has
not kept pace with the
significant changes that
have occurred in the
business environment
driving the demand for
agreed-upon procedures
(AUP) engagements
on both financial and
non-financial subject
matters. Read on…

Contributed by Secretariat, Auditing and Assurance Standards Board of ICAI.

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appropriate for the purpose of claimed from a funding
the engagement. The practitioner program.
communicates the agreed-
Revenues for
New requirements and upon procedures performed 
determining royalties,
and the related findings in the
application material agreed-upon procedures report. rent or franchise fees
based on a percentage of
clarify the practitioner’s The engaging party and other
revenues.
intended users consider for
responsibilities in relation themselves the agreed- upon  Capital adequacy
to the various parties procedures and findings reported ratios for regulatory
by the practitioner and draw their authorities.
involved in an AUP own conclusions from the work
 Non-financial subject
engagement. performed by the practitioner.
matters relating to:
An agreed-upon procedures  Numbers of passengers
engagement is not an audit, reported to a civil
 Using a practitioner’s review or other assurance
expert. aviation authority.
engagement. An agreed-upon
procedures engagement does not  Observation of
 Disclosure of involve obtaining evidence for destruction of fake or
compliance with the purpose of the practitioner defective goods reported
independence expressing an opinion or an to a regulatory authority.
requirements, as assurance conclusion in any form.
 Data generating
applicable. processes for lottery
What are subject matters on
draws reported to a
Key Points of ISRS 4400 which Agreed-upon procedures regulatory authority.
(Revised) engagements are performed?
 Volume of greenhouse
What are Agreed-upon Agreed-upon procedures are gas emissions reported to
procedures (AUP)? performed on anything including a regulatory authority.
information, documents,
“Procedures that have been measurements or compliance
agreed to by the practitioner with laws and regulations, as
and the engaging party (and if relevant. ISRS 4400 (Revised)
relevant, other parties)”. In some applies to the performance
circumstances, the procedures of agreed-upon procedures In an agreed-upon
may be agreed with intended engagements on financial or non-
users in addition to the engaging financial subject matters. Some procedures engagement,
party. Intended users other than examples of financial and non- the practitioner performs
the engaging party may also financial subject matters on which
acknowledge the appropriateness an agreed-upon procedures the procedures that have
of the procedures. engagement may be performed been agreed upon by
include:
the practitioner and the
What is an Agreed-upon
procedures engagement?
 Financial subject matters engaging party, where
relating to:
the engaging party has
In an agreed-upon procedures  The entity’s financial
engagement, the practitioner statements or specific
acknowledged that the
performs the procedures that classes of transactions, procedures performed
have been agreed upon by the account balances or are appropriate for
practitioner and the engaging disclosures within the
party, where the engaging financial statements. the purpose of the
party has acknowledged that
the procedures performed are  Eligibility of expenditures engagement.

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Significant differences between Extant ISRS 4400 vis-a-vis ISRS 4400 (Revised)
The significant differences between Extant ISRS 4400 vis-a-vis ISRS 4400 (Revised) are briefly discussed
in the table given below:

S.No. Topic Extant ISRS 4400 ISRS 4400 (Revised)

1. Structure of Standard There is no bifurcation between It is drafted in clarity format, which
Requirements & Application in contains Introduction, Objective,
extant ISRS 4400 Definitions, Requirements and
Application and Other Explanatory
Material
2. Definitions Extant ISRS 4400 does not include ISRS 4400 (Revised) includes
definitions definitions of various terms used
such as Agreed-upon procedures,
Agreed-upon procedures
engagement, Engagement partner,
Engaging party, Engagement
team, Findings, Intended users,
Practitioner, Practitioner’s
expert, Professional judgment,
Relevant ethical requirements, and
Responsible party.
3. Professional Judgment Extant ISRS 4400 is silent on the ISRS 4400 (Revised) has included
aspect of Professional Judgment. new requirement for the practitioner
to exercise professional judgment
throughout the engagement,
including in accepting, conducting
and reporting on the AUP
engagement, taking into account the
circumstances of the engagement.

Further, supporting application

material is given to explain,
and provide examples of, how
professional judgment is exercised in
an AUP engagement.
4. Disclosure of Extant ISRS 4400 requires ISRS 4400 (Revised) enhances
Independence disclosure of Independence in the transparency regarding the
report of factual findings only when Practitioner’s Independence.
Auditor is not Independent.
5. Quality Control There is no linkage of Quality ISRS 4400 (Revised) has linked the
Control with AUP Engagements in AUP Engagements with Quality
extant ISRS 4400. Control (i.e. ISQC 1)
6. Factual Findings The term ‘factual findings’ is used in The term ‘factual findings’ has been
extant ISRS 4400. replaced by the term ‘findings,’ which
is defined as the factual results of
agreed-upon procedures performed.
In addition, findings are capable of
being objectively verified, and exclude
opinions or conclusions in any form
as well as any recommendations that
the practitioner may make.

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7. Practitioner’s Expert Extant ISRS 4400 does not cover ISRS 4400 (Revised) prescribes
the aspect of Use of Practitioner’s requirements and application
expert. material dealing with the use of
Practitioner’s expert. However,
paragraph 31 explicitly states that the
wording of the report shall not imply
that the practitioner’s responsibility
for performing the procedures and
reporting the findings is reduced
because of the involvement of an
expert.
8. AUP Report Extant ISRS 4400 requires the ISRS 4400 (Revised) does not
Restrictions practitioner to include a statement require the practitioner to include a
in the AUP report that the report statement in the AUP report that the
is restricted to those parties that report is restricted to those parties
have agreed to the procedures to be that have agreed to the procedures
performed. to be performed. Such a restriction
is now based on the discretion of the
practitioner.

Further, new application material

is given to guide the practitioner in
deciding whether to restrict the use
or distribution of the AUP report.
9. Undertaking an Extant ISRS 4400 does not cover ISRS 4400 (Revised) has included
AUP Engagement the aspect of undertaking an AUP new requirement and application
together with Another engagement together with Another material to address circumstances
Engagement engagement when the practitioner is undertaking
an AUP engagement together with
another engagement.
10. Clarity on Non- In extant ISRS 4400, there is no ISRS 4400 (Revised) clarifies that the
Financial Subject explicit statement w.r.t. applicability scope includes both Financial and
Matters /scope of the Standard on Non- Non-Financial Subject Matters.
Financial Information.
11. Written Extant ISRS 4400 does not ISRS 4400 (Revised) includes
Representations include requirement on written requirement on written
representations. representations.
12. Documentation There is limited guidance on Detailed guidance has been given
documentation in the Extant ISRS on documentation in ISRS 4400
4400 (Revised).
13. Engagement Extant ISRS 4400 does not ISRS 4400 (Revised) provides detailed
Acceptance and explicitly state requirements requirements w.r.t. engagement
Continuance w.r.t. engagement acceptance and acceptance and continuance
continuance considerations, including:
 Understanding the purpose
of the engagement, and
declining the engagement if the
practitioner becomes aware
of any facts or circumstances
indicating that the procedures
are inappropriate for the
purpose of the engagement;

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 Only accepting or continuing

the engagement when certain
conditions are met; and
 Communicating with the firm
if information is obtained that
would have caused the firm to
decline the engagement had
that information been available
earlier, so that necessary action
can be taken.
 Further, supporting application
material is given to support the
new requirements, including:
 Clarifying the specificity with
which AUP and findings are
described and describing
which terms may or may not be
appropriate in the context of a
particular engagement; and
 Highlighting that certain
procedures may be prescribed
by law or regulation– However,
these will still be subject to the
conditions of specificity referred
to above.

References
 Extant ISRS 4400 issued by IAASB
 ISRS 4400(Revised) issued by IAASB
 Fact Sheet of ISRS 4400(Revised) issued by IAASB

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Audit Quality Maturity Model – Version 1.0

(AQMM v1.0)
Audit Quality is a very
important aspect of the
Chartered Accountancy CA. Durgesh Kumar Kabra
The author is a member of the Institute. He can be
Profession. Today reached at durgeshkabra@gmail.com
stakeholders have grown
beyond shareholders The case for enhancement dialogue is facilitated between the
and auditors need to do of audit quality key stakeholders on audit quality.
Audit quality cannot be measured
more in less time. The Audit documentation is extremely and judging audit quality can
auditors need to use important as what is not be highly subjective. However a
documented is not considered relative comparison is possible
technologies like Robotic done. In these times it becomes between two audit firms.
Process Automation and almost essential to have an
Even though the bird’s eye view
Data Analytics as force audit documentation tool. Data
of an audit firm’s overall audit
Analytics also take centre stage as
and speed multipliers. substantive analytical procedures quality is important, what is
The expectation provide the most appropriate relevant is the worm’s eye view
audit evidence. Firms need to of the quality of the engagement.
from auditors has have these go-to-market tools The performance of each
increased manifold. with checklists. engagement adds to the overall
audit quality and one audit gone
They would need to wrong can undo all the good the
Audit quality cannot be
upskill themselves and measured but a relative firm has done over decades.
invest in their people. comparison between firms Our auditors are grappling with
Likewise, there are can be done new accounting standards and
a variety of factors Audit quality is a complex subject
auditing in special circumstances
of the pandemic where the fraud
that will contribute and no analysis of it has achieved triangle is certainly present. The
to the success of the universal recognition. At a macro uncertainties and judgment calls
level, all this can be achieved of the auditor pose big challenges
auditor- independence when there is awareness about for the auditor. Is the auditor
of the auditor, ethics, audit quality, key stakeholders ready enough to take on the
knowledge, and are encouraged to explore ways to projects that they have taken or
improve audit quality and greater would it be better than the
experience of the staff
being some factors that
are directly proportional
to audit quality.
Communication is as
important as reporting
just as prevention is
better than cure. Read
on…

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Auditing
auditor had a self-assessment Both the Peer Review Board
tool that would help it to check and the Centre for Audit
its audit quality and diagnose Quality (CAQ) have adopted
what remedial measured it a collaborative approach, with Communication is as
needs to take? Such a model and
Implementation Guide would the CAQ having developed important as reporting
work like mass education for the quality standards and Peer just as prevention is
the already literate chartered Review Board testing the said
accountant. standards when they become better than cure.
mandatory.
Capacity Building measure The AQMM v1.0 is divided into
initiated by the Centre for Using the above-mentioned three sections and a minimum
Audit Quality collaborative approach, scoring is required in each
the AQMM v1.0 would be section to make it to a certain
The Centre for Audit Quality recommendatory initially and level of audit maturity.
(CAQ) strives to provide an after 1 year the Council will
angular discussion on audit review the date from which it Firm Maturity Rating
quality. To help bridge the would become mandatory.
Section Total
expectation gap the CAQ Reference Possible
launched a recommendatory Firms auditing the following
Points
Audit Quality Maturity Model entities are covered in AQMM
v1.0: Section 1. 280
-Version 1.0 (AQMM v1.0), Practice
which is a capacity-building (a) A listed entity; or Management –
measure. The objective of this Operation
Evaluation Matrix is for sole (b) Banks other than co- Section 2. 240
proprietors and Audit firms operative banks (except Human
to be able to self-evaluate multi-state co-operative Resource
their current level of Audit banks); or Management
Maturity, identify areas where Section 3. 80
competencies are good or (c) Insurance Companies
Practice
lacking and then develop a road However, firms doing only Management
map for upgrading to a higher branch audits of the above- - Strategic/
level of maturity. mentioned entities are not Functional
covered. Total 600

Today stakeholders
have grown beyond
shareholders and
auditors need to do
more in less time. The
auditors need to use
technologies like Robotic
Process Automation and
Data Analytics as force
and speed multipliers.

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Auditing
Basis: Section 3 - Practice
Management- Strategic/
Up to 25% in each Level 1 Indicates that the firm is very nascent
Functional
section Firm -will have to take immediate steps to
upgrade its competency or will be left Evaluation Criteria Max
lagging behind Scores
Above 25% to 50% in Level 2 Indicates firm has made some progress 3.1. Practice 20
each section Firm -will have to fine-tune further to reach Management
the next level of competency 3.2. Infrastructure – 48
Physical & Others
Above 50% to 75% in Level 3 Indicates firm has made substantial
each section Firm progress -will have to fine-tune 3.3. Practice 12
further to reach the highest level of Credentials
competency Total of Section 3. 80
Above 75% in each Level 4 Indicates firms that have made
High scores are awarded
section firm significant adoption of standards
for Quality control and
and procedures - Should focus on
Technology adoption
optimising further
in section 1, Resources
Section 1 - Practice Management - Operation turnover and compensation
management in section 2, and
Evaluation Criteria Max Scores Infrastructure (Physical &
Others) in section 3.
1.1 Practice Areas of the Firm 12
1.2 Work Flow - Practice Manuals 16 The Implementation Guide for the
1.3 Quality Review Manuals or Audit Tool 24 AQMM v1.0 shall follow soon and
shall appropriately and effectively
1.4 Service Delivery - Effort monitoring 36
guide the users about the relevant
1.5 Quality Control for engagements 80 tools and techniques to be utilized
1.6 Benchmarking of Service delivery 16 along with their respective
1.7 Client Sensitisation 16 significance, mechanism, and
utility.
1.8 Technology Adoption 64
1.9 Revenue, Budgeting & Pricing 16 Availability and use of
Total of Section 1. 280 standard formats of
documentation
Section 2 – Human Resource Management
The Yes/No criteria in many
Evaluation Criteria Max Scores instances talk of ‘availability’
2.1 Resource Planning & Monitoring as per the 28 and ‘use’ of standard formats
firm’s policy of checklists and engagement
documentation. The firm should
2.2 Employee Training & Development 44
2.3 Resources Turnover & Compensation 104
Management
2.4 Qualification Skill Set of employees and use 32 Audit documentation is
of experts
extremely important as
2.5 Performance evaluation measures carried 32
out by the firm (KPI’s) what is not documented
Total of Section 2. 240
is not considered done.

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Auditing
allocate 25% of the respective be it manufacturing or
allocated score to the presence service industry. Not just for
of the document format survival but an organization
and 75% of the respective uses technology to have a The Audit Documentation
allocated score should be for competitive advantage over tool, Data Analytics tool,
actual implementation and its peers. The AQMM v1.0 Digital Library and the
use of the standard formats of provides a list of to-dos that
documentation/policies. the organization must maintain Practice Management
as these practices at the office tool are the key essential
Audit tools will lead to the smooth and
enhanced functioning of the
audit tools needed by
The recent advances in organization. Scoring is based auditors today. These
technology have significantly
changed the way we audit
on the presence of items go-to-market tools will
mentioned in the checklist in a
these days. The Audit binary Yes/ No pattern.
provide a one-stop
Documentation tool, Data solution to all the audit
Analytics tool, Digital Library Technology adoption in service documentation and
and the Practice Management delivery like the use of audit
tool are the key essential audit tools, analytical tools and monitoring requirements
tools needed by auditors today. Digital Competency Maturity of the firm.
These go-to-market tools Model (DCMM) Version 2.0
provide a one-stop solution to attracts points. The DCMM
Version 2.0 may be referred to Negative scoring
all the audit documentation
and monitoring requirements arrive at the technical maturity The firm will attract negative
of the firm. The audit of the firm. scoring in case advisory has
documentation tool should been issued by a government/
Human Resources
include audit and accounting ICAI, debarment/ blacklisting,
standard checklists. This model recognizes the or if there is a case of
professional misconduct on
importance of human capital,
Technology Adoption the part of the member of
the most crucial resource for
the firm where he has been
The one thing that all successful the firms, and will help to
proven guilty. A firm will attract
firms have in common is strengthen its operations. Firms
negative scoring only once for a
technology. Technology in having a revolving door with
particular incident.
today’s scenario has become high staff turnover will attract
the backbone of every industry, lower scores. A firm also attracts negative
scoring when the statutory audit
Employee training and engagements are reworked
development and use of after the auditor’s report is
experts signed. The same could result
Audit quality cannot be from filing errors, information
The AQMM v1.0 pegs training
measured and judging hours at 60 for junior level, 30- insufficiency or wrong
audit quality can be 60 for mid-level, and more than interpretation of provisions, etc.
The audit team moonwalking
highly subjective. 30 for partners. All partners
need to comply with the CPE at a client’s place may lead to
However a relative requirements of ICAI. If the a disciplinary case and hence
comparison is possible firm does not have the qualified the firm needs to monitor the
between two audit firms. resources, then the services of percentage of assignments re-
an expert should be taken. worked.

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Auditing
AQMM v1.0 status should
not be publicised
This model recognizes The AQMM v.1.0 status should The Audit Quality
the importance of however not be publicized or Maturity Model – Version
mentioned by sole proprietors
human capital, the 1.0 (AQMM v1.0) is
and Audit firms on the public
most crucial resource domain e.g. on professional a cross-functional
for the firms, and will documents, visiting cards, evaluation model for
help to strengthen its letterheads, or signboards, etc. practicing firms covering
as it may amount to solicitation
operations. in view of the provisions of engagement teams, firm
Chartered Accountants Act, leadership, IT helpdesks,
The number of client disputes
(other than fees disputes)
1949. It should not be disclosed human resources
even on a website. It may,
and how they are addressed however, be made available
team, administration
also attract negative scoring. to anyone on the specific pull department, legal
Auditor-client disagreement is
defined as disputes occurring
basis i.e. where he wishes to matters, and the
see the said status, it may be
between the client and audit provided to him.
management information
firm involving accounting systems of the firm.
principles or practices, financial Conclusion
statement disclosure, or
The Audit Quality Indicators arrive at their maturity level
auditing scope or procedures.
(AQIs) should raise more but also has a mechanism to
There is a significant positive
questions, bring about help guide the members to
relation between auditor
competition between audit specifically improve upon
resignation and auditor client
firms and create market their audit quality.
disagreement. The results often
suggest that auditor resignations demand for audit quality. The
The Audit Quality Maturity
are more often accompanied AQMM not only helps firms
Model – Version 1.0 (AQMM
by auditor-client disagreement v1.0) is a cross-functional
disclosure. The disagreements
evaluation model for
(other than fees disputes) affect
practicing firms covering
the client retention decisions The firm will attract engagement teams, firm
and result in loss due to negative scoring in leadership, IT helpdesks,
audit failure. Relative to non-
disagreeing clients, disagreeing case advisory has been human resources team,
clients are more likely to issued by a government/ administration department,
legal matters, and the
have earning manipulations ICAI, debarment/ management information
and a higher risk of material
misstatement. Thus, successor
blacklisting, or if there systems of the firm. It is a
auditors are more likely to is a case of professional unifying force for having all
charge disagreement firms misconduct on the part hands on deck to help steer
with higher audit fees. So, it is the firm from the brown
highly recommended to avoid
of the member of the waters of unplanned audits
disagreements and express firm where he has been to the blue waters of being
opinion on the audit conducted proven guilty. globally recognized for audit
by the firm. quality. 

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Taxation

Whither Tax Audit and Presumptive Taxation

The Finance Act, 2021
increased the threshold
limit for applicability of
the provisions of section CA Dindayal Dhandaria
44AB(a) of the Income The author is a member of the Institute. He can be reached
Tax Act, 1961 from five at d_dhandaria@rediffmail.com and eboard@icai.in

crore rupees to ten crore

rupees, w.e.f. 1-4-2021. Tracing the history of the Historical background
The Memorandum introduction of the provisions
The Finance Act, 1984 had
accompanying the relating to compulsory audit and
inserted section 44AB in the
presumptive scheme of taxation
relevant Finance Income Tax Act, 1961 (“the
contained in sections 44AB and
Bill, 2021 explained 44AD of the Act, respectively,
Act”) w.e.f. 1-4-1985 with the
expectation, inter alia, that a
the purpose of the and certain recent amendments,
proper audit for tax purposes
amendment as to it is opined that the scope and
would ensure that the books of
incentivise non- coverage of these two sections
accounts and other records are
are being reduced in a phased
cash transactions manner. The assessees having
properly maintained, that they
to promote digital faithfully reflect the income
income from business would
of the taxpayer and claims for
economy and to further no longer be able to claim
deduction are correctly made
reduce compliance profits lower than presumptive
by him.
rate by getting their accounts
burden of small and Overview of the
audited and furnishing the audit
medium enterprises. report. The declared aims for presumptive scheme
Notwithstanding introduction of these provisions The Finance Act, 1994 had
what is stated in the would, thus, be negated. inserted sections 44AD and
Memorandum, the
author feels that the
above amendment is a
part of a larger strategy
to render the provisions
of sections 44AB and
44AD of the Act futile in
case of assessees having
income from business.
Moreover, a distinction
is made between an
assessee carrying on
business and others.
Read on…

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44AE in the Income Tax Act, 3. It introduced section 44AF
1961 (“the Act”). Section in the Act providing similar
44AD was inserted with a view benefits to retail traders.
to providing for a method of The assessees having
estimating income from the The benefits of presumptive income from business
taxation scheme were further
business of civil construction
extended to all businesses
would no longer be able
or supply of labour for civil
construction work. Section by Finance (No. 2) Act, 2009 to claim profits lower
44AE was inserted with a view w.e.f. 1-4-2011 except in case than presumptive rate
to providing for a method of of income from profession,
estimating income from the commission, brokerage and by getting their accounts
business of plying, hiring, or agency. audited and furnishing
leasing trucks owned by a
But the approach of the
the audit report. The
taxpayer, not owning more than
ten trucks.The scheme, when Department to the scheme declared aims for
introduced, was optional has been changing since its introduction of these
introduction. Beginning from
and an assessee could claim
1-4-1998, a series of steps provisions would, thus,
that his income in respect of
the abovementioned business were taken contrary to its be negated.
was lower than the specified declared beneficial objects
estimate of income, i.e., the so far as small traders are enhanced the presumptive
presumptive rate. In such concerned. For example: rate of estimating income
a case, he was subjected to from 5 per cent to 8 per
1. The Finance Act, 1999 cent of gross turnover/gross
compulsory scrutiny. But amended sections 44AD,
initially, he was not required to receipts.
44AE and 44AF of the Act
get his accounts audited. Later, w.e.f. 1-4-1998 providing for 3. The Finance Act, 2016
the requirement of compulsory enabling provisions to allow made, inter alia, the
scrutiny was removed and in an assessee to claim his following amendments to
lieu thereof, the requirements income to be lower than the section 44AD which cannot
of audit and furnishing of audit deemed profits and gains, be considered as “assessee-
report were imposed. subject to the condition that friendly”:
the books of accounts or a. No deduction was
Realising the benefit of
other documents are kept allowed for expenditure
the above-mentioned two
and maintained as required in the nature of salary,
presumptive provisions,
under section 44AA(2) remuneration, interest,
following amendments were
and the assessee gets his etc. paid to the partner
made by the Finance Act, 1997
accounts audited and as per clause (b) of
to make the scheme more
furnishes a report of such section 40, while
popular:
audit as prescribed under computing the income
section 44AB. under section 44AD.
1. It removed the requirement
of compulsory scrutiny. 2. Section 44AD as substituted b. Restrictions were
by the Finance (No. 2) Act, imposed upon the
2. It settled the controversy 2009 enlarged the scope of eligibility to claim
regarding allowability of this section by making it the benefit of section
deduction for salary and applicable to all businesses 44AD. It was provided
interest paid by a Firm to (except professionals, that where an eligible
its partners in favour of the income from commission, assessee declares profit
taxpayers; and brokerage and agency) but for any previous

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year in accordance The Finance Act, 2016 the third assessment year 2020-
with the provisions substituted the existing sub- 21, he offers income of Rs. 4
of this section and he section (5) of section 44AD lakh on turnover of Rs. 1 crore.
declares profit for any w.e.f 1-4-2017 which resulted in Thus, he has not offered
of the five consecutive preventing the claim for profits income in accordance with
assessment years lower than the presumptive the provisions of section
relevant to the previous rates. The words “who claims 44AD for five consecutive
year succeeding that his profits and gains from assessment years beginning
such previous year the eligible business are lower from Assessment Year 2017-18.
not in accordance than the profits and gains Consequently, after assessment
with the provisions specified in sub-section (1)’ year 2020-21, he will not be
of this section, he appearing in existing sub- eligible to claim the benefit
shall not be eligible section were replaced by the of section 44AD for next five
to claim the benefits words “to whom the provisions assessment years i.e. from
of the provisions of of sub-section (4) are applicable”. assessment year 2021-22 to
this section for five 2025-26.
assessment years Restrictions in availing the
subsequent to the presumptive scheme Let us consider what are the
assessment year benefits of section 44AD. These
relevant to the previous The sub-section (4) postulates are:
year to which the profit that if an assessee who has
has not been declared declared his profits as per 1. An assessee is not required
in accordance with the presumptive rates for any to maintain books of
the provisions of this previous year, he must do so for accounts and other
section. five succeeding years to claim documents as prescribed
the benefit of section 44AD under section 44AA(2); and
c. The assessee was and if in any of these five years,
required to pay advance he does not do so, he will not 2. His income is computed
tax. be eligible to claim the benefit at the rate of 8 per cent
of this section for five years of his gross turnover/
Right to adopt lower than succeeding the assessment year gross receipts or at the
presumptive rate upto 31- in which the profit was not so rate of 6 per cent in case
3-2017 declared. of prescribed digital
transactions w.e.f. 1-4-2017.
Although sub-section (1) of Let us understand the above
section 44AD mandated that [Other benefits of section 44AD
provision with the help of the
the specified percentage of gross have since been withdrawn.]
following example:
receipts or gross turnover shall
be deemed to be the profits Scope and impact of
An eligible assessee claims
of an eligible business covered section 44AD(4)
to be taxed on presumptive
by this section, sub-section basis under section 44AD for The provisions of sub-section
(5) thereof, starting with a Assessment Year 2017-18 and (4) apply if the following
non-obstante clause, provided offers income of Rs. 8 lakh (or cumulative conditions are
that an eligible assessee (i.e. a 6 lakh depending upon digital fulfilled:
small trader) could claim that transactions) on the turnover of
his profits and gains from the Rs. 1 crore. For two succeeding 1. The assessee must have
eligible business are lower than assessment Years 2018-19 and declared profit for
the presumptive rate specified 2019-2020, he offers income in any previous year in
in sub-section (1), subject to the accordance with the provisions accordance with the
prescribed conditions. of section 44AD. However, in provisions of this section i.e.

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at the rate of 8% (or 6% in So, the question arises what
case of digital transactions) the amendment achieves
of his gross turnover or by providing that he would
gross receipts; and be deprived of the benefits It is understandable
of section 44AD for five that an assessee
2. The assessee declares
profit for any of the five
assessment years succeeding will, voluntarily, stop
the year when he stops
assessment years relevant taking benefit of this scheme. enjoying the benefit of
to the previous year Logically, it seems that for such section 44AD only when
succeeding such previous five assessment years, he cannot
year not in accordance return to the presumptive
his profits are lower
with the provisions of sub- scheme and he would have to than the presumptive
section (1), i.e., not at the
presumptive rate applicable
continue to maintain accounts, rates and obviously,
get them audited and furnish
in his case. audit report. It may so happen
for substantiating
If it is so, a question arises what that his profits increase and lower profits, he would
the restriction imposed by are no longer lower than the maintain the prescribed
presumptive rates during the
sub-section (4) contemplates. It
said five assessment years. Even
accounts and other
contemplates that if an assessee
does not declare his profits at then, he will have to continue documents.
presumptive rate or higher than to maintain the accounts, get
that in any succeeding previous them audited and furnish audit Case of a new assessee
year, he cannot revert and claim report.
From the foregoing discussions,
benefit of section 44AD for five Referring to the example given it is apparent that section
assessment years thereafter. earlier, section 44AD(4) would 44AD(4) is applicable to an
It simply means that after operate for assessment years assessee who opts out of the
having declared profit not in 2021-22 to 2025-26 in case of presumptive scheme in the
accordance with section 44AD, an assessee who opts out of specified period. So, this
even if an assessee declares the presumptive scheme in sub-section does not apply to
profit at presumptive rate or assessment year 2020-21. Thus, a person who starts a business
higher than that, he would have the scope of this sub-section is and is assessed for the first time.
to maintain accounts and other limited to assessment year 2025- In the first year of his operation,
documents as prescribed under 26, in the instant case. If in he would not get the benefit of
section 44AA(2) for the said the example, the assessee opts section 44AD.
succeeding years. out of the presumptive scheme
The scope of section 44AB
in assessment year 2022-23,
It is understandable that an this sub-section will apply till Clause (a) of section 44AB
assessee will, voluntarily, stop assessment year 2027-28. contains a mandatory provision
enjoying the benefit of section that a person carrying on the
44AD only when his profits are The restriction imposed by eligible business exceeding the
lower than the presumptive the substituted sub-section (4) threshold limit must get his
rates and obviously, for applies to a taxpayer returning accounts audited and furnish the
substantiating lower profits, he to the scheme after having audit report.
would maintain the prescribed opted out within the stipulated
period. It is important to note that an
accounts and other documents. assessee can get his accounts
He would also get them audited This sub-section will cease to be audited only if either of the
and furnish the audit report applicable latest by assessment clauses of section 44AB is
so that the presumptive rates year 2027-28 as illustrated in the applicable in his case and not
are not applied in his case. foregoing example. otherwise. For claiming profits

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lower than presumptive rate, setting forth such particulars as increase his compliance cost,
he can get his accounts audited may be prescribed. and increase the administrative
only if his case is covered by burden on the tax machinery.
Thus, a person carrying on an
clauses (c) or (d). It is seen that These factors are against
eligible business can get his
a professional required to get his the aim of introducing the
accounts audited only if his case
accounts compulsorily audited presumptive scheme.
is covered by clause (e) read with
under clause (b) of this section
sub-section (4) of section 44AD. It would not be out of context to
can get his accounts audited
It has been stated hereinabove mention here that the said Finance
to claim profits lower than
that section 44AD(4) does not Act, 2016 not only inserted
presumptive rates, by virtue of
apply to persons claiming profits section 44ADA in the Act making
enabling provisions contained in
lower than presumptive rate. special provision for computing
clause (d) of the section. In case
of an assessee covered by clause profits and gains of profession on
Therefore, as regards the issue of
(a), there is no such provision presumptive basis, it also amended
claiming profits lower than the
enabling him to get his accounts clause (d) of section 44AB of
presumptive rate by maintaining
audited to claim profits lower the Act to provide that a person
the required books of account
than the presumptive rate. carrying on a profession could
and without getting them audited
declare profits lower than the
under section 44AB, there can be
Right to adopt lower than presumptive rates by fulfilling the
following contrary views in the
presumptive rate after 31- conditions imposed.
matter:
3-2017 It is worth noting that, on the
1. One view is that since section
It is seen earlier that right to one hand, the Finance Act, 2016
44AD prescribes a mandatory
adopt lower than presumptive introduces deeming provisions
presumptive rate (the section
rate was bestowed upon an for the professionals and enacts
uses the word “shall”) and
eligible assessee being a small enabling provisions to claim
since the provisions enabling
trader by sub-section (5) of profits lower than presumptive
declaring a profit lower
section 44AD which, prior to rates for them, on the other hand,
than presumptive rates have
its substitution, negated the it takes away similar benefits in
been removed from the Act,
mandatory provisions of sub- case of other eligible business.
he must declare profits at
section (1). It no longer overrides The newly inserted clause (e) to
presumptive rates.
sub-section (1) of this section. section 44AB is discriminatory.
2. Another view is that
It is clear from the comparative section 44AD is not a Conclusion
study of clause (d) of section charging section and so, A person carrying on a business is
44AB before and after its the mandatory deeming no longer allowed to claim profits
amendment, that if a person presumptive rate of profit lower than presumptive rate
carrying on business claims that specified in this section by getting his accounts audited
his profits and gains are lower cannot be applied to under section 44AB.
than the presumptive rates, he every person. It is for the
cannot get his accounts audited. It is pertinent to ask whether, in
Department to decide
the absence of the above-stated
whether to scrutinise his
Clause (e) in section 44AB enabling provisions, an assessee
accounts or not. can claim profits lower than
provides that every person
carrying on business shall, if the If the first view is upheld, there presumptive rates and if so, how. If
provisions of sub-section (4) of would be injustice to many it is held that a small trader must
section 44AD are applicable in his small businessmen whose declare his profits at presumptive
case and his income exceeds the profits from business are lower rates as provided in sub-section
maximum amount which is not than the presumptive rates. (1) of section 44AD, there would
chargeable to income-tax in any be injustice to him. If he claims
previous year, get his accounts of Even if the second view is profits lower than presumptive
such previous year audited by an upheld and he can declare lower rates by maintaining the prescribed
accountant before the specified profits than the presumptive accounts and if he is subjected
date and furnish by that date rates, he would have to undergo to scrutiny to prove the same, he
the report of such audit in the the rigours of maintaining would be facing hardships and the
prescribed form duly signed and accounts and face scrutiny. This aim of introducing presumptive
verified by such accountant and would cause hardship to him, scheme would be lost. 

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Taxation

New Compliances & Re-Approval process

under 80G (An Incisive Analysis)
This article covers
analysis of new
compliances u/s
80G which are CA. Naresh Kumar Kabra

introduced under The author is member of the Institute. He can be reached

at eboard@icai.in
Income-tax Law
The very objective of section 26.03.2021, notified that, “The
from 01.04.2021. It 80G is to provide a motivation Income-tax (6th Amendment)
also covers questions, in the form of incentive (i.e., Rules, 2021” for re-approval of
Key Challenges deduction) for the tax payers to 80G, which is to be ensured by
contribute to charity. Charity 31.08.2021 (Original due date is
and certain vital may be defined as “an altruistic 30.06.2021 which has extended
issues, for which thought and action which vide circular No. 12 of 2021
clarity is required. comes together for the benefits dated 25.06.2021.
of others”.
All these aspects It will not be surprising if in
related to these new The Income-tax Act through future, the Department comes
Finance Act 2020 made it out with the concept of rating
compliances, are mandatory for all the NGOs the Institutions, on the basis of
very meaningful (herein after referred as their conduct and compliance.
for all NGOs Institution) to obtain re- Therefore it is imperative for
approval for 80G. However, due all concerned Institutions
(Charitable to COVID-19, this amendment to strengthen their internal
Institutions i.e., was postponed to 31.03.2021. systems and compliance
Trust, Society etc.) CBDT vide notification dated departments.

having / applying
for 80G approval.
These amendments
will ensure better
accountability
and transparency.
However, non-
compliance of the
same may lead to
serious repercussions
for the Institutions.
Read on …

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Through this article, an 2. List of enclosures to be 1. Timeline of filing
attempt has been made to uploaded in the case of Re- application under different
present the discussion in a approval of existing 80G. situations:
simple manner. This includes 3. Filing of annual return of
the key challenges to the The timeline of filing
donation and issuance of
new process of approval very application, disposal thereof,
certificate.
specific to re-approval of the prescribed forms etc. w.r.t
4. Consequences in case of seeking re-approval and fresh
existing 80G and compliances failure to file Form 10BD &
of return filing, which is approval of 80G which were
10BE. brought by way of amending 1st
divided into following
5. Information to be Proviso to section 80G(5) and
sections
maintained by the introducing new rule 18AB
1. Timeline of filing Institution. & substituting rule 11AA, is
application under different 6. Issues, which require clarity. summarized as under:
situations.
7. FAQs.

1st proviso
Validity Disposal Enquiry Form
to section Timeline of filing Type of
Situations of of from to be
80G application Approval
approval pplication Dept. Filed
(5)
Re-approval within three months
(i) of existing from the 1st day of April, 5 Years 3 months* No Regular 10A
Approval 2021
Regular at least six months prior
(ii) Approval is to expiry of the said
due to expire period (i.e., 5 Years)
at least six months
prior to expiry of period
of the provisional 5 Years 6 months* Yes Regular 10AB
Provisional
approval (i.e., 3 years)
(iii) Approval is
or within six months of
due to expire
commencement of its
activities, whichever is
earlier
at least one month prior
In any to the commencement
other case of the previous year
(iv) 3 Years 1 month* No Provisional 10A
(Provisional relevant to the A.Y. from
Approval) which the said approval
is sought
*from the end of the month in which application was received

Major Amendment - 80G Also, the Provisional approval of help the Institution receive
approval will now be granted 80G will be granted immediately donations and start operations
for a period of 5 years, requiring after incorporation, which immediately, for the benefit of
renewals. The concept of perpetuity in the earlier law was a very the public at large.
has been done away with. challenging task. It will

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Taxation
2. List of enclosures to be uploaded in the case of Re-approval of existing 80G
 Copy of Instrument - Trust Deed/Society Bye Laws/MOA, AOA
 Copy of other document evidencing creation i.e., Revenue Records, 143(3) Order etc., if Institution is
not created under an instrument
 Copy of Registration with Registrar of Public Trusts / Societies / Companies
 Copy of FCRA registration
 Copy of existing approval of 80G
 Copy of Last 3 Years’ Annual Accounts, only if, ITR of A.Y. 2020-21 is not filed
All the enclosures have to be self-certified

3. Filing of annual return b) Donee has to issue a the 31st May, immediately
of donation and issuance of certificate to each donor following the F.Y. in which the
certificate in Form 10BE. [Section donation is received. It seems
80G(5)(ix)]. very impractical to ensure both
The concept of filing of Annual compliances on the last day.
Returns has been introduced c) Both the forms have to be The Department should come
for declaring various types of furnished on or before 31st out with some clarification
donations. May, immediately following for generating and issuing the
certificate to the respective
the respective F.Y. [Rule
Key Highlights donor, after certain days of filing
18AB(9)].
of return, such as in case of TDS
a) Annual Return is to be d) Related details w.r.t return and certificate.
filed electronically in Form Donor and Donee will be
10BD for the donations Practical Advice
reflected in Donor’s ITR,
received in F.Y. beginning which is a pre-condition to In the given situation, if the
from 2021-22. [Section avail deduction u/s 80G. Institution has to be law
80G(5)(viii)]. (Explanation 2A of section compliant, it needs to file
80G). the Annual Returns at least
before two days, from 31st
4. Consequences in case of May, so as to ensure issuance
The Provisional approval failure to file Form 10BD & of certificate within the due
10BE date hereby ensuring both
of 80G will be granted compliances in a timely and
immediately after a) A fee of Rs. 200 per day hassle-free manner.
to be paid, for every day
incorporation, which in (Section 234G). 5. Information to be
the earlier law was a maintained by the
very challenging task. It b) Penalty of Rs.10, 000 to Institution
Rs. 1,00,000 may be levied
will help the Institution (Section 271K).
(From 01.4.2021 for each
donor and for each type of
receive donations donation)
Problem, which one may
and start operations face a) Name of the Donor
immediately, for the
benefit of the public at The due date of filing of b) Unique Identification
Annual Return and issuance Number (UIN) –PAN or
large. of certificate are on or before AADHAAR

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Taxation
Note- If the above is not annual returns would deny the Issue 1: Can NIL Return be
available, any one of the deduction benefit to the donor filed?
following UIN, can be u/s 80G.
Opinion:
taken:
Therefore, timely compliance Nothing is currently prescribed
i. Tax payer identification with accurate particulars in the law in this regard. Since
of the country where should be ensured. Otherwise, this return is to be filed for the
the person resides correction, revision, first time by 31.05.2022, some
rectification of the return clarifications should develop in
ii. Passport this regard.
filed has to be done which
iii. Electors photo identity will unnecessarily increase Issue 2: Can Institutions
cost, time, burden and lead to receive 80G donations after
iv. Driving license inefficient utilization of human getting provisional approval?
resources.
v. Ration card Provisionally approved
Institutions need to customize Institutions shall be required
c) Address of the Donor the present accounting to apply for regular approval,
framework so that the list of as per the following time limit
d) Type of Donation (Corpus/
donations can be generated from (whichever is earlier):
Specific grant/Others)
the accounting system itself a) at least six months prior to
e) Mode of receipt (Cash/ for each nature of donation, expiry of the period of the
Kind/Electronic modes/ donor wise, so that the correct provisional registration; or
Others) reporting can be done.
b) within six months of
f ) Amount of Donation 6. Issues, which require clarity commencement of its
w.r.t practical challenges activities
g) Section under which
Donor is allowed to claim The following issues may crop Now, the question that arises –
deduction up as a result of practical What if regular approval is not
implications of the above- granted? Whether it would
i) 80G or (ii) 35(1)– mentioned amendments, which result in the donor being
(Statistical /Social / in our considered opinion shall denied the benefit of 80G for
Scientific Research) the donations made in between
be of great relevance to the
(provisional to regular)?
Accounting Challenge Institutions:

Form 10BD provides that, while

reporting the aggregate amount
of donation received from any
person, the donation type should
be reported on the basis of
nature of donation i.e., (Corpus,
specific grant, others) and mode
of receipt (Cash/Kind/Electronic
modes/Others) as well.

Practical Advice
Due to the concept of auto-
population of donation figure
in ITR, inaccurate data in

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Taxation
granting re-approval, under had the approval u/s 80G on the
new procedure? date of the donation and loses the
registration on a subsequent date.
If the Institution has In this regard, it is imperative The Department should clarify
to compare the position with this issue at the earliest.
to be law compliant, it reference to the sub-section
needs to file the Annual Whereas, in case of donations
(Sunset Clause) inserted in given to an approved Institution
Returns at least before 12AA, which can be taken as a u/s 35(1), safeguard is provided
base to conclude an opinion to to the donor in Explanation to
two days, from 31st this situation. Section 12AA(5) Section 35(1) and various case
May, so as to ensure states as follows – laws uphold that deduction for
donations before withdrawal
issuance of certificate “Nothing contained in this cannot be withdrawn.
section shall apply on or
within the due date after the 1st day of April, Issue 5: Is 80G Return
hereby ensuring both 2021”. applicable on Religious
Institutions?
compliances in a As such, a ‘Sunset Clause’ has
not been inserted for Section As per Explanation 3 of section
timely and hassle-free 80G, it can be concluded that 80G, “charitable purpose” does
manner. the approval of 80G should not not include any purpose on the
become ineffective like in the case whole or substantially the whole
of 12AA. of which is of a religious nature.
1. There is no clarification by Opinion
the Income-tax Department Opinion
on whether the donor can Meaning thereby, only those
Institution can receive donations Institutions who are approved
claim the benefit of 80G in in the above situation and there of 80G are required to file this
such circumstances or not. should not be any problem to Annual Return.
both donor and donee. It is also
2. Also, there is no concept of to be noted that as per the new However, an important thing
filing Quarterly Returns. procedure of re-approval of 80G, which is to be understood is that
the Department is duty bound other than Religious Institutions,
to re-approve the existing 80G all other Institutions, not
3. Donor may face that the
approval for 5 years, subject to approved under 80G, should
donation will be held filing of Form 10A within due ensure complete details of
ineligible for the purpose date, as prescribed. donation along with the KYC
of deduction u/s 80G, if information of the donor, so that
regular approval of 5 years Issue 4: What will be the section 115 BBC which is related
is not received. position of 80G Deduction, to taxation on anonymous
if 12AB registration gets donations, will not get attracted.
Opinion cancelled at later stage?

Institution should not accept Quarterly Return of donations

and certificates are not proposed
any donation during provisional
in the Rules. Thereby, the donors
approval period, in order to
avoid any difficulty in future
may be denied 80G benefit
against the donation given to
A ‘Sunset Clause’ has
till any clarification from the Institutions from 1st April 2021 to not been inserted for
Department in this regard. 30th June 2021, if they lose their
Section 80G, it can
12AB registration.
Issue 3: For existing be concluded that the
Institution holding the 80G Opinion
approval as on 31.03.2021, This appears to be harsh, as the
approval of 80G should
will there be any problem in donor should not be penalized not become ineffective
accepting the 80G donations by subsequent actions of the
donee, when the donee clearly
like in the case of 12AA.
before issuance of order

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Taxation
Issue 6: What are the Issue 8: Whether certificate to 10BD be aggregated?
implications, if a Trust is not be issued to all donors? In case,
a “Public Charitable Trust”, in Answer: Details of all the
 Donation is in kind.
case of 80G approval or re- donations from different
approval?  Cash Donations exceed Rs. donors can be submitted in
2,000. the single form. However,
1. Section 80G (5) – prescribes
Opinion donations received from
certain conditions which are
to be fulfilled compulsorily by a single donor of the
Nothing specific has been
Institution or funds engaged same nature, type and
prescribed in the law in this
in charitable purposes. deductibility can be
regard. Since, this return is to aggregated together to form
One of the conditions is that be first filed for the time by a one line-item while filing
if the Institution or fund is 31.05.2022. We certainly hope Form 10BD.
a Trust, then it should be that some clarification will
constituted as a Public c. Will non delivery of each
develop in this regard. However,
Charitable Trust. certificate in Form 10BE to
the Institution has to ensure donors result in separate
2. This implies that only a maintenance of all prescribed fine and penalty?
Public Trust can get 80G details, for each type of
approval. It should also be donation, as discussed in point Answer: There is no clarity
noted that there is no law in on the above scenario. It is
5 (Supra).
India at the Central level that therefore suggested that all
governs or regulates Public 7. Frequently Asked Questions (FAQs)
Trusts. The Indian Trust Act
1882 regulates Private Trusts.
Public Trusts on the other
hand are governed by State
Laws, Acts. Only few states
have a governing body
for Trusts like Devasthan
Vibhag in Rajasthan,
Charity Commissioner in
Maharashtra, Gujarat and
Madhya Pradesh.
Opinion
In order to avoid unnecessary
litigation from the Department,
the Institutions functioning in the
above mentioned states, should
register themselves with the components of the Form
a. Can Return filed
respective regulating body of the 10BE so generated on the
state, to categorize themselves as through Form 10BD be portal should be downloaded,
a Public Charitable Trust. revised? and delivery should be
ensured to maximum donors
Issue 7: What if no activities are Answer: Yes. However, by way of post, e-mail etc.
carried on by the provisionally the procedure to submit Any reasons of non-delivery/
registered Institution for 3
correction statement for failure of delivery is to be
years when it has to apply for
rectification of any mistake kept in records.
regular approval?
or to add, delete or update d. How to disclose the
Opinion: the information, is yet to be donations in case of joint
Clarifications are required from laid down. donors?
the Income-tax Department, as Answer: Report as per the
nothing is prescribed in the law b. How should donation proportion declared by the
in this regard. details required in Form joint donors. In case no

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Taxation
such declaration is received, the provisional approval
donation should be disclosed should have been passed till
in equal proportions. 31st May, 2021 i.e., one month
from the end of the month If religious Institutions
e. Signing issue Digital i.e. 30th April, 2021.
Signature (DSC) VS receive anonymous
Electronic Verification g. Which approval number is donations, then there will
Code (EVC)? to be mentioned while filing
Form 10A for re-approval
be no issue, as such. In
Answer: Application has
to be signed by DSC, if ITR of 80G? case of other Institutions
of last year filed by DSC,
Answer: Approval Number
whether holding 80G
otherwise it has to be signed approval or not, complete
mentioned on 1st order
by EVC. DSC or EVC is to be
used of that person, through granting approval should
be mentioned and not of
details of each donation
which last ITR was filed.
renewal order. should be maintained to
f. What about pending h. What is the difference
avoid taxation on the said
application as on 31st between Specific Grant donation u/s 115BBC.
March, 2021? and Corpus Donations
under the ‘type of donation’
Answer: As per section In case of other Institutions
requirement of the Form?
80G(5E), all pending
whether holding 80G
application as on 31st March,
Answer: In case of project/ approval or not, complete
2021 shall be deemed to be
considered as an application specific grants, the Donor details of each donation
filed for provisional approval stipulates certain conditions should be maintained to
under clause (iv) of the first to be satisfied for the avoid taxation on the said
proviso to sub-section (5) utilisation of the Grant, donation u/s 115BBC.
on that date. Due to this, all instructions must emanate
pending application as on from the Donor regarding the Beginning of a new era
31st March, 2021 will deemed purpose for which funds have of Charitable Institutions
to be have been filed on 1st to be utilized. Post 01.04.2021
April, 2021 and therefore in
this situation (as discussed at These instructions or This new process will catalyse
Point 1) the order granting conditions are imminent for the proceedings for the Income-
the purpose utilisation and tax Department. Apart from
for monitoring purposes, this, it shall promote charitable
though it may not be
activities, because now, there
intended to hold the funds
Quarterly Return of as a Corpus. There may be is the concept of provisional
donations and certificates conditions that, if the funds approval and because of the
are not utilised, then the concept of renewal every 5 years,
are not proposed in unutilised funds have to there will be no roving inquiry
the Rules. Thereby, the be refunded to the donor. in the affairs of the Institutions
In such circumstances, it
donors may be denied cannot be construed as
on day-to-day basis. Due to
this, they will be in a better
80G benefit against corpus donation.
position to run their activities in
the donation given to i. Can Anonymous Donations a smoother manner. Due to these
be received by the
Institutions from 1st April Institution?
welcome amendments in the law,
the ultimate purpose of giving
2021 to 30th June 2021, Answer: If religious income-tax exemption benefits
if they lose their 12AB Institutions receive will be achieved at the best and
charity will be done in its true and
registration. anonymous donations, then
there will be no issue, as such. best sense. 

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Taxation

Section 115BAC of Income Tax Act, 1961: A

step towards the New-Normal
The Indian Income
Tax Law witnesses
every year a gamut
of amendments CA. Saurav Somani
presented in the The author is member of the Institute. He can be reached
Union Budget, in at casauravsomani@gmail.com

tune with the ever-

Background ‘Salary Income’, investment-
changing, socio- linked deductions under the
economic scenario. The Income Tax Act, 1961, head ‘Profits and Gains from
The implication provides a wide range Business & Profession’. Also,
of deductions from and
of such changes exemptions of income while
there are numerous provisions
for Inter/Intra head setting-off
pervades almost every computing Total Income and and carrying forward of losses.
stratum of society Tax Liability of the taxpayer. Overall, the intent behind
and class across the Majority of these deductions such deductions/exemptions/
are enumerated under Chapter
nation. Finance Act, VIA of Income Tax Act
allowances is to lower one’s
2020, inserted a new taxable income and reduce the
(Sections 80C to 80U) which is final tax liability.
section 115BAC to based on various investments/
the Income Tax Act, payments. Some deductions/ The new section 115BAC has
allowances are specific to a kind ‘forgoing’ effect as it
1961, commonly the Head of Income, for dispenses with many of such
known as ‘New Tax example, statutory deduction deductions, allowances and
Scheme’, applicable & allowances under the head exemptions.
from Assessment Year
2021-22. The new
section meant for
Individual and Hindu
Undivided Family
(HUF) will bring
about a paradigm
shift in the way Income
Tax is computed and
perceived. Let us dive
deeper and dissect all
the possible angles of
this new provision.
Read on …

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Taxation
Analysis of Section a. The standard  However, following
115BAC deduction of Rs allowances under
50,000, professional section 10(14) can be
Applicability: The new section tax and entertainment claimed:
is applicable only for ‘Individual’ allowance [section 16].
and ‘Hindu Undivided Family a. Transport allowances
(HUF)’ from Assessment b. Leave Travel
in case of a differently
Year 2021-2022. If one opts Concession Allowance
(LTA) [Section 10(15)] abled person (Divyang
for this New Tax Scheme, the Employee).
new income tax-rates will be c. House Rent Allowance
applicable. Following table (HRA) [section 10 b. Conveyance allowance
shows a comparison between (13A)] received to meet the
the tax-rates under normal conveyance expenditure
d. Minor child income
provisions and the tax rates incurred as part of the
allowance [section
under the New Tax Scheme: employment.
10(32)]
Sl. Total Income Rate of Tax under Rate of Tax under
No. New Tax Scheme (%) Normal Provisions (%)
1. Up to ` 2,50,000 Nil Rate Nil Rate
2. From ` 2,50,001 to ` 5,00,000 5% 5%
3. From ` 5,00,001 to ` 7,50,000 10 % 20 %
4. From ` 7,50,001 to ` 10,00,000 15 % 20 %
5. From ` 10,00,001 to ` 12,50,000 20 % 30 %
6. From ` 12,50,001 to ` 15,00,000 25 % 30 %
7. Above ` 15,00,000 30 % 30 %
 Rebate under section 87A up to ` 12500 will be allowed to resident individuals if the Total Income is
less than ` 5,00,000.
 The ‘Individual’ may be a resident or non-resident, senior citizen or a very senior citizen.

Forgoing of Deductions, e. Allowances to MPs/

Exemptions and MLA [section 10(17)]
Allowances
f. Children education
Under the New Tax Scheme, allowance Under the New Tax
sub-section 2 of section g. Some special Scheme, sub-section 2
115BAC of the Income Tax Act
states that total-income will
allowances under of section 115BAC of the
section 10(14): children
be calculated without taking education allowance,
Income Tax Act states
into effect certain deductions, hostel expenditure that total-income will
exemptions, allowances, and
brought forward losses. These
allowance, allowance on be calculated without
transfer from one city
have been explained as follows: to another. taking into effect certain
1. Following deductions/ h. Exemption or
deductions, exemptions,
allowances under the head deduction for any allowances, and brought
‘salary’ will not be allowed other perquisites or forward losses.
under the new tax scheme: allowances.

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Taxation
c. Any compensation d. Expenditure on A relevant question
received to meet the scientific research might arise: Whether
cost of travel on tour or under section 35. such Brought forward
transfer. losses or unabsorbed
e. Capital expenditure depreciation pertaining
d. Daily allowance under section 35AD. to A.Y. 2020-21 or before
received to meet the will be considered or will
ordinary daily charges f. Deduction u/s 35CCC they be considered up
for expenditure on to the year when such
or expenditure which
agricultural extension option under New Tax
employees incur on Scheme is exercised? The
account of absence project.
concerned authorities
from his/her regular are expected to provide
place of duty. g. Exemption under
more clarity on this
section 10AA for matter.
2. Under the head ‘Other Special Economic
Sources’, deduction from Zones (SEZ) units.  Losses under the head
family pension income ‘House Property’:
[section 57(iia)] will not be 4. Under Chapter VI-
allowed under the new tax A: Deductions under For Self-Occupied or
sections 80C to 80U will Vacant House Property:
scheme.
not be allowed. However, Interest on housing
3. Certain exemptions like deductions under Section loan on such property
interest income on Public 80CCD(2) [contribution (Section 24) will not be
by employer under notified allowed under the new
Provident Fund (PPF)
pension scheme on behalf tax scheme.
and interest income on of an employee] and under
‘Sukanaya Samriddhi’ section 80JJAA [in respect of For Let out House
Scheme will be available additional employment cost Property: Standard
under the New Tax Scheme. of new employees] will be deduction of 30% and
Under the head ‘Business or allowed. Also ‘units’ covered deduction of municipal
Profession’, following will be under ‘International Financial taxes will be allowed
not allowed under the new Services Centre’ under under the new tax
ax scheme: section 80LA (1A) will be
scheme. Interest on
eligible for deduction under
a. Additional depreciation 80LA even if they opt for the housing loan will be
under section 32(1) new tax Scheme. allowed only to the
(iia) for new plant and extent of income under
machinery. It is to be 5. Set off of losses: this head. In other
mentioned that ‘normal’ words, loss from any
depreciation will be  Brought forward let-out property can
losses and unabsorbed be allowed to be set off
allowed.
depreciation of earlier against income from
b. Investment allowance years to the extent they other house property and
relate to the deductions/ not from any other head
under section 32AD.
exemptions withdrawn of income. Moreover,
c. Sector-specific business cannot be set off or
such loss from let out
carried forward in
deductions under property will not be
the new tax scheme.
section 33AB (Tea, Also, such unabsorbed allowed to carry forward
Coffee and Rubber depreciation (relating to in subsequent years.
producers) and additional depreciation)
33ABA (extraction will be adjusted from the Following is an example
or production of, opening written down when an Individual or
petroleum or natural value (WDV) of the HUF opts for the new tax
gas or both). block of assets. scheme:

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Taxation

Particulars House 1 House 2 return was filed under section

139(1) after opting the new tax
Rental Income ` 2,40,000 ` 90,000 scheme, then logically new tax
Less: Standard Deduction @ 30%: ` 72,000 ` 27,000 scheme will be available for such
revised return. Clarification is
` 1,68,000 ` 63,000 awaited from the Income Tax
Less: Interest on loan against House 1 ` 175,000.00 `0 authorities on this matter.
Income/(Loss) under House Property ` (7000) ` 63000 Following explains the conditions
for the option to be exercised:
This loss of Rs 7000 can be set off When and how the option
against income of House 2, Rs. under New Tax Scheme is 1. If the taxpayer is having
63,000. If no such income is there,
to be exercised? income from Business and
such loss cannot be set off from Profession: The taxpayer
any other head of income and This new tax scheme is not can opt for taxation under
will also not allowed to be carried mandatory but optional subject this new scheme either
forward to any subsequent year. to some conditions. The option is in A.Y.2021-22 or in any
to be exercised by filing Form 10- subsequent year. If the
On the contrary, if the new tax IE online before the due date of option is exercised, the new
scheme is not opted, then such Income Tax Return under section scheme will be applicable
loss from house property is 139(1) of the Income Tax Act. for subsequent years also.
allowed to be set off from any
After the option is exercised,
other head of income (up to Rs Author’s observation: Reading
the taxpayer can withdraw
2 lakh) and is also allowed to be the bare provisions, section
from this scheme only once
carried forward under the normal 115BAC states that the option
in a subsequent year, i.e., the
provisions. can be exercised only before filing
taxpayer cannot choose to
Income Tax return under Section
opt in again once he/she opts
Author’s observation: the 139(1) of the Act. Other sections
out of the scheme. The table
restrictions on setting off or for belated return u/s 139(4) and
revised return u/s 139(5) are not below is for more clarity:
carrying forward of losses
under section 115BAC are quite
Sl Nature of Assessment Status
stringent which may prevent
No. Income Year
the taxpayer from exercising the
option despite the concessional 1 Business or 2021-2022 Option under 115BAC not exercised.
tax rates. Some relaxations Profession Normal provisions applicable.
need to be provided in order to 2 Business or 2022-2023 Option under 115BAC exercised
encourage taxpayers to opt for the Profession for the first time. ‘New Tax Scheme’
new tax scheme. applicable.
3 Business or 2023-2024 New Tax Scheme Applicable
Profession
4 Business or 2024-2025 New Tax Scheme Applicable
Standard deduction of Profession
30% and deduction of 5 Business or 2025-2026 Taxpayer withdraws from this option
Profession (can only opt out once). So Normal
municipal taxes will be provisions will be applicable for this
allowed under the new A.Y. and subsequent years.
tax scheme. Interest mentioned. Accordingly, it seems From Assessment year 2026-2027
on housing loan will be that benefit for opting the new onwards, the taxpayer cannot
tax scheme is restricted only to opt again for New Tax Scheme.
allowed only to the extent income tax returns filed under However, if the tax payer ceases
of income under this 139(1), and does not extend to to have income from Business and
head. belated returns. However, in case
of revised return, if the original
Profession, the taxpayer can again
opt under the New Tax Scheme.

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Taxation
2. If the taxpayer does not have about the exercise of the new and tax liability under both
income from Business or option is not equivalent to Old and New methods and
Profession: In this case, the the exercise of the option choose accordingly.
taxpayer can decide to opt in under the new tax scheme. In  Impact on Specified Business:
or opt out every year, without other words, irrespective of Specified Businesses covered
any restriction. the intimation, the employee under section 35AD, viz,
taxpayer can exercise the
Clarification from CBDT: Cold Storage, Warehousing
option at the time of filing
Since the option under facility for agriculture
of return which will be
section 115BAC is required produce, specified hotels,
considered final.
to be exercised at the time specified hospitals, etc, are
of filing of the return, the  Employees having Business or eligible to get 100% deduction
Deductor of TDS, being an Professional Income: towards capital expenditure
employer, would not know under the normal provisions
In this case, the employees of the Income Tax Act. Also,
if employee opts for the new need not inform/intimate
tax scheme. Hence, there was the businesses involved
the employer regarding the in scientific research are
a lack of clarity regarding exercise of option at the time
whether the provisions of eligible to get deduction
of deduction of TDS. The towards scientific research
section 115BAC are to be reason: since Assessment Year
considered at the time of expenditure under normal
2021-22 is the first year of provisions. Since these
deducting tax. section 115BAC, the employee deductions are done away
CBDT has issued clarification taxpayer having business or under the new tax scheme
via circular no. C1/2020 professional income will need of section 115BAC, it is
dated 13.04.2020 which is time to decide carefully about unlikely that these specified
explained as follows: the option to be exercised. The businesses will opt for the
employer will deduct TDS new tax scheme.
 Employees having no Business under normal provisions of
or Professional Income: Income Tax Act. In near future, it is possible
The employee taxpayer that the new tax scheme
has to inform/intimate the Once such employee has
might be made compulsory.
employer whether or not the exercised the option under
In such a case, the
option of new tax regime 115BAC at the time of filing
government must come up
will be exercised. If the of Income Tax Return,
with certain relaxations and
employee doesn’t inform, the the employee will have
relief for the benefit of such
employer will deduct TDS on to intimate/inform the
employer about the same. specified businesses.
employee’s income computed
under the normal provisions The employer, accordingly, Conclusion
of Income Tax Act. The will deduct TDS under the
intimation to the employer new tax scheme for the The new tax scheme under section
subsequent assessment years. 115BAC is a significant step in
the Indian Income Tax Law. The
Other points for concessional tax rates under
consideration the scheme will encourage the
The employee taxpayer taxpayers to offer income with
has to inform/intimate the  Reduced Tax Rates versus
forgoing of several benefits: more transparency. However, since
employer whether or not the As the new tax slab is there is a crucial departure from
option of new tax regime comparatively beneficial many important deductions and
compared to the old tax exemptions, taxpayers might initially
will be exercised. If the slab in terms of reduced tax face dilemma while transitioning to
employee doesn’t inform, rates, the new tax scheme, the new tax scheme. Also, possible
the employer will deduct prima facie, seems to be misinterpretations of these new
better. However, since many provisions might crop up and lead
TDS on employee’s income significant deductions/ to litigations. Both income taxpayers
computed under the normal exemptions will have to be and practitioners will have to tread
provisions of Income Tax Act. forgone, hence the tax payer carefully while filing Income Tax
has to compute total income Return in the coming years. 

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Risk Management

People Risk Management at Banking and

Financial Institutions
Risks are everywhere
and present in
everything we do.
Risks are part of life.
Kirit Jain
So what is the need to The author is HR risk expert. He can be reached at
talk about it? When kiritjain11.kj@gmail.com

we view risk from the

perspective of a business Risk management in banking industry when it comes to
and financial organisations of varied risks, having a potential
or organisation, more all shapes and sizes have been to collapse even an excellent
so from a banking or traditionally an integral part run organisation – big or small.
financial institution of their functioning. A large Such is the strength of risk.
perspective, it seems to part of it is driven by banking When not managed well, it can
answer this question regulatory requirement given cause havoc of any magnitude
the nature of business such that can crash not only the
profoundly. Risks in organisations are in, i.e., money organisation and the financial
financial organisations management. Hence, safe industry, but it can also lead to
have the potential guarding a bank from unwanted devastating effects to crumble a
to cause adversity, incidents/accidents that can nation’s or the world’s economy
damage or losses in risk people’s money (and in turn in no time.
economy at large in eventuality)
multiple ways affecting takes as important a place as So, the question is, why do such
people, organisations, generating business and profits risks play out in spite of robust
economies and nations for financial institutions. No risk management practices to
at large scale. One of other industry is as vulnerable manage critical risks such as
as the banking and financial Credit Risk, Market Risk,
the most critical risks is
People Risk. People Risk
is a potential of loss
due to inadequate or
inappropriate human
behaviour, action or
decisions. Through this
article, I attempt to
explain why and how
such risks take place?
What can organisations
do to identify, assess,
mitigate and manage
them? Read on…

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Risk Management
Liquidity Risks and Operational resource risk is a risk of loss PNB Bank and jewellery company
Risk in organisations. Today, to the organisation due to Gitanjali Gems in India is another
world class statistical models, inadequate or inappropriate example that led to losses for the
highly evolved control and human behaviour, action or bank as internal procedures and
systems were by passed.
governance mechanism, skilled decisions. Human-factor risk
expertise and superbly engaged in any financial organisation Why do people in organisations
Central Banks monitor the is the root cause of failure cause risk? – Human errors,
financial industry, enabling it for other risks. People risk malicious actions or fraudulent
intentions by people lead to
to proactively manage these precedes all other risks and
loss or harm. While a lot of
critical risks. Still, risks play out is caused by people internally human errors can be caught,
every now and then affecting within the organisation or from managed or prevented through
the organisations’ reputation outside. When people risk is organisation’s control, monitoring
and finances. So coming back inadequately understood and and governance mechanism, most
to why these risks still take ineffectively managed, it causes malicious intentions and actions
place? The answer lies in People other critical risks to snowball are often hard to identify, monitor
Risk. Employees at all levels and avalanche. Some world or prove. The Enron Bankruptcy
in 2001 is one such example of
in an organisation carry out class financial organisations people’s misconduct in terms of
a variety of actions amidst have recognised the importance fraudulent accounting practices.
facing a variety of choices, of managing people risk while Not to forget a recent alleged
circumstances and impulses in others across the world are banking irregularity case involving
their work every day, and their still at an emerging stage to officials of a reputed Indian
conduct can either help build determine how to incorporate bank and a prestigious airline
the organization or lead it to people risk management in in India conspiring to sanction
and disburse loans of hundreds
risks. an overall framework of risk of crores to the airline in non-
management within their compliance to the bank’s credit
What is People Risk or organisation. policy. There are numerous other
Human-factor Risk - People examples across banks worldwide,
Risk, alternatively called How does People Risk occur -
where losses were caused on part
People Risk manifests through
human-factor risk or human of human errors with no malefic
behaviour of people within
intentions. A lot of such people’s
or outside organisation i.e.,
activities can be attributed to
action of employees and third-
lack of skills, training, sound
party partners, if error-clad or
procedures, poorly defined roles,
Many historical financial malicious, can lead to control and
work overload and so on. More
governance failure built around
crises such as rogue processes, systems and activities.
often, personal self-serving
interest, inaccurate or flawed
trading, credit defaults In turn, a failed process or a
judgement or decisions, unhappy
system exposes the associated
including the 2008 risks to take place leading an
or disengaged employees, internal
organisation culture, greed and
Lehman Brothers led organisation to incur a loss of
lack of integrity in conducting
financial meltdown are either financial, reputational,
or regulatory nature or all of
one’s responsibilities are bigger
still alive in our minds them. It is people who propel
behavioural misdemeanours that
cause the greatest damages.
and hearts. Most of these an organisation into the heights
of success, but it is also people How can organisations
crises were the results who can render it to fall like a manage People Risks - Clearly,
of human-factor risks towering pack of cards. A closest organisations need to adopt
example is the Rogue Trading by
manifested in operational a derivative trader whose actions
a two-pronged approach to
prevent and manage people
failure or through led the Barings Bank, UK’s oldest
risks – on one hand, they must
merchant bank, to bankruptcy due
misaligned judgement. to his fraudulent, unauthorized deploy procedures and systems
and speculative trades. The case of that can prevent (or correct)

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Risk Management
human errors from occurring; to ensure it is dynamic and
on the other hand, they need conducive to the progressing
a robust cultural response and nature of an organisation and its
vigilance mechanism to deter people. People Risk Management
people from engaging in wrong must be made an
deeds. A consistent high level Information Technology can help
of professional culture requires prevent much of People Risk - a inseparable cultural reality
building of deep behaviours
of integrity, transparency and
robust People Risk Index which within an organisation
can deliver valuable information
responsibility among people. on people risk will require that can manifest in every
Any organisation’s long-term organisations to leverage or deploy action and decision made
guard against people risks is IT-based capabilities. Appropriate
hidden within these fortifying IT intervention should be designed by its people
behaviours. The practise of these to bring together and analyze
measures on a day-to-day basis multitudes of people data from
by its people, safeguards the various internal systems, reports, wide to assess, monitor and
organisation from any risks. So, applications as well as external report People risks. Training
the measures such as instituting environment. Technologies such and awareness should be created
a People Risk Index in the as AI and machine learning can among people managers on how
organisation which can showcase further make this complex data to leverage People Risk Index to
real-time increasing/decreasing analysis more accurate, real-time, proactively manage risk issues
risk trend based on people dynamic and relevant. These data in their areas of responsibilities
parameters such as knowledge will deliver people risk insights and in their respective functions.
and skills gap, control failure to senior management, people Compensation and performance
trend, fraudulent cases, employee managers and HR through
happiness level, employee incentives for employees should
People Risk Index in real-time—
development and growth enabling them to make informed, be regularly aligned with findings
opportunities, attrition trend, timely and impactful decisions of People Risk Index to ensure
employee performance trend, in response to emerging or monetary rewards do not evoke
incentive-evoked wrong doings, potential people risks and issues. risk inducing behaviours among
pay gaps among employees, Technology backed People Risk employees. A culture of ethics
manager-employee relationship Index can enable organisations and good conduct should be
and other such factors that institute a culture of preventive promoted and individuals should
indicate areas contributing to measures to eliminate or mitigate be rewarded for consistently
people risks. This can then be high-impact people risks well in living these values in their daily
complemented by risk-mitigating time. roles and responsibilities. To
measures designed and applied
consistently addressing each Who should own People Risk conclude, HR, from their position
parameter in the People Risk in an organisation and the of strength in the organisation
Index. Composition of people role of HR Function - The can regulate right behaviours,
parameters and their relative Board or Senior Management policies, procedures and systems
significance over each other must consider People Risk as an by collaborating across all levels
can vary for each organisation accountable variable. However, in the organisation in cohesive
HR function in an organisation and synchronized manner - in
plays the vital role to drive support of making People Risk
management of People Risk given Management an inseparable
their influence and reach across cultural reality.
People Risk Index can be the organisation. As People Risk
designed to showcase is significantly associated with
people behaviour, HR is best
Someone once said “People
are Master Creators who can
indicators of increase/ placed to take lead in this area also act as ultimate destroyers”.
decrease in people risk and manage this by mobilizing
Organisations must work
resources, skills and systems
as close in real-time as with support from businesses continuously to nurture the
Master Creator trait in their
possible. and functions. HR can develop a
people. 
People Risk Index organisation-

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Practical Compliance Guideline on

Intangibles by Australia – Lessons for India
Intangible assets
are growing in
importance due to
CA. Sharad Goyal* S. P. Singh**
developments in the *The author is a member of the Institute. **The author is former
areas of information, IRS officer. They can be reached at spsingh54@gmail.com
and eboard@icai.in.
communication,
and technology. All In the absence of proper Growing importance of
these are resulting guidelines controversies keep Intangible Assets
on arising between taxpayers
in paradigm changes and tax authorities. When seen
In 1912, among the world’s 10
largest companies were the likes
in the way business from this perspective, Practical of US Steel, Jersey Standard,
is being conducted. Compliance Guidelines (PCG) Pullman and American
issued by the Australian
It is neither possible, Taxation Office (ATO) on
Tobacco. Their success rested
with their physical assets: oil
nor advisable 19 May 2021 clarifying tax- fields, railroads and factories.
for each business compliance approach and A century on, oil companies
associated risks for intangible
organisation to arrangements is a welcome
still dominate the top 10, but
there have been new entrants:
develop all intangibles step. In this article the growing IBM, Microsoft and Apple, with
required for the importance of intangibles, Apple vying the top spot. Unlike
salient features of the PCG and
conduct of its business. lessons for India are discussed.
the old industrial giants, these
three tech companies
Consequently,
transfer of intangibles
is becoming more
and more common.
Another dimension
to this development
is transfer of
intangible assets
among enterprises
of Multinational
Enterprises groups.
This entails valuation
and transfer pricing
issues. Read on…

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rely not on physical assets for increase from just 17% in 19752.
their prosperity, but on ideas Surprisingly, the current set of
and innovation – in short, their accounting standards do not
intellectual properties.1 capture the value of intangible
Legal title to intellectual
assets unless purchased. As a property separates
Studies do support and
suggest that intangible assets
result, a substantial portion of intangible assets into
enterprise value may not be
are the fundamental source evident on the face of a balance intellectual property
of competitive advantages sheet. and non-intellectual
for firms in most industries.
Technology in the firm, brand Companies are now spending
intangible. Identifiable or
of the firm, etc. are some of the millions of dollars in developing, unidentifiable intangible
intangibles whose value often enhancement, maintenance, assets possess and create
get unlocked during mergers protection, and exploitation
and acquisitions, which has (DEMPE) of intangible assets. a huge value and often
itself have increased in recent Given the recent importance outperform the value of
times. Intangible assets could of intangibles for businesses, tangible assets.
cover a wide array of human there have been considerable
accomplishments, covering work by the OECD & G20 on
inventions, works of authorship, determining arm’s length price intangibles and are taking steps to
software, data, expertise, know- of such transfers or uses. It is protect their respective tax bases.
how, experimental designs, also that often payment for
Initiative by ATO –
technical information, trade these assets is considered tax
Practical Compliance
secrets, publicity rights, domain base eroding. BEPS Action Plan
Guideline 2021/D4
names and documentation; 8-10 has given detailed guidance
anything for which one can on how to tackle these erosions In order to provide a road map
anticipate future value. Legal of taxable base. to taxpayers and Tax authorities
title to intellectual property for dealing with various issues
separates intangible assets In a MNE set-up where connected to intangibles the
into intellectual property and companies distribute among ATO on May 19, 2021 released
non-intellectual intangible. companies in different a draft Practical Compliance
Identifiable or unidentifiable jurisdictions responsibilities Guideline (PCG) 2021/D4 for
intangible assets possess and for developing and maintaining public comment—thereby
create a huge value and often intangibles in one jurisdiction, continuing the trend by ATO to
outperform the value of tangible exploitation in other, protection provide a framework to assist
assets. and ownership in other, DEMPE taxpayers in assessing the level
is designed to ensure that of risk in their transactions
As a result, in recent times, allocation of costs for functions of intangible assets with
investment in intangible assets like development, enhancement, international related parties.
is surpassing investment maintenance and protection
in tangible assets. In some and enjoyment of returns from ATO issues practical
business intangible assets have exploitation does not erode the compliance guidelines on
become the key driver of value, tax base of the jurisdiction. tax issues. Seen from Indian
innovation, and growth. In 2018 perspective these are a mix of
intangible assets made 84% Not only OECD, tax authorities Circular and Instructions. They
of all enterprise value on the around the globe are cognisant also address some relevant
S&P 500 companies, a massive of DEMPE with respect to questions. These provide broad

1. The increasing importance of intangible assets https://www.smartcompany.com.au/ [as accessed in May 2021]
2. https://www.visualcapitalist.com/intangible-assets-driver-company-value (accessed in June 2021)

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International Taxation
law administration guidance, Draft PCG 2021/D4 outlines
addressing the practical the approach which ATO is
implications of tax laws and going to take with respect to
outlining ATO’s administrative compliance and risk factors
The purpose of the
approach. For example, they connected with Intangible guidelines is to provide
might set out: Arrangements including taxpayers with additional
DEMPE of intangible assets
 How ATO assesses tax or where intangible assets are certainty and compliance
compliance risk across migrated offshore. In particular, savings, thereby reducing
a range of activities or the ATO is concerned with
arrangements in relation compliance costs. These
whether the functions
to a certain area of performed by Australian entities are also helpful to tax
the law –an activity or
arrangement is considered
(in connection with the DEMPE authorities in directing
of intangible assets) are properly
low risk (unlikely to require recognized and remunerated
their compliance
scrutiny) and where an in accordance with the arm’s- resources to higher risk
activity or arrangement is
considered high risk (likely
length principle embodied areas of the law.
in Australia’s transfer pricing
to attract scrutiny) rules. For these guidelines the
definition of intangible assets avoidance rule (GAAR), and the
 Such guidelines, also
provide practical and the DEMPE framework Diverted Profits tax (DPT).
compliance solution where are sourced from the OECD
These guidelines have been
tax laws are creating a Transfer Pricing Guidelines.
divided by ATO into two parts,
heavy administrative or
viz,
compliance burden, or Draft PCG focuses on
where the tax law might be identifying Intangible  Part One - Compliance
uncertain in its application. Arrangements that Approach - provides an
mischaracterise Australian outline of ATO’s compliance
The purpose of the guidelines
is to provide taxpayers with activities connected with approach for Intangible
additional certainty and DEMPE of intangible assets. Arrangements.
compliance savings, thereby Such arrangements may be non-
arm’s length or structured to  Part Two - Risk Assessment
reducing compliance costs.
avoid tax obligations, resulting Framework - provides
These are also helpful to tax
authorities in directing their in inappropriate outcomes for an outline of ATO’s risk
compliance resources to higher Australian tax purposes. As assessment framework,
risk areas of the law. such it covers a wide breadth which explains how ATO
of arrangements from licensing assess the compliance risks
intangibles, research and of Intangible Arrangements.
development (R&D) activities,
Part One - Compliance
Companies are now cost contribution arrangements,
Approach
and intangibles migrations.
spending millions of Maintenance of adequate
dollars in developing, Draft PCG is designed to focus documentation and self-
on ‘tax risks’ associated with
enhancement, the potential application of
assessing the risk is at first
the responsibility of the
maintenance, protection, Australia’s provisions regarding taxpayers. Part One outlines
and exploitation of transfer pricing, withholding documentation and evidence
tax, Capital Gains tax, capital which ATO would generally
intangible assets. allowances, the general anti- expect when assessing the level

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International Taxation
of compliance risk posed by in connection with any Arrangements. This will act
the Intangible Arrangements engagement or review, and as a guide for the taxpayers
according to the ATO’s risk other relevant information to assess the Risk Factors as
assessment framework set from third party / they relate to their Intangible
out in Part Two. ATO has public sources or other Arrangements.
provided a preliminary list of government agencies.
information which ATO will The risk assessment framework
examine whether taxpayers have The Documentation and includes an assessment of the
relevant international related Evidence Expectations outlined risk of Intangible Arrangements
party dealings, are a significant are categorised as: based on:
global entity (SGE) and/or have
 understanding and  Risk Factors (as set out
disclosed a relevant Category
evidencing the commercial in Appendix 1 of these
C reportable tax position.
considerations and Guideline) which outline
The preliminary list contains
taxpayer’s decision making features and Examples of
following documents:
Arrangements that ATO will
 understanding the
use to inform assessment
 Australian income tax legal form of Intangible
returns of the compliance risks in
Arrangements
Intangible Arrangements,
 General purpose financial  identifying and evidencing and
statements the intangible assets
and connected DEMPE  Documentation and
 International Dealings Evidence Expectations,
Schedules activities, and
including the level of
 Country-by-Country  analysing the tax and profit evidence that ATO will have
reporting data exchanged outcomes of Intangible regard to when assessing
automatically or by Arrangements. Intangible Arrangements
exchange of information against the Risk Factors to
It is clarified in the guidelines assess the level of risk posed.
request, including any
that the documents’ list outlined
available Masterfile, Local
is intended to serve as a general The Risk Factors (refer
File Parts A and B and/or
guide and should not be treated Annexure to this article) include
Country-by-Country Report
as an exhaustive list of the High, Medium and Low Risk
 Information obtained from kind of documents, evidence Factors and focus on following
foreign jurisdictions through and matters which ATO may five parameters:
exchange of information take into account in the event
processes, and they wish to review Intangible 1. understanding and
Arrangements. Depending evidencing the commercial
 Other information obtained upon the business complexities considerations and
previously by the ATO or complexities of Intangible decision making, in
Arrangements, governance particular where taxpayer
processes and systems, the has restructured or had
documentation and evidence a change associated with
Maintenance of adequate requirements might vary. Intangible Arrangements,
documentation and self- Part Two - Risk 2. understanding the form of
assessing the risk is at Assessment Framework Intangible Arrangements,
first the responsibility of This part is designed to 3. identifying and evidencing
the taxpayers. explain how ATO assesses the the intangible assets and
compliance risks of Intangible connected DEMPE

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International Taxation
activities of Intangible Leanings for India
Arrangements.
The draft PCG 2021/D4, in a very
4. analysing the tax and profit elaborate manner, lays down the If the Intangible
way tax authorities in Australia
outcomes of Intangible
will perceive and peruse the Arrangements exhibit one
Arrangements, and Intangible Arrangements of the or more High Risk Factors,
taxpayers. It is a commendable
5. understanding the type of step towards establishing then the taxpayer can
example arrangements, taxpayer friendly environment. expect deeper level of
ATO consider to be High, For the tax authorities as well,
Medium or Low risk, it will bring disciple and focus scrutiny from ATO.
which have been described in their approach towards
in Appendix 2 of these Intangible Arrangements. It will apex court ruled that any sum
Guideline. be very helpful for the taxpayers paid by resident end users, as
as they will know in advance consideration for the resale/use
as to how their Intangible of computer software, cannot
If the taxpayer is not able to
Arrangements will be looked at be typically branded as royalty
provide sufficient evidences or by the authorities. This will help
substantiate its claim for the under the tax treaties. It amounts
taxpayers in planning in a better to procurement of goods. Apart
parameters mentioned above, way. The downside is that the from this, there are controversies
then the risk is categorised guidelines will put very heavy in many cases regarding valuation
as High. If the evidences are compliance burden on taxpayers for transfer pricing purposes. The
available, but incomplete, then towards documentation and tax authorities, in many cases,
the risk category is Medium, audit, especially since there is no have held the value of intangibles
minimum threshold proposed received by the Indian companies
otherwise Low. A quick in the guidelines for audit and
summary of Risk Factors as from their group companies as
documentation. “NIL”. In most of such cases,
laid down by ATO in these
this approach has not found
guidelines is the Annexure and In India, there are plethora of favour with courts. This results
placed at the end of this article. litigation in India on taxation in uncertainty for taxpayers and
of royalty on intangible assets. unnecessary costs for taxpayers as
Having regard to these Risk Latest is the ruling of the well as government. To minimise
Factors ATO will finalise Supreme Court1 pronounced in both, government should come
the assessment of the February 2021 on the difference out with a detailed guidelines for
compliance risks of Intangible between use of the copyright taxpayers and tax auditors. For
Arrangements. It is clarified and the acquisition or use of this, the draft guidelines issues by
that these Risk Factors will the copyrighted article. The ATO would be helpful.
serve as general guidance only
and do not form an exhaustive
list of features or examples of
arrangements which ATO may
consider when assessing the
level of risk posed by Intangible
Arrangements.

If the Intangible Arrangements

exhibit one or more High Risk
Factors, then the taxpayer can
expect deeper level of scrutiny
from ATO.

3. Engineering Analysis Centre of Excellence Private Limited vs. CIT (SC) [Civil Appeal Nos. 8733-8734 of 2018]

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International Taxation
Annexure
Summary of Risk Factors
Risk focus areas High Risk Factors Medium Risk Low Risk Factors
- Intangibles Factors
Arrangements
1 2 3 4
A. Understanding  Documentation Documentation and Documentation
and evidencing and evidence does evidence mentioned and evidence
the commercial not substantiate in Column 2 are mentioned in
considerations and the commercial incomplete. Column 2 are
decision making, considerations and adequate.
in particular associated decision
where Intangibles making.
Arrangements are  Failure to substantiate
restructured or that there was due
changed consideration and
assessment of the
commercial options
realistically available
as alternatives,
disregarding any
anticipated tax effects.
 Failure to substantiate
any clear quantifiable,
non-tax financial
benefits of Intangibles
Arrangements.
B. Understanding the  The form of Intangibles Documentation and Documentation
form of Intangibles Arrangements is evidence mentioned and evidence
Arrangements not substantiated in Column 2 are mentioned in
by the documents incomplete. Column 2 are
or evidence, such as adequate.
legal agreements,
correspondence of
relevant persons,
taxpayer’s internal
guidelines, manuals,
policies, procedures,
governance and like
documents relevant to
the arrangement.
 Documentation and
evidence does not
substantiate that the
form of Intangibles
Arrangements is
consistent with the
substance.

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International Taxation
• Documentation
and evidence does
not substantiate the
characterisation of any
payments made under
arrangements, including
recognising an amount
in the nature of a royalty
where relevant.
A. Identifying and • Documentation and Documentation and Documentation and
evidencing the evidence does not evidence mentioned evidence mentioned
intangible assets and specifically identify in Column 2 are in Column 2 are
connected DEMPE the intangible assets incomplete. adequate.
activities of Intangibles connected with Intangibles
Arrangements Arrangements.
• Documentation and
evidence does not
substantiate the DEMPE
activities connected with
Intangibles Arrangements,
including how such
activities generate value.
• Documentation and
evidence does not
substantiate that the
entities stated to primarily
manage, perform and
control DEMPE activities
and assume associated
risks have the necessary
capability, financial
capacity and/or assets to
do so in substance.
B. Analysing the tax • Documentation and Documentation and Documentation and
and profit outcomes evidence does not evidence mentioned evidence mentioned
of Intangibles substantiate that the in Column 2 are in Column 2 are
Arrangements economic outcomes incomplete. adequate.
and benefits obtained
by relevant entities in
connection with intangible
assets align with their
contributions to DEMPE
activities, having regard
to functions performed,
assets used and risk
assumed.
• Documentation and
evidence does not
substantiate that the
tax and profit outcomes
are consistent with the
commercial or economic
substance of Intangibles
Arrangements.

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• Documentation evidencing
the determination of
transfer pricing methods,
valuations, projections
and/or other analyses
that have influenced the
characterisation and
quantum of transactions
executed under the
Intangibles Arrangements
is not consistent with
the anticipated tax and
non-tax benefits actually
considered in deciding to
enter the arrangements, or
relies on inadequate, non-
contemporaneous and/or
unreliable analysis or data.
A. Understanding the type • Intangibles Arrangements Intangibles Intangibles
of example arrangements exhibit features or Arrangements Arrangements
ATO consider to be high, characteristics of the high exhibit features or exhibit features or
medium or low risk, as risk examples described characteristics of the characteristics of the
described in Appendix 2 in Appendix 2 of these medium risk examples low risk examples
of these Guidelines Guidelines. described in Appendix described in
2 of these Guidelines. Appendix 2 of these
Guidelines.

Examples of High Risk, Medium Risk and Low Risk Factors as given in Appendix 2 to PCG which will
be used by ATO are as follows. Over period of time ATO will keep on enriching this Appendix:

High Risk Medium Risk Low Risk

1. Centralisation of intangible 6. Centralisation of intangible 10. Centralisation of intangible
assets (limited DEMPE assets (sale of intangible assets (third-party purchase
functions offshore with asset with residual services and immediate on-sale of
cost-based R&D services in provided in Australia) intangible asset)
Australia)
7. Transfer of rights to 11. Contract research and
2. Bifurcation of intangible intangible assets via a development arrangement
assets Licence Agreement (cost-based R&D services
performed under oversight
3. Non-recognition of 8. Contract research and of foreign parent)
Australian intangible assets development arrangement
and DEMPE activities (cost-based R&D services 12. Cost contribution
with insufficient clarity of arrangement (sharing
4. Migration of pre- functional profile) and joint management of
commercialised intangible intangible asset and DEMPE
assets 9. Cost contribution functions)
arrangement (pre-existing
5. Non-arm’s length licence intangible asset values may
arrangements be incorrect and outcomes
do not align with inputs)

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Industry

Enticement For Pharmaceuticals Sector –

“Drastic Times Call For Drastic Measures”
The pandemic has
brought into limelight
the Atmanirbhar
Mission and the
Government’s new CA Neha Jain D
initiatives/ schemes are The author is a member of the Institute. She can be
reached at nehajain1180@gmail.com
just the steps in right
direction. To ensure Introduction announced industrialization
revival of economy policies enabling adequate
the government The Indian economy was investments from foreign to
primarily an agriculture-based
has announced economy and the public sector
ensure a comprehensive and
various schemes had the task of industrializing
rapid growth of the Indian
under certain sectors economy.
the country. However, the
including automotive, economy was not able to see the Although the measure of
pharmaceutical, textiles sunrise due to the inefficiency of foreign investments into
etc. to establish a global public sector. The private sector the Indian Territory was for
supply chain and fulfil was at its initial stages and industrialization and progress of
the deeply rooted moto could not flourish due to non- the economy, it had somewhere
availability of adequate capital still left a loophole in terms of
of the Government for investment. This proved to huge dependency on various
“vocal for local and be an obstacle in progress of countries in many sectors.
local for global”. These the private sector. However,
schemes will not only realizing the importance of As the COVID-19 pandemic
lead to self-sustainance industrialization through hit the world economy
but will also enable the both the public and private last year, the importance
country to wipe out the sector, the then government of being ‘Atmanirbhar’
unemployment plague
in a phased manner. The
discussion in the present
article highlights
certain features of
the PLI scheme in
pharmaceutical sector
announced on 03 March
2021 along with its
detailed operational
guide issued on 01 June
2021 and corrigendum
on 30 June 2021 and 22
July 2021.Read on…

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Industry
was emphasized and the Firstly, it can be noted that the Group GMR – FY Remarks
importance of being self- PLI scheme for pharmaceuticals 2019-20
reliant on various fronts came is third scheme issued by the (INR)
into spotlight. One such key Ministry of Chemicals and A 5000 crore Inclusive
sector was the pharmaceutical Fertilizers after the scheme or more of 5000
sector. Although India has for promotion of domestic crore
been a key source for certain manufacturing of critical key
B 500 crore – Inclusive
drugs required for treatment starting materials (KSMs)/ 5000 crore of 500
of the virus on one side, the Drug intermediaries/ Active crore
unavailability of raw materials Pharmaceutical Ingredient
C Less than
(drugs) to manufacture vaccines (API) and scheme for medical 500 crore
in India has become a major devices. (incl.
hindrance too. MSME
Salient features of the entities)
Presently India meets its huge scheme:
demand for patented drugs 3. The applicant
through imports but exports 1. The ultimate outcome (manufacturer) can be a
only a lower value of generic of the scheme to the proprietor, partnership
drugs. This could be due to applicants is the incentive. firm, LLP or Company
inadequate facilities for research The incentive under the registered in India.
and development or lack of present scheme is a form of However, the applicant
investment to involve huge financial benefit provided should not be any willful
production capacities. based on incremental sales defaulter in any Indian
and eligible investments laws, declared bankrupt or
Keeping in mind all the done. reported as fraud by the
important factors hindering the bank or financial institution
growth of the sector in all terms, 2. The scheme has segregated or non-banking financing
The Ministry of Chemicals and manufacturers into three company.
Fertilizers issued a notification different groups basis
on 03 March 2021 rolling out the global manufacturing 4. The manufactured goods
a Production Linked Incentive revenue (GMR). The term eligible for incentive
scheme for pharmaceutical to global manufacturing under the scheme are
incentivize certain high value revenue means the also classified into three
pharmaceuticals to enable the consolidated revenue different categories.
sector flourish at its best and to of the group (enterprise
penetrate in global markets. The
which directly or indirectly
detailed operational guidelines
exercise 26% or more of
of the scheme were issued
voting right in the other or The ultimate outcome
on 01 June 2021 providing an
incentive of about INR 15000
appoint more than 50% of of the scheme to the
crore across the sector for a the board of directors in applicants is the incentive.
period of 6 years from FY 2022- other enterprise) and/ or The incentive under the
in vitro diagnostic medical
23 to FY 2028-29.
devices. Revenues from any present scheme is a
In the present article, we shall other source for instance form of financial benefit
discuss certain key features R&D services, rental provided based on
of the scheme as laid down in incomes, etc., shall be incremental sales and
the operational guidelines and excluded for calculating the
corrigendum thereon: GMR.
eligible investments done.

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Industry

Category Manufactured “other drugs” as approved from State licensing

product by the Department of authority regulatory
1 Specific high value
Pharmaceutical (DoP) agencies as on
goods such as would also be eligible for 01.04.2021.
biopharmaceuticals, application under the
complex generic scheme. Hence, even if the Group C
drugs, patented drugs manufactured by an
drugs or drugs a. The applicants under
applicant do not fall under
nearing patent the scheme will be
the general categories stated
expiry, cell based selected based on the
above, the applicant is
or gene therapy gross manufacturing
drugs, Orphan eligible to approach the DoP
investment in India
drugs, Special depending on the criticality
during the last 10 years
empty capsules like of drug requirement.
(FY 2010-11 to 2019-
HPMC, Pullulan,
enteric etc,, complex 5. Selection of applicant: 20);
excipients, phyto- Only one applicant on
behalf of a group is eligible b. Number of new drug
pharmaceuticals,
other drugs as under the scheme and applications by the
approved. investment and sales will applicant or by group
be collectively considered. company by the US/
2 Active
Pharmaceutical Weightage has been given UK/ Japan/ Canada
Ingredients / Key to the below criteria for EU country (member
Starting materials / selection of applicants of PICS), WHO-
Drug Intermediates GMP compliance
(Not covered under Group A & B certificate from State
the earlier PLI licensing authority etc.,
scheme) a. The applicants under regulatory agencies as
3 Repurposed drugs, the scheme will be on 01.04.2021;
Auto immune drugs, selected based on the
anti-cancer drugs, gross manufacturing c. GMR from
anti-diabetic drugs, investment in India pharmaceutical goods
anti- infective drugs, in FY 2019-20.
cardiovascular drugs, during the last 10 years
psychotropic drugs (FY 2010-11 to 2019-
20); Group C for MSME
and anti- retroviral
drugs, In-vitro a. Number of
diagnostic devices, b. Research and
development manufacturing plants
Other drugs not
manufactured in expenditure as a in India owned by
India., Other drugs percentage of the GMR applicant/group
as approved from pharmaceutical company and approved
goods in last 3 years (FY by US/ UK/
It should be taken note that
2017-18 to 2019-20);
even though the scheme
focuses on production of c. Number of new drug
high value drugs, sufficient applications by the Only one applicant on
resilience is given to applicant or by group
the API/ KSMs also to
behalf of a group is eligible
company by the US/
avoid any shocks to the UK/ Japan/ Canada under the scheme and
Indian Pharmaceutical EU country (member investment and sales will
industry. It specifically of PICS), WHO-GMP be collectively considered.
also mentions that the compliance certificate

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Japan/ Canada/ EU equipment, IT systems f. Expenditure incurred
country (member as part of quality on cost of technology
of PICS), WHO- assurance/ certification/ purchased will also be
GMP compliance manufacturing etc. considered as eligible
certificate from State investment.
licensing authority etc., c. The manufacturer
regulatory agencies as can also add the g. Expense incurred in
on 01.04.2021; non-creditable taxes relation to registration
as part of the cost. of the product in India
b. GMR from The investment made and other countries
pharmaceutical goods in plant & machinery including renewal
in FY 2019-20. can be taken under a charges is an eligible
Finance lease (as per investment.
For in-vitro diagnostic Accounting Standard
medical devices, the 19 – Leases or Indian h. However, there are a
selection criteria for all Accounting Standard few investments (as
groups remain same except (Ind-AS) – 116 Leases). mentioned below)
that GMR from in vitro Further, the machinery which will not be
diagnostic medical devices can be used for eligible to fulfill the
in FY 2019-2020 has to be production of products investment criteria
considered. not falling under the under the scheme:
6. Investments: As it is rightly PLI scheme. However,
an appropriate i. second hand/ used/
said, No Pain No Gain. refurbished plant,
It is the responsibility of declaration of usage of
machinery will have to machinery, equipment,
the manufacturer to make utilities or research
investments to receive be submitted.
and development
reward in the form of equipment.
d. Expense in relation to
incentive. The guidelines
construction of building
of the scheme specifies the
where a new plant and
types of expenses, which
would qualify as eligible machinery is installed is
investment. eligible. However, where Expense in relation to
the internal compound construction of building
a. Most importantly, the wall/ roads (associated where a new plant and
investment should be infrastructure) are
made on or after 01st constructed, the eligible
machinery is installed is
April 2020. investment value eligible. However, where
for such associated the internal compound
b. Expense incurred on
new plant, machinery,
infrastructure is limited wall/ roads (associated
to 20% of investment
equipment, associated in new plant and
infrastructure) are
utilities including machinery. constructed, the eligible
expense on packaging, investment value for such
freight / transport, e. Expenditure incurred associated infrastructure
insurance, and erection for Research and
and commissioning Development (R&D) is limited to 20% of
of the new plant, is allowed, provided investment in new plant
machinery, equipment the clinical trials are and machinery.
including laboratory conducted in India.

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ii. Expenditure on residential colonies and 7. Incentive: The reward
consumables and similar structures. under the scheme is
raw material used for iv. The expenditure incurred computed based on the
manufacturing on land required for incremental sales of
the project / unit shall the products every year
iii. Expenditure on
not be considered for along with the minimum
guest house building,
determining threshold cumulative investment on a
recreational facilities,
investment. timely basis.
office building,

Group Minimum Investment Minimum sales of eligible product

A INR 1000 crores in 5 years For the first Financial year (FY 2022-23) – greater than INR 50
crores and for subsequent financial years 7% of increment in sale
(20% incremental every year) of eligible product
B INR 250 crores in 5 years For the first Financial year (FY 2022-23) – greater than INR 10
crores and for subsequent financial year 7% of increment in sale
(20% incremental every year) of eligible product
C INR 50 crores in 5 years For the first Financial year (FY 2022-23) – greater than INR 1
crore and for subsequent financial year 7% of increment in sale
(20% incremental every year) of eligible product
C Committed Investment over a For the first Financial year (FY 2022-23) – INR 50 lakhs and
(MSME) period of 5 years for subsequent financial year 7% of increment in sale of eligible
product.
(20% incremental every year)

8. Certain important Net incremental Sales of therapy drugs and has global
relaxations in the scheme Eligible Product x Rate of manufacturing revenue of say
include that the applicant Incentive INR 5000 crores. The Company
is eligible to change the recorded a turnover of INR 450
The term incremental sales means crore of the eligible product in
product mix up to five sales of eligible product during India during FY 2019-20. The
times during the tenure of a given Financial Year minus the Company applies under the PLI
scheme. baseline sales of the product in scheme notified on 3 March
9. Where an applicant is unable FY 2019-20. The rate of incentive 2021. Let us discuss the value
is computed on the incremental of incentive, which would be
to fulfill the minimum
sales over the base line. disbursed to the Company.
investment or incremental
sales condition, the applicant Incentive rate
Incentive rate (Products
will be denied the incentive Financial year (Products falling in
falling in category 1 & 2)
for the particular year. category 3)
However, it will not hinder 2022-23 10% 5%
the applicant from being 2023-24 10% 5%
eligible under the scheme in 2024-25 10% 5%
subsequent years too. Also,
2025-26 10% 5%
the applicants who exceed
2026-27 8% 4%
the prescribed minimum
investments and sales will 2027-28 6% 3%
be eligible for additional Let us take an instance to Assuming that the Company
incentive as per direction by understand the complete has met the requirement for
DoP. scenario minimum investment as laid
down in the scheme on a timely
10. The incentive will be X Ltd is engaged in basis. The incentive eligible under
computed as below: manufacturing of cell based the scheme will be as follows:

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Net sale of eligible Base line sales Min. Incentive (Category A
Financial Year
product (assumed) (FY 19-20) product)
2022-23 500 crores 450 crores 50 crores X 10% = 5 crores
2023-24 (more than min. 7% growth
550 crores 450 crores 100 crores X 10%= 10 crore
from FY 2022-23 of 500 crores)
2024-25 (more than min. 7% growth
680 crores 450 crores 230 crores X 10% = 23 crores
from FY 2023-24 of 550 crores)
2025-26 (more than min. 7% growth
750 crores 450 crores 300 crores X 10% = 30 crores
from FY 2024-25 of 680 crores)
2026-27 (more than min. 7% growth
850 crores 450 crores 400 crores X 8% = 32 crores
from FY 2025-26 of 750 crores)
2027-28 (more than min. 7% growth 470 crores X 6% = 28.20
920 crores 450 crores
from FY 2026-27 of 850 crores) crores

Therefore, it is very important for PLI scheme is claimed. Drug required to furnish a quarterly
the manufacturer to project its N is sold in the market and review report within 30 days
business performance in terms also used for manufacture from the end of every quarter.
of both investment requirements of another product by the 2. However, any changes in terms
and revenue from eligible Company. Hence, when drug of shareholding pattern or
product under the scheme. N is used for production of successor-in interest has to
another product, M Ltd is be intimated to the PMA for
Key Points To Note eligible to claim the incentive approval of the DoP to consider
a. Where the eligible product on drug N to the extent of for disbursal of incentives.
under the scheme is used cost of the manufacture when 3. The applicant would be required
for in-house consumption the other product is sold. to submit the application to
of another manufactured claim the incentive on an
eligible product that is sold, c. In a case where the applicant annual basis along with relevant
the Company will be able to has availed incentive under supporting within one month
claim the benefit only for one any other scheme on a from the end of the financial
of the products. For eg. Z Ltd product which is used for in- year i.e., 30 April of succeeding
is engaged in manufacture of house manufacture of eligible FY.
drug A which is also used in product under this scheme.
4. The PMA after due verification
the manufacture of another The cost of the product
would release 75% of the claim
drug B and claims benefit used for manufacture will and the balance 25% of the claim
under the PLI scheme for be reduced from the sales to will be released after submitting
both the drugs. The incentive compute incentive under the audited accounts. Thus, enabling
can be claimed on the drug present scheme. Thereby, an a successful implementation of
A or drug B when the final applicant can claim benefit incentive scheme to an applicant.
product (drug B) is sold. on a product only once.
Conclusion
b. Where the eligible product Disbursement of Incentive As it is rightly known, “Health is
is used for in-house 1. The application for scheme Wealth”. The health of the Indian
consumption and used for has to be submitted between economy can be invigorated only
manufacture of any other 2 June 2021 to 15 August 2021 after successfully implementing the
product not eligible under with the Project Management radical schemes of the government
the scheme, then in such a Agency (PMA) appointed by the in wealth creating sectors in
scenario the actual cost of the Department of Pharmaceuticals terms of both strengthening the
(DoP) along with necessary economy and also creating multiple
product will be considered
declarations and bank guarantee employment opportunities. Even
as sales when the final from a scheduled commercial though the country is witnessing its
product which consumed bank. The PMA or any other difficult times presently, it is to be
the eligible product is sold. agency appointed by DoP is duly remembered that every cloud has
Let’s say M Ltd is engaged authorized to visit the offices/ a silver lining. Our steps are in a
in manufacture of various manufacturing facility of the positive direction and we will have
products including “drug N” applicant. After obtaining an to wait for a few years to reap the
for which incentive under the approval, the applicant will be harvest. 

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Audit Trail in Accounting Software

The new requirement for
the maintenance of audit
trail by the companies will
substantially affect the ways,
the books of accounts are
maintained on computer
software especially, by small Bharat Zinzuvadia
and medium size companies. The author is member of the Institute. He can be reached
at bmzinzuvadia@gmail.com
The software companies will
have upgrade their software to
keep it compliant with the new Introduction and ensuring that the audit trail
requirements. Besides the new cannot be disabled”.
provision for the companies to The Ministry of corporate affairs
use a software with audit trail, vide a notification No. G.S.R. *The application of this provision
a new reporting requirement 205(E) dated 24th March 2021, is however, now postponed up to
for the auditors of the company has amended The Companies 1st April 2022.
is also added, which will pose (Accounts) Rules, 2014, and a
new proviso is added to sub rule This amendment will have a
a challenge, especially in substantial impact on the way
beginning.The drafting of the (3), which says,
the accounting software are
notification indicates strict “Provided that for the financial developed and used by companies
application by the company. year commencing on or after in India.
The notification was issued on the 1st day of April, 2021*, every
24th March 2021, and it was company which uses accounting The use of accounting software
applicable to all companies software for maintaining its for maintaining financial records
(which uses accounting books of account, shall use only is common in these days. In fact,
software) for each transaction, such accounting software which many commercial entities use
with effect from 1st April 2021. has a feature of recording the several accounting software for
However, it is now deferred up audit trail of each and every their specific needs.
to 1st April 2022. The reporting transaction, creating an edit log
requirement for the auditors of The amended rules says that
of each change made in the books “….. every company which
the company is also applicable of account along with the date
from the same date. Therefore, uses accounting software for
when such changes were made maintaining its books of
the auditors should address
a situation where, they have
to comment on the audit trail
feature of the accounting
software being used by the
company, but the management
of the company is not bound
to maintain the audit trail.
The reporting requirement is
applicable from 1st April 2022
so, the auditors have to give
their comments on the audit
trail feature before it becomes
mandatory for the companies
to implement the requirement.
Another situation could
be, where the company has
upgraded its system later, but
before the closure of the account
next year. Read on…

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account……”. It raises a question accounting software. Almost audit trail. For example, SAP,
about what it means by use of all companies having active beside capturing the basic
accounting software? It also businesses, use accounting details of a transaction, also
raises the question of what should software. The question here is captures more information
be included in the books of whether, that software has a on the same transaction, the
accounts. Because the rules are feature of keeping audit trail. audit trail of such additional
applicable without exception to information may or may not
all companies, irrespective of size, To ensure that the accounting be kept. According to the
nature, and status of the company. software has an audit trail notification, an accounting
feature, in compliance with the software is required to
Let us take an example of a One requirement of the new provision, capture the audit trail for all
Person Company engaged in the management may consider details once it is recorded.
a trading business and using the following matters.
a readily available mobile 4. The management of the
application that gives the details 1. What would be the minimum company is to ensure that the
of receivables and payables. The information an accounting accounting software should
rest of the accounting records are software should provide as an have a control to ensure
kept in physical notebooks. audit trail report, to render that the audit trail feature
the software, a Companies was prevented from being
Once, it is established that the Act complied accounting disabled.
company uses an accounting software?
software, these provisions Naturally, the audit trail entry
become applicable,(considering 2. The rules provide that this cannot be manually changed
the mobile application, and provision is applicable from by the users. The accounting
accounting software), and 1st April 2022. These rules software must capture the
therefore, I do not know if in this are prescribed under the trail automatically as the
situation, whether the company provisions of section 128 of operations are performed.
has to compulsorily switch over the Act. The noncompliance The audit trail feature should
to an accounting software that of the provisions of section be hard coded so that it
keeps the audit trails, because 128 attracts a penalty, which does not give an option to
rules require the company to ranges from fifty thousand to enable or disable the feature.
use “…accounting software five lakh rupees. However, it may not be
which has a feature of recording the case for all accounting
The management should also
audit trail of each and every software. Where an option is
think on, how to deal with a
transaction…” or the word “each available to change the
situation when it is evident
and every” will be understood to that the accounting software
have a limited reference to those used by the company does
transactions which are currently not comply with the new
kept on accounting software (the provisions.
mobile application in our above Nowadays, it is
example). The second approach 3. There is a range of accounting
appears to be more practical and software available ranging practically impossible to
advisable. from an extremely basic avoid use of accounting
function to a complex
It may also be noted that section one which takes business software. Almost all
128 of the Companies Act
2013 (the Act) provides for the
decisions with the help of companies having
AI (Artificial Intelligence).
maintenance of the books of Different accounting software active businesses, use
accounts at a registered office or
at some other location and it also
would record the same
transaction in different ways
accounting software. The
provide that such records may be question here is whether,
by capturing or not capturing
kept in electronic form. It does the other dimensions of
not force a company to keep the the same transaction, and
that software has a
accounts in electronic form. therefore it would become feature of keeping audit
highly judgmental as to
Nowadays, it is practically
what would constitute and trail.
impossible to avoid use of

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applicability of the audit trail to a section 8 company beside recording audit trail (edit log)
feature, the management other companies if it maintains its facility and the same has been
should put in place other books of account on accounting operated throughout the year
controls, to ensure that the software. for all transactions recorded in
audit trail feature remains the software and the audit trail
operative continuously. The requirement of maintaining feature has not been tampered
the books of accounts on a with and the audit trail has been
5. For any software, the audit software which provide audit preserved by the company as per
trail data is a set of records trails feature was initially the statutory requirements for
like other records and applicable from the financial record retention”.
therefore the audit trail year starting from the 1st April
records are saved in the 2021. However, the MCA vide B. What is an Audit Trail?
same data base besides the notification No. 247 (E) dated
other records. Any direct 1st April 2021 has deferred the Audit trail is primarily used to
modification to the database application up to 1st April 2022. ensure integrity of electronic
will not be captured in the data. It is a set of system records
audit trail, secondly, the audit The companies must check generated by an accounting
trail records itself can be whether their accounting software containing details of
changed once an access to the software comply with this operations and modification to
database is available. requirement or not. If not, they a transaction from beginning
must upgrade or modify their to end. It is also referred as to
6. Any modification in the accounting software to ensure it audit log. It provides details on
database, not routed through complies. As per the amended the operations on a particular
user interface would not be rules, this requirement of using transaction in its chronological
recorded in the audit trail or an accounting software with audit order.
audit log. trail feature, will be applicable
from 1st April 2022, and therefore Audit trail is necessary for
A. Applicability the companies and accounting verification of different
software developers do have a elements of the transaction
Every company which uses reasonable time to upgrade their such as existence, completeness,
accounting software for systems. occurrence, and accuracy.
maintaining its books of account.
Another question it triggers is, Basically, it contains details such
So, the provision is applicable whether the auditors should as
to every company irrespective consider a situation where the
of size, nature and status except 1. Details about origin of the
accounting software adopted by
those companies which do records – date and time
the company is not compliant
not use accounting software. stamp.
with Companies (Accounts)rules
Traditional bookkeeping methods 2014, while drafting his audit
have now been enhanced by report?
computer programs that assist the
task with accuracy. Even a very The Ministry of Corporate
small company involved in simple affairs vide a notification G.S.R.
trading activity would be using 206(E) dated 24th March 2021, The companies must
mobile applications and other has amended The Companies check whether their
such primary accounting software (Audit and Auditors) Rules, 2014
which provides a basic platform which provides that, amongst accounting software
to address their business needs.
There could be a situation where
other things to be reported by
the auditors under the head
comply with this
though most of the transactions “Other Matters to be Included requirement or not.
are not kept in accounting in Auditors Report”, para (g) has
software and some to the records been inserted which ask auditor ..
If not, they must
are kept in spreadsheet software. upgrade or modify their
“(g) Whether the company has
The provision is also applicable used such accounting software accounting software to
to a one person company, small
company, dormant company and
for maintaining its books of
account which has a feature of
ensure it complies.

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2. Reference or copy of the basic question arises because different
records or documents based accounting software records the
on which the transaction is transaction in different ways
recorded – original and new and style. A complex accounting Audit trail is primarily
values. software would capture multiple
dimensions of a transaction,
used to ensure integrity
3. Details of approval of the whereas a basic accounting of electronic data.
transactions – designation of software would record the
approving person. transaction with primary details It is a set of system
4. Details of modification in the only. records generated
records of transaction – with by an accounting
reasons of change. Similarly, the method and

5. Identification of person
style of recording the audit software containing
trail and generating audit trail
involved – user ID. report would defer in each of details of operations
Some software provide special
the accounting software. Some
software simply highlight the
and modification to
reports that help the auditors in
the verification of the records.
changes whereas some software a transaction from
show changes for the given beginning to end.
However, there is a difference transaction but do not have
between the reports for the the facility to generate a report
auditors and audit trail. Such of the audit log. I think MCA 1. Whether the company
reports may or may not fall within or the ICAI should provide a has used such accounting
the definition of audit trail report. clarification about the form and software for maintaining its
style of the audit trail feature in books of account which has
C. Verification of Software an accounting software. a feature of recording audit
audit trail. trail?
In the absence of proper
The verification of audit trail is guidelines, it would be difficult 2. Whether such feature
neither a new area nor a new to determine which transactions has been operated
method of audit, in fact it is should be subjected to the audit throughout the year for all
part of regular audit exercise. log and for which transaction transactions recorded in
The auditor while conducting the records of audit trails are not the software?Whether the
verification of different audit necessary for the compliance of audit trail feature has been
assertions, verifies audit trail to these revised rules. tampered with?
ensure existence, completeness,
occurrence, accuracy etc. 3. Whether the audit trail
E. What type of report
However, the format of audit has been preserved by the
trail defers when it comes to should the accounting
company as per the statutory
the electronic data processing software provide? requirements for record
environment. retention?
The audit trail or audit log is
required to pinpoint the exact
D. Audit trail of each The new reporting requirement
person who has initiated or
transaction under The Companies (Audit
modified the transactions and
and Auditors) Rules, 2014 is
the basic records or documents
The notification has specifically applicable with effect from 1st
supporting the occurrence of the
clarified that the accounting April 2022, and therefore, the
transactions. It should present the
software should capture audit auditors, while issuing a report
details in sequential order of its
trail for each transaction to make on or after 1st April 2022, must
the software compliant of these occurrence. consider the new reporting
rules. requirement in the report and
F. Reporting requirement accordingly, comment on all four
The question of which type, in Auditor’s report. questions.
and nature of transactions are
to be covered under the system The auditor is asked four questions The audit plan for the verification
of audit trail generation. This under para (g) of rule 11. of the audit trail should include.

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Technology
1. Discussion with the IT team 5. Auditors require commenting
of the company, about the on whether the audit trail
functioning of the audit trail records were preserved by
feature and content of log the company for period In the absence of proper
report (audit trail) among
others.
as determined by the guidelines, it would be
Companies’ Act 2013.
difficult to determine
2. Verification of the report
generated from the system
Since the auditors are which transactions
specifically asked that
and checking that the report “Whether the audit trail should be subjected to
provided by the software
contains all necessary details has been preserved by the the audit log and for
company as per the statutory
to constitute it as a proper
requirements for record
which transaction the
audit trail.
retention”.The auditor is records of audit trails
3. The auditors have to required to comment on are not necessary for
comment on whether the preservation of audit trail
audit trail feature was in records of earlier years. the compliance of these
operation throughout the Reporting on the audit trail of revised rules.
year and all the transactions earlier periods would require
recorded are subjected to the auditors to check the
the audit trail module of the records of all earlier periods.
software. Besides, the auditors should software being used by the
also consider, company, even though, for the
If the audit trail feature is accounting period for which
hard coded and automatic, a. Any change or update of the report is being issued, the
the answer to this question the accounting software management of the company was
involves a low audit risk. in past. not bound to maintain audit trail.
In case there is an option
to enable or to disable this b. Adoption of new So far as it relates to big
feature, the auditor should software in recent past. business houses, which uses
test the other controls, in well-structured ERP like SAP
the system to ensure that the c. If the company is under
or MS Dynamics NAV, the new
feature was in continuous investigation under
operation through the audit requirement does not pose a
any provision of the
period. big question, as these ERPs are
Companies’ Act 2013,
already in compliance with the
the records should be
4. To answer the third question, requirements. It may pose a
kept for that period as
whether the audit trail challenge where the company
well.
feature has been tampered? uses and in-house developed ERP
This requires knowledge of or and ERP where this feature
G. At Last
the ISA audit and a detailed of audit trail was not given an
study of the operations of the The new duty cast on the importance for one or another
audit trail function. management to use a software reason.
that provides a feature of audit
The possibility of the trail and the new duty casted on Some browser-based accounting
audit trail feature being auditor to report on audit trail solutions available in market
tampered also poses a great are two separate provisions and do have a transaction tracking
audit risk, especially in a should be linked with each other. facility, but they do not provide
highly computerized audit a log report while other software
environment. The auditor While preparing the audit report have not given importance to
should consider this risk after 1st April 2022, the auditors the audit trail feature though it
while planning other audit have to comment on the audit gives some useful reports for the
areas. trail feature of the accounting auditors. 

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227

ACCOUNTANT’S BROWSER
“PROFESSIONAL NEWS & VIEWS PUBLISHED ELSEWHERE”
Index of some useful articles taken from Periodicals received during June- July 2021 for the reference of
Faculty/Students & Members of the Institute.

1. Accountancy 5. Management
NOCLAR proposals aim to help CPAs find Contributions of entrepreneurial orientation in
the right balance by Ken Tysiac. Journal of the use of agile methods in project management
Accountancy, June 2021, pp.14-19. by Mesquita Blas Garcia and Cristina Dai Pra
2. Audit Martens. Innovation and Management Review,
Vol.18/01, 2021, pp.17-33.
Making audits more effective through data
visualization by Nick Higginbotham and Innovation in the subsistence marketplace: An
Luke Nash. Journal of Accountancy, April/ analysis considering multiple concepts and
May-2021, pp.13-19. approaches by Vitor Koki da Costa Nogami
and Andres Rodriguez Veloso. Innovation
Reaching new standards by Gianfranco and Management Review, Vol.18/01, 2021,
Bonadies. A Plus, Vol.17/3, 2021, pp.24-31.
pp.2-16.
3. Economics
Moving from Human Resource Management
Effect of exchange rate uncertainty on bilateral to human asset management: A key to
trade performance in SAARC countries: A competitive advantage by Manish B.
gravity model analysis by Banna Banik and Raval and Ashish B. Gorvadiya. Chartered
Chandan Kumar Roy. International Trade, Secretary, Vol.51/06, June 2021, pp.100-102.
Politics and Development, Vol.5/1, 2021,
pp.32-50. Predictors and outcome of customer
satisfaction: Moderating effect of social trust
Eyes on the prize by John Loring, CPA
by Sara Javed and Md. Salamun Rashidin.
Canada, May/June-2021, pp.30-37.
Decision,Vol.48/3, 2021, pp.27-48.
Social capital and firms choice of financing
under credit constraints: Microeconomic 6. Taxation and Finance
evidence from Pakistan from Sana Ullah
and Mohammad Tariq Majeed. Decision, American rescue plan act enacts many
Vol.48/3, 2021, pp.3-13. tax provisions by Alistair M. Nevius, J.D.
Trade competiveness of India’s textile and Journal of Accountancy, April/May-2021,
apparel sector by T K Rout and Gordhan pp.20-22.
K Saini. Economic and Political Weekly, Revolutionizing the taxation experience
Vol.56/22, May 29, 2021, pp.55-62.
by Doris Chik and Eugene Yeung. A Plus,
4. Investment Vol.17/3, 2021, pp.8-13.

SEBI and sustainability reporting in Transfer pricing and advance pricing

India- Embracing the future by Pradeep Agreements in India by Rajiv V Shah
Ramakrishnan and Surabhi Gupta. Chartered and Ravisankar G. Chartered Secretary,
Secretary, Vol.51/06, June 2021, pp.27-33. Vol.51/06, June 2021, pp.96-99.

Full Texts of the above articles are available with the Central Council library, ICAI, which can be referred
on all working days. For further inquiries please contact on 011-30110419 and 011-30110420 or by
e-mail at library@icai.in.

www.icai.org THE CHARTERED ACCOUNTANT AUGUST 2021 111

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Legal Decisions
Income Tax under law; ITAT termed AO’s allegations of the
purchase and sale transactions being bogus and non-
DIRECT LD/70/13 ITAT Chennai: I.T.A.No.1562/ genuine as being baseless.
TAXES Chny/2019 The Dy. Commissioner of
Income Tax Vs. Kovai Media P.Ltd.
24/06/ 2021 LD/70/15; ITAT Mumbai: .I.T.A. No.5594/
Mum/2018 Arysta LifeScience India Limited
Assessee-Company is a start-up recognised by the Vs. The Asst. Commissioner of Income Tax
Department of Industrial Policy & Promotion and 17/06/2021
had issued equity shares at a premium of Rs. 124.67
per share valued as per the discounted cash flow Assessee earned management fees of Rs.1489 Lacs
(DCF) method; The AO held that valuation method from its two AEs however, the said amount was
was not in accordance with Rule 11UA and therefore reflected as Rs.1002.13 Lacs in Form 3CEB as filed
sought to tax the excess premium under u/s 56(2) by the assessee along with the return of income;
(viib); ITAT took note of CBDT circular dealing CIT(A) had enhanced assessee’s income by Rs.1489
with exemptions for start-ups from applicability of Lacs; ITAT noted that management fees of Rs.1489
section 56(2)(viib) and observed that exemption lacs earned by assessee stood credited to assessee’s
was available even in the cases where addition P&L Account and were thus already been considered
u/s 56(2)(viib) was made before the issuance of while computing assessee’s income and thus no
Notification dated 19/02/2019 subject to submission enhancement was warranted; ITAT explained
of prescribed declaration and fulfilment of necessary that that the figures in Form No.3CEB have been
conditions, which the Assessee was found to have reported on ‘net basis’ which at the most, could be an
fulfilled in the present case; ITAT affirmed CIT(A)’s inadvertent/ bona-fide/ oversight error.
view that section 56(2)(viib) was not applicable
to assessee.
LD/70/16; ITAT Mumbai: ITA No.487/Mum/2021
The Sardar Partapsingh Education Society
LD/70/14; ITAT Mumbai: ITA No.6322/Mum/2019 Vs. The Commissioner of Income Tax
Dy. Commissioner of Income Tax Vs. M/s. (Exemptions) 11/06/ 2021
Nirshilp Securities Pvt. Ltd 21/06/2021
ITAT held that merely because trust earns surplus
ITAT deletes disallowance of loss on account of it cannot be said to exist for profit; Provisions of
National Spot Exchange Limited (NSEL) scam section 13(1)(c) need not be looked into for claim
by holding it to be non-speculative in nature and of exemption u/s 10(23C)(vi); Assessee sought
being allowable as a business loss u/s 28; Assessee is exemption u/s 10(23C)(vi) for which the provisions
engaged in business of trading in shares, Assessee had of section 13(1)(c) need not be looked into as it
purchased and sold commodities on the electronic is applicable if exemption is claimed u/s 11/12;
exchange platform by trading in the paired trader’s Exemption u/s 10(23C)(vi) was denied by the CIT(E)
contracts and used to be unaware of the identity of the on the grounds that the Assessee had earned surplus,
buyer/ seller while entering into the contract; In 2013 paid rent to Trustees for land of the school building;
the NSEL scam was exposed wherafter a significant Mere excess of income over expenditure cannot be
shortage of stock was reported by an independent decisive of trust existing solely for profits.
auditor in NSEL’s accredited warehouses and the
assessee had incurred a loss/cost of Rs.87.93 Cr; ITAT LD/70/17; Delhi High Court: CM No. 18316/2021
noted that assessee had actually made payment of Gurgaon Realtech Limited Vs. National
Rs. 87.93 Cr towards cost of commodities for which Faceless Assessment Centre 04/06/ 2021
no stock was received; AO erred in interpreting the
meaning of “speculative transaction” u/s 43(5) and Assessment order passed u/s 143(3) for AY 18-19 set
further in applying the test of actual delivery without aside by the Delhi High Court observing that after
first satisfying whether a contract for purchase and 01.04.2021 the assessment order could have only been
sale falls within the ambit of a contract envisaged passed in consonance with the provisions of Section
Contributed by CA. Sahil Garud, GST & Indirect Taxes Committee (CA. Mandar Telang), Disciplinary Directorate and ICAI’s Editorial Board Secretariat. For details please visit
Editorial Page webpage at https://www.icai.org/post/editorial-board. Readers are invited to send their comments on the selection of cases and their utility at eboard@icai.in. For full
judgement write to eboard@icai.in.

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144B; Assessee had filed an appeal before the CIT(A) remuneration beyond the statutory limit of Rs.
only to ensure that the time period to file the appeal 48 lacs prescribed under the Companies Act for
is not crossed, before simultaneously challenging the the assessee; In its return of income, the assessee
validity of the assessment order by a writ petition; reduced the entire remuneration of Rs.2.76 Cr. paid
As per Revenue, the writ was not maintainable since to the director while treating the receipt as capital
appeal was also filed and pending; High Court held grant; AO treated the grant as a benefit taxable under
that the assessment order being without jurisdiction, the general provisions of Sec. 56(1); ITAT allowed
was thus non-est in the eyes of law writ was thus Revenue’s appeal noting that assessee had claimed
maintainable. the entire payment of Rs. 2.76 Cr. as expenditure in
its return of income without taking credit of the sum
received from the holding company; Separately ITAT
LD/70/18; ITAT Mumbai: ITA No.7692/ allowed deduction of leave encashment salary noting
Mum/2019 IDBI Bank Limited Vs. The Asst. that leave encashment is not a statutory liability but
Commissioner of Income Tax 31/05/ 2021 a contractual liability and hence does not attract
For AY 2007-08, assessee filed a return of income Section 43B.
declaring a loss of Rs.155 Cr.; The AO had dropped
assessment proceedings which were initiated pursuant LD/70/21; Madras High Court: W.P.No.32751
to issuance of notice u/s 143(2) noting that return of of 2017 Durr India Private Limited Vs. The
income was invalid; In revisionary proceedings u/s Asst. Commissioner of Income Tax
264, CIT directed AO to treat assessee’s ITR-V as 27/05/ 2021
valid since it was physically furnished as signed by
Managing Director of assessee; AO followed the said High Court held that that once the case was remitted
direction however still disallowed the assessee from back, it was incumbent to pass a draft assessment
carrying forward the loss of Rs.155 Cr; ITAT directed order u/s.143 (3) r.w.s. 92CA(4) and Sec144C(1);
to allow the benefit of carry forward of loss by When the law mandates a particular thing to be
holding that the AO in the order giving effect to CIT’s done in a particular manner, then it has to be done
directions travelled beyond the scope of directions
in that manner; Final order in second round (after
by disentitling the assessee from carrying forward
the loss. matter was remanded back) was passed by Revenue
by ‘bypassing’ statutory safeguards prescribed under
the IT Act and hence High Court remitted the case
LD/70/19; ITAT Ahmedabad: ITA No. 405/ back with a direction to pass draft assessment order
AHD/2020 Ashokbhai kanubhai Patel within period of 3 months from date of receipt of
Vs.The Asst. Commissioner of Income Tax this order.
31/05/2021
Section 54B does not require the Assessee to carry LD/70/22; ITAT Indore: ITA No. 477/Ind/2013
out agricultural operations himself; ITAT allows Swastik Coal Corporation Pvt Ltd.
exemption u/s 54B to the assessee-non-resident; The Vs. The Asst. Commissioner of Income Tax
assessee with his father and brother sold an agricultural 20/05/ 2021
land for Rs.16.98 Cr. out of which Assessee’s share
was of Rs.7.24 Cr. and he claimed exemption u/s 54B Before ITAT, the assessee claimed that notice u/s
of Rs.6.64 Cr in AY 2016-17 on account of purchase 143(2) served upon it for AY 2008-09 was not in
of another land for agricultural operations; Onus is confirmation of the procedure laid down in Sec. 282;
upon the revenue to prove that the concerned land Revenue claimed to have served the notice through
was not used for the purpose of agricultural operations
speed post and submitted the photocopy of the Speed
by bringing tangible material on record which can be
used against the assessee and against the form 7/12 Post envelope as proof on record; ITAT observed that
along with form 8 available on record. Revenue was unable to prove the name/ designation/
identification of the person to whom the notice
was served and there was no concrete evidence
LD/70/20; ITAT Mumbai: ITA No. 2668/ produced by the Revenue with regard to the services
Mum/2018The Dy. Commissioner of Income of notice; ITAT accepted assessee’s contention
Tax Vs. M/S GBTL Limited 28/05/ 2021
that the signature of the recipient does not belong
Assessee-Company received Rs. 2.27 Cr. from its to any of the officer/director or employee of
holding company in order to pay the director’s the company.

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INDIRECT GST it is immaterial whether such a trade or commerce or

TAXES such activity is for a pecuniary benefit or not.
LD/70/23 [2021-TIOL-1505-HC-MAD-
GST], Greenwood Owners Association
Vs UOI, 1-07-2021. LD/70/25 [2021-TIOL-395-CESTAT-MAD]
Commissioner of Customs Vs M/S Angel
Exemption under entry No. 77 of the Exemption Starch and Food Pvt Ltd.
Notification No.12/2017-CTR, towards the
contributions made to Resident Welfare Association Where the law contains the provisions for the
(RWA) for sourcing of goods and services from a amendment to the shipping bills, and where there
third person for the common use of the members of the amendments are genuine, the department cannot
RWA applies even to the cases where the amount of deny the legal right to amend the details in the
contribution exceeds the monetary limit prescribed shipping bill.
in the said notification i.e., Rs.7,500. However, the
maximum exemption would be up to an amount of
Rs.7,500 per month per member. LD/70/26 [2021-TIOL-398-CESTAT-BANG]
M/S Automotive Marketing Pvt Ltd. Vs
Commissioner of Central Tax And Central
LD/70/24 [2021-TIOL-395-CESTAT-MAD] Excise, Cochin 07-07-2021
In The High Court Of Gujarat At
Ahmedabad Nagri Eye Research CA certificate is believed to be issued after sufficient
Foundation Vs Union of India 09-07-21 verification of records and thus the evidentiary value
of the same should not be challenged, in cases where
The sale of medicines by a charitable trust to outdoor such a certificate is issued in refund matters to the
patients, even at discounted rates amounts to effect that incidence of tax has not been passed on to
business since as per section 2(17) of the CGST Act, the customers.

Disciplinary Case
confirmation of converting unsecured loans into
capital (Corpus Fund). There was an unsecured
loan of the Complainant amounting to Rs.23.70
Lakhs in the Society wherein the Respondent was
the Auditor and he did not act diligently to obtain
the confirmation from the Complainant before
certifying conversion of the same into Corpus
Fund. The same fact was also got confirmed
from the witness (President of the Society). The
Conversion of unsecured loan by Auditor into witness submitted that the money was never being
capital i.e., corpus fund without obtaining borrowed; hence there is no question of taking
confirmation. Held, Respondent is guilty of concurrence from the Complainant but from
Professional misconduct under Clause (7) of the Respondent’s point of view it was borrowing,
Part I the Second Schedule to the Chartered recorded in books of accounts. The Committee
Accountants Act 1949. further noted that Respondent accepted his guilt/
mistake that confirmation was not sought by him
Held from the Complainant. In view of above noted
In the instant case, the charge against the facts, the Committee held that the Respondent was
Respondent is that he manipulated the Balance grossly negligent in performing his professional
Sheet of the “Society” for the year 2013-2014 to duties. He is guilty of professional and other
wipe out entries of unsecured loans and produced misconduct falling within the meaning of Clause
false evidence to SHO and investigation officer. (2) of Part IV of First Schedule and Clause (7) of
Further allegation is that he does not obtain any Part I of the Second Schedule to the Chartered
confirmation from the Complainant to transfer the Accountants Act, 1949.
Unsecured Loans to the Corpus Fund of the Society.
The Committee observed that there is mistake on Mrs. Namita Gupta Vs CA. Kulbhushan Garg (PPR-
the part of the Respondent for not obtaining the /341//2014-DD/362/2014/DC/527/2017)

114 THE CHARTERED ACCOUNTANT AUGUST 2021 www.icai.org

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Circulars/Notifications
Given below are summarised important Circulars and Notifications issued by the CBDT, CBIC-GST and
FEMA since the publication of the last issue of the journal, for information and use of members. Readers
are requested to use the citation/website or weblink to access the full text of desired circular/notification.
Suggestions on this column can be submitted at eboard@icai.in

DIRECT I. NOTIFICATIONS The detailed Notification can be downloaded from

TAXES the link below:
1. Amendment in Rule 8AA, insertion of new
Rule 8AB and Form No. 5C vide Income-tax https://www.incometaxindia.gov.in/communications/
(18th Amendment), Rules, 2021 - Notification notification/notification_77_2021.pdf
No. 76/2021, dated 02-07-2021
3. Various assessees notified u/s 10(46) - Notification
Vide this notification, a new sub-rule (5) has No. 78,80&81/2021, dated 09-07-2021 & 14-07-2021
been inserted in Rule 8AA (specifying method of
determination of period of holding of capital assets ‘Haryana Building and Other Construction Workers
in certain cases). Rule 8AA(5) provides the rules Welfare Board’ (PAN AAATH6995H), ‘Haryana
for determination of capital asset as long term or Labour Welfare Board’ (PAN AAATH2451C) &
short term capital assets in case the amount which
‘Himachal Pradesh Computerization of Police
is chargeable to income-tax as income of specified
entity under section 45(4) under the head “Capital Society’, (PAN AABAH0360G) are notified for the
gains”. New rule 8AB has been inserted in the Income- purposes of section 10(46) in respect of specified
tax Rules, 1962 to provide rules regarding attribution income subject to specified conditions for AYs 2021-
of income taxable under section 45(4) to the capital 22 to 2024-25 and for the periods as specified in the
assets remaining with the specified entity, under respective notifications.
section 48. A new Form No. 5C has been introduced
to be filed by a specified entity furnishing details of The detailed Notification can be downloaded from
amount attributed to capital asset remaining with the the link below:
specified entity. https://www.incometaxindia.gov.in/communications/
The detailed Notification can be downloaded from notification/notification_78_2021.pdf
the link below: https://www.incometaxindia.gov.in/communications/
https://www.incometaxindia.gov.in/communications/ notification/notification_80_2021.pdf
notification/notification_76_2021.pdf
https://www.incometaxindia.gov.in/communications/
2. New Rule 8AC notified vide Income - tax (19 th notification/notification_81_2021.pdf
Amendment), Rules, 2021 - Notification No. 77/2021,
dated 07-07-2021 4. M/s Patanjali Research Foundation Trust approved
for the purposes of section 35(1)(ii) - Notification No.
Finance Act 2021 amended section 50 by inserting a 79/2021, dated 12-07-2021
proviso to the effect that in a case where goodwill of
a business or profession forms part of a block of asset M/s Patanjali Research Foundation Trust, Haridwar
for AY beginning on 01.04.2020 and depreciation (PAN:-AABTP8183E) approved for the purposes of
thereon has been obtained by the assessee under the section 35(1)(ii) r.w.r. 5C & 5D under the category
Act, the written down value of that block of asset and “Research Association” for Scientific Research from
short term capital gain, if any, shall be determined in AY 2022-23 to 2027-28.
such manner as may be prescribed. Accordingly, vide
this notification, a new Rule 8AC laying down manner The detailed Notification can be downloaded from
of computation of short term capital gains and written the link below:
down value u/s 50 where depreciation on goodwill
has been obtained is inserted in the Income-tax https://www.incometaxindia.gov.in/communications/
Rules, 1962. notification/notification_79_2021.pdf

(Matter on Direct and Indirect Taxes, is contributed by Direct Taxes Committee, GST & Indirect Taxes Committee and Corporate Laws and Corporate Governance Committee of ICAI
respectively. FEMA updates by CA. Manoj Shah, CA Hinesh Doshi and CA. Sudha G. Bhushan)

www.icai.org THE CHARTERED ACCOUNTANT AUGUST 2021 115

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II. CIRCULARS (b) Calculation of threshold for the financial year

2021-22
1. Circular regarding use of functionality under
Section 206AB and 206CCA of the Income-tax Act,
1961 - Circular No. 11/2021, dated 21-06-2021 (c) Adjustment for GST, purchase returns

Vide this Circular, the CBDT had briefed about the (d) Whether non-resident can be buyer under
logic of the new functionality “Compliance Check section 194Q of the Act
for Sections 206AB & 206CCA” being made available
on the reporting portal (https://report.insight.gov. (e) Whether tax is to be deducted when the seller is
in/) of the Income-tax department for tax deductors a person whose income is exempt
and collectors who are liable for compliance of the
provisions of section 206AB and 206CCA w.e.f. (f ) Whether tax is to be deducted on advance payment
01.07.2021. Further, an Order u/s 138(1)(a)(i) has also
been issued simultaneously directing DGIT(Systems) (g) Whether provisions of section 194Q of the Act
be the specified income-tax authority for furnishing shall apply to buyer in the year of Incorporation
information to the ‘Tax Deductor/Tax Collector’,
having registered in the reporting portal of the Project (h) Whether provisions of section 194Q of the Act
Insight through valid TAN, to identify the ‘Specified shall apply to buyer if the turnover from business
Persons’ for the purposes of section 206AB and is 10 crore or less
206CCA through the aforesaid functionality. Also, the
procedure to be followed for sharing of information (i) Cross application of section 194-0, sub-section
with tax deductors/collectors for the same is laid down (lH) of section 206C and section 194Q of the Act
vide issue of Notification in this regard.

The detailed Circular and Order can be The detailed Circular can be downloaded from the
downloaded from the link below: link below:
https://www.incometaxindia.gov.in/communications/ https://www.incometaxindia.gov.in/communications/
circular/circular_11_2021.pdf circular/circular_13_2021.pdf
https://www.incometaxindia.gov.in/Lists/Latest%20News/
3. Guidelines under section 9B and sub-section (4) of
Attachments/453/order_206AB_and_206CCA_complaince_
check_MiscComm_21_6_21.pdf section 45 of the Income-tax Act, 1961 - Circular No.
14/2021, dated 02-07-2021
https ://w w w.incometa xindia .gov.in/Lists/P re ss%20
Releases/Attachments/941/Press-Release-Clarification-for- Section 9B(4) provides that if any difficulty arises
the-use-of-functionality-under-section-206AB-206CCA-
dated-23-06-2021.pdf in giving effect to the provisions of this section and
section 45(4), the CBDT may, with the approval of
https://www.incometaxindia.gov.in/communications/ the Central Government, issue guidelines for the
notification/notification01_2021-compliance-check-
functionality.pdf purposes of removing the difficulty. The CBDT, has
issued the guidelines in this regard as specified in
2. Guidelines under section 194Q of the Income-tax this Circular. Guidelines have, inter alia, clarified that
Act, 1961 - Circular No. 13/2021, dated 30-06-2021 rule 8AB also applies to capital assets forming part
Section 194Q(3) empowers the CBDT to issue of block of assets. Wherever the terms capital asset
guidelines for the purpose of removing difficulties. is appearing in the rule 8AB, it refers to capital asset
Vide this Circular, in exercise of power contained u/s whose capital gains is computed under section 48 as
194Q(3), the CBDT, with the approval of the Central well as capital asset forming part of block of assets.
Government, has issued the guidelines specified in Further, wherever reference is made for the purposes
this Circular. These guidelines at some places have of section 48, such reference may be deemed to include
also tried to remove difficulties in implementing the reference for the purposes of section 43(6)(c) and
provisions of section 194-O and section 206C(1H)
section 50.
using power contained in section 194-O(4) and
section 206C(1-I) of the Act. Guidelines have been The detailed Circular can be downloaded from the
issued in respect of the following:
link below:
(a) Applicability on transactions carried through https://www.incometaxindia.gov.in/communications/
various Exchanges circular/circular_14_2021.pdf

116 THE CHARTERED ACCOUNTANT AUGUST 2021 www.icai.org

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III. PRESS RELEASES/INSTRUCTIONS/OFFICE incometax.gov.in as the “designated portal” for the

MEMORANDUM/ORDER purpose of Faceless Penalty in terms of sub-para(xi)
of Para 2 of National Faceless Penalty Scheme,2021
1. Income Tax Department conducts searches in (Notification No. 2/2021 dated 12.01.2021).
Raipur - Press Release, dated 24-06-2021
The complete text of the above Order(s) can be
Specific actionable intelligence was received by the
downloaded from the link below:
Income Tax Department that a set of people were to
https://www.incometa xindia.gov.in/Lists/Latest%20
carry out an outside-the-books cash transaction of N e w s / A t t a c h m e n t s / 4 5 6 / We b _ P o r t a l _ F a c e l e s s _
a substantial amount at Raipur, Chhattisgarh. Upon Assessment_29_6_21.pdf
further investigations, the input was found to be https://www.incometa xindia.gov.in/Lists/Latest%20
credible and the hawala dealer was identified. News/Attachments/457/Web_Portal_Faceless_Penalty_
Scheme_29_6_21.pdf
The complete text of the above Press Release can
be downloaded from the link below: 4. CBDT grants further relaxation in electronic filing
of Income Tax Forms 15CA/15CB – Press Release,
https://www.incometaxindia.gov.in/Lists/Press%20Releases/
dated 05-07-2021
Attachments/944/PressRelease_ITD_conducts_searches_in_
Raipur_24_6_21.pdf
The CBDT has decided that the taxpayers can
2. Government grants further extension in timelines submit Forms 15CA/15CB in manual format to the
of compliances & also announces tax exemption for authorized dealer till 15.07.2021. Authorized dealers
expenditure on COVID-19 treatment and ex-gratia are advised to accept such Forms till 15.07.2021 for
received on death due to COVID-19 - Press Release, the purpose of foreign remittances. A facility will be
dated 25-06-2021 provided on the new e-filing portal to upload these
Government has decided to provide income-tax forms at a later date for the purpose of generation of
exemption to the amount received by a taxpayer the Document Identification Number.
for medical treatment from employer or from any
The complete text of the above Press Release can
person for treatment of COVID-19 during FY 2019-
20 and subsequent years. Further, in order to ease be downloaded from the link below:
compliances to be made by taxpayers, reliefs are https ://w w w.incometa xindia .gov.in/Lists/P re ss%20
being provided through Notifications nos. 74/2021 R e l e a s e s / A t t a c h m e n t s / 9 4 6 / P r e s s R e l e a s e _ C B DT _
g rant s_f ur ther_rel a x ation_in_electronic_ filing_of_
& 75/2021 dated 25.06.2021 & Circular no. 12/2021 ITForms_15CA_15CB_5_7_21.pdf
dated 25.06.2021 by extending the timelines for
making such compliances. 5. Processing of returns with refund claims under
section 143(1) of the Income-tax Act, 1961 beyond
The complete text of the above Press Release can the prescribed time limits in non-scrutiny cases –
be downloaded from the link below: Order u/s 119, dated 05-07-2021
https://incometaxindia.gov.in/Lists/Press%20Releases/
Attachments/945/PressRelease_Government_grants_ To mitigate genuine hardship being faced by the
further_extension_in_timelines_compliances_25_6_21.pdf taxpayers, the CBDT, by virtue of its powers u/s 119, has
https://www.incometaxindia.gov.in/communications/ relaxed the time-frame prescribed in second proviso to
circular/circular_no_12_2021.pdf section 143(1) and directed that all validly filed returns
https://www.incometaxindia.gov.in/communications/ up to AY 2017-18 with refund claims, which could not
notification/notification_74_2021.pdf be processed under u/s 143(1) and which have become
https://www.incometaxindia.gov.in/communications/ time-barred, subject to the exceptions mentioned in this
notification/notification_75_2021.pdf Order, can be processed now with prior administrative
3. Order designating web portal www.incometax.gov.in approval of Pr.CCIT/CCIT concerned. The intimation
as the “designated portal” for the purpose of Faceless of such processing u/s 143(1) can be sent to the assessee
Assessment Scheme & Faceless Penalty Scheme - F. concerned by 30.09.2021.
No. CIT (NaFAC)-1/2021-22/203&204, dated 29-06-2021
CBDT has issued Order for designating the web portal The complete text of the above Order can be
www.incometax.gov.in as the “designated portal” for the downloaded from the link below:
purpose of Faceless Assessment in terms of Explanation https://www.incometaxindia.gov.in/Lists/Latest%20News/
(i) to section144B(1). Simultaneously, CBDT has Attachments/461/Processing_of_returns_with_refund_
issued another Order designating the web portal www. claims_MiscComm_5_7_21.pdf

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6. Income Tax Department conducts searches in CIRCULAR

Hyderabad – Press Release, dated 09-07-2021
2. Clarification regarding applicability of GST on
Income Tax Department carried out a search supply of food in Anganwadis and Schools
and seizure operation on 06.07.2021on a group
based in Hyderabad. The group is engaged in The CBIC vide Circular No. 149/05/2021 dated
real estate, construction, waste management and 17th June, 2021 has clarified that services provided
infrastructure. to an educational institution by way of serving of
food (catering including mid- day meals) is exempt
The complete text of the above Press Release can from levy of GST irrespective of its funding from
be downloaded from the link below: Government grants or corporate donations [under
https://www.incometaxindia.gov.in/Lists/Press%20Releases/ Entry 66(b)(ii) of Notification No. 12/2017-Central
Attachments/947/PressRelease_ITD_conducts_searches_in_ Tax (Rate) dated 28th June, 2017].
Hyderabad_9_7_21.pdf

7. Income Tax Department conducts surveys As per said entry 66, any catering service provided
in Bengaluru – Press Release, dated 13-07- to an educational institution is exempt from GST.
The entry further mentions that such exempt service
2021
includes mid-day meal service as specified in the
ITD carried out a survey operation on 08.07.2021 entry. The scope of this entry is thus wide enough to
on two business premises in Bengaluru on cover any serving of any food to a school, including
one of India’s leading manpower services pre-school.
provider. The assessee has been claiming huge
Further, an Anganwadi inter alia provides pre-
deduction u/s 80JJAA which incentivises new
school non-formal education. Hence, aganwadi is
employment generation, subject to fulfillment
covered by the definition of educational institution
of certain conditions such as emoluments paid (as pre-school). Hence, serving of food to anganwadi
to the employee (which should be less than shall also be covered by said exemption, whether
Rs. 25,000 per month) and number of days of sponsored by Government or through donation from
employment etc. corporates.
The complete text of the above Press Release 3. Clarification regarding applicability of GST
can be downloaded from the link below: on the activity of construction of road where
https://www.incometaxindia.gov.in/Lists/Press%20 considerations are received in deferred payment
Releases/Attachments/948/Press-Release-IT- (annuity)
D epar tment-conduct s-sur ve ys-in-Bengalur-
dated-14-07-2021.pdf The CBIC vide Circular No. 150/06/2021 dated
17th June, 2021 has clarified that Entry 23A of
Notification No. 12/2017-Central Tax (Rate)
Significant Notifications and Circulars issued in dated 28th June, 2017 does not exempt GST on the
GST and Customs from 16th June, 2021 to 15th annuity (deferred payments) paid for construction
July, 2021 of roads.

INDIRECT GST Service falling under heading 9967 (service code),

TAXES by way of access to a road or a bridge on payment of
NOTIFICATIONS
annuity is exempt vide said Entry 23A. Heading 9967
1. Penalty for non-compliance with the covers “supporting services in transport” under which,
provisions of Dynamic QR Code to be waived off code 996742 covers “operation services of National
till 30th September Highways, State Highways, Expressways, Roads
& streets; bridges and tunnel operation services”.
The CBIC vide Notification No. 28/2021 CT dated 30th
June, 2021 has waived penalty payable by a registered Entry 23 of said notification exempts “service by way
person under section 125 of the CGST Act, 2017 for of access to a road or a bridge on payment of toll”.
not complying with the requirement of Dynamic QR Together the Entries 23 and 23A exempt access to
Code as notified vide Notification No. 14/2020-CT road or bridge, whether the consideration is in the
dated 21st March, 2020, till 30th September, 2021. form of toll or annuity [heading 9967].

118 THE CHARTERED ACCOUNTANT AUGUST 2021 www.icai.org

 Legal Update
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Services by way of construction of road fall under Notification No. 11/2017-Central Tax (Rate)
heading 9954. This heading inter alia covers general dated 28th June, 2017 and attract GST at the rate
construction services of highways, streets, roads of 18%.
railways, airfield runways, bridges and tunnels.
Consideration for construction of road service may 6. Clarification regarding GST on milling of wheat
be paid partially upfront and partially in deferred into flour or paddy into rice for distribution by
annual payments (and may be called annuities). State Governments under PDS

It has been clarified that plain reading of Entry 23A Issue: Whether composite supply of service by
makes it clear that it does not cover construction way of milling of wheat into wheat flour, along
of road services (falling under heading 9954), even with fortification, by any person to a State
if deferred payment is made by way of instalments Government for distribution of such wheat flour
(annuities). under Public Distribution System is eligible for
exemption under entry No. 3A of Notification No.
4. Clarification regarding GST on supply of 12/2017-Central Tax (Rate) dated 28.06.2017? If
various services by Central and State Boards not, then what would be the applicable rate of GST on
(such as National Board of Examination)
such milling?
The CBIC vide Circular No. 151/07/2021 dated 17th
June, 2021 has been clarified that: Entry No. 3A exempts “composite supply of goods
and services in which the value of supply of goods
i) GST is exempt on services provided by Central constitutes not more than 25 per cent of the value of
or State Boards (including the boards such the said composite supply provided to the Central
as National Board of Examination) by way Government, State Government or Union territory
of conduct of examination for the students, or local authority or a Governmental authority or a
including conduct of entrance examination for Government Entity by way of any activity in relation
admission to educational institution [under Entry to any function entrusted to a Panchayat under article
No. 66 (aa) of Notification No. 12/2017-Central 243G of the Constitution or in relation to any function
Tax (Rate) dated 28th June, 2017]. entrusted to a Municipality under article 243W of the
Constitution”
ii) GST is also exempt on input services relating to
admission to, or conduct of examination, such as The Clarification: The CBIC vide Circular No.
online testing service, result publication, printing 153/09/2021 dated 17th June, 2021 has clarified that-
of notification for examination, admit card and
questions papers etc., when provided to such i) Public Distribution specifically figures at entry 28
Boards [under Entry No. 66(b)(iv) of Notification
of the 11th Schedule to the Constitution, which lists
No. 12/2017-Central Tax (Rate) dated 28th June,
the activities that may be entrusted to a Panchayat
2017].
under Article 243G of the Constitution. Hence,
iii) GST at the rate of 18% applies to other services said entry No. 3A would apply to composite supply
provided by such Boards, namely of providing of milling of wheat and fortification thereof by
accreditation to an institution or to a professional miller, or of paddy into rice, provided that value
(accreditation fee or registration fee) so as of goods supplied in such composite supply (goods
to authorise them to provide their respective used for fortification, packing material etc.) does
services. not exceed 25% of the value of composite supply.
It is a matter of fact as to whether the value of
5. Clarification regarding rate of tax applicable on
goods in such composite supply is up to 25% and
construction services provided to a Government
requires ascertainment on case-to-case basis.
Entity, in relation to construction such as of a
ropeway on turnkey basis
ii) In case the supply of service by way of milling of
The CBIC vide Circular No. 152/08/2021 dated wheat into flour or of paddy into rice, is not eligible
17th June, 2021 has clarified that works contract for exemption under Sl. No. 3A for the reason that
service provided by way of construction such value of goods supply in such a composite supply
as of rope way fall under Entry no. 3(xii) of exceeds 25%, then the applicable GST rate would

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be 5% if such composite supply is provided to a CUSTOMS

registered person, being a job work service (entry
CIRCULAR
No. 26 of Notification No. 11/2017- Central Tax
(Rate) dated 28.06.2017). 10. Implementation of RMS for processing of
Duty Drawback claims
Combined reading of the definition of job-work
[section 2(68), 2(94), 22, 24, 25 and section 51] makes Risk Management System (RMS) in export was
it clear that a person registered only for the purpose introduced with effect from 15.7.2013 to be
of deduction of tax under section 51 of the CGST Act implemented in two phases. In the first phase, RMS
is also a registered person for the purposes of the said processed the data and provided output to ICES up to
entry No. 26, and thus said supply to such person is goods examination stage. The CBIC vide Circular No.
also entitled for 5% rate. 15 /2021-Customs dated 15th July, 2021 has issued
the implementation of the second phase, wherein
7. Clarification regarding GST on service supplied
by State Government to their undertakings or RMS will process the shipping bill data after the
PSUs by way of guaranteeing loans taken by Export General Manifest (EGM) is filed electronically
them and will provide required output to ICES for selection
of shipping bills for risk-based processing of duty
The CBIC vide Circular No. 154/10/2021 dated 17th drawback claims.
June, 2021 has re-iterated that guaranteeing of loans
by Central or State Government for their undertaking Detailed Circular can be accessed at: Circular-No-
or PSU is specifically exempt under entry No. 34A of 15-2021.f;jsessionid=B01368EC244C06A6D59640C
Notification No. 12/2017-Central Tax (Rate) dated A0E3212C0 (cbic.gov.in)
28.06.2017
11. Clarification for improvements in Faceless
8. Clarification regarding GST rate on laterals/ Assessment
parts of Sprinklers or Drip Irrigation System
The CBIC has comprehensively reviewed the
The CBIC vide Circular No. 155/11/2021 dated 17th implementation of Faceless Assessment and has taken
June, 2021 has clarified that laterals/parts to be used various measures required for expediting the pace
solely or principally with sprinklers or drip irrigation of assessment and Customs clearance of imported
system, which are classifiable under heading goods in respect. Circular No.14 /2021-Customs
8424, would attract a GST of 12%, even if supplied dated 14th July,2021
separately. However, any part of general use, which
gets classified in a heading other than 8424, in terms Detailed Circular can be accessed at :
of Section Note and Chapter Notes to HSN, shall Circular-No-14-2021. essionid= C4E1B7BA14CF94
attract GST as applicable to the respective heading. E72A24B515D7BE5D57 (cbic.gov.in)
9. Clarification in respect of applicability of
Dynamic Quick Response (QR) Code on B2C FEMA A.P. (DIR Series) Circular No. 07 dated
invoices and compliance of Notification No. June 17, 2021
14/2020- CT dated 21.03.2020
Liberalized Remittance Scheme for
The CBIC vide Circular No. 156/12/2021-GST Resident Individuals – Reporting:
has clarified various issues relating to applicability
of Dynamic Quick Response (QR) Code on B2C AD bank were required to upload the data in respect
(Registered person to Customer) invoices and of number of applications received and total amount
compliance of Notification No. 14/2020-Central Tax, remitted under LRS on Online Return Filing Scheme
dated 21st March, 2020. Accordingly, the Circular No. (ORFS).
146/2/2021-GST, dated 23.02.2021 issued earlier in
this regard stands modified to this extent. It has now been decided to collect this information
in XBRL system instead of the ORFS. AD Bank shall
Detailed circular can be accessed at: https:// upload the requisite information on XBRL system on
www.cbic.gov.in/resources/htdocs-cbec/gst/156-12- or before 5th of succeeding month from Jul 01, 2021
2021%20GST%20Circular.pdf onwards.

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Notification, 22nd June, 2021

No. 1-CA(7)/196/2021 —Whereas certain draft (b) in any of the financial, commercial, industrial
regulations further to amend the Chartered undertakings with minimum fixed assets or
Accountants Regulations, 1988, were published minimum total turnover or minimum paid-up
as required by sub-section (3) of section 30 of the share capital as may be approved by the Council
Chartered Accountants Act, 1949 (38 of 1949), in the from time to time.
Gazette of India, Extraordinary, Part III, Section 4,
dated the 23rd September, 2020, inviting objections (3) An articled assistant shall inform to his principal
and suggestions from persons likely to be affected about such industrial training at least three
thereby, before the expiry of forty-five days from the months before the date on which such training is
date on which the said Gazette containing the said to commence.
notification is made available to the public; (4) The period of industrial training may be between
And Whereas the said Gazette was made available to nine months to eighteen months.
the public on the 23rd September, 2020; (5) The industrial training shall be received under
And Whereas the objections and suggestions received a member of the Institute. An Associate who
from the public on the said draft regulations have has been a member for a continuous period of
been considered by the Council of the Institute; at least three years shall be entitled to train one
industrial trainee at a time and a fellow shall be
Now, Therefore, in exercise of the powers conferred by entitled to train two industrial trainees at a time,
sub-section (1) of section 30 of the said Act, the Council, whether such trainees be articled assistants or
with the approval of the Central Government, hereby audit assistants.
makes the following regulations further to amend the
Chartered Accountants Regulations, 1988, namely:- Provided that in the case of the Central or
State Governments, Central statutory and
1. Short title and Commencement, - judicial authorities, regulatory bodies, banking
companies and other departments of Central or
(1) These regulations may be called the Chartered
State Governments, Institution or Organisation,
Accountants (Amendment) Regulations,
the industrial training shall be imparted by an
2021.
officer who is also a member of the Institute
(2) They shall come into force on the date of of that Government, Authority, Body, Bank,
their publication in the Official Gazette. Department of Central or State Government,
Institution or Organisation, as may be recognised
2. In the Chartered Accountants Regulations, 1988, - by the Council from time to time.
(i). for regulation 51, the following regulation shall Provided further that the entitlement of such
be substituted, namely:- officer who is also a member of the Institute to
train the industrial trainee shall be determined by
“51. (1) An articled assistant who has passed the the Council from time to time keeping in view the
Intermediate (Professional Competence) number of years of service and the nature of services
Examination or Professional Education being rendered by the department concerned.
(Examination-II) or Intermediate examination
and has completed a minimum of eighteen (6) An agreement of training shall be entered into in
months of practical training according to these the form approved by the Council.
regulations shall be eligible for industrial training.
(7) On completion of the industrial training, the
(2) (a) An articled assistant may, serve as an member shall issue a certificate in the form
industrial trainee for a period specified in sub- approved by the Council to the trainee and
regulation (4) in the offices of the Central or forward a copy of the same to the Secretary.
State Governments, Central statutory and
judicial authorities, regulatory bodies, banking (8) The period of industrial training referred under
companies and such other departments of this regulation, shall be treated as service under
Central or State Governments, Institution or articles for all purposes of these Regulations,
Organisation as may be decided by the Council provided the certificate referred to in sub-
from time to time; or regulation (7) is produced.

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(9) Subject to the provisions of sub-regulation (1), an (ii). in regulation 54, in sub-regulation (5), for the
articled assistant may also serve as an industrial words “one year”, the words “eighteen months”
trainee for a period from six to eighteen months shall be substituted.
in any foreign Country under a member of the (iii). in regulation 58:
accountancy body in that country recognized
(a) in sub-regulation (2), -
by the International Federation of Accountants
in such manner as may be determined by the (A) for the words “If the period of the excess
Council from time to time. leave taken is sought to be served”, the words
“The period of excess leave taken shall be
(10) A member may depute a trainee for industrial served” shall be substituted;
training upto a period of three months in any
(B) for the words “last served his articles,” the
foreign Country, in such manner as may be words “last served his articles and” shall be
determined by the Council. substituted;
(11) The industrial trainee shall be paid such monthly (b) sub-regulation (4) shall be omitted.
stipend as may be agreed mutually between the
industrial trainee and the member imparting the [CA. (Dr.) JAI KUMAR BATRA, Acting Secy]
industrial training.”; [ADVT.-III/4/Exty./120/2021-22]

Notification, 8th July, 2021

No. 1-CA(7)/197/2021 —Whereas certain draft from the public on the said draft regulations have
regulations further to amend the Chartered been considered by the Council of the Institute;
Accountants Regulations, 1988, were published
Now, therefore, in exercise of the powers conferred by
as required by sub-section (3) of section 30 of the
sub-section (1) of section 30 of the aforesaid Act, the
Chartered Accountants Act, 1949 (38 of 1949),
Council, with the approval of the Central Government,
in the Gazette of India, Extraordinary, Part III,
hereby makes the following regulations further to
Section 4, dated the 11th December, 2020, vide
amend the Chartered Accountants Regulations, 1988,
notification No.1-CA(7)/197/2020, dated the 10th
namely:-
December, 2020, inviting objections and
suggestions from persons likely to be affected 1. (1) These regulations may be called the Chartered
thereby, before the expiry of fortyfive days from Accountants (Amendment) Regulations, 2021.
the date on which the copies of the said Gazette
containing the said notification was made available (2) They shall come into force on the
to the public; date of their publication in the Official
Gazette.
And whereas the said Gazette was made available to
the public on the 11th December, 2020; 2. In the Chartered Accountants Regulations, 1988,
in Schedule “A”, for Form 18, the following Form
And whereas the objections and suggestions received shall be substituted, namely:-

FORM ‘18’
(See section 2(2) of the Chartered Accountants Act, 1949, regulation 53B and regulation
190 of the Chartered Accountants Regulations, 1988)
PARTICULARS OF OFFICES AND FIRMS
1. Name of firm/trade name of Chartered Accountant in practice
2. PAN number and GST Registration number of firm1
3. Name(s) of the proprietor/partners of firm with his/ their membership number(s) Details of Partners
Holding Certificate of Practice (Chartered Accountant/Company Secretary/Cost Accountant)
1
In case PAN number and GST Registration number of firm is not available at the time of making application, it should be submitted within three
months from the time of making application.

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S.N. Name of Professional Membership Whether membership Date from which

Partner Qualifications* No.: isactive (Yes/ No) Certificate of Practice held:

Details of Partners Holding Professional Qualifications Other than Chartered Accountant/Company

Secretary/Cost Accountant, permitted as per regulation 53B
S.N. Name of Professional Membership No. : Degree No. Name of University/ Institution
Partner Qualifications* which issued the Degree

4. (a) Date of formation of proprietary/partnership firm

(b) Date on which the present partnership was entered into
(c) Whether the partnership is supported by a Deed?
(d) Whether all the partners are sharing the profits of the firm?
5. Ref. No; Date and particulars of approval of trade/firm name obtained from the Council (applicable to
cases where the firm was started on or after 1.1.1983)
6. Address of the Head Office of the firm/Chartered Accountant in practice.
7. (a) Address(es) of the branch office(s) of the firm/Chartered Accountant in practice, if any
(b) Date on which each branch office was opened
8. Name of the member, with membership number who is incharge of each of the offices, i.e., head office and
branch offices.

Head Office Name of the member in-charge Membership Number

Branch Office(s) Name(s) of the member(s) in-charge Membership Number(s)

9. Whether the proprietor/any partner stated in serial number 3 above is/are partner or proprietor or paid
assistant with any other firm(s) of chartered accountants in practice anywhere in India and whether any of
them are engaged in a full time or a part-time occupation elsewhere ?
YES NO
10. If yes, give details in each case

Name of the Partner/ Name(s) of the firm (s) of Capacity in which Particulars of full time
proprietor/paid assistant chartered accountants with connected or part-time occupation
which connected elsewhere if any

11. In case of a firm, whether any partner is also practicing in his individual name?

YES NO

12. If yes, give name(s) and membership number(s) of the member(s)

13. Name(s) of the member(s) of the Institute with membership number(s) holding full time employment in
the firm/under the chartered accountant in practice and date of joining of each such member.
* Professional Qualifications of partners who are non-chartered accountants should be duly attested by an Independent Practicing Chartered
Accountant who is not a partner of the said firm/ relative of the said person.

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14. Whether any paid assistant stated at serial number 13 above is partner or proprietor or paid assistant with
any other firm(s) or chartered accountant in practice anywhere in India ?

YES NO

15. If yes, give details:-

Name of the paid assistant Name(s) and place(s) of firm(s) in which Capacity in which connected
engaged as partner/ Proprietor/paid with the firm, i.e. as partner/
Assistant Proprietor/paid Assistant

16. Whether any paid assistant stated at serial number 13 above is practicing?
17. If yes, give name(s) and membership number(s) of the paid assistant(s)

Declaration
I/ We hereby confirm that the information given in this Form is true and correct.

Place: Signature(s) of the proprietor/all

Date: partner(s) of the firm with their
membership number(s).”

JAI KUMAR BATRA, Acting Secy.

[ADVT.-III/4/Exty./146/2021-22]

Note: The principal regulations were published in (x) Notification No. 1-CA(7)/44/99 published in
the Gazette of India, Extraordinary, vide number the Gazette of India dated 26th February, 2000
1-CA(7)/134/88 dated 1st June, 1988 and subsequently
amended by the following numbers:- (xi) Notification No.1-CA(7)/45/99 published in
the Gazette of India, dated 26th February, 2000
(i) Notification No.1-CA(7)/1/89 published in (xii) Notification No.1-CA(7)/51/2000 published
the Gazette of India, dated 7th October, 1989 in the Gazette of India, Extraordinary, dated
(ii) Notification No.1-CA(7)/10/90 published in 17th August, 2001
the Gazette of India, dated 19th January, 1991 (xiii) Notification No.1-CA(7)/59/2001 published
(iii) Notification No.1-CA(7)/11/90 published in in the Gazette of India, Extraordinary dated
the Gazette of India, dated 19th January, 1991 28th September, 2001
(iv) Notification No.1-CA(7)/12/91 published in (xiv) Notification No.1-CA(7)/64/2002 published
the Gazette of India, dated 23rd February, 1991 in the Gazette of India, Extraordinary dated
31st March, 2003
(v) Notification No.1-CA(7)/13/90 published in
the Gazette of India, dated 2nd February, 1991 (xv) Notification No.1-CA(7)/64A/2003 published
in the Gazette of India, Extraordinary dated
(vi) Notification No.1-CA(7)/19/92 published in
4th December, 2003
the Gazette of India, dated 7th March, 1992.
(vii) Notification No.1-CA(7)/28/95 published in (xvi) Notification No.1-CA(7)/83/2005 published
the Gazette of India dated 1st September, 1995 in the Gazette of India, Extraordinary dated
28th July, 2005
(viii) Notification No.1-CA(7)/30/95 published
in the Gazette of India, Extraordinary dated (xvii) Notification No.1-CA(7)/84/2005 published
13th March, 1996 in the Gazette of India, dated 17th June, 2006
(ix) Notification No. 1-CA(7)/31/97 published in (xviii) Notification No. 1-CA(7)/92/2006 published in
the Gazette of India, dated 16th August, 1997 the Gazette of India, dated 13th September, 2006

124 THE CHARTERED ACCOUNTANT AUGUST 2021 www.icai.org

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(xix) Notification No. 1-CA(7)/102/2007(E) published (xxiv) Notification No. 1-CA(7)/167/2014 published
in the Gazette of India, dated 17th August, 2007 in the Gazette of India, Extraordinary dated
23rd January, 2015.
(xx) Notification No.1-CA(7)/116/2008 published in
the Gazette of India, dated 25th September, 2008 (xxv) Notification No.1-CA(7)/178/2016 published
in the Gazette of India, Extraordinary dated
(xxi) Notification No.1-CA(7)/123/2008 published in
25th May, 2017.
the Gazette of India, dated 3rd December, 2008
(xxvi) Notification No.1-CA(7)/193/2020 published
(xxii) Notification No. 1-CA(7)/145/2012 published
in the Gazette of India, Extraordinary dated
in the Gazette of India, Extraordinary dated
19th October, 2020.
1st August, 2012
(xxvii) Notification No.1-CA(7)/196/2021, published
(xxiii) Notification No. 1-CA(7)/154/2014 published
in the Gazette of India, Extraordinary dated the
in the Gazette of India, Extraordinary dated
23 rd June, 2021.
22nd July, 2014

New Publications - Sustainability Reporting Standards Board, ICAI (2021-22)

The Sustainable Development Goals (SDGs) Sustainable Development

define global sustainable development priorities Goals – Accountants Creating
and aspirations for 2030 and seek to mobilize Sustainable World – Part 2
global efforts around a common set of goals and The publication “Sustainable
targets. Accountancy profession has a crucial Development Goals - Accountants
role to play in advancing and achieving the 2030 Creating Sustainable World Part
agenda for sustainable development. The Institute 2” contains an overview and
of Chartered Accountants of India (ICAI), as a related aspects of six SDGs (SDG
partner in nation building, has been continuously 6 to SDG 11). The publication
undertaking several initiatives to support the would assist members and other stakeholders
achievement of SDGs by public and private in finding and developing innovative solutions,
organisations. In its endeavor to disseminate incorporating the concepts of sustainable
development to mitigate the impending economic
knowledge, awareness and adoption of UN – SDGs
and environmental uncertainties and also guide
2030 Agenda, Sustainability Reporting Standards businesses through the transition from theory to
Board of the Institute of Chartered Accountants of action. The publication is available on ICAI website
India had developed a publication on “Sustainable at https://icai.org/post/sustainability-reporting-
Development Goals – Accountants Creating standards-board.
Sustainable World – Part 1” covering overview and
Sustainable Development
related aspects of SDG 1 to SDG 5 with an objective
Goals – Accountants Creating
to encourage all stakeholders to contribute towards Sustainable World – Part 3
the attainment of Sustainable Development Goals.
The publication also highlights important role The publication “Sustainable
accountants can play in integrating the goals into Development Goals - Accountants
governance, management and reporting as well as Creating Sustainable World –
Part 3” contains an overview and
in facilitating greater connectivity between social
related aspects six SDGs (SDG
and environmental benefit and economic benefit. 12 to SDG 17). The publication
The publication is available on ICAI website at aims to assist members and other stakeholders in
https://icai.org/post/sustainability-reporting- helping organizations identify and act on the full
standards-board. range of priority SDG targets that intersect with
their operations and value chains. The publication
In furtherance to this initiative, the Board has is available on ICAI website at https://icai.org/
released the following publications: post/sustainability-reporting-standards-board.

www.icai.org THE CHARTERED ACCOUNTANT AUGUST 2021 125

 ICAI News
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Announcement, Election 2021

Option for Polling Booths
in Ahmedabad, Bengaluru, Chennai, Delhi/New Delhi, Kolkata, Mumbai, Pune and Thane Cities
New Delhi, 12th July, 2021

The next elections to the Council and the Regional For the forthcoming elections to the Council and
Councils of the Institute are scheduled to be held Regional Councils, it is proposed to set up polling
on 3rd and 4th December, 2021 thin cities having more booths at different locations in Ahmedabad,
than 2500 members and on 4 December, 2021 at Bengaluru, Chennai, Delhi/New Delhi, Kolkata,
Mumbai, Pune and Thane. The locations of the
all other places in terms of the provisions of Rule proposed polling booths in these cities, where last
21 of the Chartered Accountants (Election to the elections were held and which are now included but
Council) Rules, 2006. According to the provisions subject to availability, are published below.
of clause (3) of Schedule 2 to Rule 6 of the aforesaid
Rules, a notice is required to be published giving It is notified for the general information of members
the voters in cities, having more than one polling that any member in such a place, wishing to vote at
a particular proposed polling booth, may send his
booth located at different addresses, an opportunity written request to the Acting Secretary, The Institute
to exercise their option to vote at a particular of Chartered Accountants of India, ICAI Bhawan,
polling booth within that city. In accordance with Post Box No. 7100, Indraprastha Marg, New Delhi
th
the said provisions, this Notice is being published – 110 002, so as to reach him latest by 16 August,
for information of such voters. 2021. Request received after 16th August, 2021, will
not be entertained.
It may be clarified for general information of
st The general allocation of polling booth to voters
members that the list of voters as on 1 April, would be done either on the basis of pin-code
2021 will be drawn, on the basis of professional numbers or proximity of professional addresses of
addresses given by the members, and such address the voters. For details of proposed locations please
is taken into consideration for the purpose of visit Institute’s website at https://resource.cdn.icai.
allotment of voters to different polling booths org/65574election2021-52903.pdf.
in a city.
How to Exercise Option:
It has been our endeavour to allot the polling booth
near to the professional addresses as given by the There is no prescribed format/application for
voters. It is possible that a voter might prefer to exercising option for a particular polling booth.
A member wishing to exercise his option for a
exercise his franchise at a polling booth within the particular polling booth may send his request in
same city but located near his residence/office which writing giving his name, membership number and the
is not as per the Institute’s record his professional address of the polling booth in which he would like
address. This announcement helps such voters to to be attached. Such an application should reach the
indicate their option for a polling booth located at a Acting Secretary at Institute’s Headquarters at ICAI
place which is not near to their professional address. Bhawan, Indraprastha
th
Marg, New Delhi – 110 002
For instance, based on the professional address of latest by 16 August, 2021 either through e-mail at
a voter, he would be, in the normal course, allotted optionpb2021@icai.in; or by any other mode.
a polling booth situated at ‘A’ place. Suppose, he
CA. (Dr.) Jai Kumar Batra
prefers to exercise his franchise at `B’ place which is
near his residence or office (but not his professional Acting Secretary and Returning Officer
address), as the case may be, he is required to
Note: The Institute has proposed certain
indicate his option for the polling booth at ‘B’ place amendments in the Chartered Accountants
in response to this announcement. Otherwise, (Election to the Council) Rules, 2006 to the Central
he would be required to vote at the polling booth Government. The above announcement is as per the
situated at ‘A’ place only. existing provisions of these Rules.

126 THE CHARTERED ACCOUNTANT AUGUST 2021 www.icai.org

 ICAI News
243

Recognizing and Honouring Excellence in Sustainable Initiatives and Innovations

Sustainability Reporting Standards Board

The Institute of Chartered Accountants of India
(Set up by an Act of Parliament)
Presents

ICAI
INTERNATIONAL
SUSTAINABILITY
REPORTING

Awards 2020-21
For outstanding contribution towards
Gender Equality and Climate Change

Last Date of Receipt of Entries

November 15th, 2021

OBJECTIVES PROCEDURE FOR PARTICIPATION

• To Recognize initiatives and innovative 1. There is no Participation Fees. Entries are

practices of entities towards identification and invited from corporates, non-corporates,
disclosure of Climate Change related risks professional firms, for profit as well as not for
and opportunities. profit organizations.
2. Sustainability Report/Annual Report for at least
• To Recognize initiatives and innovative
12 months relating to the period between
practices undertaken by the entities towards
January 1, 2020 to June 30, 2021 is eligible for
Gender Equality.
participation.
• To Honour entities taking transformational 3. Decision of the Panel of Judges in all the matters
initiatives in the areas of climate neutrality, relating to the Awards will be final.
innovative climate finance and climate
4. To participate, fill in the Entry Form available at
leadership.
https://forms.gle/Rk6eP2xKhD8Lcuyw6 and
submit the requisite enclosure(s) as per the
• To Encourage entities globally to act as a role
entry form at sustainability@icai.in on or
model, sponsor or ally in championing gender
before November 15th, 2021.
equality.

PROCESS FOR DECIDING AWARDEES

AWARDS
Selection of awardees in specified categories will be
One Gold Shield Award in each category.
through a robust three tier process:
CATEGORIES OF THE COMPETITION
1. Review by Technical Reviewers on defined
parameters.
Category 1: ICAI International Award
on Gender Equality
2. Review of short-listed Sustainability Reports
by Shield Panel.

3. Selection by External Jury consisting of

representatives across the globe from
regulatory bodies, industrialists,
Category 2: ICAI International Award
philanthropists, professionals, academicians
on Climate Change
etc.

For further information please write us at srsb@icai.in; sustainability@icai.in or visit our website www.icai.org or
Call 011-30110474/456

Secretary, Sustainability Reporting Standards Board

The Institute of Chartered Accountants of India
ICAI Bhawan, Post Box No. 7100, Indraprastha Marg, New Delhi-110002

Cat
www.icai.org THE CHARTERED ACCOUNTANT AUGUST 2021 127 ICAI Intern
on Gend
 ICAI News
244

Sustainability Reporting Standards Board

The Institute of Chartered Accountants of India
(Set up by an Act of Parliament)

"LEADING THE TRANSFORMATION TO

A HEALTHIER, HAPPIER, AND SAFER PLANET”
HINDI VERSION OF CORPORATE FILM
The Institute of Chartered Accountants of India (ICAI), as part of its ongoing commitment for being partner
in nation building, truly upholds the power of our students and members to come together and contribute in
making our planet healthier, happier and safer. In its endeavour to create awareness on environmental
issues among the members and other stakeholders, Sustainability Reporting Standards Board had
developed the Corporate Film on “Leading the transformation to a Healthier, Happier, and Safer Planet”. In
order to reach the masses to point maximum, the Hindi Version of the Corporate Film has also been
released by the Board and the same is available at http://icaitv.com/video/1478/sustainability-reporting-
standards-board-icai-releases-hindi-version-corporate-film.

एक ���क ,खुशहाल और �ुर��त हम पांतरण का नेतृ

ABOUT SUSTAINABILITY REPORTING STANDARDS BOARD

Sustainability Reporting Standards Board (SRSB) has been constituted by ICAI in February 2020, with the
mission to formulate comprehensive, globally comparable, and understandable standards for measuring
and disclosing non-financial information about an entity's progress towards United Nations Sustainable
Development Goals (SDG) 2030.
The Board has worked relentlessly via various initiatives to identify and develop opportunities for chartered
accountants, develop audit guidance as well as enhance knowledge of members and other stakeholders.
Activities and initiatives undertaken by the SRSB are available at https://icai.org/post/sustainability-
reporting-standards-board. For any further details, please mail at sustainability@icai.in.

128 THE CHARTERED ACCOUNTANT AUGUST 2021 www.icai.org

 ICAI in Media
245

ICAI in Media : Glimpses of June - July, 2021

announcements were made on 73rd Chartered Accountants’’ Day.
ICAI has also launched a mobile application on quality learning
services for CA students.
ICAI President Nihar N Jambusaria said the body has waived the
fees of all CA students who have lost both parents/ single parents

ICAI launches drive for financial, due to COVID-19.

“The scheme will be effective for the next 2 years. This is an
tax literacy endeavour of ICAI to provide relief to the students and let them
continue their studies without any difficulty,”he said.
July 01, 2021
Jambusaria further said the guidelines that have been approved by
New Delhi, Jul 1 (PTI) Institute of Chartered Accountants of India the Ministry of Corporate Affairs will pave the way for CA firms
(ICAI) on Thursday launched a financial and tax literacy drive to to partner with members of other professions and offer varied
educate people about financial planning and tax-related matters. services under one roof.
‘The chartered accountants’ body launched a multilingual portal Debashis Mitra, vice-president, ICAI, said the institute “bears
for all the digital e-learning resources and a tool to help firms self- testimony to the fact that strong foundations go a long way in
identify their audit quality maturity level, as per a press release. The creating a unique and historic Institution”.

www.icai.org THE CHARTERED ACCOUNTANT AUGUST 2021 129

 ICAI in Media
246

Classifieds
5857 Jharkhand based CA firm having 5
partners and 10 years’ experience requires
firms for merger. Contact: malhotrarnc@
gmail.com, 8757832399.

5858 Delhi NCR based 32 year old firm invites

merger proposals from CA firms. Mail
brief profile to sangeeta.pgc@gmail.com

130 THE CHARTERED ACCOUNTANT AUGUST 2021 www.icai.org

 Sustainability Reporting Standards Board
The Institute of Chartered Accountants of India
(Set up by an Act of Parliament)

Join the
Carbon Footprint Challenge
An Initiative to Promote Climate-Friendly Choices
Carbon
Footprint The Carbon Footprint Challenge is Sustainability Reporting Standards Board of
ICAI’s initiative aimed to contribute in developing carbon reduction strategies and
Challenge motivating chartered accountants fraternity to take concrete steps.

About Sustainability Reporting

We invite our Members to join the Carbon Standards Board of ICAI
Footprint Challenge and work together with us
for greener and sustainable planet. Sustainability Reporting Standards Board
(SRSB) of ICAI has the mission to
Send us innovative, practical and elaborated formulate comprehensive, globally
ideas/ suggestions for making offices of chartered comparable, and understandable
accountants carbon neutral. It should be backed standards for measuring and disclosing
up with present and future plan of action, non-financial information about an entity’s
preferably along with supporting reasons/ progress towards United Nations
calculations. Sustainable Development Goals (SDG)
2030. The Board is working relentlessly to
Mail us at sustainability@icai.in facilitate adoption of a model of engaging
on or before August 15th, 2021. multiple stakeholders to develop action
plans for promoting Sustainable
SRSB will evaluate the entries and ten Best Development Agenda 2030 across various
entries will be awarded Certificate of Appreciation. sectors in India.
Regd. with the RNI No. 738/57 Regd No. DL (C)-01/1190/2021-23, D. No. MH/MR/TECH-47/1/2021 License to post without prepayment,
ISSN 0009-188X WPP license No MR/TECH/WPP-133/DL(C)/2021. Posted at Mumbai Patrika Channel Sorting Office, Mumbai.
Published on 1st of Every Month. Posting Date: First 3 days of Current Month.

The Institute of Chartered Accountants of India

Your Thought Leadership

is valuable to ICAI
Inviting Articles, Research papers and Case Studies

#Inspiring Professionals
Could your thought be the next vector in the changing
accounting landscape?

#Control gets a wide berth in the new

accounting age
Write a business success story?
Inbox at eb@icai.in

#Spreading literacy
Empowering with financial knowledge
Inbox at eb@icai.in

#How Sustainable we are?

Enjoy present without compromising future
Inbox at eb@icai.in

#Valuation
What do you see when valuing a business?

#Gender Parity
Significant gains are made when gender parity is achieved
Inbox at eb@icai.in

#Any other professional topic in mind?

Write and send to eb@icai.in

Page 132
 ICAI in Media
246

Classifieds
5857 Jharkhand based CA firm having 5
partners and 10 years’ experience requires
firms for merger. Contact: malhotrarnc@
gmail.com, 8757832399.

5858 Delhi NCR based 32 year old firm invites

merger proposals from CA firms. Mail
brief profile to sangeeta.pgc@gmail.com

130 THE CHARTERED ACCOUNTANT AUGUST 2021 www.icai.org