e-NewsLetter e-NewsLetter - Baroda Branch of WIRC of ICAI

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Baroda Branch of WICASA of The Institute of Chartered Accountants of India e-NewsLetter “Leveraging Strength, Catalyzing Tomorrow” Reason for going Abroad- Maximum Amount Allowed 1. For tourism (Other Than Nepal and/or Bhutan) - Aggregrate amount of USD 10,000 for any one financial year, on self-declaration basis, irrespective of the number of visits undertaken during the year.* *You can avail this facility, even you are availing facility while visiting foreign for employment or immigration or studies. 2. For Tourism to Nepal and/or Bhutan A resident Indian is allowed to take INR of denomination of Rs.100 or lesser denomination to Nepal and Bhutan without limit. 3. For Business Trip (other than to Nepal and/or Bhutan) USD 25,000 per visit** **Business Visits means visits in connection with attending of an international conference, seminar, specialised training, study tour, apprentice training, etc. If you want release of foreign exchange exceeding USD 25,000 for business travel abroad (other than to Nepal and Bhutan), irrespective of the period of stay, requires prior permission from the Reserve Bank. 4. For Business Trip (To Nepal and/or Bhutan) No release of foreign exchange is admissible 5. For Medical Treatment USD 100,000 or its equivalent*** *** AD Category-I banks and AD Category-II, may release foreign exchange up to USD 100,000 or its equivalent to resident Indians for medical treatment abroad on self-declaration basis, without insisting on any estimate from a hospital/doctor in India/abroad. A person visiting abroad for medical treatment can obtain foreign exchange exceeding the above limit, provided the request is supported by an estimate from a hospital/doctor in India/abroad. An amount up to USD 25,000 is allowed for maintenance expenses of a patient going abroad for medical treatment or check-up abroad, or to a person for accompanying as attendant to a patient going abroad for medical treatment/check-up. The amount of USD 25,000 allowed to the patient going abroad is in addition to the limit of USD 100,000 mentioned above. 6. For Studies Student can avail this from AD Category-I bank and AD Category-II. USD100000 or the estimate received from the institution abroad, per academic year, whichever is higher. 7. For Employment USD 100,000 on the basis of self-declaration Withdrawal Period : You can withdraw Permissible foreign exchange 60 days in advance. In case it is not possible to use the foreign exchange within the period of 60 days, it should be immediately surrendered to an authorized person. However, residents are free to retain foreign exchange up to USD 2,000, in the specified manner. Payment Mode : The value of foreign currency which we want to carry if, it is upto Rs. 50000 , then you can pay that in Cash. If, the value of foreign currrency is more than Rs. 50000, entire payment should be made by way of a crossed cheque/banker’s cheque/pay order/demand draft/debit card/credit card/prepaid card only. Surrender of foreign currency : When you return from a foreign trip, travellers are required to surrender unspent foreign exchange held in the form of currency notes and travellers cheques within 180 days of return. However, they are free to retain foreign exchange up to USD 2,000, in the specified manner. You can hold foreign coins without any limit. Usage of Cards : Holder of International Credit Cards (ICCs)/ATMs/Debit Cards can use it for travel abroad in connection with various purposes and for making personal payments like subscription to foreign journals, internet subscription, etc. If the person has a foreign currency account in India or with a bank overseas, he/she can even obtain ICCs of overseas banks and reputed agencies. Carrying Indian currency : In India, Residents are free to take outside India (other than to Nepal and Bhutan) currency notes of Government of India and Reserve Bank of India notes up to an amount not exceeding Rs. 7,500 per person. They may take or send outside India (other than to Nepal and Bhutan) commemorative coins not exceeding two coins each. A resident of India, who has gone out of India on a temporary visit, may bring into India at the time of his return from any place outside India (other than Nepal and Bhutan), currency notes of Government of India and Reserve Bank of India notes up to an amount not exceeding Rs. 7,500. Foreign currency to India : A person coming into India from abroad can bring with him foreign exchange without any limit. However, if the aggregate value of the foreign exchange in the form of currency notes, bank notes or travellers cheques brought in exceeds USD 10,000 or its equivalent and/or the value of foreign currency alone exceeds USD 5,000 or its equivalent, it should be declared to the Customs Authorities at the Airport in the Currency Declaration Form (CDF), on arrival in India. Export of gifts : A person resident in India is free to send (export) any gift article of value not eaxceeding Rs. 5, 00,000 provided export VOL. VI l JULY 2012 10 “Wisdom begins in wonder.”
Baroda Branch of WICASA of The Institute of Chartered Accountants of India of that item is not prohibited under the extant Foreign Trade Policy and the exporter submits a declaration that goods of gift are not more than Rs. 5, 00,000 in value. Export of goods or services up to Rs. 5, 00,000 may be made without furnishing the declaration in Form GR/SDF/PP/SOFTEX, as the case may be. Revised Schedule VI EXPLANATION OF CURRENT ASSETS/LIABILITIES Contributed by: Mohd. Atiq Qureshi (CA. Final Student) The above bifurcation of assets and liabilities between current and non-current would require major reclassification in Balance Sheets of all companies and would have impact on the current ratio. Some of such instances of reclassifications are as under:- 1) Presently even the current maturities to long term debt are shown as part of long term debt and only disclosure of amount due to be repaid within one year is made. However, as per Revised Schedule VI current maturities to long term debt would be depicted as “Other Current Liabilities”. 2) As per old schedule VI interest accrued and due on long term loans were shown as part of long term loans but in Revised Schedule VI the same is shown as Current Liabilities. 3) Currently all loans and advances (except capital advances) are shown under Current Assets & Loans and Advances but now onwards the same need to be bifurcated between current and non-current, accordingly the sub heading of long term loans and advances has been introduced in Revised Schedule VI. 4) The provisions also need to be bifurcated among long term and short term, the latter one being classified as current, and former being classified as non-current e.g. employee related provisions ; accordingly sub heading of long term provisions has been introduced. Under old Schedule VI all provisions were being shown under Current Liabilities and Provisions. 5) Under old Schedule VI the trade receivables (Debtors) / trade payables (creditors) were always shown as Current, but in revised Schedule VI, these can also be shown as Non-Current. It appears that where the credit is offered on deferred credit basis or the payment is not expected to be received from debtors within normal operating cycle/ 12 months from reporting period, the same need to be disclosed as Non- Current. EXAMPLES OF CURRENT ASSETS/LIABILITIES For understanding the above definitions let us apply the same in following cases Question 1 : As on 31st March, 2011, a property developer has inventories of residential units which it expects to sell in three years. Historically similar residential units have been sold in three years. As of 31st March, 2012, should the inventories of residential units be classified as current or non-current assets? e-NewsLetter “Leveraging Strength, Catalyzing Tomorrow” Solution: Assets shall be classified as current when it satisfies any of the four criteria. Since the inventories of residential units in the given case, satisfy the given requirement i.e. it is expected to be realized in, or is intended for sell or consumption in, the entity’s normal operating cycle, the residential units should be classified as Current Assets. Question 2 : A primary school require a deposit to be paid upon enrolment in the school, should the student leave the school, this deposit is refundable within three months, However based on historical evidence the majority of students enrolling to primary school continue with school and receive the deposit back at the end of six year period. How should the deposits be classified? Solution: The deposit shall be classified as current liabilities. Despite the historical evidence that indicates that the majority of deposits are only repaid at the end of six years period, the deposits are payable on three month notice. Revised Schedule VI states that a liability should be classified as current when the entity does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting date. Therefore, the deposits should be classified as Current Liabilities. Open issues for SEBI 1) The Balance Sheet format prescribed under Clause 41 of the Listing Agreement, which is on the lines of existing Schedule VI, will now be inconsistent with the Revised Schedule VI Balance Sheet format. Based on the above guidance, we are of the following views on the issues raised: (a) Half yearly results: � � � Clause 41(V)(h) prescribes a format for presentation of Balance Sheet items at the end of half year. Though the clause specifically acknowledges that the format drawn from Schedule VI it does not allow automatic amendment in case of any change/revision in Schedule VI. Until new format is prescribed by SEBI, companies will have to continue to present Half-yearly Balance Sheet in old format. (b) Annual audited yearly results: � � Clause 41(V)(h) does not refer to any format for annual audited balance sheet. Two views seem possible until clause 41 is amended: a) View 1: Company can use the format used in its annual financial statements, i.e., as per the revised Schedule VI. b) View 2: Company should use the same format of balance sheet items in its half-yearly and annual audited results. As per the exposure draft of guidance note on Revised Schedule VI, this should be in the format of Revised Schedule VI. SEBI should take immediate steps to align the formats with New Schedule VI. VOL. VI l JULY 2012 11 “Powerful Dreams Inspire Powerful Action”
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