Important sections in
Maharashtra State Co-operative
Act relating to
Audit & Reporting
Requirements
BYCA P.G.KUKREJA
CA P.G.KUKREJA
Economic Activities
Three Sectors
a) Private
b) Public
c) Co-operative
CA P.G.KUKREJA
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.
Professional Opportunities in Co-operative sector
Co-operative Sector
1.Auditing
2.Accounting
3.Advisors
4.Members in Governing Body
CA P.G.KUKREJA
Acts & Rules Applicable
Co-operative Societies Act under
which registered.
Rules framed under the Act
Bye-Laws approved by the Registrar
Notifications and orders issued
under the Power of Act, Rules.
CA P.G.KUKREJA
Development of Laws
•
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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.
1)
2)
3)
4)
5)
6)
Provided ;
Member who does not perform above duties shall be classified as NON
ACTIVE MEMBER’.
Society to inform classification within 30 days of the year
Non active member for 10 years liable for expulsion
Eligible to re classify as active member on complying.
Appeal lies before registrar within 60 days of knowing
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 laws
Provision 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:
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
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.
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, 1960Every 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 Meetings
Directors/Committee members
Functional Director/CEO/MD
Employees/staff- As per above decisions
CA P.G.KUKREJA
Types of Societies
I.
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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.
CA P.G.KUKREJA
Type ‘A’ Societies-State level contd.
 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
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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. Boards
All 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
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All co-op Hsg having < 100 members
All co-op. Lift Irrigation & Water user Societies having < 100 members
All 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
CA P.G.KUKREJA
Section 81(2)
Audit shall be carried out as per Auditing
Standards notified by State Government.
CA P.G.KUKREJA
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 – Omissions
9. 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
society
13.Auditor conducted audit without appointment order issued.
CA P.G.KUKREJA
SECTION 65 & RULE 49(a)
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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.
2.
3.
Defaulter to Society
Default in payment of Loan
Taken advance or anamat or goods on credit & not paid within 30 days of
demand or date on which advance availed whichever is earlier
4. 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 children
11. 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 44A
CHARGING 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 43
RESTRICTION 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 registrar
1) Annual Report of activities
2) Its audited statements of accounts
3) Plan for disposal of surplus
4) List of amendment to bylaws
5) 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
CA P.G.KUKREJA
Section70- Investment of Funds
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•
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•
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 Advances
Only 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
CA P.G.KUKREJA
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 members
not 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 maintained
Rule 65(1)
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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.
CA P.G.KUKREJA
SECTION 82-Rectification of Defects
• Rectification Report to Registrar within 3 months.
• Auditor’s remark on Report itemwise and submit report to
Registrar.
CA P.G.KUKREJA
Submission of Audit Report
1. Submission to Registrar & Society
• Banks- In Form N1
• Other than Banks- In Form N2
2. 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 MEMORANDUM
FORM N1 & N2
1.
2.
3.
4.
All Information & explanation to best of Auditor’s knowledge.
Proper books of accounts as required by Act.
Balance sheet and P & L / I & E show True & Fair view.
Whether Accounting Stds have no adverse effect on
accounts.
CA P.G.KUKREJA
शद्
ु धी 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 Cooperative 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
Own
Control
Use
Small Private Business
Own &
Control
Use
Co-operatives
Owner
Control
Use
CA P.G.KUKREJA
SEVEN PRINCIPLES:
CO-OP RAINBOW
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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
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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 Auditor
2. 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.
CA P.G.KUKREJA
NOTE ON FRAUDS
CA P.G.KUKREJA
TAXATION OF CO-OP HOUSING SOCIETY
Income Tax
• MEANING
• STATUS- CO-OP HOUSING SOC.
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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
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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.
(i) District level Societies;
750 p.a.
(ii) Handloom weavers co-operative
societies;
500 p.a.
(i) 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:
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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
CA P.G.KUKREJA