Notifications (July 2021)

Notifications

THE ICAI HAS UPDATED FORM 18 TO INCLUDE INFORMATION ON NON-CA PARTNERS

Under Regulation 53B, the ICAI updates Form 18 of particulars of offices and firms of chartered accountants to include details about non-chartered accountant partners. By issuing the Chartered Accountants (Amendment) Regulations, 2021, the ICAI has revised the Chartered Accountants Regulations, 1988. Form 18 in Schedule “A” of the Chartered Accountants Regulations, 1988 has been replaced by the modification.

Regulation 190 mandates that the ICAI keep a record of Chartered Accountants in Practice offices and firms. The aforementioned Regulation further states that a chartered accountant in practice or a firm of chartered accountants must submit to the Institute Form No. 18 describing details about his or her office within one month of the approval of the trade/firm name or the start of practice. Each change in the firm’s constitution/address/CA must be filed with the aforementioned Form. The format of Form No. 18 to be filed by CAs/Firms with ICAI is provided in Schedule A of the aforementioned Regulations. 

In Form 18, additional information is requested, including the firm’s PAN number and GST registration number, as well as the names of partners with professional qualifications other than Chartered Accountants (Company Secretary/Cost Accountant / Engineer/ Advocate/Architect/Actuary, as permitted under regulation 53B).

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THE CBDT HAS ISSUED A NEW RULE FOR COMPUTING THE STCG OR WRITTEN DOWN VALUE, IN CASES WHERE GOODWILL DEPRECIATION HAS BEEN RECEIVED

The Central Board of Direct Taxes (CBDT) has issued Rule 8AC, which governs the computation of short-term capital gains for enterprises that claimed goodwill depreciation from April 2020 until the present. This year’s budget stated that depreciation relief cannot be claimed on goodwill from this fiscal year. The relief claimed in the previous fiscal year will be taxed.

The CBDT has published the Income Tax Amendment (19th Amendment) Rules, 2021, which aims to change the Income-tax Rules, 1962 Rule 8AC in relation to the computation of short-term capital gains and written-down value under Section 50 where goodwill depreciation has been received. For the purposes of goodwill, capital gains are defined as the difference between the written down value of a block of assets at the start of the relevant year and the actual cost of any asset (goodwill). The capital gains emerging from the transfer of short-term capital assets are assumed to be the source of this excess.

Furthermore, if the goodwill is the only asset in the block of assets for which the assessee received depreciation in the assessment year beginning on April 1, 2020, and the block of assets ceases to exist due to transfer, there will be no capital gains or losses on account of the block of assets ceasing to exist. Finally, capital gains on the transfer of goodwill must be calculated in accordance with standard income tax laws.

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