Mandatory Climate- Related Financial Disclosures For Australia: What You Need to Know

Key Rate Changes and Amendments Following the 55th GST Council Meeting

Home > Key Rate Changes and Amendments Following the 55th GST Council Meeting

1. Rate Decreased:

S No.	Goods/Services	Before (Rate/Condition)	After (Rate/Condition)
1	Fortified Rice Kernels	18%	5%
2	Gene therapy to treat life-threatening diseases	Taxable	Exempted
3	Food items going into preparation for free distribution to weaker sections under a government program subject to the existing conditions.	As applicable	5%
4	Fresh or dried black pepper/dried raisins when supplied by agriculturist	5%	No liable to GST
5	Approved skill training partners of NSDC	18%	Exempted
6	Sub-systems of Long-Range Surface to Air Missile (LRSAM) and similar software	Taxable	Exempted

2. Rate Increased:

S No.	Goods/Services	Before (Rate/Condition)	After (Rate/Condition)
1	ACC blocks (concrete) containing more than 50% fly ash content	5%	12%

3. Rates Clarified:

S No.	Goods/Services	Before (Rate/Condition)	After (Rate/Condition)
1	Sale of used Electric Vehicles (EV) by and to individuals	As applicable	5%
2	Sale of used EV by businesses after refurbishment	12%	18% on their profit
3	Bank/NBFC penal charges for loan defaults	As applicable	Exempted

4. RCM Amendment related to Sponsorship Services-

Before Amendment:

Nature of service	Supplier	Recipient
Services provided by way of sponsorship to any body corporate or partnership firm.	Any person	Any body corporate or partnership firm located in the taxable territory.

After Amendment (w.e.f.16-01-2025):

Nature of service	Supplier	Recipient
Services provided by way of sponsorship to any body corporate or partnership firm.	Any person other than a body corporate	Any body corporate or partnership firm located in the taxable territory.

SBC Comments:

a. Corporates providing sponsorship services must now pay GST under the Forward Charge Mechanism (FCM), replacing the earlier Reverse Charge Mechanism (RCM).

b. Corporates can avail full ITC without reversing 𝐩𝐫𝐨𝐩𝐨𝐫𝐭𝐢𝐨𝐧𝐚𝐭𝐞 𝐈𝐧𝐩𝐮𝐭 𝐓𝐚𝐱 𝐂𝐫𝐞𝐝𝐢𝐭 (ITC) under Section 17(2) of the CGST Act, 2017.

5. Amendment related to

Composite Dealers-

Before Amendment:

Nature of service	Supplier	Recipient
Service by way of renting of any immovable property other than residential dwelling.	Any unregistered person	Any registered person

After Amendment (w.e.f.16-01-2025):

Nature of service	Supplier	Recipient
Service by way of renting of any immovable property other than residential dwelling.	Any unregistered person	Any registered person other than a person who has opted to pay tax under composition levy

SBC Comments:

a. Renting or leasing of immovable property by unregistered persons to composite dealers is now excluded from the scope of RCM.

b. Composite dealers benefit from 𝐫𝐞𝐝𝐮𝐜𝐞𝐝 𝐆𝐒𝐓 𝐥𝐢𝐚𝐛𝐢𝐥𝐢𝐭𝐢𝐞𝐬 and simplified reporting, promoting ease of doing business for smaller taxpayers.

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NFRA Auditor and Audit Committee Communication Series – ECL

NFRA Auditor and Audit Committee Communication Series - ECL

Home > NFRA Auditor and Audit Committee Communication Series – ECL

Overview

The National Financial Reporting Authority (NFRA) has initiated a series aimed at improving communication between statutory auditors and audit committees, with a focus on significant areas of accounting and auditing. The inaugural publication which was published on January 10, 2025; emphasizes the auditing of accounting estimates and judgments, particularly on Expected Credit Losses (ECL) under Ind AS 109, “Financial Instruments.“

Objective

NFRA highlights the importance of effective interaction between auditors and audit committees to ensure audit quality and the integrity of financial statements. The Companies Act, 2013, mandates audit committees to review financial statements, audit processes, and internal controls. Similarly, SEBI regulations require a focus on accounting estimates involving management judgment. This collaboration is critical to upholding transparency and investor confidence.

Target area(s)

Accounting estimates, including provisions for liabilities, asset impairments, and deferred tax recognition, often involve complex judgments. Ind AS 109 prescribes the ECL model for impairment loss recognition, marking a shift from the “Incurred Loss” approach. The ECL model considers potential credit losses from the moment a financial asset is recognized, incorporating future economic conditions and time value of money.

ECL applies to various financial assets, including loans, advances, trade receivables, and bank balances. It relies on unbiased, probability-weighted scenarios, rather than extreme cases, and often involves significant management judgment and expert input.

Recommendations – Key Considerations for Audit Committees

NFRA suggests that audit committees ask auditors several critical questions regarding ECL assessments, including:

Changes in ECL balances and their impact on profit and loss accounts.
Verification of the ECL model’s appropriateness for different financial asset classes.
Adequacy of internal controls and credit risk management systems.
Assessment of related party transactions and their implications for ECL provisioning.

Auditors are encouraged to evaluate management’s assumptions, the independence of subject matter experts, and the robustness of data used in ECL calculations.

References – Standards and Guidance for Auditors

The publication outlines key Standards on Auditing (SAs) relevant to accounting estimates:

SA 540 focuses on risk assessment, management bias, and documentation in auditing estimates.
SA 701 mandates reporting key audit matters, including significant management judgments.
SA 260 (Revised) emphasizes communication with governance bodies regarding qualitative aspects of financial reporting.

Global Context and Best Practices

The report references guidance from the Basel Committee on Banking Supervision, which underscores the role of professional scepticism, risk assessment, and expert use in auditing complex estimates like ECL.

Conclusion

“NFRA’s initiative aims to strengthen the partnership between auditors and audit committees, ensuring a higher standard of audit quality and public trust. This effort is especially crucial in addressing complex accounting estimates that require precision, transparency, and collaboration.”

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Mandatory Climate- Related Financial Disclosures For Australia: What You Need to Know

Home > Mandatory Climate- Related Financial Disclosures For Australia: What You Need to Know

Starting from January 1, 2025, Australia implemented mandatory climate-related financial disclosures for large businesses and financial institutions. This initiative aims to enhance transparency regarding how organizations manage climate-related risks and opportunities.

Legislative Framework

The Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Act 2024, which received Royal Assent on September 17, 2024, introduces these mandatory reporting requirements. The Australian Securities and Investments Commission (ASIC) will oversee the enforcement of this regime.

Group	Start Date	Who Needs to Report	Criteria
Group 1	January 1, 2025	Large companies and NGER reporters above publication threshold	Revenue ≥ $500M Assets ≥ $1B 500+ employees
Group 2	July 1,2026	Medium-large companies, all other NGER reporters —————————————- Investment funds (RSEs, CCIVs) with large assets	Revenue ≥ $200M Assets ≥ $500M 250+ employees ————————– $5B+ in assets under management
Group 3	July 1, 2027	Medium-sized companies	Revenue ≥ $50M Assets ≥ $25M 100+ employees

What Needs to Be Reported?

Businesses must prepare an annual sustainability report as part of their regular financial reporting. These reports will include:

• Governance: How the board oversees climate-related risks and targets.

• Strategy: Impacts of climate risks on business operations and financial health.

• Risk Management: Processes for identifying and managing climate risks.

• Metrics and Targets: Greenhouse gas emissions (Scopes 1, 2, and 3), climate-related financial impacts, and progress toward sustainability goals.

Additionally, businesses must conduct a scenario analysis to test their resilience under two climate scenarios:

1. A 1.5-degree warming scenario.

2. A higher warming scenario exceeding 2 degrees.

Scope 1:

Direct emissions from sources owned or controlled by the company, like fuel combustion in vehicles or on-site energy production.

Scope 2:

Indirect emissions from purchased energy, such as electricity, heat, or steam used by the company but generated off-site.

Scope 3:

Other indirect emissions from the company’s value chain, including emissions from suppliers, product use, waste disposal, and employee commuting.

What Are the Key Dates?

• 2025-2027: Temporary liability relief for directors regarding disclosures on Scope 3 emissions, scenario analysis, and transition plans.

• 2025 Onward: Sustainability reports must be lodged with the Australian Securities and Investments Commission (ASIC) alongside financial statements.

• 2030 Onwards: full audit assurance (reasonable assurance) will be mandatory for sustainability reports to ensure their reliability. Before this, limited assurance will be bought in, focusing on key metrics such as greenhouse gas emissions and governance practices. Independent auditors, in collaboration with climate and sustainability experts, will verify these disclosures, enhancing transparency and accountability in corporate reporting.

Steps Businesses Should Take Now

Preparing for these requirements will take time and effort. Here are some steps businesses can take to get started:

Immediate Actions

1. Form a Cross-Functional Team: Include representatives from finance, risk, sustainability, and legal departments.

2. Assess Climate Risks: Identify and prioritize climate risks and opportunities that could impact your business.

3. Develop a Strategy: Define your response to climate risks, including setting emissions reduction targets and aligning executive incentives with climate goals.

Medium-Term Actions

4. Conduct Scenario Analysis: Test your business’s resilience under different climate scenarios.

5. Enhance Data Collection: Improve the measurement of emissions and other key metrics.

6. Prepare for Assurance: Begin early audits to ensure readiness when full assurance requirements come into effect.

Long-Term Actions

7. Build Capability: Train employees across the organization to integrate climate considerations into decision-making.

Explore Opportunities: Invest in innovative solutions, like low-carbon products or emissions reduction projects.

Government and Regulatory Guidance

ASIC has urged businesses to proactively engage with these requirements by implementing appropriate governance arrangements and sustainability record-keeping processes.

The commission acknowledges the transition period and intends to adopt a proportional and pragmatic approach to supervision and enforcement as industries adjust.

Implications for Businesses

While the new reporting requirements aim to align Australia with international climate reporting standards, concerns have been raised about the financial and administrative burdens, particularly for sectors like agriculture. Critics argue that the compliance costs may be passed onto consumers, potentially leading to higher prices. However, proponents believe that these measures will enhance transparency and better position businesses to manage climate-related risks and opportunities.steadfastconsul

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GST Update – 55th GST Council Meeting Recommendations

Home > GST Update – 55th GST Council Meeting Recommendations

The council meeting held on December 21, 2024, thoughtfully addressed the long-awaited concerns and hopes expressed by taxpayers

Recommendations with respect to Changes in rates

1. GOODS

1. Reduction of GST rate on Fortified Rice Kernel (FRK) to 5%

2. Reduction of compensation cess to 0.1% on supplies to merchant exporters at par with GST rate on such supplies

3. To extend the Concessional rate of 5% on food inputs used in making food for free distribution to economically weaker sections under government schemes

2. SERVICES

1. Restaurant Services:

• The concept of ‘declared tariff’ is to be replaced with the ‘value of supply’ to determine tax rates:

• 𝟏 18% GST with ITC: If the value of supply exceeds ₹7,500 per unit

• 5% GST without ITC: If below ₹7,500.

• Restaurants in hotels can choose between 5% GST (without ITC) or 18% GST (with ITC).

2. Increase of GST rate from 12% to 18% on the sale of all old and used vehicles, including EVs (except specified categories already taxed at 18%). GST is applicable only on suppliers’ margins (difference between purchase and selling price or depreciated value if claimed). However, it is not applicable to unregistered persons.

Recommendations with respect to Exemptions

1. GST on Gene Therapy to be exempted

2. To extend the IGST exemption to systems, sub-systems, equipment, parts, sub-parts, tools, test equipment, and software used for the assembly or manufacture of the LRSAM system.

3. To exempt from IGST imports of all equipment and consumable samples by the Inspection Team of the International Atomic Energy Agency (IAEA) subject to the specified condition

4. To exempt GST on contributions made by general insurance companies from third- party motor vehicle premiums to the Motor Vehicle Accident Fund.

Recommendations with respect to Exemptions

1. To exclude taxpayers registered under the composition levy scheme from the scope of Sr. No. 5AB of Notification No. 09/2024-CTR (dated 08.10.2024), which brought the renting of commercial/immovable property (excluding residential dwellings) by unregistered persons to registered persons under the reverse charge mechanism. Additionally, to regularize the period from the effective date of the notification (10.10.2024) until the issuance of the proposed notification on an “as-is-where-is” basis.

2. The supply of sponsorship services provided by body corporates is to be brought under the Forward Charge Mechanism.

Clarifications Recommended

1. Autoclaved Aerated Concrete (AAC) blocks with a fly ash content exceeding 50% are classified under HSN code 6815 and are subject to a 12% GST rate.

2. Pepper whether fresh green or dried pepper and raisins when supplied by an agriculturist is not liable to GST.

3. Proposed amendment to redefine “Pre-Packaged and Labelled” to include all retail commodities up to 25 kg or 25 litres, either pre-packed as per the Legal Metrology Act or labeled in compliance with its declaration requirements Clarifications On GST rates of “Ready to eat popcorn” which is mixed with salt and spices classifiable under HSN 21069099

If supplied as other than pre-packaged and labelled-5%
If supplied as pre-packaged and labelled-12%
However, when popcorn is mixed with sugar thereby changing its character to sugar confectionery (eg: Caramel Popcorn) it would be classifiable under HS 17049090 and attract 18%

4. Payment Aggregators regulated by the RBI are eligible for the exemption under entry at Sl. No. 34 of Notification No. 12/2017-CT(R) dated 28.06.2017, as they fall within the scope of the term ‘acquiring bank’ defined in the said entry. However, this exemption does not extend to payment gateways (PG) or other fintech services that do not involve the settlement of funds.

5. No GST is applicable on ‘penal charges’ levied and collected by banks and NBFCs from borrowers for non-compliance with loan terms.

Recommendations with respect to Exemptions

1. The supply of goods warehoused in Special Economic Zones (SEZ) or Free Trade Warehousing Zones (FTWZ) is treated as Neither a supply of goods nor a supply of services:

▪ This applies when the goods are supplied to any person before clearance for:

▪ Export or Domestic Tariff Area (DTA).

▪ The provision aligns SEZ/FTWZ warehousing transactions with existing GST rules for Customs bonded warehouses.

2. Omission of Sections 12(4) and 13(4) of the CGST Act, 2017, and Rule 32(6) of the CGST Rules, 2017, to resolve existing ambiguities regarding vouchers.

Clarifications on Transactions Involving Vouchers:

• Non-Supply Nature: Transactions in vouchers will neither be treated as a supply of goods nor as a supply of services.

• Principal-to-Principal Basis: The distribution of vouchers on a principal-to-principal basis will not attract GST. However, for distribution on a principal-to-agent basis, GST will apply to the commission, fee, or other amounts charged by the agent.

• Associated Services: Additional services like advertisement, marketing, co-branding, customization, and technological or customer support associated with vouchers will be subject to GST based on the charges for these services.

• Unredeemed Vouchers (Breakage): Income recognized from unredeemed vouchers will not be treated as supply, and no GST will be levied on such breakage income.

3. No proportional reversal of ITC under Section 17(1) or Section 17(2) of the CGST Act, 2017, is required to be made by the ECO for supplies on which they are required to pay tax under Section 9(5) of the CGST Act, 2017.

4. Clarification regarding the availability of Input Tax Credit (ITC) under Section 16(2)(b) of the CGST Act, 2017, in the context of Ex-Works contracts:

o In an Ex-Works contract, goods are considered “received” by the recipient when:

▪ Delivered to the recipient or transporter at the supplier’s premises.

▪ Ownership transfers to the recipient at that point.

o This interpretation aligns with Section 16(2)(b) of the CGST Act, 2017, enabling the recipient to claim Input Tax Credit (ITC).

o TC claims are subject to compliance with:

▪ Sections 16 and 17 of the CGST Act.

▪ All eligibility and procedural requirements.

o This clarification ensures smooth ITC claims in cases where ownership transfers at the supplier’s location.

5. Clarification on Late Fees on Delay filing of GSTR 9 and 9C

a. The GST Council recommended clarifying through a circular that the late fee under Section 47(2) of the CGST Act, 2017, is applicable for delays in filing the complete annual return under Section 44 of the CGST Act. This includes both:

• FORM GSTR-9 (Annual Return)

• FORM GSTR-9C (Reconciliation Statement) (where applicable).

▪ All eligibility and procedural requirements.

b. Waiver of Excess Late Fees for Past Returns (FY 2017-18 to 2022-23):

• The GST Council proposed issuing a notification under Section 128 of the CGST Act, 2017 to waive the excess amount of late fees for delayed filing of FORM GSTR-9.

The waiver is conditional:

• The delayed FORM GSTR-9 for these years must be filed on or before March 31, 2024.

• The related FORM GSTR-9C (if applicable) must also be filed within the same timeline.

3. No proportional reversal of ITC under Section 17(1) or Section 17(2) of the CGST Act, 2017, is required to be made by the ECO for supplies on which they are required to pay tax under Section 9(5) of the CGST Act, 2017.

Measures for Streamlining GST Compliance

1. Track and Trace Mechanism:

o A new provision (Section 148A) in the CGST Act, 2017 will enable the government to enforce a Track and Trace Mechanism for specified evasion-prone commodities.

o This system will use a Unique Identification Marking on goods or packages to trace them throughout the supply chain.

2. Clarification on Online Services:

For supplies of online services (e.g., online gaming, OIDAR) to unregistered recipients, the supplier must:

o Record the State name of the recipient on the tax invoice.

o Treat this State name as the recipient’s address under Section 12(2)(b) of IGST Act, 2017 and Rule 46(f) of CGST Rules, 2017.

Key Measures for GST Law and Procedure

1. Retrospective Amendment to Section 17(5)(d):

The phrase “plant or machinery” will be replaced with “plant and machinery” in the CGST Act, effective from July 1, 2017.

SBC Comments:

• The amendment aligns the provision with the explanation of Section 17.

• The Supreme Court, in Safari Retreat, highlighted two exceptions under Section 17(5)(d):

• ITC eligibility for goods or services used to construct “plant or machinery.“

• ITC eligibility for construction of immovable property not made on one’s own account.

• While the amendment addresses the first exception, it leaves ambiguity around the second, potentially leading to further disputes.

• The amendment to Section 17(5)(d) is anticipated but considered incomplete.

• The second exception highlighted by the Supreme Court remains unresolved, leaving scope for litigation

2. Reduction of Pre-deposit for Penalty Appeals:

Pre-deposit for appeals under Section 129(3) reduced from 25% to 10%.Identical provision introduced under Section 112 for first appellate authority orders involving penalties under Section 129(3).

3. ISD Mechanism:

Include inter-state RCM transactions under ISD and amend related provisions (effective from 01.04.2025).

4. Temporary ID Numbers:

Introduce Rule 16A for generating temporary IDs for unregistered persons making payments under Rule 87(4).

5. Composition Levy Modification:

Allow taxpayers to update the “category of registered person” in FORM CMP-02 through FORM GST REG-14.

Key Measures for GST Law and Procedure

6. Amendment to Invoice Management System (IMS)

Key recommendations by the GST Council to strengthen IMS functionality under the CGST Act and Rules:

• Amendment to Section 38 and Rule 60:

• Legal framework for generating FORM GSTR-2B based on taxpayer actions in IMS.

• Ensures consistency in Input Tax Credit (ITC) claims.

• Amendment to Section 34(2): Mandates ITC reversal by recipients for credit notes to enable suppliers to reduce output tax liability.

• Insertion of Rule 67B: Standardized procedure for adjusting suppliers’ output tax liability against credit notes.

• Amendment to Section 39(1) and Rule 61: Links FORM GSTR-3B filing to the availability of FORM GSTR-2B for reconciliation.

SBC Comments:

• Enhances transparency, prevents fraudulent ITC claims, and ensures accurate tax compliance.

• Effective implementation depends on GST portal readiness and taxpayer adaptability.

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FIXED ASSETS Physical Verification and Tagging

Home > FIXED ASSETS Physical Verification and Tagging

Offerings

Asset Auditing & Tagging

Follows Floor-Book &Book-Floor methods to achieve the Asset Audit outputs

FAR Creation

Creation of the New FAR with the info available with client. Which could help their final audit process

Invoice or Document Digitalization

Take control over all the document via digitizing all of the documents to the required formats

Inventory /Stock Verification

Verify and keep a track on the complete stock In’s & Out’s

SOP Creation

Take control over all the assets and inventory by creating business process or SOP

E-Invoicing

E-invoicing is a system in which B2B invoices and a few other documents are authenticated electronically by GSTN for further use on the common GST postal.

Asset & Inventory Audit TECHNIQUES

Physical Asset Verification can be done in a number of ways depending on organizational objectives, the nature of the assets, and their geographical distribution. It is, therefore, essential that the objectives of the physical asset verification project are clearly outlined from the start along with broader organizational buy-in. Two of thecommonly used

Methods are briefly discussed below.

BOOK – FLOOR
FLOOR – BOOK

BOOK – FLOOR

FA Record – Obtain the existing Fixed Asset Register from the Finance team.

Verify – Verfiy all the Tag all the assets assets from the while verifying record along with simultaneously the SPOC.

Tag – Tag all the assets while verifying simultaneously

Reports – Provide the required reports of Mapping assets to books.

FLOOR – BOOK

Verify – Ask for SPOC and verify all the assets that you can see on the floor.

Tag – Tag all the assets while verification.

Digitalize – Digitalize all the assets on day-day basis to the excel formats

Reports – Confirm all the assets depart wise by the HOD’s. Reconcile the assets to the record if any.

Physical Verification of Fixed Assets:

Definition of Physical Verification of Fixed Assets
Importance of Regular Physical Verification
Overview of Tagging Fixed Assets with Barcode or QR Code

Definition:

Process of physically inspecting and verifying the existence, condition, and location of fixed assets.

Objectives:

Ensure accuracy of asset records, prevent loss or theft, and maintain compliance with regulatory requirements.

Frequency:

Typically conducted annually or semi-annually, depending on organizational policies and industry standards.

Importance of Regular Physical Verification:

01 Accuracy:

Helps identify discrepancies between recorded and actual asset quantities, values, and locations.

02 Compliance:

Ensures adherence to accounting standards and regulatory requirements for asset reporting and valuation.

03 Risk Mitigation:

Minimizes the risk of asset misappropriation, loss, or unauthorized disposal.

04 Asset Optimization:

Provides insights into underutilized or obsolete assets, enabling better decision-making for asset management.

Tagging Fixed Assets with Barcode or QR Code:

Definition: Process of affixing unique identifiers, such as barcode or QR code labels, to fixed assets for tracking and identification purposes.

Benefits: Facilitates rapid and accurate asset identification, streamlines inventory management processes, and enhances data accuracy.

Technologies: Utilizes barcode scanners, mobile devices, and asset management software for seamless tracking and monitoring.

Implementation Considerations: Factors to consider include label durability, readability, and compatibility with existing asset management systems.

Implementing Physical Verification and Tagging:

Establish Clear Procedures:

Define standardized procedures for conducting physical verification, tagging assets, and updating asset records.

Assign Responsibilities:

Designate responsible personnel or teams for coordinating and executing the verification and tagging processes.

Select Tagging Technology:

Choose appropriate tagging technology (barcode or QR code) based on organizational needs, budget, and infrastructure.

Train Personnel:

Provide training to employees involved in the verification and tagging process to ensure proper execution and adherence to protocols.

Document and Review:

Maintain detailed records of verification and tagging activities, and periodically review and update asset records as needed.

Challenges and Considerations:

Technology Integration:

Ensure compatibility and seamless integration of barcode or QR code tagging systems with existing asset management software.

Label Durability:

Select durable label materials and adhesives capable of withstanding various environmental conditions and asset usage.

Data Security:

Implement measures to safeguard sensitive asset information stored in barcode or QR code databases from unauthorized access or tampering.

Scalability:

Consider scalability and expansion requirements when selecting tagging solutions to accommodate future growth and asset additions.

Best Practices for Effective Tagging and Verification:

Standardize Labelling:

Adopt consistent labelling conventions and formats for barcode or QR code tags to facilitate uniform asset identification.

Conduct Regular Audits:

Schedule periodic audits and spot checks to verify the accuracy and completeness of asset records and tagging.

Leverage Mobile Technology:

Equip personnel with mobile devices equipped with barcode or QR code scanners for on-the-go asset tracking and verification.

Automate Processes:

Implement automation tools and workflows to streamline tagging, verification, and data capture processes, reducing manual errors and inefficiencies.

Monitor and Review:

Monitor asset tracking data and performance metrics regularly to identify areas for improvement and optimize asset management practices.

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Rule 86B: The Most Ignored but Important GST Provision You Need to Know

Home > Rule 86B: The Most Ignored but Important GST Provision You Need to Know

RULE 86B-Restrictions on use of amount available in electronic credit ledger In cases where –

₹50 Lakh Threshold

Applies if monthly taxable supplies (excluding exempt/zero-rated) exceed ₹50 lakh.

99% ITC Utilization Cap

Maximum 99% of output tax liability can be paid using the electronic credit ledger.

1% Cash Payment Mandate

At least 1% of tax liability must be paid in cash

Exceptions to the 99% ITC Utilization Restriction:

High-Income Tax-Payers

Applies if the person or key individuals (e.g., proprietor, MD, partners) paid over ₹1 lakh as income tax in each of the last two financial years.

Refund Recipients

Applies for those receiving refunds exceeding ₹1 lakh in the preceding year for unutilized ITC under clause (i) and (ii) of first proviso Section 54(3).

Excess Cash Payment

Registered persons who paid more than 1% of cumulative output tax liability through the electronic cash ledger during the financial year.

Specific Entities

Government departments, PSUs, local authorities, and statutory bodies are exempt.

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AP Policy for Establishment of Private Industrial Parks with ‘Plug and Play’ Industrial Infrastructure (4.0) 2024-29

Home > AP Policy for Establishment of Private Industrial Parks with ‘Plug and Play’ Industrial Infrastructure (4.0) 2024-29

Introduction

The Government of Andhra Pradesh (GoAP) prioritizes industrial growth to drive economic progress, generate employment, and attract significant investments, leading to a multiplier effect on the state’s economy. Recognising the increasing proposals for industrial development, GoAP has introduced a policy to encourage the establishment of private Industrial Parks by creating a framework that enhances participation from potential developers.

Through this policy, the state is committed to establishing world-class Industrial Parks, thereby positioning Andhra Pradesh as a prime destination for global and domestic investments in industrial development.

Objectives-

Executing Agency-

The Department of Industries & Commerce, Government of Andhra Pradesh, or any other agency it authorizes, will serve as the executing agency for the Andhra Pradesh Private Industrial Parks Policy, 2024.

What are covered under the scope of the policy?

A Industrial Zones and Locations

Areas already notified as industrial zones in the master plan by the Directorate of Town and Country Planning, Government of Andhra Pradesh.
Locations with potential to be developed into industrial zones, later converted by the Andhra Pradesh Industrial Corridor Development Authority (APICDA) or a competent authority.

B Land Requirements by Park Size

Nano or Tiny Parks: Minimum of less than 10 acres of contiguous land.
MSME Parks: Minimum of 10 acres to a maximum of 100 acres of contiguous land.
Large or Sector-Specific Parks: Between 100 acres and 1,000 acres of contiguous land.
Mega Parks: More than 1,000 acres of contiguous land.
Parks must be located outside notified urban area limits.

C Sector-Specific Industrial Parks

Parks focusing on sectors such as:

Biotechnology, pharmaceuticals, toys, electric vehicles, semiconductors, defence and aerospace, food processing, leather, textiles, drones, and downstream industries of evolving needs.

D Policy Focus

The policy targets high-growth industrial clusters and locations, providing world-class infrastructure through strategic interventions. It covers project costs for common infrastructure and production-support buildings, including engineering, accessories, and packaging, with flexibility to adapt development to local requirements.

E Promotion of Plug-and-Play Industrial Parks

The policy aims to establish Plug-and-Play Industrial Parks and Flatted Factory Sheds, focusing on Nano and MSME Parks. These developments align with existing or upcoming schemes of the Government of India (GoI) and the Government of Andhra Pradesh (GoAP). Essential components include ready-built infrastructure and facilities to support industrial operations.

The broad three models for development of industrial parks having private sector participation-

Model-1

• Industrial Park Development with complete private land

Model-2

• Industrial Park Development with Partial Government / APIIC Land

Model-3

• Industrial Park Development with Complete Government/APIIC Land.

Incentives, Subsidies, and Disbursement Milestones for Private Nano, Tiny, & MSME Parks AND Private Large Industrial Parks & Mega Industrial Parks-

Selection Criteria of the Proposals:

Proposals are evaluated based on available external infrastructure (roads, water, electricity) and the location’s industrial potential. Providing external infrastructure is a key incentive to catalyze park development.

Upto 100% exemption for other types of upfront incentives are-

Converting charges for agricultural land to non- agricultural use
Charges for changes in land use under the Master Plan.
Stand duty and registration charges for land pooling for industrial parks.
On layout approval charges.

Capital Subsidy-

a. Upto INR 5 Lakhs per acre for Private Nano or Tiny and MSME Parks

b. Upto INR 3 Lakhs per acre for Private Large Industrial Parks & Mega Industrial Parks

c. Phase-wise release schedule as per Milestone is as follows-

Subsidy release phase	Progress Status	Milestone Achieved	Milestone of incentive / subsidy release
Phase – I	Approval of the Project	Minimum Assured External Infra such as Road, Power, Water, etc.	Upfront incentives sanctioned
Phase – II	25% progress	Upto 25% area developed or 15% of area allotted, whichever is higher	30% of subsidy amount
Phase – III	75% progress	Upto 75% area developed or 50% of area allotted, whichever is higher;	20% of subsidy amount
Phase – IV	100 % Complete	100% area developed; CFC in place; 75% area allotted	20% of subsidy amount
Phase – V	Operational Park	>80% area allotted; 20% area implemented	Last 30% subsidy amount release

Policy Implementation Summary:

Nodal Agencies: APIIC or APMSMEDC will manage EoIs, RFPs, and proposal evaluations for industrial parks based on their size.
Evaluation Committee: A multi-department committee like SIPC or SIPB will review and recommend proposals, with the Chief Secretary resolving disputes.
Operating Guidelines: Detailed guidelines on definitions and procedures for incentives will be issued separately.

Where can SBC help:

Our Incentives & Refunds team will assist you in:

Analyzing eligibility for Incentives and refunds
Documentation review
Application for Incentives and reimbursements
Documentation review
Resolving issues with authorities

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Supreme Court’s Ruling on DRI Officers as ‘Proper Officers’ for Issuing SCNs

Home > Supreme Court’s Ruling on DRI Officers as ‘Proper Officers’ for Issuing SCNs

Introduction

The Supreme Court examined a series of legislative, administrative, and judicial developments regarding the authority of officers like the Directorate of Revenue Intelligence (DRI) to issue Show Cause Notices (SCNs) under Section 28 of the Customs Act, 1962. Below is a detailed analysis:

Background and Evolution
Initial Controversy (Sayed Ali Case, 2011)	• The Supreme Court in “Sayed Ali” held that the Commissioner of Customs (Preventive) (CCP) was not a “proper officer” under Section 2(34) of the Customs Act. • Without this designation, CCP lacked jurisdiction to issue SCNs under Section 28. • As a result, SCNs issued by CCP were invalid, raising doubts about the authority of other officers, including those from DRI, to issue SCNs.
Legislative Response (Post- Sayed Ali)	To counter the implications of Sayed Ali, the government introduced: 1. Amendments via Finance Act, 2011: Section 28 was revamped, and Explanation 2 was added to specify that non-levy, short-levy, or erroneous refunds before April 8, 2011, would be governed by the old provisions of Section 28. 2. Section 28(11) via Validation Act, 2011: This provision retrospectively deemed all customs officers, appointed under Section 4(1), as “proper officers” under Section 28 for both past and future cases. 3. Notification No. 44/2011 (July 6, 2011): Assigned proper officer functions to DRI officers for assessment and reassessment purposes under Sections 17 and 28.
Conflicting High Court Rulings	1. Sunil Gupta (Bombay High Court): Upheld the jurisdiction of DRI officers as proper officers under Section 28. 2. Mangali Impex (Delhi High Court): Held that Section 28(11) did not empower DRI officers to issue SCNs for periods before April 8, 2011
Both judgments were challenged before the Supreme Court. Canon India Case (2021)	The Supreme Court in Canon India ruled: 1. DRI officers are not proper officers unless explicitly entrusted with functions under Section 6 or through specific assignments by CBIC or the Commissioner of Customs. 2. This ruling invalidated many SCNs issued by DRI officers.

Issues Reviewed by the Supreme Court
1. Authority of DRI Officers to Issue SCNs	• Notifications and circulars (e.g., Circular No. 4/99-Cus. and Notification No. 44/2011) already conferred proper officer powers on DRI. • The Court found that Canon India failed to consider these statutory provisions.
2. Interplay Between Sections 17 and 28	• Section 17 governs assessment and reassessment, while Section 28 governs post-clearance recovery of duties via SCNs. • The Court clarified that issuing SCNs under Section 28 is distinct from the assessment functions under Section 17.
3. Use of ‘The Proper Officer’ in Section 28	• The term “the proper officer” in Section 28 does not restrict jurisdiction to the officer who cleared the goods under Section 17. • Instead, it refers to any officer specifically assigned functions under Section 5.
4. Constitutional Validity of Section 28(11)	The provision was upheld as it retroactively validated the actions of customs officers, including DRI, as proper officers for issuing SCNs.
5. Amendments in Finance Act, 2022	Introduced Section 110AA to clarify that only officers assigned jurisdiction under Section 5 could issue SCNs under Section 28.

Observations and Findings
1. Error in Canon India Judgement	• Canon India overlooked critical statutory provisions and notifications empowering DRI officers. • This led to an erroneous conclusion that DRI officers lacked jurisdiction
2. Validity of Notifications and Circulars	Notifications like No. 44/2011 and earlier circulars validly assigned functions under Section 28 to DRI officers.
3. Policy Against Multiple SCNs	The Customs Department’s policy ensures that once an SCN is issued by one officer, no other officer can issue another SCN for the same matter, addressing concerns of overlapping jurisdiction.
4. Distinct Roles Under Sections 17 and 28	• Section 17 deals with initial assessment, while Section 28 pertains to post-clearance recovery, which often follows investigations by agencies like DRI. • These functions are separate, and Section 28 does not depend on the officer who performed the Section 17 assessment.
5. Constitutionality of Amendments	Amendments introduced via the Finance Act, 2022, were held to be a valid exercise of legislative power.

Way Forward
1. Disputes on SCNs:	SCNs already issued by DRI and other officers, previously challenged on jurisdictional grounds, now stand valid, provided they were issued within the limitation period.
2. Adjudication of Pending Matters:	With the jurisdiction issue resolved, future proceedings will focus on the merits of individual cases.

SBC Comments
1. Guidance on Jurisdictional Authority	This ruling provides clear guidance on the jurisdictional authority of the Directorate of Revenue Intelligence (DRI) and other officers under the Customs Act, eliminating doubts about their roles and responsibilities.
2. Resolution of Procedural Uncertainties	It addresses and resolves procedural uncertainties, ensuring that the legal process is streamlined and consistent across cases.
3. Clarity on SCNs and Legal Validity	The decision upholds the legitimacy of past and future SCNs, offering clarity on their issuance and validity, thereby reducing legal challenges on this ground.
4. Establishment of a Structured Framework	A structured framework is established for handling disputes, ensuring that cases are dealt with efficiently and equitably.
5. Prevention of Jurisdictional Overlap	By defining the scope of authority, the ruling limits the misuse of overlapping jurisdictions between enforcement bodies, promoting fair administration of customs laws.

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AP Industrial Development Policy

Home > AP Industrial Development Policy

Introduction

Andhra Pradesh’s strategic location and long coastline have fostered a strong trade ecosystem, with major ports connecting India’s interior to global markets.

Andhra Pradesh used digitization and key reforms to streamline industrial approvals, achieving the top spot in India’s “Ease of Doing Business” rankings by the Department for Promotion of Industry and Internal Trade.

Need for a New Industrial Policy 2024-29

For nearly 30 years, companies have invested heavily in Asia for its low costs and large consumer market, but this has led to a risky overconcentration in a few countries. To counter rising costs, supply chain risks, and geopolitical uncertainties, companies are now seeking diverse production hubs, with India emerging as a prime option due to its economic reforms, skilled workforce, competitive costs, and strong international ties. While India’s advantages make it an appealing alternative, continued reforms are essential to fully leverage its potential in global supply chains.

Through its renewed industrial policy, the state of Andhra Pradesh aims to continue such a reform-based agenda

Policy Period and Applicability

Policy Period and Applicability
Policy period	5 years from the date of the policy notification (i.e 26-10-2024) or till the new policy is announced.
Applicability	a) New and existing enterprises investing and establishing new units. b) Existing enterprises investing in the expansion of units.
Approvals	Needs to obtain Consent of Operation and commence commercial production during the operative period of the Policy, unless otherwise exempted through a G.O., to be eligible to claim incentives under this policy
Investment Cut-off date for eligibility of Incentives under new policy	This policy will replace IDP 2023-27 upon notification, but enterprises currently benefiting from IDP 2023-27 may continue to receive those benefits till the end of its operative period.

Focused Sectors:

The Andhra Pradesh Industrial Development Policy (4.0) 2024-29 identifies “sustenance” and “propelling” sectors as the target areas for growth:

1.Sustenance Sectors:

These are sectors with a well-established presence in the state, contributing substantially to its GSDP and employment. They include:

1 Chemicals and Petrochemicals

2 Food, Agro, and Marine Products

3 Textiles and Apparel

4 Metals and Alloys

5 Cement and Building Materials

2. Propelling Sectors:

1.These sectors are rapidly expanding, offering the potential to integrate Andhra Pradesh further into global supply chains. These sectors include:

1 Electronic Manufacturing

2 Renewable Energy and Electric Vehicles

3 Pharmaceuticals and Biotechnology

4 Aerospace and Defense

5 Logistics and Warehousing

By focusing on these targeted sectors, the policy aims to leverage Andhra Pradesh’s strengths and position it as a hub for industrial growth and sustainable development

Download To Know More About Projects and respective incentives

Policy Implementation Summary:

1. State Investment Promotion Board (SIPB): Chaired by the Chief Minister, SIPB meets monthly to expedite decisions on industrial projects and approve mega projects.

2. State Investment Promotion Committee (SIPC): Chaired by the Chief Secretary, SIPC, which includes key secretaries and officials, meets monthly to monitor investment policies, large projects, and proposals for mega projects. SIPC also advises SIPB on amendments and incentives, though final approval remains with SIPB.

3. Operating Guidelines: Detailed guidelines on definitions and procedures for incentives will be issued separately.

Where can SBC help:

Our Incentives & Refunds team will assist you in

Analyzing eligibility for Incentives and refunds
Documentation review
Application for Incentives and reimbursements
Documentation review
Resolving issues with authorities

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AP Integrated Clean Energy Policy 4.0

Home > AP Integrated Clean Energy Policy 4.0

Introduction

India’s government has set ambitious climate goals in line with its Nationally Determined Contributions (NDCs), aiming to install 500 GW of renewable energy (RE) capacity by 2030. A key part of this effort is the “National Green Hydrogen Mission” launched in 2023, targeting 5 million tonnes of green hydrogen production per year by 2030 to establish India as an export leader in clean fuel. Andhra Pradesh has emerged as a renewable energy leader, expanding its RE capacity from 1.3 GW in 2014 to 9.5 GW in 2024. To further advance these goals, the state government introduced the “Andhra Pradesh Integrated Clean Energy Policy, 2024. ”This policy seeks to add over 160 GW of RE capacity and attract investments worth INR 10 lakh crore, potentially creating 750,000 jobs. This policy aims to establish Andhra Pradesh as a clean energy hub and foster economic self-reliance.

Operating Period and Policy Scope

The Policy is set to operate for five years from its issuance date (i.e., from 30-10-2024), focusing on various clean energy technologies, including

Solar Power
Wind Power
Wind-Solar Hybrid Power
Mini and Small Hydro
Energy Storage
Green Hydrogen and its derivatives
Biofuels
Electric Mobility-EV Charging Infrastructure
Renewable Energy Manufacturing Projects

All Clean Energy Projects and RE Manufacturing Projects availing incentives under this policy shall not be eligible for any additional incentives under the AP Industrial Development Policy (IDP) or other policies issued by GoAP .

Migration of Projects from Previous Policies

Projects approved under previous policies may migrate to this policy if they meet conditions, such as demonstrating progress. Migrated projects must comply with the new policy’s charges and timelines but may adjust previous payments made under earlier policies.

All the projects allocated under previous policies that are unable to migrate because of non- adherence to timelines stated therein and also not commissioned / that have not been completed as per the timelines including extension(s)/ conditions shall be treated as deemed cancelled and the allocated resources will be made available for fresh allocation under the ICE policy

Eligibility for Clean Energy Projects

Entities Eligible

Registered companies, government entities, partnership firms, individuals, and all APDISCOM consumers can establish clean energy projects for electricity sale or captive use, per the Electricity Act – 2003, as amended from time to time.

Project Requirements

Developers must submit a Detailed Project Report (DPR) to the State Nodal Agency (State Nodal Agency ) outlining technical and financial capabilities.

Evaluation by State Nodal Agency

State Nodal Agency will assess current capacities and the technical, financial, and commercial feasibility of proposals, ensuring developers have the necessary capabilities.

Technical Experience

Developers should have prior experience in renewable energy (RE) or relevant infrastructure projects.

Net Worth Requirements

• Solar: Rs.50 Lakhs/MWp

• Wind: Rs.100 Lakhs/MW.

• Pumped Storage Power, small and Mini Hydro: Rs.50 Lakhs/MW.

• No net worth requirement for RE manufacturing, Green Hydrogen (GH), and Biofuel projects, but a Detailed Project Report (DPR) is mandatory.

Land Facilitation, Power Evacuation, and Allotment

1. Land and Substation Availability: The State Nodal Agency (State Nodal Agency ) will provide a quarterly list of available government land parcels, while APTRANSCO will list substations suitable for power evacuation.

2. Land Allotment Process: Developers must apply for land allotment to the respective government department. State Nodal Agency will facilitate the process by coordinating between the department and developers.

3. Lease and Allotment Terms: Government land can be leased to developers for up to 30 years (or 33 years for Pumped Storage Power, Mini, and Small Hydro Projects) as per the Andhra Pradesh Land Allotment Policy 2012. Land used for Clean Energy Projects will receive deemed non-agricultural status, with applicable land conversion fees exempted.

4. Land Purchase Option for Pumped Storage Power & Hydro Projects: Developers of Pumped Storage Power and Mini/Small Hydro projects can opt to buy government land outright at a minimum rate of INR 5 lakh per acre.

5. Lease Rates: Different rates apply based on the project type:

Clean Energy Projects: INR 31,000/acre/year, with a 5% increase every two years.
Biofuel Projects: INR 15,000/acre/year (only for government land), with the same 5% escalation.
Green Hydrogen Hubs: INR 1,00,000/acre/year (only for government land at ports).

6. Forest Land: Developers must apply through the State Nodal Agency for forest land allocation per the forest department’s guidelines.

7. Private Land: Developers planning projects on private land must handle land acquisition independently.

Resource Allocation

State Nodal Agency’s Role in Resource Allocation and Land Prioritization-

Facilitation by State Nodal Agency: The State Nodal Agency will help developers with resource allocation and project feasibility checks with APTRANSCO/APDISCOMs.
Allocation Basis: Resources will be allocated on a first-come, first-served basis. However, Renewable Energy (RE) Manufacturing and biofuel projects, which generate high employment, will receive priority.
Priority for Land Allocation: Land is allocated based on project value addition (INR per acre) in the following priority order:

Statutory Clearances

a) All the Clean Energy Projects (except Pumped Storage Power, Mini & Small Hydro projects) shall be exempted from obtaining any NOC/Consent for establishment under pollution control laws from the AP Pollution Control Board.

b) In case of Pumped Storage Power, Mini & Small Hydro projects, the State Nodal Agency shall facilitate in faster issuance of Environmental Clearances (EC) & Forest Clearances (FC).

Renewable Energy Certificate (REC)

• Projects developed under this policy are eligible for Renewable Energy Certificate (REC) benefits, following APERC Renewable Power Purchase Obligation regulations, 2022, and any future amendments.

• Deemed injection of in-house or co-located solar generation by prosumers is also eligible for REC benefits per guidelines in APERC Regulation No. 5 of 2022.

Single Window Clearance

NREDCAP will develop a portal for facilitating single window clearance for all projects under this policy. The services of this single window clearance portal will be made available to all the projects under this policy for obtaining time-bound statutory clearances.

Download To Know More About Projects and its Incentives

Project Timelines

Projects using resources allocated by GoAP must follow policy-defined timelines; projects allocated via bidding without state resources follow bid document and Power Purchase Agreement timelines.
Projects with land and resource allocation by SNA must meet milestones set by the SNA, divided into two phases: Allotment and Project Construction Schedule.
Allotment Phase: Requires meeting 7 milestones, including payment of fees, DPR approval, connectivity approval, land agreement, and financial closure.
Construction Schedule Phase: Requires meeting 4 milestones, including equipment order, construction start, mid-term status, and project commissioning
PSP projects may receive a maximum extension of 12 months, while other projects are eligible for a 6-month extension.
Developers must return resources to SNA within 14 days of cancellation notice, allowing reallocation to others.
SNA grants time extensions at INR 20,000 per MW/month (plus GST).
Additional delays (beyond 6/12 months) incur a penalty of 0.25% of project cost per quarter, up to 6 months. No incentives apply beyond this period.
If only part capacity is commissioned within the allowed time, the remaining capacity is canceled, and the Performance Bank Guarantee (PBG) for un-commissioned capacity is forfeited.

Policy Implementation

• The State Investment Promotion Committee (SIPC) and State Investment Promotion Board (SIPB) expedite investment decisions in Andhra Pradesh.

• NREDCAP receives, screens, and evaluates Clean Energy and RE Manufacturing investment proposals.

• After NREDCAP’s review, proposals go to the Energy Department, which submits them to SIPC.SIPC scrutinizes and forwards proposals to SIPB for review.

• SIPB recommends proposals to the Government of Andhra Pradesh, which has the final approval authority.

Where can SBC help

Our Incentives & Refunds team will assist you in

Analyzing eligibility for Incentives and refunds
Documentation review
Application for Incentives and reimbursements
Documentation review
Resolving issues with authorities

Key Rate Changes and Amendments Following the 55th GST Council Meeting

1. Rate Decreased:

2. Rate Increased:

3. Rates Clarified:

4. RCM Amendment related to Sponsorship Services-

Before Amendment:

After Amendment (w.e.f.16-01-2025):

SBC Comments:

5. Amendment related to

Composite Dealers-

Before Amendment:

After Amendment (w.e.f.16-01-2025):

SBC Comments:

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NFRA Auditor and Audit Committee Communication Series - ECL

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Objective

Target area(s)

Recommendations – Key Considerations for Audit Committees

References – Standards and Guidance for Auditors

Global Context and Best Practices

Conclusion

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What Needs to Be Reported?

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Medium-Term Actions

Long-Term Actions

Government and Regulatory Guidance

Implications for Businesses

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FIXED ASSETS Physical Verification and Tagging

Offerings

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Methods are briefly discussed below.

BOOK – FLOOR

FLOOR – BOOK

Physical Verification of Fixed Assets:

Definition:

Objectives:

Frequency:

Importance of Regular Physical Verification:

Tagging Fixed Assets with Barcode or QR Code:

Implementing Physical Verification and Tagging:

Challenges and Considerations:

Best Practices for Effective Tagging and Verification:

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Rule 86B: The Most Ignored but Important GST Provision You Need to Know

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AP Policy for Establishment of Private Industrial Parks with ‘Plug and Play’ Industrial Infrastructure (4.0) 2024-29

Introduction

Objectives-

Executing Agency-

What are covered under the scope of the policy?

A Industrial Zones and Locations