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    Today majority of the Indians are reaping the benefit of Industrial Liberalization and Globalization of the Indian economy. The then Prime Minister Mr. P V Narasimha Rao with the guidance and support of the then Finance Minister Mr. Manmohan Singh, has made paradigm shift in Industrial Licensing policy, Public Sector Policy, Foreign Investment & Foreign Technology agreement Regulations and Competition Laws (erstwhile MRTP Act) vide new Industrial Policy which was made effective from July 25, 1991.


    The author, in commemoration of Silver Jubilee Anniversary of Industrial Liberalization in 1991, has made an attempt to bring the fine details of FDI Inflows and its impact in India post announcement of New Industrial Policy, 1991 (NIP) and also the details of recent FDI regime liberalization.


    Government of India has introduced key reforms to the FDI policy, to help attract further investments. To achieve this goal, some measures such as the introduction of the composite cap that does away with the distinction between FDI and Foreign Portfolio Investment (FPI) and liberalizing FDI norms in 15 major sectors have been taken. Higher FDI limits would encourage more investment.


    FDI in India has started picking up, which stood at USD16.63 billion in FY2015-16, about 13 per cent higher than 14.69 billion in FY2014-15.


    Trends in India’s FDI Inflows, 1996 - 2016




















    Recent key changes of FDI Regulations


    I .      Press Note No. 5/2016, dated 24th June, 2016


    The Union government on 20th June, 2016 has announced radical changes in FDI Regulations and the said changes have been made effective by virtue of Press Note No. 5/2016, by which the following major changes have been made in FDI regulations to give impetus for employment and job creation and also for enhancing the FDI flows into India




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    1. Permission of 100% FDI under government approval route for trading, including through e-commerce, in respect of food products manufactured or produced in India.


    1. Foreign investment beyond 49% has now been permitted through government approval route, in cases resulting in access to modern technology in the country or for other reasons to be recorded. The condition of access to ‘state-of-art’ technology in the country has been done away with.


    1. FDI limit for defence sector has also been made applicable to Manufacturing of Small Arms and Ammunitions covered under Arms Act 1959.


    1. 100% FDI under automatic route is permitted for Broadcasting Carriage Services (Mobile TV, DTH, Teleports, Cable Networks and HITS)


    1. In case of Pharmaceutical Sector, 74% FDI in Brownfield Projects is made under automatic route. FDI beyond 74% for Brownfield Projects is under government route. The Greenfield Investment is permitted upto 100% under automatic route


    1. Civil Aviation Sector is also permitted upto 100% FDI in both Brownfield Projects and the Greenfield projects


    1. In case of Private Security Agencies, the FDI is permitted upto 49% under automatic route and under government approval beyond 49% and upto 74%. However Section 6 of the Private Security Agencies (Regulation) Act, 2005 need to be amended to accommodate the above FDI changes.


    1. In case of Animal Husbandry, the condition related to “Controlled Conditions” has been done away


    1. In case of Single Brand Retail Trading (SBRT), the condition related to 30% local sourcing of goods is relaxed for 3 years of establishment and may relax upto 5 years of establishment with the government approval. FDI into SBRT upto 49% is permitted under automatic route and under government route for FDI beyond 49%


    1. Press Note No. 12/2015, dated 24-11-2015


    1. The Government has permitted the 100% FDI into Manufacturing Companies (Subject to the sectoral caps and conditions stated for selective list of industries) under automatic route.


    1. FDI into LLP is almost made at par with Companies thereby paving the way to use LLP structure of business for most of the business activities.


    1. For swapping of shares (i.e., Exchange of Shares of the Indian Company between the Resident Investors and the Foreign Investors with Shares of Foreign Entity), no approval of Government is required, if the transaction otherwise falls under automatic route.


    1. Incorporated Foreign entities (viz., Companies, Partnership firms and Trusts) controlled by the NRIs is equated with the NRIs and can avail all the benefits of NRIs.


    1. The Limits for approval of FIPB has been enhanced from Rs. 2,000 Crores to Rs. 5,000 Crores, thereby the cases to be referred to Cabinet Committee on Economic Affairs (CCEA) will be reduced.


    1. Many plantation activities (coffee, rubber, cardamom, palm oil, olive oil) have been brought under automatic route, over and above the tea plantation activities.


    1. Defence production has been opened for FDI upto 49%, subject to the conditions stated therein.


    1. In case of Construction and Development Activities, the condition relating to minimum project size and minimum investment size has been done away and necessary changes have been brought in other related conditions.


    1. Many changes have been introduced in Single Brand Retail Trading



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    FDI Inflows - India's Trajectory



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    Post the above key changes, now very few sectors/industries have been left over for approval from the Government for FDI investments.


    The NIP followed with the above key recent changes are further bolstered with the key reforms of the Government viz., “Make in India” and “Ease of doing Business”


    Post the Britain Exit Referendum (Brexit) for exit from EU, India is poised to play key role in the World Economy and is becoming silver line in the dark clouds of economic turmoil across the global economies and many countries will select India as a favorable FDI destination.




    On 23 May 2016, the OECD Council approved the amendments to the Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations ("Transfer Pricing Guidelines"), as set out in the 2015 BEPS Report on Actions 8-10 "Aligning Transfer Pricing Outcomes with Value Creation" and the 2015 BEPS Report on Action 13 "Transfer Pricing Documentation and Country-by-Country Reporting". These amendments provide further clarity and legal certainty about the status of the BEPS changes to the Transfer Pricing Guidelines, which were endorsed by the Council on 1 October 2015, by the G20 Finance Ministers on 8 October 2015, and by the G20 Leaders on 15-16 November 2015.


    The amendments approved by the Council translate these BEPS transfer pricing measures into the Transfer Pricing Guidelines, as well as into the Recommendation of the Council on the Determination of Transfer Pricing Between Associated Enterprises, which now contains a reference in the Preamble to these BEPS Reports. Given the way in which the Transfer Pricing Guidelines are integrated into the domestic law of certain countries, including by direct reference to the Guidelines themselves, this update process further clarifies the status of the BEPS changes to the Transfer Pricing Guidelines.


    Actions 8-10 – Transfer pricing aspects:


    The OECD has included its updated transfer pricing guidance in one report under Actions 8-10, covering: amended guidance on applying the arm’s length principle (revisions to section D of chapter I of the OECD Transfer Pricing Guidelines), notably providing guidance on the identification of the actual transaction undertaken, on what is meant by control of a risk, and on the circumstances in which the actual transaction undertaken may be disregarded for transfer pricing purposes.


    Guidance on comparability factors in transfer pricing, including location savings, assembled workforce, and MNE group synergies (additions to chapter I of the OECD Transfer Pricing Guidelines). This guidance remains unchanged from the guidance issued as part of the 2014 report on transfer pricing for intangibles.


    New guidance on transfer pricing for commodity transactions (additions to chapter II of the OECD Transfer Pricing Guidelines). A new version of chapter VI of the OECD Transfer Pricing Guidelines addressing intangibles, including new guidance on the return to funding activities and on hard-to -value intangibles. New guidance on low-value adding intragroup services (revisions to chapter VII of the OECD Transfer Pricing Guidelines).


    An entirely new version of chapter VIII of the OECD Transfer Pricing Guidelines, covering cost contribution arrangements In addition, the Actions 8-10 package describes additional work to be conducted by the OECD to produce new guidance on the application of the transactional profit split method.









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    The specific changes introduced in the OECD Transfer Pricing Guidelines by these Reports are as follows:


    • The current provisions of Chapter I, Section D of the Transfer Pricing Guidelines are deleted in their entirety and replaced by new guidance.


    • Paragraphs are added to Chapter II of the Transfer Pricing Guidelines, immediately following paragraph 2.16.


    • A new paragraph is inserted following paragraph 2.9.


    • The current provisions of Chapter V (Documentation) of the Transfer Pricing Guidelines are deleted in their entirety and replaced by new guidance and annexes.


    • The current provisions of Chapter VI (Intangible Property) of the Transfer Pricing Guidelines and the annex to this Chapter are deleted in their entirety and replaced by new guidance and annex.


    • The current provisions of Chapter VII (special considerations for Intra group services) of the Transfer Pricing Guidelines are deleted in their entirety and replaced by new guidance.


    • The current provisions of Chapter VIII (Cost contribution arrangements) of the Transfer Pricing Guidelines are deleted in their entirety and replaced by new guidance.


    Although the countries participating in the OECD/G20 BEPS Project had already agreed to the final reports under BEPS Actions 8-10 and 13, the OECD Council Transfer Pricing Recommendation formally adopts the amendments to the TPG as of 23 May 2016. As noted, these changes could have implications for both the OECD member countries and non-member countries.


    Individual countries take different approaches with respect to whether and how they incorporate the TPG into their domestic tax systems. For example, in some countries, the domestic rules explicitly refer to the approved OECD TPG. Other countries may not have such an explicit reference. In addition, some countries require some form of administrative or other action to incorporate a new version of the TPG into the domestic law. Some countries may take the view that the amendments to the TPG merely clarify pre-existing transfer pricing principles, and in practice, consequently could have retroactive effect.


    Multinational enterprises (MNEs) should understand and analyse the implications of this development for each jurisdiction in which they operate. For example, MNEs should review the amendments to the TPG with respect to their global operations and their current transfer pricing policies and approaches. There will likely be increased scrutiny by tax authorities from OECD member countries and non-OECD member countries applying the concepts of the amendments to cross-border intercompany transactions.


    Further work is being undertaken to make conforming amendments to the remainder of the Transfer Pricing Guidelines, in particular to Chapter IX "Transfer Pricing Aspects of Business Restructurings." This work is well advanced and it is expected that Committee on Fiscal Affairs will soon invite interested parties to review the conforming changes to Chapter IX to establish that real or perceived inconsistencies with the revised parts of the Guidelines have been appropriately addressed, and duplication appropriately removed.



    An investor having appetite to leverage his investment capacity, may indulge in borrowing funds to invest in Securities and can plan to earn profits out of the investment activity. Normally an investor has to provide security to the lender for funds being borrowed. The borrowings made with an intent to invest in Securities is normally called as Margin Trading. 

    To overcome the difficulties of maintaining the leverage at the time of investing in various securities In order to provide such facility SEBI has come up with a concept named MARGIN TRADING.f ramed a Scheme called Securities Lending Scheme, 1997. Also it has framed legal framework for Margin Funding by various intermediaries of the Securities Market. All the above concepts are cumulatively called as “Margin Trading”


    Introduction: - 

    An auditor should obtain sufficient appropriate audit evidence in order to give opinion on the true and fair view of financials. Sufficiency and appropriateness of audit evidence shall depend on the assessed level of inherent and control risk of the entity. To assess the level of control risk, we exercise compliance procedures and based on the findings of the compliance procedures and other considerations like materiality, we decide the nature and extent of substantive procedures to be performed. 

    SA-200 “Basic principles governing an audit" (Erstwhile AAS-1) states that, "The auditor should obtain sufficient appropriate audit evidence through the performance of compliance and substantive procedures to enable him to draw reasonable conclusions therefrom on which to base his opinion on the financial information." 

    External Confirmation is a substantive procedure used to obtain audit evidence. SA-505 deals with “External Confirmations”. The purpose of this Standard on Auditing (SA) – 505 is to establish standards on the auditor's use of external confirmations as a means of obtaining audit evidence. 

    SA 505 is effective for audit of financial statements for period beginning on or after April 1, 2010. 

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