CA P.G.KUKREJA

Important sections in Maharashtra State Co-

operative Act relating to Audit & Reporting

RequirementsBY- CA P.G.KUKREJA

CA P.G.KUKREJA

Economic ActivitiesThree Sectors

a) Privateb) Publicc) Co-operative

Individually owned Business

• One Person -Owns -Controls -Operates -Benefits/Profits

Private Company

• Investors are owners• Profits shared among investors• Voting weighted according to number of share

investment

What is Co-operative???....

A cooperative is an autonomous association of persons united voluntarily to

meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically controlled enterprise.

CA P.G.KUKREJA

Professional Opportunities in Co-operative sector

Co-operative Sector1.Auditing2.Accounting3.Advisors4.Members in Governing Body

CA P.G.KUKREJA

Acts & Rules ApplicableCo-operative Societies Act

under which registered.Rules framed under the ActBye-Laws approved by the

RegistrarNotifications and orders issued

under the Power of Act, Rules.

CA P.G.KUKREJA

Development of Laws

• Co-op. Credit Societies Act, 1904- for credit• Co-op. Societies Act, 1912- for non credit• Co-op. Societies became a state subject in 1919• Various State laws• Multi State Co-op. Societies Act(MSCS) 2002• Now 97th Constitutional Amendment for co-ops.

CA P.G.KUKREJA

97th Constitutional Amendment for Co-op Reforms(Jan 2012)

• Amendment of Article 19 - A Fundamental Right.• Insertion of Article 43B makes it a Directive Principle of State.• Election Commission like authority mandated: “The

superintendence, direction & control of preparation of electoral rolls for, and conduct of, all elections to a cooperative society shall vest in such authority or body, as may be provided by the legislature of a state.”

CA P.G.KUKREJA

97th Constitutional Amendment contd.

• Fixed term of five years to elected board.• Active members- Economic participation & attending

meetings.• Professional mgt by expert & Functional Directors.• Equality by providing reservations for women & SC/ST.• Provides for Independent professional Audit.• Gives Right to Information to Members of Coop societies.• Empower Govt. to obtain periodic report & A/cs.• Provides for Offences relating to coop societies &

Penalties for such offences.• Principles of Good Governance.

CA P.G.KUKREJA

Gujarat High Court Decision

368(2). Power of Parliament to amend the Constitution and Procedure thereof.

Bill is passed in each house by a majority of the total membership of that House of not less than 2/3rd of that member of that House present & voting.

The amendment shall also require to be ratified by Legislatures of not less than ½ of the States by resolutions to that effect passed by those Legislatures.

CA P.G.KUKREJA

We therefore allow this Public Interest Litigation by declaring that the Constitution [97th Amendment] Act,2011 inserting part IXB containing Article 243ZH to 243ZT is ultra vires the Constitution of India for not taking recourse to Article 368(2) of the Constitution providing for the Ratification by the majority of the State Legislatures.

This order, however, will not affect other parts of the Constitution[97th Amendment] Act, 2011.

CA P.G.KUKREJA

CONCEPT OF ACTIVE MEMBER

• Section 2(19)(a-1)Active Member means one who - participates in the affairs of the co-operative society and - utilizes the minimum level of services or products of that

society as maybe prescribed in the bye laws • Section 26(1) A member shall be entitled to exercise such rights as provided

in the act, rules and bye laws.Provided that no member shall exercise the rights until:He has made such payment to the society in respect of membership or acquired such interest in the society - as maybe prescribed and specified under the by laws of the society

CA P.G.KUKREJA

CONCEPT OF ACTIVE MEMBER• Section 26(2) It shall be duty of every member of a society a) To attend one general body meeting in five years ( this clause not to apply if absence is

condoned by GB)b) To utilise minimum level of services atleast once in 5 years as per bye laws of the society.

Provided ;1) Member who does not perform above duties shall be classified as NON ACTIVE

MEMBER’.2) Society to inform classification within 30 days of the year3) Non active member for 10 years liable for expulsion4) Eligible to re classify as active member on complying.5) Appeal lies before registrar within 60 days of knowing6) Election done immediately – All members have voting lights

CA P.G.KUKREJA

ACTIVE MEMBER AS PER BYE LAWS

Provision made in new model bye laws- Housing.Bye law no.3 (xxiv) (a) defined an active member means a

person; 1) Who has purchased and or owns the flat / Unit in the

society . 2) Who attends at least one General body meeting of the

society in the previous five consecutive years.( this clause not to apply if absence is condoned by GB)

3) He has at least paid the amount equivalent to one year of society maintenance and service charges within a consecutive period of five years.

CA P.G.KUKREJA

ACTIVE MEMBER- As per bye lawsProvision made in New Model Bye laws Co-op Bank:Bye Law no. (14) Active Member“Active Member” means a person who has been

admitted as an ‘Ordinary Member” under the bye laws of the Bank and who complies following conditions:

1) To attend at least one general body meeting in the previous 5 consecutive yrs. (This clause not to apply, if absence is condoned by GB)

2) To utilize minimum level of services as provided on bye law no. 15 as following

CA P.G.KUKREJA

Active Member – As per Byelaws

Provision made in Co-op Bank New Bye laws no 15 model level of services for becoming Active Member:

Proviso I: Aggregate deposits in all types of accounts as per above for the continuous period of not less than ONE YEAR in the Bank.

Proviso II: ‘Borrower’ means an ordinary member, who is enjoying any type of sanctioned and availed credit facility of the Bank for continuous TWO YEAR during the last 5 years.

Sr. No.

Deposit on Prv List date

Share Capital(Rs.)

Deposit (Rs.) Or Loan(Rs.)

1 Upto Rs. 100 Cr. 500 3,000 50,000

2 Rs.100 Cr to Rs. 500 Cr 1,000 5,000 50,000

3 Rs. 500 Cr. & above 1,500 7,000 1,00,000

CA P.G.KUKREJA

AUTHORISED PERSON –As per MSC Act,1960• Sec2(2-A) of MSC Act, 1960 “Authorised Person” means any person

duly authorised by the Registrar to take action under the provisions of this Act.

• In Section 79(1A) of MSC Act, 1960-Every society shall file returns within 6 months of the close of F.Y. to which

the accounts relate, to the Registrar or the person authorised by him.• In section 82 of MSC Act, 1960 to submit Audit Rectification report:

Provided that, the registrar or the person authorised by him shall scrutinize the Audit rectification report accordingly and inform the society about such report within 6 months from the date of receipt thereof.

• Thus registrar can discharge his function by appointing an authorized person on his behalf .

CA P.G.KUKREJA

AUTHORIZED PERSON- contd.

• Person Authorised under Act to discharge responsibilities/obligations otherwise liable for Penal Actions

• Any Member of the Society any Committee member Entire Committee Auditor appointed by GB, any other person as per MCS Act who is made accountable.

• Person appointed by Registrar to discharge his functions – u/s 77A, 79, 82, 88 and any other sections.

• Any panel person any Officer any other person as per MCS Act, whom the Registrar has made Accountable.

CA P.G.KUKREJA

PROFESSIONAL MGT• Section 2(11-A) “expert director” means & includes a person having

experience in the field of Banking, management, Co-operation and includes a person having specialization in any other field relating to the objects and activities undertaken by the concerned society.

• Section 2(14-A) “Functional director” means & includes a Managing Director or a C.E.O by whatever designation called, or any of the Head of Department of the concerned society, nominated by the committee.

• Section 73-AAA(2) of the Act provides discussed hereinabove provides for co-option of 2 expert Directors and also one (upto 17 members) or two function directors (above 17 members) to bring professionalism in the working of co-operative societies.

CA P.G.KUKREJA

HSG SOCIETY BYE-LAWS: PROFESSIONAL MGT.

Housing Society Bye-Laws no 116(b) provides as under:1. The Committee of the society may co-opt “2 Expert

Directors” relating to the objects and activities of the society.2. The no. of such co-opted members shall not exceed 2 in

addition to the strength of the Committee.3. Such co-opted members shall not have the Right to Vote in

any election of the society & cannot be elected as office bearers of the committee.

4. 116(c) The Committee of the Society may co-opt 2 “Functional Director”, such members shall excluded foe the total com. Members & shall have no right to Vote.

CA P.G.KUKREJA

PROVISION MADE IN THE NEW MODEL BYE LAWS

Bye Law no. 116(a) provides that:“ Election of all the members of the committee shall

be held once in 5 yrs. before expiry of its term, in accordance with the provisions of Section 73 CB of the Act & the Rules/procedures framed there under.

Committee to intimate to the State Election Authority for holding of its election before expiry of its Term. On Failure – Committee ceases to hold Office after expiry & attract action by Registrar u/s 77A.

CA P.G.KUKREJA

PROVISION MADE IN THE NEW MODEL BYE LAWS

Bye Law no. 123 provides: “The 1st meeting of the newly elected &

outgoing Committee shall be held within 15 days from the date of constitution of the new committee as per Bye law no. 119 & the provisions of Section 73AAA”

CA P.G.KUKREJA

Democratic member control

The People who own and control and finance the cooperative are those who use it.

CA P.G.KUKREJA

Participation Roles

Co-operatives operate through the roles of Principal parties by passing Resolutions/taking decisions in their respective meetings.

Members in General MeetingsDirectors/Committee membersFunctional Director/CEO/MDEmployees/staff- As per above decisions

CA P.G.KUKREJA

Types of Societies

I. Type ‘A’ Societies-State level State Level Apex or Federal Co-operative Societies. Maharashtra State Co-operative Bank. Maharashtra State Co-operative Land development

Bank. Maharashtra State Co-operative Housing Finance

Corporation. Maharashtra State Co-operative Tribal Development

Corporation.

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Maharashtra State Cotton Growers Co-operative Marketing Federation.

All Co-operative Sugar Factories. All District Central Co-operative Banks. All Co-operative Spinning Mills. All Co-operative Milk Federations or Unions having average

per day milk collection 1,00,000 liters or more during the preceding fin-year.

CA P.G.KUKREJA

II. Type ‘B’ Societies All Co-operative Urban Banks. All Salary Earners Co-operative Banks. Primary Agriculture Co-op. Credit Societies and Adiwasi Co-op Credit

Societies having paid up share capital > Rs. 10 lakhs. Having Deposits > Rs.100lakhs. Salary earners Co-op Credit Societies having paid up share capital of >

Rs.1 crore All Govt. aided Co-op Processing Societies excluding Sugar Factories. All Govt. aided Co-op. Industrial Societies or Industrial Estates.

CA P.G.KUKREJA

Type ‘B’ Societies contd.All District or Taluka Co-op. Sale Purchase Unions.All District Central Co-op. Consumer Societies.All Divisional and District Co-op. BoardsAll Co-op. Milk Federation/Unions having Average per day milk collection < 1,00,000 liters during the preceding financial year.Any other District /Taluka Co-op. Federations/Unions which are not included in Type A Societies.

CA P.G.KUKREJA

III. Type ‘C’ Societies

All Primary Agriculture Co-op. Credit Societies and Adiwasi Co-op. Credit Societies having paid up share capital of < Rs. 10 lakhs.All Co-op. Credit societies having deposits not more than Rs. 100 lakhs or paid up share capital < Rs. 10lakhs.Salary Earners Co-op. Credit Societies having paid up share capital of < Rs. 100 lakhs, as per last audit report.Housing Societies having 100 and >100 members.All Primary Consumer Co-op. Societies.All Primary Co-op. Dairy, Poultry, Fishery, Piggery & Livestock Societies.All non aided Co-op. Industrial Societies/Industrial Estates.

CA P.G.KUKREJA

Type ‘C’ Societies contd.

All non aided Co-op. Processing Societies excluding Sugar factories.All types of Primary Co-op. Marketing Societies.All types of Primary Weavers (Handloom & Power loom ) co-op. Societies.Other Agricultural co-op. Societies.Co-o. lift irrigation & Water users Societies having 100 members more than 100 members.Any other society or class of societies not falling under Type A, B above or Type D below.

CA P.G.KUKREJA

IV. Type “D” Societies

All co-op Hsg having < 100 membersAll co-op. Lift Irrigation & Water user Societies having < 100 membersAll Labour Forest Co-op. Societies.Other General Co-op Societies

CA P.G.KUKREJA

PROVISIONS RELATING TO AUDIT

CA P.G.KUKREJA

SECTION 75(2A)

• Appoint Auditor /Auditing Firm from panel approved by State Govt. in its Annual General Meeting.

• File form of return to Registrar, Name of auditor & his consent within 30 days from date of AGM.

• Same Auditor shall not be appointed for more than 3 consecutive years.

CA P.G.KUKREJA

SECTION 81

• Audit shall be completed within 4 months from close of financial year.• Failed to appoint Auditor & to file return u/s 75(2A) or 79(1B), Registrar

shall appoint auditor from panel.• No Auditor accept audit of more than 20 societies excluding societies

having paid up capital of < Rs. 1 Lakh.

• Registrar shall submit audit report of every Apex society to State Government for being laid before both houses of State Legislature.

• Audit Report shall have: All particulars of defects or irregularities. In case of financial irregularities & misappropriation or fraud, auditor

shall investigate & report modus operendi, entrustment & amount involved.

CA P.G.KUKREJA

ELIGIBILITY OF AUDITOR FOR PANEL

• C.A. having fair knowledge of functioning of society & experience of at least one year in auditing of societies & working knowledge of मराठी.

• Auditing Firm- Fair knowledge of functioning of society & knowledge of मराठी.

• Certified Auditor- 1. Who holds degree. 2. Fair knowledge of functioning of society 3. 3 yrs experience in audit of society

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Section 81(2)

Audit shall be carried out as per Auditing Standards notified by State Government.

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Section 81(5B)

• Audit Report to submitted within 1 month from its completion & in any case before issuance of notice of Annual General Meeting.

• Any person is guilty of an offence, auditor shall file specific report to registrar within 15 days of date of submission of his report & after obtaining permission from registrar file FIR.

• Auditor who fails to file FIR, his name shall be removed from panel.

• Financial irregularities resulting loss of society, auditor shall prepare report & submit along with audit report

CA P.G.KUKREJA

Criteria for removal of name of Auditor from Panel

1. Non submission of Audit Report.2. Not Disclosing correct picture of accounts.3. Audit not completed within stipulated time u/s 81(1).4. Non submission of special report.5. Failure to file Special report.6. Failure to file F.I.R.7. Non submission of report of scrutiny.8. Test Audit or Re-audit – Omissions9. Auditor is borrower & conducted audit.10. Auditor or his family member is employee/ Ex-employee.11. Auditor conducting Concurrent or internal audit of concerned co-op

society.12. Auditor or family member is committee member of concerned co-op

society13.Auditor conducted audit without appointment order issued.

CA P.G.KUKREJA

SECTION 65 & RULE 49(a)• Amounts to be deducted before calculating Net Profit: Interest payables on loans & deposits Establishment Expenses Rent, Rates & Taxes Audit Fee Provision for depreciation Provision for Bonus Provision for Bad & Doubtful Debts Provision for Gratuity Capital redemption fund Provision for Depreciation in Investment Retirement Benefits Other claims in any other Law.

CA P.G.KUKREJA

SECTION 73CA DISQUALIF’N OF D’TOR

1. Defaulter to Society2. Default in payment of Loan3. Taken advance or anamat or goods on credit & not paid within 30 days

of demand or date on which advance availed whichever is earlier4. Committed breach of Co-operative Discipline.5. Classified as non-active member u/s 26(2).6. He carries business carried by society.7. Held responsible u/s 79 or 88.8. Incurred any disqualification under Acts/ Rules.9. Salaried Employee of any Society.10. Has > 2 children11. Guilty for any offence u/s 146 & convicted u/s. 147.

CA P.G.KUKREJA

RULE 107 (a)- Travelling expense of Directors

• Chairman or Vice Chairman- Federal Society, State level society, Sugar factory, spinning mill- by Air only- Attach ticket

• Director- Share capital 50crore or more can travel by train first class. Can claim 1 1/2 of actual fare .

• If ticket not attached – entitled to second class fare

CA P.G.KUKREJA

SECTION 28- RESTRICTION ON HOLDING SHARES

A MEMBER CANNOT HOLD SHARES OF I/5TH OF TOTAL SHARE CAPITAL OR MORE THAN RS. 20,000/-

HOWEVER STATE GOVT. BY NOTIFICATION IN OZ CAN SPECIFY ANY CLASS OF SOCIETY HIGHER/LOWER THAN THE ABOVE LIMIT.

CA P.G.KUKREJA

RULE 23- Valuation of shares

• Person ceases to be a member then share are returned to him or to nominee by making valuation of shares

Value per share=Net Worth No of shares Net Worth= Paid up share capital+ Free Reserves-Accumulated Loss - shortfall in provisions Eg1: NV=Rs.1000/-, Valuation= Rs. 400/- Society shall return share=no of shares x 400/- Eg 2: If the Valuation comes at Rs. 1,200/- society shall return Rs.

1,000/-per share.• Specialized Report u/s 88.

CA P.G.KUKREJA

SECTION 44ACHARGING OF INTEREST

• Urban Co-operative bank cannot recover as interest > the principal for Loan granted for Agriculture purpose

• Non Agriculture Loan up to Rs.10,000/-.• The above shall not apply to loan exceeding Rs.1lakh

given by Co-op Agri. & Rural Multipurpose Dev. Bank to any member.

CA P.G.KUKREJA

SECTION 43RESTRICTION ON BORROWINGS

• Only to extent as may be prescribed.• Limit as per Rule=Paid up share capital+ Reserve fund+ Building

fund- Accumulated Loss x 10.• Not Applicable- No financial assistance from Govt.• Not Applicable to C.C.S.E.

CA P.G.KUKREJA

SECTION 79(1A)

File returns within 6 months of close of financial year to registrar1) Annual Report of activities2) Its audited statements of accounts3) Plan for disposal of surplus4) List of amendment to bylaws5) Declaration of date of holding AGM & conduct of election

when due.6) Statement regarding Appointment of Auditor.7) Statement of Rectification of audit.8) Statement regarding Co-operative education & training.9) Contribution made to Co-operative education & training.10) Provisions made for contribution to Election Fund.11) Status of preparation of list of Active & Non Active members.

CA P.G.KUKREJA

SECTION 79(1B)

File return regarding name of auditor & his written consent within 1 month from AGM

CA P.G.KUKREJA

SECTION 81(1)(f)

Remuneration to Auditor/ Auditing firm

Borne by Society

Rates as may be Prescribed

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Section70- Investment of Funds

• Funds to be invested only in• DCC/SCB having A class in last 3 consecutive years.• Securities specified in Sec 20 of Indian Trust Act 1882• Shares/Bonds of societies having similar classification• CCSE shall invest its funds subject to guidelines issued by

RBI.• Any other mode permitted by Rules/general or special

order by Government.

CA P.G.KUKREJA

Loans to Nominal Members

For Purchase of Consumer Durables subject to ceiling:

Bank with Deposit • Upto Rs. 50 crores :- Rs.50,000/-

per borrower• Above Rs. 50 crore :- Rs.1,00,000/-

per borrower

CA P.G.KUKREJA

Aggregate Ceiling on Unsecured AdvancesOnly Applicable to Urban Co-operative Banks

-Should not exceed 10% of Total assets as per Audited Balance sheet of preceding F.Y.

Loan to Directors & their relatives

- Urban Co-operative Banks have been prohibited to grant Secured/Unsecured loans.

CA P.G.KUKREJA

Real Estate Sector Exposure

Urban Co-operative banks can provide loans for housing, real estate and commercial real estate upto10% of total assets.

For Housing loans to individual for purchase of Dwelling units upto25lakhs- Additional limit of 5% of total assets.

With effect from 31/10/2011, Tier I - Upto Rs. 30Lakh Tier II- Upto Rs. 70Lakh

CA P.G.KUKREJA

Exposure Norms

a) Individual Exposure:- Not exceeding 15% of Capital Funds

b) Group Exposure :- Not exceeding 40% of Capital Funds

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BRIDGE LOANS/INTERIM FINANCE

-Urban Co-operative Banks cannot grant Bridge/Interim finance.-Pending proposal of loan with TLIs.

CA P.G.KUKREJA

Loan against Shares/Debentures

Physical form- Rs. 5 lakh Demat form- Rs. 10lakh Margin 50% Within overall ceiling of 20% of own funds of bank. Urban Co-op Bank- prohibited to grant loans to stock

brokers and commodity brokers

CA P.G.KUKREJA

FINANCING FOR AGRICULTURE ACTIVITIES

Urban Co-operative Banks

Direct finance to membersnot through Primary Agricultural Co-op societies/Land Dev

Banks

No Objection Certificate

Follow scale of finance i.e. NCL

CA P.G.KUKREJA

Books of Accounts & Registers to be maintainedRule 65(1)

• Register of members in Form 1.• List of Active members in Form J1.• List of Non-active members J2.• Register of Shares.• Register of Debentures & Bonds.• Minute book of AGM.• Record of attendance of AGM.• Meeting book of Committee meeting & sub committee. • Cash Book, Day Book, Bank Book.• General & Personal ledgers.• Stock Register• Property Register in Form of X• Register of Auditor appointed & their written consent.• Register of Audit objection & rectification• Returns of society in form Y• Register of approved valuers in case of Banks(Property > 5 cr. 2 valuers to be approved)

CA P.G.KUKREJA

SECTION 81(2)

Audit shall include examination of :• Book entry transaction.• Personal expenses debited to revenue.• Whether loans have been shown as Deposits.• Financial assistance of government used properly.• Physical verification of Cash balance/securities.• Quick action against overdues.

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SECTION 82-Rectification of Defects

• Rectification Report to Registrar within 3 months.• Auditor’s remark on Report itemwise and submit report to

Registrar.

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Submission of Audit Report

1. Submission to Registrar & Society• Banks- In Form N1• Other than Banks- In Form N22. Accounting Policy in conformity with as issued by State

Govt./ICAI.3. Quantify effect of shortfall in various provisions, in

certifying Profit/Loss.

CA P.G.KUKREJA

AUDIT MEMORANDUMFORM N1 & N2

1. All Information & explanation to best of Auditor’s knowledge.2. Proper books of accounts as required by Act.3. Balance sheet and P & L / I & E show True & Fair view.4. Whether Accounting Stds have no adverse effect on

accounts.

CA P.G.KUKREJA

शुद्धी पत्रक

PROCEDURE FOR EMPANELMENT ADVERTISEMENT

TO BE ANNOUNCED

CA P.G.KUKREJA

COMPULSORY REGISTRATION FOR SOCIETIES & AUDITOR

Websites to be visited for Online Registration of Co-operative Societies.

http://sahakarayukta.maharashtra. gov.in/SITE/Home/Home.aspx

https://mahasahakar.maharashtra. gov.in

CA P.G.KUKREJA

CORPORATE GOVERNANCE IN CO-OPERATIVE SOCIETIES & BANKS

CONCEPT:1. Corporate Governance- “Just Doing Things Fairly”2. Inclusive definition covering policies & practices adopted

by corporate entity in achieving objectives.3. Significant at contextual & operational level rather than

conceptual level.4. Code of Corporate conduct.5. Shri Kumarmangalam Birla Committee- Listing Agreement

Clause – 49.

CA P.G.KUKREJA

Ensure Corporate governance in Co-operative Sector

• Principles of Democratic member control-through active member.

• Autonomous functioning.• Professional management.• Avoid Political Interference & corruption .• Improve administration & Improve reporting system

to govt. and members.• Good ACCOUNTING & AUDITING practices• Accountability on management & members

CA P.G.KUKREJA

RELEVANCE IN CO-OPERATIVES

Large Business/ Multinationals

Small Private Business

Co-operatives

Own Control Use

Own & Control Use

OwnerControl

Use

CA P.G.KUKREJA

SEVEN PRINCIPLES:CO-OP RAINBOW

• Voluntary & open Membership• Democratic Member Control• Members Economic Participation• Autonomy & Independence• Education, Training & Information• Co – operative Among the Co – operatives • Concern for the Community

CA P.G.KUKREJA

SIGNIFICANCE OF CO-OPERATIVE IN INDIAN SCENARIO

• Organization for the poor, illiterate and unskilled people• Institution of Mutual help and sharing• Softens the class conflict and reduces the social

cleavages• Reduces the bureaucratic evils and follies of political

factions• Overcomes the constraints of agricultural development • Creates conducive environment for small and cottage

industries

CA P.G.KUKREJA

HURDLES IN IMPLEMENTING THE CORPORATE GOVERNANCE IN

CO-OPERATIVE SECTOR

• Legal Constraints• Lack of professionalization & trained personnel.• Importance is given to electoral merit rather than qualitative merit.• Politicization of Cooperatives• Total lacking of cooperative Principles at Board level and senior management

level• Ignorance for self sustainable growth• Remuneration policy not commensurating with market trends• No statutory restriction on tenure of directorship• Weak internal control system • Inadequate MIS.• Lack of Operational Transparency.• No access to Capital Market.

CA P.G.KUKREJA

ROLE OF CHARTERED ACCOUNTANT IN CORPORATE GOVERNANCE

1. Vital role as Statutory/Internal Auditor2. Attestation functions, Fund management, Credit appraisal,

Monitoring loan accounts, Tax planning, Arbitration Vetting 1 time Settlement Proposals, Treasury Operations, Staff Training & Implementing Evaluation of Corporate Governance in Co-op.

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NOTE ON FRAUDS

CA P.G.KUKREJA

TAXATION OF CO-OP HOUSING SOCIETYIncome Tax

• MEANING• STATUS- CO-OP HOUSING SOC.• Residential• Person includes AOP/BOI• Due Date- Audited• Deductions under Chapter VIA.• Applicability of 14A in respect of exempt income.• TDS Provisions.

CA P.G.KUKREJA

M-VAT• MVAT Applicable only when: - Dealing in Goods - Doing Business - Dealer- Leasing of space- - Lease transactions

CA P.G.KUKREJA

TDS LIABILITY UNDER MAVT ACT, 2002

• Works Contract for > Rs.10Lakhs – liable to deduct TDS.• Tax deducted when bills are credited.• Limit of Rs.10lakhs is per contractor.• Rate of TDS - Registered Dealer- 2% - Unregistered Dealer- 5%• Tax on NET BILL AMOUNT• TDS amount should not exceed tax payable by Contractor.• No Deduction Certificate.• Failing to deduct or pay TDS, provisions or recovery will apply including

Interest.• TDS to be paid within 10 days from end of month in Form 210.• Issue TDS certificate in Form 402 to Contractor.• Send Statement in duplicate in Form 405 to Joint Commissioner of Sales

Tax (Returns)• Separate Register in Form 404

CA P.G.KUKREJA

PROFESSION TAX

1. A schedule is appended to Profession Tax Act which specifies the persons liable to Profession Tax.

2. Specific Entry is inserted in said schedule for Societies.3. Entry 16 in schedule reads as under as on 01/04/2006(i) State level Societies; 2500 p.a.(ii) Co-operative sugar factories and spinning Mills; 2500 p.a.(iii) District level Societies; 750 p.a.(iv) Handloom weavers co-operative societies; 500 p.a.(v) All other co-operative societies not covered by Clauses (i), (ii), (iii)and (iv) above 750 p.a.

CA P.G.KUKREJA

Service Tax Applicable to Co-operative Housing Society

• Co-operative Society collects the Expenditure incurred for some specific purpose like:

- Municipal taxes- Water charges on the basis of area of Flats.- Other expenses like Maintenance/ Repairs are

collected on society’s building etc.- No element of service in case of reimbursement of

expenses.

CA P.G.KUKREJA

Position for 01.07.2012

• Exempted Services:- Mega exemption- Activity which is exempt for Levy of Service Tax- Housing Society/ Residential complex, the exemption is

limited to 5000p.m. per Member.

CA P.G.KUKREJA

• Service charges Taxable:- Non Occupancy Charges- Repair Fund- Maintenance and repair charges- Share transfer fees- Parking Charges- Water Charges- Club house, swimming, pool etc.

CA P.G.KUKREJA

• Service tax contd.

• Reimbursement Exempted:- Property Tax- Water charges- Insurance exp• Funds Exempted:- Sinking Fund

CA P.G.KUKREJA

SUGGESTIONS

CA P.G.KUKREJA

DISCLAIMER

• The above views / presentations do not & shall not be considered as professional advice of Goregoan-Malad CPE study circle/WIRC or our firm. The Information contained here is of general nature & not intended to address the circumstances of any particular individual & Entity.

CA P.G.KUKREJA

THANK YOU