The Institute of Chartered Accountants of India (ICAI) has sought details on reports of alleged discrepancies in the books of the Anil Dhirubhai Ambani Group’s flagship company, Reliance
Communications (RCom), to see if it needs to initiate any action against the telecom major’s auditor.
The Department of Telecom (DoT) has appointed independent auditor that scrutinized the accounts
of RCom had found that the telecom major has under-reported revenues of Rs. 2,799 crore to the
Government, resulting in under-payment of Rs. 315 crore as license fee and spectrum charges during 2006-08.

The government has begun random audits of IT companies across the country on possible violations of the Software Technology Parks of India (STPI) Act, even as it mulls extending the benefits of this legislation to 2015.

The Securities and Exchange Board of India has proposed changes to the way public share offerings
are done, spelt out guidelines for smaller companies to raise capital through share sales, and called for more disclosures from listed companies to prevent delayed shocks in the form of holes in the books of accounts.

• Companies listed on SME exchanges to be exempted from eligibility norms applicable for IPOs & FPOs
• Minimum IPO application size and trading lot for small and medium enterprises to be Rs.1 lakh
• Companies wanting to list on SME platform should have maximum Rs.25 crore paid-up capital. For listing on NSE and BSE, minimum paid-up capital of Rs.10 crore to be required
• Shares reserved for a company’s employees in public issues will have a ceiling of Rs.1 lakh on the value of allotment per employee
• All listed entities, with subsidiaries, have an option to submit consolidated financial statements as per IFRS, but these entities will have to continue filing their standalone results as per Indian GAAP
• Companies have to give half yearly disclosure of balance-sheet items with audited figures or unaudited figures with limited review
• Companies will mandatory disclose audited results within 45 days of the end of the quarter. Results have to be disclosed within 60 days for those companies that opt to submit annual audited results on a stand-alone basis

US prosecutors who used wiretaps to make their insider trading case against billionaire Raj
Rajaratnam, founder of hedge fund firm Galleon Group, intent to use similar tactics to fight future
crimes on Wall Street.

China raised the amount that foreign funds can invest in stocks by 25% to $ 1 billion, encouraging
inflows after the benchmark index slumped into a bear market in August.

The Securities and Exchange Board of India (SEBI) has allowed stock exchanges to extend trading time by almost two-and-a-half hours, permitting them to operate between 9 a.m. and 5 p.m.

National Stock Exchange (NSE) has advised its members to ensure compliance with the Financial
Action Task Force (FATF)’s public statement, which is to protect the international financial system from the abuse of money laundering and terrorist financing.

Mukesh Ambani’s Reliance Industries (RIL) proposes give one bonus share for every share owned in the company for the first time in 12 years in a move intended to instill confidence in investors about the company’s growth prospects.

According to the Securities and Exchange Board of India (SEBI), all trades in corporate bonds
between mutual funds, foreign institutional investors, venture capital funds and RBI-regulated
entities would be cleared and settled through the National Securities Clearing Corporation or the
Indian Clearing Corporation from December 1, 2009.

Investors can now trade on the Bombay Stock Exchange in Exchange Traded Funds (ETFs) that
are exclusively available on the National Stock Exchange (NSE).

Pursuant to the recommendations made by the Secondary Market Advisory Committee of SEBI
and discussions with major stock exchanges and with a view to expand the reach of the markets
for exchange traded products, it has been decided to allow SEBI registered stock brokers (including
trading members of stock exchanges) to provide access to clients through authorized persons. The
framework governing the market access through authorized persons is prescribed. This framework
provides the minimum requirements and the stock exchanges and stock brokers may prescribe
additional requirements, as they may deem appropriate, in the interest of investors and market.
The authorized person shall not receive or pay any money or securities in its own name or account.
All receipts and payments of securities and funds shall be in the name or account of stock broker.
The authorized person shall receive his remuneration - fees, charges, commission, salary,
etc. - for his services only from the stock broker and he shall not charge any amount from the
clients.

A special bench of the Income Tax Appellate Tribunal (ITAT), Delhi has held that fees paid by
Indian broadcasting companies to foreign satellite service providers can be taxed in India. The foreign satellite companies held the view that the amount received by them from India cannot be taxed in India because they have no material or men or machinery or a combination of them in India.

The Punjab Government has decided to pay interest on delay in refund of value added tax (VAT) under the new industrial policy 2009. The time period for issuing VAT refunds has also been reduced
from 90 days to 60 days.

In a setback to telecom major Vodafone Essar, the Income Tax department has issued a show cause
notice to Vodafone International Holdings, alleging tax evasion in its $ 11.2 billion deal with Hutchison Telecommunications International Ltd. in 2007.In the 531-page notice sent under Section 201(1) and 201(1A) of the IT Act, 1961, it asked Vodafone to explain why it should not be held that “the tax department has competent jurisdiction to proceed against it for the default of non-deduction of tax at source” in the transaction.

The empowered committee of the State Finance Ministers has come up with the first discussion paper on Goods and Services Tax. The broad contours of the proposed GST structure are as under:

PROPOSED GST STRUCTURE
DUAL GST MODEL
The GST shall have two components:

• one levied by the Centre (CGST i.e Central GST ) and
• the other levied by the States (SGST i.e State GST)

Foreign investment in India can come broadly in form of

• Foreign Direct Investments (FDI)
• Foreign Portfolio Investments

It is clarified that service tax is not chargeable on the services provided in respect of tour undertaken
for carrying out Haj and Umrah Pilgrimage in Saudi Arabia by Indian pilgrims considering these as
export of service, provided they fulfill the other conditions of export as provided in Export of
Service Rules.

Egypt has offered India an exclusive industrial area in the Suez Canal Development Zone. India has
become the first country to which Egypt has made this rare offer.

The Reserve Bank of India (RBI) has decided to permit recognized stock exchanges to offer
currency futures contracts in currency pairs of Euro-INR, Japanese Yen-INR and Pound Sterling-INR, in addition to the US dollar-rupee contracts which are already permitted.

The Government of India has decided to include ready made garments along with textiles under the
rupee export credit interest rates subvention scheme with retrospective effect from December 1, 2008.

Interest rates on loans to commercial real estate sector may move up with the Reserve Bank of
India (RBI), increasing the provisioning requirement for advances to this sector from the present level of 0.4 per cent to 1 per cent.

As RBI has mandated that no bank can charge more than the prime lending rate for loans up to
Rs.2,00,000, bank have been working on thin margin but on the other hand, micro finance
institutions (MFIs) charge between 25 per cent and 50 per cent, with their average lending rate
hovering around 30 per cent.

Essar Group’s telecom holding company (ETHL Communications) has raised Rs. 4,280 crore by
issuing rated, listed, zero coupon, non-convertible debentures (NCDs) through private placement to
part finance the group’s refinery and steel businesses. The issue which opened on October 7, 2009 was oversubscribed by more than three times with over 20 investors across mutual funds, insurance companies and corporates. The Non-Convertible debenture issue was sold in two separate series of Rs. 2,250 crore each, maturing in July 2011 and December 2011. The yield for the series A and series B is 9.15% and 9.25% respectively.

Special Refinance Facility (SRF) to banks withdrawn under Section 17(3B) of the Reserve
Bank of India Act, 1934. In terms of this facility all scheduled commercial banks (excluding RRBs)
are provided refinance from the Reserve Bank equivalent to up to 1.0 per cent of each bank’s
Net Demand and Time Liabilities (NDTL). As per Second Quarter Review of Monetary Policy
2009-10, Banks cannot avail fresh refinance from the Reserve Bank under this facility from now
on wards.

Government will provide interest subvention of 2% p.a. to Public Sector Banks in respect of short-
term production credit up to Rs.3 lakh provided to farmers. This amount of subvention will be
calculated on the crop loan amount from the date of its disbursement/drawal up to the date of
repayment or up to the date beyond which the outstanding loan becomes overdue i.e. March 31,
2010 for Kharif and June 30, 2010 for Rabi, respectively, whichever is earlier, subject to a
maximum period of one year. This subvention will be available to Public Sector Banks on the
condition that they make available short-term credit at ground level at 7% p.a.

Mauritius vice prime minister and finance minister Ramakrishna Sithanen has strongly supported the
Double Taxation Avoidance Treaty (DTAA) it has with India. According to him, it is not a one-off
treaty between the two countries but that both the countries have such treaties with many other
countries and it is unfair to single out Mauritius and any unilateral move to change the terms of
the treaty would be in violation of international laws. He further said that the proposed direct tax
code of India which proposes treaty over-riding is also a unilateral move and against international
laws.

• Base Rate at 8.55 per cent taking 2008-09 data.
• Sub-base rate lending not viable.
• Norms to be applicable on loans with duration of one year and above, including working capital loans.
• Lending below Base Rate not to exceed 15 per cent of total incremental lending for the financial year.
• All new and existing loans that come up for renewal to come under the new rate.
• All loan categories currently not linked to the Base Rate, except credit card receivables,  loans to banks’ own employees, etc.
• Administered lending rate for small borrowers be deregulated.

The ceiling on interest rates on pre-shipment rupee export credit up to 270 days and post-shipment
rupee export credit up to 180 days had been stipulated at BPLR minus 2.5 per cent, valid up to
October 31, 2009. It has been decided to extend the validity of the above dispensation up to April
30, 2010.

The elections to the Central Council of the Institute of Chartered Accountants of India are scheduled on 4th and 5th December, 2009. At this juncture, it is therefore important to analyze some of the key agendas before the CA profession to be taken up by the Council of the Institute with the consultative process and the active participation of the members.

• Employment Opportunities: It is important to harness national and international employment opportunities for newly qualified Chartered Accountants as well as for mid- level and top level management positions.
• It is important to restructure education and training and to provide residential course for significant skill up-gradation of members empowering them to compete with MBAs and other professions globally.
• Introduction of IFRS and International Accounting and Auditing Standards have increased complexities coupled with extensive compliance requirements. We have chalked out a plan for simplification and reduction in complexities in accounting and audit especially for small and medium enterprises/ companies.
• Auditors’ Independence and appointment:The position of auditors has to be strengthened and duly empowered with independence. The power to appoint auditors by Board of Directors or those charged with governance has severely impacted the efficacy of audit.
• It is important to strongly pursue with RBI, MCA, SEBI and other regulatory authorities for appointment of Chartered Accountants as independent auditors, joint auditors and special auditors through empanelment in banks, listed entities and other entities in which public is substantially interested  and it is also important to ensure transparency in appointments.
• Professional Fee Scale: It is important to prescribe that the norms of eligibility for tendering are within reasonable professional standards and are not highly leveraged to suit to specific section. It is necessary to introduce minimum fee benchmark for all tendering assignments and to prohibit tendering in specific professional areas.
• To prescribe minimum fee benchmark for concurrent, revenue and inspection audit of banks, insurance, co-operative societies, public sector enterprises etc.
• To fully involve the members in industry in the Institute’s affairs and as members of the Councils, Committees and professional development and technical groups to utilize their immense talent to the advantage of the profession.
• To empower Chartered Accountants to be elevated as CFOs, CEOs and as entrepreneurs for setting up industries, businesses, funds and service organizations.
• To significantly increase professional opportunities for members in practice especially for younger members and smaller firms.