Akshaya tritiya - Gold

“The story of gold has a deeper message, one that has none of the transitory qualities of what we choose to use as money. Seen in this broader sense, the story of gold has no ending.” _ Peter Bernstein in The Power of Gold

When compared in world level India is considered to be as the largest consumer of Gold. Until 1990, Gold Control Act, huge quantity of gold was entering into India either through legal or illegal means. The private holders used to hold around 10 tola bars of gold which would be converted into jewellery during family functions. Investment in 22 carat gold still beats the security markets and it still remains the favoured mode of investment.

This attitude of the people has paved way for the banks to bring in the Gold Deposit Scheme, and even sale of gold through Banks. While, the government has brought in various regulations and restrictions (restriction on gold loans, unregulated deposits scheme ordinance 2019 and so on), inorder to ensure that the liquid cash flows back into the markets (security market).

As per the report of the World Gold Council in March 2019, it is observed that India has the 11th largest gold reserve and the current holding pegged at 607 tonnes. India would have been at the tenth position had the list included only countries. International Monetary Fund (IMF) ranks third on the list.

The World Gold Council reports: “In the longer term, we are confident that India’s favorable demographic trends, the growing affluent middle class and declining age profile, should ensure a buoyant consumption growth."

India produces only 0.5% of its annual gold consumption and the remaining is imported. The import of gold is roughly around 700 Tons per annum.

Market condition: When compared to the sale on Akshaya Trithiya previous year the percentage of sale of gold in quantity has gone up by nearly 30 %, this is the start for the regrowth of the gold market as the people try to buy gold with all the amount that they possess despite the regulatory restrictions.

History of gold during inflation: In 1970’s gold was valued as per the gold standards. The inflation during 1970’s was up 306% and the value of the gold was officialy $35 an ounce. Despite the increase in inflation the gold which was priced at $850 per ounce in 1980 had dropped down to $300 in 2001 losing 65% of its value. On a study it is observed that inflation does not necessarily translate into higher gold prices.

Demand for Gold: Despite the risk of fall in Gold prices it still has its market due to a. fear of inflation, b. the fear that most of the commercial bonds or other paper documents may lose their intrinsic value c. Looking at the history it is observed that despite the fall of its prices on a temporary basis it is believed that the prices of Gold would continue to increase.

FAQ’s on Specified Companies (Furnishing of information about payment to micro and small enterprise suppliers) Order, 2019

1.    Who are covered under this order?

All the companies where the payments to MSME are due for more than 45 days.

2.    Is it mandatory to file Initial return as the form was made available in the month of May 2019?

Yes, It is necessary to file initial return as the information as on January 22, 2019 is to be furnished with the MCA by May 30, 2019.

3.    Due date for filing the half yearly return for the period ended March 2019?

The half yearly return for the period October 2018 – March 2019 is to be filed by May 30, 2019.

4.    Due date for filing initial and half yearly returns?

Periodicity of the return	Due date for filing
Initial Return (one time only)	May 30, 2019
Half yearly return April – September October - March October 2018 – March 2019	October 31 April 30 May 30, 2019

    

5.    How do you identify MSME?

As defined under MSME Act, MSME’s are classified in two classes as Manufacturing Enterprises and Service Enterprises

Manufacturing Sector
Enterprises	Investment in plant & machinery
Micro Enterprises	Does not exceed twenty five lakh rupees
Small Enterprises	More than twenty five lakh rupees but does not exceed five crore rupees
Medium Enterprises	More than five crore rupees but does not exceed ten crore rupees
Service Sector
Enterprises	Investment in equipments
Micro Enterprises	Does not exceed ten lakh rupees:
Small Enterprises	More than ten lakh rupees but does not exceed two crore rupees
Medium Enterprises	More than two crore rupees but does not exceed five crore rupees

Specified Companies (Furnishing of information about payment to micro and small enterprise suppliers) Order, 2019

MCA Order

Specified Companies (Furnishing of information about payment to micro and small enterprise suppliers) Order, 2019

Dated:  January 22, 2019

Applicability: All companies who gets supplies of goods or services from micro and small enterprises (MSME) and whose payments to MSME suppliers are pending for more than forty five days from the date of acceptance or the date of deemed acceptance of the goods or services as per the provisions of section 9 of the Micro, Small and Medium Enterprises Development Act, 2006 (27 of 2006).

Periodicity of the return:

Periodicity of the return	Due date for filing
Initial Return (one time only)	May 30, 2019
Half yearly return April – September October - March October 2018 – March 2019	October 31 April 30 May 30, 2019

       

Content of the return:

Total amount that is due. 

Reasons for Delay in amount of payments due

Place of Supply under GST

Valuation Under GST

Introduction

The valuation of goods/ services that are provided by the service provider to the recipient is vital for the purpose of calculating GST. The valuation under GST is governed by the, GST Valuation (Determination of Value of Supply of Goods and Services) Rules, 2016.

Valuation / Methods of determining the value of goods

The methods of determining the value of goods is broadly divided into two

Monetary Consideration

Some of the valuations methods where the consideration is fully monetary are explained below:

Transaction Value Method:

-          Value determined in monetary terms

-       Taxable value is the transaction value that is agreed by the seller and the  recipient

-          While determining the transaction value, one has to consider the following:

Taxes(excluding GST), packing expense, insurance, interest or late fees or penalty for delayed payment, any subsidies, trade and other discounts and other transactions that affect the price of that particular goods / service.

-    Certain types of discounts to be excluded like, trade discounts, quality discounts and so on

Comparison Method:

-   When the value cannot be determined by the above method then the transaction value of the like goods/ services supplied or provided to the other customers are considered.

-      While determining the value under this method, the following have to be considered between the valued goods and compared goods:

o     date of supply

o     commercial value and quantity levels

o     composition, quality and design

o     freight and insurance depending on the place of supply

Computed Value Method

-     When the value cannot be determined by any of the above said methods then the transaction value is determined based on the computed value method, in the below manner:.

-    While determining the value under this method, the following is to be considered

o        cost of production, manufacture/ processing of goods, cost of provision of service

o          design or brand charges/ royalty incurred, if any

o     other general expenses incurred or profit earned with regard to the goods/ services being valued

Residual

When the value cannot be determined by any of the above said methods then the transaction value is determined in a reasonable manner considering the principles and general provisions of the rules.

Query: what is reasonable manner?

Valuation in case of Pure Agent

When a pure agent:

-       Enters into a contractual agreement with the recipient of services/ goods

-       Does not intend nor holds the title of the goods/ services

-       Does not use the goods/ services so procured

-       Gets reimbursed at actual incurred for procurement of the goods/ services.

Valuation:

-        The expenditure / cost incurred by the service provider as a pure agent shall be excluded from the value of taxable service if the following is satisfied:

  o   Service provider acts as a pure agent of the recipient of service / goods while making payment to the third party

  o   The recipient uses the goods/ services procured by the service provider in the capacity as a pure agent.

  o The liability to make payment to the third party lies on the recipient of service, however he authorized the service provider to make payment on his behalf.

  o   To maintain separately the details of payments made by the service provider

  o   The invoice to clearly indicate the payments made by the service provider on behalf of the recipient

  o   The service provider to claim only such amount paid by him to the third party on behalf of the service recipient

  o   Procurement of such goods/ services as a pure agent is in addition to the services that he provides.

Valuation in case of Money Changer

-       The value of the taxable services such as purchase/ sale of foreign currency, money changing, provided by the money changer is determined on the following:

  o   to consider the RBI reference rate at the time of conversion of the currency from / to INR and to multiply it with the total units of currency

  o   if the RBI reference rate is not available then the value shall  be 1% of the gross amount of INR provided/ received by the person changing the money

  o if the currencies involved in exchange is not INR then the value shall be equal to 1% of the lesser of the two amounts the person changing the money would have received by converting the two currencies into INR.

Non-Monetary Consideration

Where, the consideration for supply includes non-monetary consideration, the following methods are to be adopted to determine the taxable value:

   a)   Open Market Value of such supply (full value of money excluding taxes under GST laws, payable by a person to obtain such supply at the time when supply being valued is made)

   b)   Total money value of the supply i.e. monetary consideration plus money value of the non-monetary consideration

    c)   Value of supply of like kind and quality

    d)   Value of supply based on cost i.e. cost of supply plus 10% mark-up

   e)   Value of supply determined by using reasonable means (Best Judgement method)