GST BASIC

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October 3, 2016

About Goods and Service Tax (GST)

GST Introduction:

GST is a indirect tax applicable to whole India.

GST is a single tax applicable on goods and services right from manufacture to retailer who sell the goods to ultimate consumer.

GST need:

To eliminate prevailing multiplicity. complexity and ambiguity in the area of indirect tax, one single tax was required to be implemented. GST will replace indirect tax levies and proposed Acts are as under:

Central Level Tax: proposed to merge

1.  Custom Duty
2.  Excise Duty
3.  Corporation Tax
4.  Service Tax
5.  Central Sales Tax
6.  Stamp Duty in respect of bill of exchange, cheque & promissory notes.

State Level Tax: proposed to merge

7.  Sales Tax ( VAT)
8.  Entry & Octroi Tax
9.  Tolls Tax
10.  Luxury Tax
11. Taxes on lands and building
12. Excise Duty on alcoholic liquor etc.
13. Stamp Duty in respect of documents

State Level Tax: proposed to merge

Under GST, GST & CGST would be levied simultaneously on the transaction of enterprises except on exempted goods and services. Important to note here both the tax CGST & SGST would be levied on same price/Cost unlike the VAT which is levied on value of goods inclusive of CST.

Movement of Tax : Sale within state

Movement of Tax : Sale interstate

Black Money Disclosure

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October 2, 2016

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Black money disclosure at Rs 65,000 crore till 8.00 pm

The government’s Income Declaration Scheme (IDS) saw an overwhelming response just a few hours before the deadline was to end.

A senior income-tax official said the total declaration under the scheme is above Rs 65,000 crore till 8.00 pm. On this number, government likely to earn nearly Rs 30,000 crore.
I-T department expects total declarations could reach between Rs 70,000 crore and Rs 80,000 crore in next 3 hours.
The government had opened a four-month window for declaring unaccounted money, which would attract 45 per cent tax, penalty and cess.
Surprisingly Hyderabad emerged as a top destination with declaration of Rs 13,000 crore, followed by Mumbai ( Rs 8,500 crore), New Delhi (Rs 6,000 crore) and Kolkata (Rs 4,000 crore). The total number of declarant from Mumbai is 4,000.
The four-month window for disclosing domestic black money deposits will close on Friday
– Business Standard

My WordAds Review

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September 24, 2016

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Journal Entry for Guarantee

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August 23, 2016

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Journal Entry of Guarantee

An undertaking in writing for performance of another person or obligation in case of default by person primerly responsible for act.
Guarantee is a non fund based limit sanctioned by bank or financial institution.

AS 29- Para 10.4 “Provision, Contingent Liabilities and Contingent Assets”- A contingent liability is:

(a) a possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the enterprise; or
(b) a present obligation that arises from past events but is not recognised because:
(i) it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation;or
(ii) a reliable estimate of the amount of the obligation cannot be made.

Disclosure of Contingent Liability:

Para 26 – An enterprises should not recognise contingent liability.

Para 68 – Unless the possibility of any outflow in settlement is remote, an enterprise should disclose for each class of contingent liability at the balance sheet date a brief description of the nature of the contingent liability and, where practicable:

(a) an estimate of its financial effect, measured under paragraphs 35-45;

(b) an indication of the uncertainties relating to any outflow; and

(c) the possibility of any reimbursement.

Journal Entries:

Guarantee is a contingent liability and shown in notes of account only. Some people do not want to take risk of forget at the time of finalisation of financial statements of an enterprises. Therefor i workout following solution with the help of undermentioned entries in books of account:

Step -1 Create a Contingent Liability Sub-group under the heading of Long Term Provisions:
Step -2 Create 2 Leger under said sub group;
BG CDE Bank (Guarantee Issuing Bank)
BG ABC International Pvt Ltd (To whom BG is given)
Step -3 Journal Entry:

Entry for opening of bank guarantee:

BG Margin A/c Dr
To Bank a/C
(Being ..% margin paid to bank for issue of BG of Rs. … in favour of ABC International Pvt Ltd)

Entry for payment of BG Charges

BG Charges/ Bank Charges A/c
To Bank A/C
(Being Rs. .. /-paid to bank against issue of BG, valaidity period 21.07.2016 to 20.07.2019 in favour of ABC international)

Entry for handover of BG to party

BG ABC International Pvt Ltd Dr Eg 20,000.00
To BG CDE Bank A/C eg 20,000.00
(Being bank guarantee handed over to party)

Trail position at the year end :

1. Both the ledger is grouped in same sub group, therefore, closing balance will be NIL no effect in financial statement;

2. You can observed following ledger in trail balance and you can mitigate risk to forget at the time of preparation of financial statement. Contingent Liability Credit 0 BG ABC International Pvt Ltd 20,000.00 BG CDE Bank A/C – 20,000.00

Entry for provision against Bank Guarantee

Open new ledger in the group of contingent liability as “BG Provision A/c)

Profit & Loss A/c Dr
To BG Provision
(Being provision made against given guarantee)

Entry when guarantee invoked

BG CDE Bank Dr
To BG Margin A/c
To Bank A/c
(being BG no .. invoked by party)

BG Provision Dr.
To BG ABC International Pvt Ltd.
(being BG no .. invoked by part and amount paid by bank)

Accounting Entries for Letter of Credit (LC)

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July 29, 2016

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Journal Entries For Letter of Credit

Commonly Known As : L C

Letter of Credit:

Letter of Credit is a credit letter from bank assuring/guaranteeing of a buyer payment to a seller (Business Transaction). Buyer payment to a seller will be clear on time in specified currency with specified amount subject to fulfill defined conditions of letter of credit.

Journal Entries:-

(1) Entry for opening of LC

L.C. Margin A/c Dr.
To Bank A/c
(Being ..% margin part to bank against LC of Rs. …………)

(2) Payment of Commission/LC Charges

L.C. Charges /Commission A/c Dr.
To Bank A/c
(Being LC Commission and Charges Paid against LC No. ….of Rs. .)

(3) Purchase of Goods

Purchase A/c Dr.
To Party (Creditor) A/c
(Being goods purchased against letter of LC No. ….)

(4) Entry for realization of LC

Party (Creditor) A/c Dr.
To Letter of credit A/c
(Being LC forwarded to buyer’s LC No. …..)

(5) Payment of LC

Letter of Credit Dr
To LC Margin A/c
To Bank A/c

(6) In Case of devolvement of LC

Letter of Credit Devolved A/c
To Letter of Credit
To L C Margin A/c
(Being LC no .. of Rs. devolved and margin adjusted by bank)

DECLARATION UNDER SECTION 194C(6) OF THE INCOME TAX ACT 1961

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July 12, 2016

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“ DECLARATION U/S 194 C (6) OF THE INCOME TAX ACT 1961”

From,
(Name and address of Payee)

To,
(Details of Payer)

The freight/transport charges amounting Rs. ______ for transportation of goods by goods carriage having registration number _______ may be paid or credited to my account without deduction of TDS u/s 194C of the Income Tax Act, 1961. I/We M/s __________in the capacity of proprietor/Partner/Director hereby declare that I/We do not own more than ten goods carriages and also did not own more than ten goods carriage at any time during period from 1St April, _____to 31st March, ________. My Permanent Account Number is __________ . I hereby enclose a self Attest photocopy of my PAN Card.

For ______________

Signature
Name:____________
Designation ________
Date:_____________
Place: ____________

CHAPTER- XIV- Procedure for assessment

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April 7, 2016

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CHAPTER- XIV- Procedure for assessment

Section – 139 : Return of income
Section – 139A : Permanent account number
Section – 139B : Scheme for submission of returns through Tax Return Preparers
Section – 139C : Power of Board to dispense with furnishing documents, etc., with return
Section – 139D : Filing of return in electronic form
Section – 140 : Return by whom to be 33[verified
Section – 140A : Self-assessment
Section – 141 : Provisional assessment
Section – 141A : Provisional assessment for refund
Section – 142 : Inquiry before assessment
Section – 142A : Estimation of value of assets by Valuation Officer
Section – 143 : Assessment
Section – 144 : Best judgment assessment
Section – 144A : Power of45[Joint Commissioner] to issue directions in certain cases.
Section – 144B : Reference to Deputy Commissioner in certain cases
Section – 144BA : Reference to 54[Principal Commissioner or] Commissioner in certain cases.
Section – 144C : Reference to dispute resolution panel
Section – 145 : Method of accounting
Section – 145A : Method of accounting in certain cases
Section – 146 : Reopening of assessment at the instance of the assessee
Section – 147 : Income escaping assessment
Section – 148 : Issue of notice where income has escaped assessment
Section – 149 : Time limit for notice
Section – 150 : Provision for cases where assessment is in pursuance of an order on appeal, etc
Section – 151 : Sanction for issue of notice
Section – 152 : Other provisions
Section – 153 : Time limit for completion of assessments and reassessments
Section – 153A : Assessment in case of search or requisition
Section – 153B : Time-limit for completion of assessment under section 153A
Section – 153C : Assessment of income of any other person
Section – 153D : Prior approval necessary for assessment in cases of search or requisition
Section – 154 : Rectification of mistake
Section – 155 : Other amendments
Section – 156 : Notice of demand

Belated Return U/s 139 (4)

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March 21, 2016

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Filing late Return of Income u/s 139 (4) after the end of assessment year Vs. Prosecution U/s 276CC

Provisions of section 139 (4) allow to file Return of Income, before the expiry of one year from the end of the relevant assessment year.

Considering the provisions of section 139 (1)/139 (4), we can rule out the following possibilities of filing of Return of Income.

Situation/s.	Section	Filing time	Remarks	Remarks
1	139 (1)	Within due date of filing	It is always better to file Return of Income in time to avoid litigations.	Prosecution u/s 276CC cannot be initiated
2	139 (1)	Within the time extended by CBDT (For AY 2015-16 time extended by CBDT till 31^st August 2015)	Filing of return within the extended time is a return filed as good as within the time frame u/s 139 (1) i.e. all the advantages are available such as revision u/s 139 (5). C/f of losses etc.	Prosecution u/s 276CC cannot be initiated
3	139 (4)	After the due date u/s 139 (1) but before the end of the relevant assessment year	Advantages not available i.e. C/f of losses not allowed (except depreciation loss). Revision not allowed. However this return is not barred by time and allowed as such.	Prosecution u/s 276CC cannot be initiated
4	139 (4)	After the end of the a relevant assessment year, but within the expiry of one year from the end of relevant assessment year	Section 139 (4) allows to file before the expiry of one year from the end of relevant assessment year. (For Example for AY. 2015-16 Return can be filed up to 31^st March 2017 belatedly)	Prosecution can be initiated U/s 276CC
5	–	No filing of return allowed after the time specified in 4) above.	Return of Income not allowed to be filed after the expiry of one year from the end assessment year i.e. it is barred by time. (For example For AY. 2015-16, Return of Income cannot be filed after 31^st March 2017. After 31^st March 2017 the return will be time barred) In such case Return can be only upon notice issued u/s 142 (1).Further assessments in such cases are done u/s. 144. (Best Judgment Assessment)	Prosecution can be initiated U/s 276CC

http://taxguru.in/income-tax/filing-late-return-income-139-4-assessment-year-prosecution-276cc.html

Notification 93_2015

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December 30, 2015

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[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART-II,
SECTION 3, SUB-SECTION (i)]

GOVERNMENT OF INDIA
MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE) (CENTRAL BOARD OF DIRECT TAXES)

NOTIFICATION

New Delhi, the 16th December, 2015

INCOME-TAX

G.S.R. 978(E).— In exercise of the powers conferred by sub-section (6) of section 195 read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:-

1. (1) These rules may be called the Income-tax (21st Amendment) Rules, 2015.

(2) They shall come into force on the 1st day of April, 2016.

2. In the Income-tax Rules, 1962 (hereafter referred to as the said rules), for rule 37BB, the following rule shall be substituted, namely:-

“37 BB. Furnishing of information for payment to a non-resident, not being a company, or to a foreign company.— (1) The person responsible for paying to a non-resident, not being a company, or to a foreign company, any sum chargeable under the provisions of the Act, shall furnish the following, namely:-

(i) the information in Part A of Form No.15CA, if the amount of payment or the aggregate of such payments, as the case may be, made during the financial year does not exceed five lakh rupees;

(ii) for payments other than the payments referred in clause (i), the information,—

(a) in Part B of Form No.15CA after obtaining,—

(I) a certificate from the Assessing Officer under section 197; or

(II) an order from the Assessing Officer under sub-section (2) or sub-section

(3) of section 195;

(b) in Part C of Form No.15CA after obtaining a certificate in Form No. 15CB from an accountant as defined in the Explanation below sub-section (2) of section 288.

(2) The person responsible for paying to a non-resident, not being a company, or to a foreign company, any sum which is not chargeable under the provisions of the Act, shall furnish the information in Part D of Form No.15CA.

(3) Notwithstanding anything contained in sub-rule (2), no information is required to be furnished for any sum which is not chargeable under the provisions of the Act, if,—

(i) the remittance is made by an individual and it does not require prior approval of Reserve Bank of India as per the provisions of section 5 of the Foreign Exchange Management Act, 1999 (42 of 1999) read with Schedule III to the Foreign Exchange (Current Account Transaction) Rules, 2000; or

(ii) the remittance is of the nature specified in column (3) of the specified list below:

SPECIFIED LIST

Sl. No. Purpose code Nature of payment as per RBI

1 S0001 Indian investment abroad-in equity capital (shares)

2 S0002 Indian investment abroad-in debt securities

3 S0003 Indian investment abroad-in branches and wholly owned subsidiaries

4 S0004 Indian investment abroad-in subsidiaries and associates

5 S0005 Indian investment abroad-in real estate

6 S0011 Loans extended to Non-Residents

7 S0101 Advance payment against imports

8 S0102 Payment towards imports-settlement of invoice

9 S0103 Imports by diplomatic missions

10 S0104 Intermediary trade

11 S0190 Imports below Rs.5,00,000-(For use by ECD offices)

12 S0202 Payment for operating expenses of Indian shipping companies operating abroad.

13 S0208 Operating expenses of Indian Airlines companies operating abroad

14 S0212 Booking of passages abroad – Airlines companies

15 S0301 Remittance towards business travel.

16 S0302 Travel under basic travel quota (BTQ)

17 S0303 Travel for pilgrimage

18 S0304 Travel for medical treatment

19 S0305 Travel for education (including fees, hostel expenses etc.)

20 S0401 Postal services

21 S0501 Construction of projects abroad by Indian companies including import of goods at project site

22 S0602 Freight insurance – relating to import and export of goods

23 S1011 Payments for maintenance of offices abroad

24 S1201 Maintenance of Indian embassies abroad

25 S1202 Remittances by foreign embassies in India

26 S1301 Remittance by non-residents towards family maintenance and savings

27 S1302 Remittance towards personal gifts and donations

28 S1303 Remittance towards donations to religious and charitable institutions abroad

29 S1304 Remittance towards grants and donations to other Governments and charitable institutions established by the Governments

30 S1305 Contributions or donations by the Government to international institutions

31 S1306 Remittance towards payment or refund of taxes

32 S1501 Refunds or rebates or reduction in invoice value on account of exports

33 S1503 Payments by residents for international bidding.

(4) The information in Form No. 15CA shall be furnished,—

(i) electronically under digital signature in accordance with the procedures, formats and standards specified by the Principal Director General of Income-tax (Systems) under sub-rule (8) and thereafter printout of the said form shall be submitted to the authorised dealer, prior to remitting the payment; or

(ii) electronically in accordance with the procedures, formats and standards specified by the Principal Director General of Income-tax (Systems) under sub-rule (8) and thereafter signed printout of the said form shall be submitted to the authorised dealer, prior to remitting the payment.

(5) An income-tax authority may require the authorised dealer to furnish the signed printout of Form No.15CA referred to in clause (ii) of sub-rule (4) for the purposes of any proceedings under the Act.

(6) The certificate in Form No. 15CB shall be furnished and verified electronically in accordance with the procedures, formats and standards specified by the Principal Director-General of Income-tax (Systems) under sub-rule (8).

(7) The authorised dealer shall furnish a quarterly statement for each quarter of the financial year in Form No.15CC to the Principal Director General of Income-tax (Systems) or the person authorised by the Principal Director General of Income-tax (Systems) electronically under digital signature within fifteen days from the end of the quarter of the financial year to which such statement relates in accordance with the procedures, formats and standards specified by the Principal Director General of Income-tax (Systems) under sub-rule (8).

(8) The Principal Director General of Income-tax (Systems) shall specify the procedures, formats and standards for the purposes of furnishing and verification of Form 15CA, Form 15CB and Form 15CC and shall be responsible for the day-to-day administration in relation to the furnishing and verification of information, certificate and quarterly statement in accordance with the provisions of sub-rules (4), (6) and (7).

Explanation.— For the purposes of this rule ‘authorised dealer’ means a person authorised as an authorised dealer under sub-section (1) of section 10 of the Foreign Exchange Management Act, 1999 (42 of 1999).”.

3. In the said rules, in Appendix-II, for Form No.15CA and Form No. 15CB, forms shall be substituted, namely.

Income From Salary

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December 25, 2015

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I. Income under the head Salaries

Salary is defined to include:

a) Wages

b) Annuity

c) Pension

d) Gratuity

e) Fees, Commission, Perquisites, Profits in lieu of or in addition to Salary or Wages

f) Advance of Salary

g) Leave Encashment

h) Annual accretion to the balance of Recognized Provident Fund

i) Transferred balance in Recognized Provident Fund

j) Contribution by Central Government or any other employer to Employees Pension Account as referred in Sec. 80CCD

Points to consider:

a) Salary income is chargeable to tax on “due basis” or “receipt basis” whichever is earlier.

b) Existence of relationship of employer and employee is must between the payer and payee to tax the income under this head.

c) Income from salary taxable during the year shall consists of following:

i. Salary due from employer (including former employer) to taxpayer during the previous year, whether paid or not;

ii. Salary paid by employer (including former employer) to taxpayer during the previous year before it became due;

iii. Arrear of salary paid by the employer (including former employer) to taxpayer during the previous year, if not charged to tax in any earlier year;

Exceptions – Remuneration, bonus or commission received by a partner from the firm is not taxable under the head Salaries rather it would be taxable under the head business or profession.

Place of accrual of salary:

a) Salary accrues where the services are rendered even if it is paid outside India;

b) Salary paid by the Foreign Government to his employee serving in India is taxable under the head Salaries;

c) Leave salary paid abroad in respect of leave earned in India shall be deemed to accrue or arise in India.

Exceptions – If a Citizen of India render services outside India, and receives salary from Government of India, it would be taxable as salary deemed to have accrued in India.

Taxability of various components of salary:

No.	Section	Particulars	Taxability/Exemption
1.	17	Basic salary	Fully taxable
2.	17	Dearness Allowance (referred to as ‘DA’)	Fully taxable
3.	17	Bonus, fees or commission	Fully taxable

A.

Allowances

4.	10(13A)read with Rule 2A	House rent allowance	Least of the following is exempt: a) Actual HRA Received b) 40% of Salary (50%, if house situated in Mumbai, Calcutta, Delhi or Chennai) c) Rent paid minus 10% of salary * Salary = Basic + DA (if part of retirement benefit) + Turnover based Commission Note: i. Fully taxable, if HRA is received by an employee who is living in his own house or if he does not pay any rent ii. It is mandatory for employee to report PAN of the landlord to the employer if rent paid is more than Rs. 1,00,000 [Circular No. 08 /2013 dated 10-10-2013].
5.	10(14)	Children education allowance	Up to Rs. 100 per month per child up to a maximum of 2 children is exempt
6.	10(14)	Hostel expenditure allowance	Up to Rs. 300 per month per child up to a maximum of 2 children is exempt
7.	10(14)	Transport allowance granted to an employee to meet expenditure on commuting between place of residence and place of duty	Up to Rs. 1600 per month (Rs. 3200 per month for blind and handicapped employees) is exempt
8.	Sec. 10(14)	Allowance granted to an employee working in any transport business to meet his personal expenditure during his duty performed in the course of running of such transport from one place to another place provided employee is not in receipt of daily allowance.	Amount of exemption shall be lower of following: a) 70% of such allowance; or b) Rs. 10,000 per month.
9.	10(14)	Conveyance allowance granted to meet the expenditure on conveyance in performance of duties of an office	Exempt to the extent of expenditure incurred for official purposes
10.	10(14)	Travelling allowance to meet the cost of travel on tour or on transfer	Exempt to the extent of expenditure incurred for official purposes
11.	10(14)	Daily allowance to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of duty	Exempt to the extent of expenditure incurred for official purposes
12.	10(14)	Helper/Assistant allowance	Exempt to the extent of expenditure incurred for official purposes
13.	10(14)	Research allowance granted for encouraging the academic research and other professional pursuits	Exempt to the extent of expenditure incurred for official purposes
14.	10(14)	Uniform allowance	Exempt to the extent of expenditure incurred for official purposes
15.	10(7)	Any allowance or perquisite paid or allowed by Government to its employees (an Indian citizen) posted outside India	Fully Exempt
16.	–	Allowances to Judges of High Court/Supreme Court (Subject to certain conditions)	Fully Exempt.
17.	10(45)	Following allowances and perquisites given to serving Chairman/Member of UPSC is exempt from tax: a) Value of rent free official residence b) Value of conveyance facilities including transport allowance c) Sumptuary allowance d) Leave travel concession	Fully Exempt
18.	–	Allowances paid by the UNO to its employees	Fully Exempt
19.	10(45)	Allowances to Retired Chairman/Members of UPSC (Subject to certain conditions)	Exempt subject to maximum of Rs. 14,000 per month for defraying the services of an orderly and for meeting expenses incurred towards secretarial assistant on contract basis.
20.	Sec. 10(14)read with Rule 2BB	Special compensatory Allowance (Hilly Areas) (Subject to certain conditions and locations)	Amount exempt from tax varies from Rs. 300 to Rs. 7,000 per month.
21.	Sec. 10(14)read with Rule 2BB	Border area, Remote Locality or Disturbed Area or Difficult Area Allowance (Subject to certain conditions and locations)	Amount exempt from tax varies from Rs. 200 to Rs. 1,300 per month.
22.	Sec. 10(14)read with Rule 2BB	Tribal area allowance in (a) Madhya Pradesh (b) Tamil Nadu (c) Uttar Pradesh (d) Karnataka (e) Tripura (f) Assam (g) West Bengal (h) Bihar (i) Orissa	Up to Rs. 200 per month is exempt
23.	Sec. 10(14)read with Rule 2BB	Compensatory Field Area Allowance. If this exemption is taken, employee cannot claim any exemption in respect of border area allowance (Subject to certain conditions and locations)	Up to Rs. 2,600 per month is exempt
24.	Sec. 10(14)read with Rule 2BB	Compensatory Modified Area Allowance. If this exemption is taken, employee cannot claim any exemption in respect of border area allowance (Subject to certain conditions and locations)	Up to Rs. 1,000 per month is exempt
25.	Sec. 10(14)read with Rule 2BB	Counter Insurgency Allowance granted to members of Armed Forces operating in areas away from their permanent locations. If this exemption is taken, employee cannot claim any exemption in respect of border area allowance (Subject to certain conditions and locations)	Up to Rs. 3,900 per month is exempt
26.	Sec. 10(14)read with Rule 2BB	Underground Allowance to employees working in uncongenial, unnatural climate in underground mines	Up to Rs. 800 per month is exempt
27.	Sec. 10(14)read with Rule 2BB	High Altitude Allowance granted to armed forces operating in high altitude areas (Subject to certain conditions and locations)	a) Up to Rs. 1,060 per month (for altitude of 9,000 to 15,000 feet) is exempt b) Up to Rs. 1,600 per month (for altitude above 15,000 feet) is exempt
28.	Sec. 10(14)read with Rule 2BB	Highly active field area allowance granted to members of armed forces (Subject to certain conditions and locations)	Up to Rs. 4,200 per month is exempt
29.	Sec. 10(14)read with Rule 2BB	Island Duty Allowance granted to members of armed forces in Andaman and Nicobar and Lakshadweep group of Island (Subject to certain conditions and locations)	Up to Rs. 3,250 per month is exempt
30.	10(14)	City Compensatory Allowance	Fully Taxable
31.	10(14)	Fixed Medical Allowance	Fully Taxable
32.	10(14)	Tiffin, Lunch, Dinner or Refreshment Allowance	Fully Taxable
33.	10(14)	Servant Allowance	Fully Taxable
34.	10(14)	Project Allowance	Fully Taxable
35.	10(14)	Overtime Allowance	Fully Taxable
36.	10(14)	Telephone Allowance	Fully Taxable
37.	10(14)	Holiday Allowance	Fully Taxable
38.	10(14)	Any Other Cash Allowance	Fully Taxable

B.

Perquisites

39.	17(2)(i) read with Rule 3(1)	Rent free unfurnished accommodation provided to Central and State Government employees	License fees determined in accordance with rules framed by Government for allotment of houses shall be deemed to be the taxable value of perquisites.
40.	17(2)(i)/(ii) read with Rule 3(1)	Unfurnished rent free accommodation provided to other employees	Taxable value of perquisites i. If house property is owned by the employer, the taxable value of perquisite shall be: A. 15% of salary, if population of city where accommodation is provided exceeds 25 lakhs B. 10% of salary, if population of city where accommodation is provided exceeds 10 lakhs but does not exceed 25 lakhs C. 7.5% of salary, if accommodation is provided in any other city ii. If house property is taken on lease or rent by the employer, the taxable value of perquisite shall be: i. Lease rent paid or payable by the employer or 15% of the salary, whichever is lower Salary includes: a) Basic Pay b) Dearness Allowance (only to the extent it forms part of retirement benefit salary) c) Bonus d) Commission e) All other allowances (only taxable portion) f) Any monetary payment which is chargeable to tax But does not include i. Value of any perquisite ii. Employer’s contribution to PF iii. Benefits received at the time of retirement like gratuity, pension etc. Note:* 1) Rent free accommodation is not chargeable to tax if provided in remote area. 2) Rent free accommodation provided to High Court or Supreme Court Judges, Union Ministers, Leader of Opposition in Parliament, an official in Parliament and Serving Chairman and members of UPSC is tax free perquisite. 3) The value so determined shall be reduced by the amount of rent, if any, recovered from the employee. 4) If employee is transferred and retain property at both the places, the taxable value of perquisites for initial period of 90 days shall be determined with reference to only one accommodation (at the option of the assessee). The other one will be tax free. However after 90 days, taxable value of perquisites shall be charged with reference to both the accommodations.
41.	17(2)(i) read with Rule 3(1)	Rent free furnished accommodation	Taxable value of perquisites shall be computed in following manner: a) Taxable value of perquisite assuming accommodation to be provided to the employee is unfurnished b) Add: 10% of original cost of furniture and fixtures (if these are owned by the employer) or actual higher charges paid or payable (if these are taken on rent by the employer). c) Less: The value so determined shall be reduced by the amount of rent, if any, recovered from the employee
42.	17(2)(i) read with Rule 3(1)	Accommodation provided in a hotel Hotel accommodation will not be chargeable to tax if : a) It is provided for a total period not exceeding in aggregate 15 days in the financial year; and b) Such accommodation in hotel is provided on employee’s transfer from one place to another place.	Taxable value of perquisite shall be lower of following: a) Actual charges paid or payable by the employer to such hotel; or b) 24% of salary
43.	17(2)(iii) read with Rule 3(2)	Motor Car / Other Conveyance	Taxable value of perquisites (See Note 1 below)
44.	17(2)(iii) read with Rule 3(3)	Services of a domestic servant including sweeper, gardener, watchmen or personal attendant (taxable only in case of specified employee [See Note 4])	Taxable value of perquisite shall be salary paid or payable by the employer for such services less any amount recovered from the employee.
45.	17(2)(iii) read with Rule 3(4)	Supply of gas, electricity or water for household purposes	Taxable value of perquisites: ➢ Manufacturing cost per unit incurred by the employer., if provided from resources owned by the employer; ➢ Amount paid by the employer, if purchased by the employer from outside agency Note: 1. Any amount recovered from the employee shall be deducted from the taxable value of perquisite. 2. Taxable in case of specified employees only [See note 4]
46.	17(2)(iii) read with Rule 3(5)	Education Facilities	Taxable value of perquisites (See Note 2 below)
47.	17(2)(iii) read with Rule 3(6)	Transport facilities provided by the employer engaged in carriage of passenger or goods (except Airlines or Railways)	Value at which services are offered by the employer to the public less amount recovered from the employee shall be a taxable perquisite
48.	17(2)(v)	Amount payable by the employer to effect an insurance on life of employee or to effect a contract for an annuity	Fully Taxable
49.	17(2)(vi)read with Rule 3(8)	ESOP/ Sweat Equity Shares	Fair Market value of shares or securities on the date of exercise of option by the assessee less amount recovered from the employee in respect of such shares shall be the taxable value of perquisites. Fair Market Value shall be determined as follows: a) In case of listed Shares: Average of opening and closing price as on date of exercise of option (Subject to certain conditions and circumstances) b) In case of unlisted shares/ security other than equity shares: Value determined by a Merchant Banker as on date of exercise of option or an earlier date, not being a date which is more than 180 days earlier than the date of exercise of the option.
50.	17(2)(vii)	Employer’s contribution towards superannuation fund	Taxable in the hands of employee to the extent such contribution exceeds Rs.1,00,000
51.	17(2)(viii)read with Rule 3(7)(i)	Interest free loan or Loan at concessional rate of interest	Interest free loan or loan at concessional rate of interest given by an employer to the employee (or any member of his household) is a perquisite chargeable to tax in the hands of all employees on following basis: 1) Find out the “maximum outstanding monthly balance” (i.e. the aggregate outstanding balance for each loan as on the last day of each month); 2) Find out rate of interest charged by the SBI as on the first day of relevant previous year in respect of loan for the same purpose advanced by it; 3) Calculate interest for each month of the previous year on the outstanding amount (mentioned in Step 1) at the rate of interest given in Step 2 4) From the total interest calculated for the entire previous year (step 3), deduct interest actually recovered, if any, from employee 5) The balance amount (Step 3-Step 4) is taxable value of perquisite Nothing is taxable if: a) Loan in aggregate does not exceed Rs. 20,000; or b) Loan is provided for treatment of specified diseases (Rule 3A) like neurological diseases, Cancer, AIDS, Chronic renal failure, Hemophilia (specified diseases). However, exemption is not applicable to so much of the loan as has been reimbursed to the employee under any medical insurance scheme.
52.	17(2)(viii)read with Rule 3(7)(ii)	Facility of travelling, touring and accommodation availed of by the employee or any member of his household for any holiday	a) Taxable value of perquisite shall be expenditure incurred by the employer less amount recovered from employee. b) Where such facility is maintained by the employer, and is not available uniformly to all employees, the value of benefit shall be taken to be the value at which such facilities are offered by other agencies to the public.
53.	17(2)(viii)read with Rule 3(7)(iii)	Free food and beverages provided to the employee	1) Fully Taxable: Free meals in excess of Rs. 50 per meal less amount paid by the employee shall be a taxable perquisite 2) Exempt from tax: Following free meals shall be exempt from tax: a) Food and non-alcoholic beverages provided during working hours in remote area or in an offshore installation; b) Tea, Coffee or Non-Alcoholic beverages and Snacks during working hours are tax free perquisites; c) Food in office premises or through non-transferable paid vouchers usable only at eating joints provided by an employer is not taxable, if cost to the employer is Rs. 50(or less) per meal.
54.	17(2)(viii)read with Rule 3(7)(iv)	Gift or Voucher or Coupon on ceremonial occasions or otherwise provided to the employee	a) Gifts in cash or convertible into money (like gift cheque) are fully taxable b) Gift in kind up to Rs.5,000 in aggregate per annum would be exempt, beyond which it would be taxable.
55.	17(2)(viii)read with Rule 3(7)(v)	Credit Card	a) Expenditure incurred by the employer in respect of credit card used by the employee or any member of his household less amount recovered from the employee is a taxable perquisite b) Expenses incurred for official purposes shall not be a taxable perquisite provided complete details in respect of such expenditure are maintained by the employer
56.	17(2)(viii)read with Rule 3(7)(vi)	Free Recreation/ Club Facilities	a) Expenditure incurred by the employer towards annual or periodical fee etc. (excluding initial fee to acquire corporate membership) less amount recovered from the employee is a taxable perquisite b) Expenses incurred on club facilities for the official purposes are exempt from tax. c) Use of health club, sports and similar facilities provided uniformly to all employees shall be exempt from tax.
57.	17(2)(viii)read with Rule 3(7)(vii)	Use of movable assets of the employer by the employee is a taxable perquisite	Taxable value of perquisites a) Use of Laptops and Computers: Nil b) Movable asset other than Laptops, computers and Motor Car: 10% of original cost of the asset (if asset is owned by the employer) or actual higher charges incurred by the employer (if asset is taken on rent) less* amount recovered from employee. See Note 1* for computation of perquisite value in case of use of the Motor Car
58.	17(2)(viii)read with Rule 3(7)(viii)	Transfer of movable assets by an employer to its employee	Taxable value of perquisites a) Computers, Laptop and Electronics items: Actual cost of asset less depreciation at 50% (using reducing balance method) for each completed year of usage by employer less amount recovered from the employee b) Motor Car: Actual cost of asset less depreciation at 20% (using reducing balance method) for each completed year of usage by employer less amount recovered from the employee c) Other movable assets: Actual cost of asset less depreciation at 10% (on SLM basis) for each completed year of usage by employer less amount recovered from the employee.
59.	17(2)(viii)read with Rule 3(7)(ix)	Any other benefit or amenity extended by employer to employee	Taxable value of perquisite shall be computed on the basis of cost to the employer (under an arm’s length transaction)less amount recovered from the employee. However, expenses on telephones including a mobile phone incurred by the employer on behalf of employee shall not be treated as taxable perquisite.
60.	10(10CC)	Tax paid by the employer on perquisites (not provided for by way of monetary payments) given to employee	Fully exempt
61.	10(5)	Leave Travel Concession or Assistance (LTC/LTA), extended by an employer to an employee for going anywhere in India along with his family* *Family includes spouse, children and dependent brother/sister/parents. However, family doesn’t include more than 2 children of an Individual born on or after 01-10-1998. (Subject to certain conditions)	The exemption shall be limited to fare for going anywhere in India along with family twice in a block of four years: • Where journey is performed by Air – Exemption up to Air fare of economy class in the National Carrier by the shortest route • Where journey is performed by Rail – Exemption up to air-conditioned first class rail fare by the shortest route • If places of origin of journey and destination are connected by rail but the journey is performed by any other mode of transport – Exemption up to air-conditioned first class rail fare by the shortest route. • Where the places of origin of journey and destination are not connected by rail: * Where a recognized public transport system exists – Exemption up to first Class or deluxe class fare by the shortest route * Where no recognized public transport system exists – Exemption up to air conditioned first class rail fare by shortest route. Notes: i. Two journeys in a block of 4 calendar years is exempt ii. Taxable only in case of Specified Employees [See note 4]
62.	Proviso to section 17(2)	Medical facilities in India	a) Expense incurred or reimbursed by the employer for the medical treatment of the employee or his family (spouse and children, dependent – parents, brothers and sisters) in any of the following hospital is not chargeable to tax in the hands of the employee: i. Hospital maintained by the employer. ii. Hospital maintained by the Government or Local Authority or any other hospital approved by Central Government iii. Hospital approved by the Chief Commissioner having regard to the prescribed guidelines for treatment of the prescribed diseases. b) Medical insurance premium paid or reimbursed by the employer is not chargeable to tax. c) Any other expenditure incurred or reimbursed by the employer for providing medical facility in India is not chargeable to tax up to Rs. 15,000 in aggregate per assessment year.
63.	Proviso to section 17(2)	Medical facilities outside India	Any expenditure incurred or reimbursed by the employer for medical treatment of the employee or his family member outside India is exempt to the extent of following (subject to certain condition): a. Expenses on medical treatment – exempt to the extent permitted by RBI. b. Expenses on stay abroad for patient and one attendant – exempt to the extent permitted by RBI. c. Expenditure incurred on travelling of patient and one attendant- exempt, if Gross Total Income (before including the travel expenditure) of the employee, does not exceed Rs. 2,00,000.

C.

Deduction from salary

1.

16 (ii)

Entertainment Allowance received by the Government employees (Fully taxable in case of other employees)

Least of the following is exempt from tax:

a) Rs 5,000

b) 1/5th of salary (excluding any allowance, benefits or other perquisite)

c) Actual entertainment allowance received

2.

16(iii)

Employment Tax/Professional Tax.

Amount actually paid during the year. However, if professional tax is paid by the employer on behalf of its employee than it is first included in the salary of the employee as a perquisite and then same amount is allowed as deduction.

Deduction under Chapter VI-A

D.

Retirement Benefits

	Leave Encashment
1.	10(10AA)	Encashment of unutilized earned leave at the time of retirement of Government employees	Fully Exempt
2.	10(10AA)	Encashment of unutilized earned leave at the time of retirement of other employees (not being a Government employee)	Least of the following shall be exempt from tax: a) Amount actually received b) Unutilized earned leave* X Average monthly salary c) 10 months Average Salary** d) Rs. 3,00,000 * While computing unutilized earned leave, earned leave entitlements cannot exceed 30 days for each completed year of service rendered to the current employer Average salary = Average Salary* of last 10 months immediately preceding the retirement ***Salary = Basic Pay + DA (to the extent it forms part of retirement benefits)+ turnover based commission
	Retrenchment Compensation
3.	10(10B)	Retrenchment Compensation received by a workman under the Industrial Dispute Act, 1947 (Subject to certain conditions).	Least of the following shall be exempt from tax: a) Amount calculated as per section 25F(b)of the Industrial Disputes Act, 1947; b) Rs. 5,00,000; or c) Amount actually received Note: i. Relief under Section 89(1) is available ii. 15 days average pay for each completed year of continuous service or any part thereof in excess of 6 months is to be adopted under section 25F(b) of the Industrial Disputes Act,1947
	Gratuity
4.	10(10)(i)	Gratuity received by Government Employees (Other than employees of statutory corporations)	Fully Exempt
5.	10(10)(ii)	Death -cum-Retirement Gratuity received by other employees who are covered under Gratuity Act, 1972 (other than Government employee) (Subject to certain conditions).	Least of following amount is exempt from tax: 1. (15/26) X Last drawn salary* X completed year of service or part thereof in excess of 6 months. 2. Rs. 10,00,000 3. Gratuity actually received. 7 days in case of employee of seasonal establishment. * Salary = Last drawn salary including DA but excluding any bonus, commission, HRA, overtime and any other allowance, benefits or perquisite
6.	10(10)(iii)	Death -cum-Retirement Gratuity received by other employees who are not covered under Gratuity Act, 1972 (other than Government employee) (Subject to certain conditions).	Least of following amount is exempt from tax: 1. Half month’s Average Salary* X Completed years of service 2. Rs. 10,00,000 3. Gratuity actually received. Average salary = Average Salary of last 10 months immediately preceding the month of retirement * Salary = Basic Pay + DA (to the extent it forms part of retirement benefits)+ turnover based commission
	Pension
7.	–	Pension received from United Nation Organization by the employee of his family members	Fully Exempt
8.	10(10A)(i)	Commuted Pension received by an employee of Central Government, State Government, Local Authority Employees and Statutory Corporation	Fully Exempt
9.	10(10A)(ii)	Commuted Pension received by other employees who also receive gratuity	1/3 of full value of commuted pension will be exempt from tax
10.	10(10A)(iii)	Commuted Pension received by other employees who do not receive any gratuity	1/2 of full value of commuted pension will be exempt from tax
11.	10(19)	Family Pension received by the family members of Armed Forces	Fully Exempt
12.	57(iia)	Family pension received by family members in any other case	33.33% of Family Pension subject to maximum of Rs. 15,000 shall be exempt from tax
	Voluntary Retirement
13.	10(10C)	Amount received on Voluntary Retirement or Voluntary Separation (Subject to certain conditions)	Least of the following is exempt from tax: 1) Actual amount received as per the guidelines i.e. least of the following a) 3 months salary for each completed year of services b) Salary at the time of retirement X No. of months of services left for retirement; or 2) Rs. 5,00,000
	Provident Fund
14.	–	Employee’s Provident Fund	For taxability of contribution made to various employee’s provident fund and interest arising thereon see Note 3.

E.

Arrear of Salary and relief under section 89(1)

1.	15	Arrear of salary and advance salary	Taxable in the year of receipt. However relief under section 89 is available
2.	89	Relief under Section 89	If an individual receives any portion of his salary in arrears or in advance or receives profits in lieu of salary, he can claim relief as per provisions of section 89 read with rule 21A

F.

Other Benefits

1.	–	Lump-sum payment made gratuitously or by way of compensation or otherwise to widow or other legal heirs of an employee who dies while still in active service [Circular No. 573, dated 21-08-1990]	Fully exempt in the hands of widow or other legal heirs of employee
2.	–	Ex-gratia payment to a person (or legal heirs) by Central or State Government, Local Authority or Public Sector Undertaking consequent upon injury to the person or death of family member while on duty [Circular No. 776, dated 08-06-1999]	Fully exempt in the hands of individual or legal heirs
3.	–	Salary received from United Nation Organization [Circular No. 293, dated 10-02-1981]	Fully exempt
4.	10(6)(ii)	Salary received by foreign national as an officials of an embassy, high commission, legation, consulate or trade representation of a foreign state	Fully exempt if corresponding official in that foreign country enjoys a similar exemption
5.	10(6)(vi)	Remuneration received by non-resident foreign citizen as an employee of a foreign enterprise for services rendered in India, if: a) Foreign enterprise is not engaged in any trade or business in India b) His stay in India does not exceed in aggregate a period of 90 days in such previous year c) Such remuneration is not liable to deducted from the income of employer chargeable under this Act	Fully exempt
6.	10(6)(viii)	Salary received by a non-resident foreign national for services rendered in connection with his employment on a foreign ship if his total stay in India does not exceed 90 days in the previous year.	Fully exempt
7.	–	Salary and allowances received by a teacher /professor from SAARC member state (Subject to certain conditions).	Fully exempt

Notes:

1. Motor Car (taxable only in case of specified employees [See note 4] except when car owned by the employee is used by him or members of his household wholly for personal purposes and for which reimbursement is made by the employer)

S. No.	Circumstances	Engine Capacity up to 1600 cc	Engine Capacity above 1600 cc
1	Motor Car is owned or hired by the employer
1.1	Where maintenances and running expenses including remuneration of the chauffeur are met or reimbursed by the employer.
1.1-A	Used wholly and exclusively in the performance of official duties.	Fully exempt subject to maintenance of specified documents	Fully exempt subject to maintenance of specified documents
1.1-B	Used exclusively for the personal purposes of the employee or any member of his household.	Actual amount of expenditure incurred by the employer on the running and maintenance of motor car including remuneration paid by the employer to the chauffeur and increased by the amount representing normal wear and tear of the motor car at 10% per annum of the cost of vehicle less any amount charged from the employee for such use is taxable value of perquisite.
1.1-C	The motor car is used partly in the performance of duties and partly for personal purposes of the employee or any member of his household.	Rs. 1,800 per month (plus Rs. 900 per month, if chauffeur is also provided to run the motor car) shall be taxable value of perquisite	Rs. 2,400 per month (plus Rs. 900 per month, if chauffeur is also provided to run the motor car) shall be taxable value of perquisite
1.1-C		Nothing is deductible in respect of any amount recovered from the employee.
1.2	Where maintenances and running expenses are met by the employee.
1.2-A	Used wholly and exclusively in the performance of official duties.	Not a perquisite, hence, not taxable	Not a perquisite, hence, not taxable
1.2-B	Used exclusively for the personal purposes of the employee or any member of his household	Expenditure incurred by the employer (i.e. hire charges, if car is on rent or normal wear and tear at 10% of actual cost of the car, if car is owned by the employer) plus salary of chauffeur if paid or payable by the employer minus amount recovered from the employee.
1.2-C	The motor car is used partly in the performance of duties and partly for personal purposes of the employee or any member of his household	Rs. 600 per month (plus Rs. 900 per month, if chauffeur is also provided to run the motor car) shall be taxable value of perquisite	Rs. 900 per month (plus Rs. 900 per month, if chauffeur is also provided to run the motor car) shall be taxable value of perquisite
1.2-C		Nothing is deductible in respect of any amount recovered from the employee.
2	Motor Car is owned by the employee
2.1	Where maintenances and running expenses including remuneration of the chauffeur are met or reimbursed by the employer.
2.1-A	The reimbursement is for the use of the vehicle wholly and exclusively for official purposes	Fully exempt subject to maintenance of specified documents	Fully exempt subject to maintenance of specified documents
2.1-B	The reimbursement is for the use of the vehicle exclusively for the personal purposes of the employee or any member of his household (taxable in case of specified employee as well as non-specified employee)	Actual expenditure incurred by the employer minus amount recovered from the employee
2.1-C	The reimbursement is for the use of the vehicle partly for official purposes and partly for personal purposes of the employee or any member of his household.	Actual expenditure incurred by the employer minus Rs. 1800 per month and Rs. 900 per month if chauffer is also providedminus amount recovered from employee shall be taxable value of perquisite.	Actual expenditure incurred by the employer minus Rs. 2400 per month and Rs. 900 per month if chauffer is also providedminus amount recovered from employee shall be taxable value of perquisite.
3	Where the employee owns any other automotive conveyance and actual running and maintenance charges are met or reimbursed by the employer
3.1	Reimbursement for the use of the vehicle wholly and exclusively for official purposes;	Fully exempt subject to maintenance of specified documents	Fully exempt subject to maintenance of specified documents
3.2	Reimbursement for the use of vehicle partly for official purposes and partly for personal purposes of the employee.	Actual expenditure incurred by the employer as reduced by Rs. 900 per month	Not Applicable

Educational Facilities

Taxable only in the hands of specified employees [See note 4]

Facility extended to	Value of perquisite
Facility extended to	Provided in the school owned by the employer	Provided in any other school
Children	Cost of such education in similar school less Rs. 1,000 per month per child (irrespective of numbers of children) less amount recovered from employee	Amount incurred less amount recovered from employee (an exemption of Rs. 1,000 per month per child is allowed)
Other family member	Cost of such education in similar school less amount recovered from employee	Cost of such education incurred

Other Educational Facilities

Particulars	Taxable Value of Perquisites
Reimbursement of school fees of children or family member of employees	Fully taxable
Free educational facilities/ training of employees	Fully exempt

Employees Provident Fund

Tax treatment in respect of contributions made to and payment from various provident funds are summarized in the table given below:

Particulars	Statutory provident fund	Recognized provident fund	Unrecognized provident fund	Public provident fund
Employers contribution to provident fund	Fully Exempt	Exempt only to the extent of 12% of salary*	Fully Exempt	–
Deduction under section 80C on employees contribution	Available	Available	Not Available	Available
Interest credited to provident fund	Fully Exempt	Exempt only to the extent rate of interest does not exceed 9.5%	Fully Exempt	Fully Exempt
Payment received at the time of retirement or termination of service	Fully Exempt	Fully Exempt (Subject to certain conditions and circumstances)	Fully Taxable (except employee’s contribution)	Fully Exempt

* Salary = Basic Pay + Dearness Allowance (to the extent it forms part of retirement benefits) + turnover based commission

Payment from recognized provident fund shall be exempt in the hands of employees in following circumstances:

a) If employee has rendered continue service with his employer (including previous employer, when PF account is transferred to current employer) for a period of 5 years or more

b) If employee has been terminated because of certain reasons which are beyond his control (ill health, discontinuation of business of employer, etc.)

4. Specified Employee

The following employees are deemed as specified employees:

1) A director-employee

2) An employee who has substantial interest (i.e. beneficial owner of equity shares carrying 20% or more voting power) in the employer-company

3) An employee whose monetary income* under the salary exceeds Rs.50,000

*Monetary Income means Income chargeable under the salary but excluding perquisite value of all non-monetary perquisites

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About Goods and Service Tax (GST)

GST Introduction:

GST need:

Central Level Tax: proposed to merge

State Level Tax: proposed to merge

State Level Tax: proposed to merge

Movement of Tax : Sale within state

Movement of Tax : Sale interstate

Journal Entry of Guarantee

Disclosure of Contingent Liability:

Journal Entries:

Step -1 Create a Contingent Liability Sub-group under the heading of Long Term Provisions: Step -2 Create 2 Leger under said sub group; BG CDE Bank (Guarantee Issuing Bank) BG ABC International Pvt Ltd (To whom BG is given) Step -3 Journal Entry:

Entry for opening of bank guarantee:

Entry for payment of BG Charges

Entry for handover of BG to party

Entry for provision against Bank Guarantee

Entry when guarantee invoked

Journal Entries For Letter of Credit

Commonly Known As : L C

Letter of Credit:

Journal Entries:-

(1) Entry for opening of LC

(2) Payment of Commission/LC Charges

(3) Purchase of Goods

(4) Entry for realization of LC

(5) Payment of LC

(6) In Case of devolvement of LC

Step -1 Create a Contingent Liability Sub-group under the heading of Long Term Provisions:
Step -2 Create 2 Leger under said sub group;
BG CDE Bank (Guarantee Issuing Bank)
BG ABC International Pvt Ltd (To whom BG is given)
Step -3 Journal Entry: