07 Oct 22

Whether Form 15CA has to be submitted in all cases since the Bankers demand it invariably ?

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FILING OF FORM 15CA & 15CB IN CASE OF REMITTANCE(S) TO THE NON-RESIDENTS Nowadays, trade is not limited to one own’s country…

07 Oct 22

Who can Incorporate a LLP?

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What is LLP As per Section 3 of the Limited Liability Partnership Act (LLP Act), 2008, an LLP is a body corporate…

07 Oct 22

What is PAN and why is PAN needed?

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What is PAN and why is PAN needed? PAN stand for Permanent Account No. PAN is a 10-digit alphanumeric identification number (AAAAA1234A)…

07 Oct 22

Will i get a registration certificate for my Proprietorship concern

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Will I get a registration certificate for my Proprietorship concern> Sole Proprietorship is the easiest form of business as there is no…

07 Oct 22

What is HUF, How to form a HUF and Taxability of HUF Income.

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HUF means Hindu Undivided Family. A HUF automatically comes into existence when a person gets married and start his family It’s not…

07 Oct 22

Startup India

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Startup India is a flagship initiative of the Government of India, intended to build a strong ecosystem that is conducive for the…

07 Oct 22

What is Consultancy?

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CONSULTANCY What is consultancy? Consultancy means offering an expert opinion in a particular field. Consultants and consultancy firms are the common terms…

October 7, 2022
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To initiate any activity to add growth in a business the first question rises up in our mind how does it benefit…

October 7, 2022
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BRIEF OF INDIAN INCOME TAX SYSTEM Tax is a financial charge imposed on the taxpayer. Through this, the Government revenue is raised…

October 7, 2022
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The Foreign Contribution (Regulations) Act started with an objective to regulate the acceptance and utilisation of foreign contribution or foreign hospitality by certain…

FILING OF FORM 15CA & 15CB IN CASE OF REMITTANCE(S) TO THE NON-RESIDENTS

Nowadays, trade is not limited to one own’s country only. But in this globalised economy, it is very easy to trade with different countries. And with the help of digital net banking, it is also very easy to settle the payment for the trade or services provided between different nations.

As per the Indian Income Tax Act, any payment/services on which TDS is applicable, the payment to the party should be done after deducting TDS.

If any payment is made outside India, then there is one problem that the tax cannot be collected from them at a later stage. Therefore, to track this type of transaction, where any payment is made to the Non – Residents, filing of Form 15CA and 15CB introduced.

As per Section 195 of Income Tax Act, 1961 which mandates the deduction of Income Tax from payments made to Non-Resident. The person who is making the remittances (Remitter) to the non-resident needs to furnish an undertaking in Form 15CA accompanied by a Chartered Accountants Certificate in Form 15CB.

WHAT IS FORM 15CA?

Form 15CA is a type of declaration of remitter, in which remitter gives the information about his organisation and bank details through which the payment is being remitted. It also contains the information for nature of payment and what amount in Foreign Currency is being remitted. Also, remittee (Non-Resident) details are mentioned in this Form.

When a person desires to remit any money to non-resident, the bank do check whether the tax was paid or not. If tax is not paid in the form of TDS, it will be checked if it is certified by the Chartered accountant or the Assessing Officer. Bank asks for Form 15CA/15CB as a document of genuine transactions.

The furnishing of information Form 15CA has been classified into 4 parts –

PART A: – If the remittances is chargeable to tax under Income Tax Act, 1962 and the remittance or the aggregate of such remittance does not exceed Rs. 5 Lakh during the Financial Year.

PART B: – Where remittance is chargeable to tax and the remittance or the aggregate of remittances exceeds Rs. 5 Lakh during the financial year and an order/certificate u/s 195(2)/ 195(3)/197 of Income Tax Act has been obtained from the Assessing Officer.

PART C: – Where remittance is chargeable to tax and the remittance or the aggregate of remittances exceeds Rs. 5 Lakh during the financial year and a certificate in Form No. 15CB has been obtained.

PART D: – Where the remittance is not chargeable to tax under Income Tax Act, 1961.

WHAT IS FORM 15CB?

Form 15 CB (Certificate of an accountant) is a Form which is required to be signed by a Chartered Accountant. This is a kind of certification in which remitter & remittee personal information is mentioned. This certificate also mentioned the Nature of Transaction, Amount of Remittance (in Foreign Currency & INR), TDS rates.

Form 15CB is the certificate where the CA Examines the remittance chargeability as per the provisions under Section 5 and 9 of the Income Tax Act along with the provisions of the Double Tax Avoidance Agreements.

Upload of Form 15CB is mandatory to file Part C of Form 15CA. To prefill the details in Part C of form 15CA, the Acknowledgement Number of e- verified form 15CB should be verified.

EXEMPTION TO PAYMENT/REMITTANCES, WHERE FORM 15CA & 15CB IS NOT REQUIRED?

Individual don’t need to furnish the information in Form 15CA and 15CB for remittance which requires no RBI approval.

As per Rule 37BB following is the List of payments (33 items) which does not require compliances and reporting through the submission of 15CA and 15CB: –

Nature of Payment	Purpose code as per RBI
Indian investment abroad – in equity share capital	S0001
Indian investment abroad – in debt securities	S0002
Indian investment abroad – in wholly owned subsidiaries or branches	S0003
Indian investment abroad – in subsidiaries and associates	S0004
Indian investment abroad – in real estate	S0005
Loans extended to Non-Residents	S0011
Advance payment against imports	S0101
Payment towards imports- settlement of invoice	S0102
Imports by diplomatic missions	S0103
Intermediary trade	S0104
Imports below Rs.5,00,000- (For use by ECD offices)	S0190
Operating expenses of Indian shipping companies operating abroad.	S0202
Operating expenses of Indian Airlines companies operating abroad	S0208
Booking of passages abroad -Airlines companies	S0212
Remittance towards business travel.	S0301
Travel under basic travel quota (BTQ)	S0302
Travel for pilgrimage	S0303
Travel for medical treatment	S0304
Travel for education (including fees, hostel expenses etc.)	S0305
Postal Services	S0401
Construction of projects abroad by Indian companies and also including import of goods at project site	S0501
Freight insurance in relate import and export of goods	S0602
Payments for maintenance of offices abroad	S1011
Maintenance of Indian embassies abroad	S1201
Remittances by foreign embassies in India	S1202
Remittances for family maintenance and savings by the non-residents	S1301
Remittance towards personal gifts and donations	S1302
Remittances towards donations to religious and charitable institutions abroad	S1303
Remittances to other Governments and charitable institutions established by the Governments as grants and donations	S1304
Remittances towards Contribution or donations by the Government to international institutions	S1305
Remittances for payment or refund of taxes.	S1306
Rebates or Refunds or reduction in invoice value on account of exports	S1501
Payments by residents for international bidding.	S1503

You can also read my coming suggested related articles on:-

Procedure of filing of Form 15CA & 15CBs.
How to create DSCs Files and UDIN Generation.

What is LLP

As per Section 3 of the Limited Liability Partnership Act (LLP Act), 2008, an LLP is a body corporate formed and incorporated under the Act and a legal entity separate from its partners. It will have perpetual succession.

The rights and duties of the partners are covered in the LLP agreement between the partners or between the partners and the LLP.

Since LLP having the benefits of both ‘a body corporate structure’ as well as ‘a partnership firm structure’ LLP is called a combination of a company and a partnership.

Who can incorporate an LLP?

Any Individual person can incorporate an LLP, but another legal entity may also become a partner in the proposed LLP through its authorized person. Foreign Nationals/NRIs are also allowed to become a partner and designated partners in LLP but subject to the requirement of one Indian resident designated partner.

Limit for the number of Partners in an LLP

Limited Liability Partnership shall have at least two individuals designated partners every time, and at least one designated partner should be resident in India, and there is no maximum limit for the number of maximum partners or designated partners in the LLP.

Stepwise procedure to incorporate an LLP is as under:

1. Digital Signature Certificate

LLP formation fillip form can upload only after affixed the Digital Signature Certificate of anyone authorized Designated partner of the proposed LLP, So whose signatures are to be affixed on the e-forms has to be obtained from any authorized certifying agency.

2. Reservation of name

RUN form (Reservation of Unique Name) Need to file with the MCA to get name approval letter for proposed LLP (proposed LLP name availability facility is also available on the MCA portal)

3. Submission of Incorporation form for LLP formation or to get the certificate of Incorporation of LLP

Fillip Form (LLP formation form) need to submit with the MCA along with following documents:

Copy of PAN Card of all the partners and designated partners.
Copy of the Address Proof of Partners: Voter’s ID or Passport or Driver’s license or Aadhar Card (Passport is mandatory in case of Foreign Nationals/NRIs)
Copy of the Residence Proof of Partners: telephone bill, mobile bill, latest bank statement, electricity bill (Should not be older more than two months).
Photograph – Partners should also provide their passport size photograph
Copy of the Latest address proof for registered address of proposed LLP (Electricity Bill or mobile bill or GAS Bill)
Copy of Non-Objection Certificate (NOC) from the owner of the premises of the registered address.
Copy of FORM no. 9 under Rule 7 and 10(8) (Consent to act as Partner or Designated Partner)
Copy of the disclosure of the interest of Partners and Designated Partners.
Subscriber Sheet duly signed by the partners or designated partner and from the practicing professional.

Note: All the documents related to the Foreign Nationals/NRIs should be translated in the English language and duly notarized and apostilled.

After submitting Fillip form with the MCA department with all required attachments, the Registrar will issue a certificate of incorporation only after checking the forms and satisfying himself about the compliance with relevant provisions of the LLP Act to register the LLP.

Can we apply for DIN along with FILLIP form

We can also apply for a new DIN (Director Identification Number) in fillip form but a maximum of two DIN is allowed to apply in it, if anyone wants to apply more than two DIN then we need to apply in a separate application in form DIR-3.

Filing of LLP agreement (Form-3)

The LLP agreement defines the rights and duties of the partners and also among the LLP and its partners or designated partners. The LLP Agreement will print on Stamp Paper and the values of Stamp Paper are depending on the state to state stamp duty rate. Form 3 (Information with regard to LLP) needs to file with the MCA within 30 days of the date of incorporation.

For registration please click here https://www.mycorporation.in/india/llp-register-limited-liability-partnership

What is PAN and why is PAN needed?

PAN stand for Permanent Account No. PAN is a 10-digit alphanumeric identification number (AAAAA1234A) issued to all individuals, companies, non-resident Indians or anyone who pays taxes in India. It’s one of identity proof which can be use as identity. The PAN card will be issued within 15-20 days from the date of application

Other important facts about PAN Number are listed below:

All the tax-related information of a person/company is stored against a single PAN across India.
No two persons/entity/organisation can have the same PAN number.
PAN card acts as a unique identity proof along with driving licence, aadhaar card voter ID, etc.
It is valid for a lifetime irrespective of any change in address of the cardholder.

Why PAN needed?

Quoting the PAN is mandatory when filing Income Tax returns, tax deduction at source, or any other communication with Income Tax Department. PAN is also steadily becoming a mandatory document for opening a new bank account, to receive a taxable salary, a new landline telephone connection / a mobile phone connection, purchase of foreign currency, bank deposits above ?50,000, purchase and sale of immovable properties, vehicles, jewellery etc.

Here are some examples:-

PAN card number is required while filing the income tax return.
Permanent Account Number is mandatory for opening a new bank account, Demat account, foreign currency purchases.
Register a new business.
Carry out transactions like sale and purchase of house property, etc.
Transfer money from NRE to NRO account.
Making payments of more than Rs 50,000 towards bank deposits.
Purchase of shares exceeding Rs 50,000 in value.
Any payment for insurance Policy above Rs 50,000 requires quoting of PAN number
Any purchase of bonds above Rs 50,000, etc.
PAN number is mandatory to apply for Visa, Credit Card, Bank loan, etc.

Can minor apply for pan card?

A minor cannot apply for PAN card herself directly. Parents, guardians or a representative assessee has to apply on her behalf. The form to use is form 49A which is the same one that adults also have to use. The PAN card will be issued within 15-20 days from the date of application. This has to be submitted along with identity proofs of the father or guardian; they will have to sign the form as well.

PAN also comes in handy if the minor is earning. Generally, a minor’s income is clubbed with the parent’s income. But in certain case, it is taxable in her hands, according to section 64 of the income-tax Act. For instance, the income of a “minor child suffering from any disability of the nature specified in section 80U” will be taxed in her hands. Further, income generated by a minor from manual work or skill, specialised knowledge or talent. In such cases, a PAN becomes mandatory. The child will also have to file her income tax return through a representative assessee.

Structure of PAN Number

Out of the 10 digits that it has, the first 3 characters consist of alphabets sequenced from AAA to ZZZ.
The 4th character gives information about the cardholder. Here is the list on the type of taxpayer/card-holder who is defined by a letter.
A stands for Association of Persons (AOP)
B stands for Body of Individuals (BOI)
C stands for Company
F stands for Firm
G stands for Government
H stands for Hindu undivided Family (HUF)
L stands for Local Authority
J stands for Artificial Judicial Person
P stands for Individual
T stands for Trust (Association of Persons)
E stands for LLP (Limited Liability Partnership)
The 5th character is a letter picked from the ‘Surname’ of the individual
Characters from 6-9 are random numbers
10th character is again an alphabet meant to verify the validity of the code
Use of PAN Card
Fees for PAN

The application fee is Rs 107/- for dispatch within India and Rs 989/- for outside the country. The PAN card will be issued within 15-20 days from the date of application.

Benefits of PAN Card

PAN card acts a proof of ‘date of birth’ while applying for Visa, bank loans, etc.
It also acts as a photo identity proof for the cardholder.
It helps the government in tracking various financial transactions.

Prescribed PAN application forms

Indian citizens who wish to apply for a new PAN can apply for one by submitting a duly filled and signed Form 49A to any of the TIN-FCs managed by NSDL.

Form 49A

Foreign citizens who wish to apply for a new PAN can apply for one by submitting a duly filled and signed Form 49AA to any of the TIN-FCs managed by NSDL. However, a Qualified Foreign Investor PAN applicant should submit Form 49AA to a Depository Participant after filling up the KYC details.

Form 49AA

In case of entities who have a PAN but do not have a PAN card and wish to get a PAN card, or wish to make changes to their existing PAN card may fill up the Change Request Application form
Income department has started issuing online PAN those have Aadhaar card without any fees.

Request for New PAN Card or / and Changes or Correction in PAN Data Form

For know more about PAN click here https://www.mycorporation.in/

Will I get a registration certificate for my Proprietorship concern>

Sole Proprietorship is the easiest form of business as there is no government registration needed in order to start a sole proprietorship business in India. As there is no specific law applicable on the sole proprietorship it’s easy to operate and compliance are minimal. You will be needed few documents to open a bank account, at least two documents as proof of business located in the form of government registrations such as shop act license, MSME (Udyog Aadhaar) and GST registration.

Proprietorship businesses are considered to be one and the same as the Proprietor. The PAN card of the proprietor will be used for the opening bank account, obtaining licenses/registrations/ certificates in the name of the sole proprietorship and filing an income tax return for the sole proprietorship. Hence, obtaining PAN card for the Proprietor is the first step in establishing a sole proprietorship.

To start a business in proprietorship and get it to register as a Sole Proprietorship, the following documents are required:

PAN Card
Aadhaar Card
Bank Account
Registered office proof

Although sole proprietor does not require any specific registrations, he is advised to obtain a few registrations to make his business function smoothly.

MSME (Udyog Aadhaar)
Shop and Establishment
GST registration

MSME

The Government of India has enacted the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 in terms of which the definition of micro, small and medium enterprises is as under:

Enterprises engaged in the services and manufacture or production, processing or preservation of goods as specified below:
- A micro enterprise is an enterprise where investment in plant and machinery does not exceed Rs. 1 Crore and Turnover not exceed 5 crore.
- A small enterprise is an enterprise where the investment in plant and machinery does not exceed Rs. 10 Crore and Turnover not exceed 50 crore.
- A medium enterprise is an enterprise where the investment in plant and machinery does not exceed Rs. 20 Crore and Turnover not exceed 100 crore.

Shop and Establishment

An Act to amend and consolidate the law relating to the regulation of hours of work, payment of wages, leave, holidays, terms of service and other conditions of work of persons employed in shops, commercial establishments, establishments for public entertainment or amusement and other establishments and to provide for certain matters connected therewith.

GST registration

GST stands for Goods and Services Tax. GST will be a single, destination based, consumption tax that will replace existing taxes, including CENVAT, Octroi, Sales Tax, and Excise Duty, etc. Unlike the old tax structure, where the state of origin received tax revenue, in the new GST model the state in which goods and services are consumed is the state that will receive the revenue.

To start your business under proprietorship visit our website www.mycorporation.in

HUF means Hindu Undivided Family. A HUF automatically comes into existence when a person gets married and start his family It’s not necessary that this new family should also have kids. The day when a Boy or a Girl get married, they have formed a HUF.

HUF is a family with husband, wife and children (and children’s spouses if any) living together. You can save taxes by creating a family unit and pooling in assets to form an HUF. HUF is taxed separately from its members. Therefore, deductions (such as under Section 80) or exemptions allowed under the tax laws can be claimed by it separately.

Under Hindu Law, an HUF is a family which consists of all persons lineally descended from a common ancestor and includes their wives and unmarried daughters. An HUF cannot be created under a contract, it is created automatically in a Hindu Family.

Karta of a HUF is the senior most male member of the family and in financial terms he can also be called manager of the family. In this account a corpus is created where every family member can pool their income. The corpus will be handled by or authorized to handle by Karta (head of the family). Signature of karta will be required for every transaction from the bank. These accounts are similar to individual saving bank accounts; there will be various tax benefits that are available for an individual’s account while the income of members is being pooled in HUF account.

Ancestral Property: Ancestral property may be defined as the property which a man inherits from any of his three immediate male ancestors, i.e. his father, grandfather and great grandfather. Therefore, property inherited from any other relation is not treated as ancestral property. Income from ancestral property held by following families is taxable as income of HUF:

a) A family of widow mother and sons (may be minor or major) ;
b) Family of husband and wife, having no child ;
c) Family of two widows of deceased brothers ;
d) Family of two or more brothers ;
e) Family of uncle and nephew ;
f) Family of mother, son and son’s wife ;
g) Family of a male and his late brother’s wife.

Note: Property obtained by daughter from joint family property would be her absolute property. Any income therefrom is chargeable to tax in her hands in the individual status only. This will also apply to any legal heir obtaining property in the capacity of a descendent.

Basic criteria for an HUF

There are some essential conditions that must be fulfilled to qualify as an HUF. These are outlined below:

Only one member or co-parcener cannot form an HUF;
The joint family continues even in the hands of females after the death of the sole male member;
An HUF need not consist of two male members. One male member is enough. For example, a father and his unmarried daughters may form and HUF.

Taxability of HUF Income

HUF has its own PAN and files a separate tax return. A separate joint Hindu family business is created since it has an entity separate from its members.

1 Deduction from gross total income: An HUF is entitled for deductions available under Chapter VI-A (as applicable) while calculating its taxable income.

2 Rate of Tax:

An HUF is taxed on same slab rates which are applicable to an Individual.

An HUF is liable to pay Alternate Minimum Tax if the tax payable is less than 18.5 per cent (including cess and surcharge) of “Adjusted Total Income” subject to prescribed conditions.

How to form an HUF?

While there are tax advantages of forming an HUF, you must also know some conditions –

One person cannot form HUF. An HUF is formed by a family.

An HUF is automatically created at the time of marriage.

HUF consists of a common ancestor and all of his lineal descendants, including their wives and unmarried daughters.

Hindus, Buddhists, Jains and Sikhs can form HUFs.

HUF usually has assets which come as a gift, a will, or ancestral property, or property acquired from the sale of joint family property or property contributed to the common pool by members of HUF.

Once an HUF is formed it must be formally registered in its name. An HUF should have a legal deed. The deed shall contain details of HUF members and the business of the HUF. A PAN number and a bank account should be opened in the name of the HUF.

Partial Partition

It is a type of partition in which some of the willing co-parceners get out of the HUF and rest of them continue the HUF. The partial partition may be property-specific when some of the properties are divided among the co-parceners and balance continue to be the property of the HUF. When a claim of total partition has been made by any co-parcener on behalf of HUF, the assessing officer shall inquire about it. For this, he shall serve a notice to all the co-parceners of the HUF and enquire whether the total partition has taken place and if yes, then on which date it is effected.

A HUF can be formed with just two members, one of whom is a co-parcener. But for an entity to be taxed as a HUF, it should have at least two co-parceners. For example, when any HUF consist of only husband and wife, then there is only one co-parcener (the wife is a member but not a co-parcener) and therefore, in such case income can’t be taxed in hands of HUF. It will be taxed in the hands of individual co-parceners. Unmarried daughters would always be a co-parcener and have the equal right over the property just like a son. The status of a married daughter in her father’s property is that of a co-parcener.

Since HUF is one person as per Income Tax Act, a proprietor of a business can be an individual or a HUF. A proprietorship concern is not governed by any specific law as such, and therefore there is no bar on HUF becoming a proprietor of any concern.

For filing the Income tax return of an HUF click here https://www.mycorporation.in/india/income-tax-return-online-check-refund-status-efiling-of-itr

Startup India is a flagship initiative of the Government of India, intended to build a strong ecosystem that is conducive for the growth of startup businesses, to drive sustainable economic growth and generate large scale employment opportunities. The Government through this initiative aims to empower startups to grow through innovation and design.

Several programs have been undertaken since the launch of the initiative on 16th of January, 2016 by Hon’ble Prime Minister, to contribute to his vision of transforming India into a country of job creators instead of job seekers. These programs have catalyzed the startup culture, with startups getting recognized through the Startup India initiative and many entrepreneurs availing the benefits of starting their own business in India.

An entity shall be considered as a Startup:

1. If it is incorporated as a private limited company or registered as a partnership firm or a limited liability partnership in India

2. Up to seven years from the date of its incorporation/registration; however, in the case of startups in the biotechnology sector, the period shall be up to ten years from the date of its incorporation/registration

3. If its turnover for any of the financial years since incorporation/registration has not exceeded INR 25 Crores

4. If it is working towards innovation, development or improvement of products or processes or services, or if it is a scalable business model with a high potential of employment generation or wealth creation

Note: An entity formed by splitting up or reconstruction of a business already in existence shall not be considered a ‘Startup’.

Eligibility for Startup Registration

The company to be formed must be a private limited company or a limited liability partnership.
The firm must provide innovative schemes or products.
It should be a new firm or not older than five years, and the total turnover of the company should be not exceeding 25 crores.
The firms should have obtained the approval from the Department of Industrial Policy and Promotion (DIPP).
To get approval from DIPP, the firm should be funded by an Incubation fund, Angel Fund or Private Equity Fund.
The firm should have obtained a patron guarantee from the Indian patent and Trademark Office.
It must have a recommendation letter by an incubation.
Capital gain is exempted from income tax under the startup India campaign.
Angel fund, Incubation fund, Accelerators, Private Equity Fund, Angel network must be registered with SEBI (Securities and Exchange Board of India).

The benefit under Startups India Scheme

For availing various benefits under the Startup India scheme, an entity would be required to be recognized by DIPP as a startup by applying at https://www.startupindia.gov.in/content/sih/en/startupgov/startup-recognition-page.html

The benefits provided to recognized startups under the Startup India initiative are:

1. Self-Certification: Self-certify and comply under 3 Environmental & 6 Labour Laws

2. Tax Exemption: Income Tax exemption for a period of 3 consecutive years and exemption on capital and investments above Fair Market Value

3. Easy Winding of Company: In 90 days under Insolvency & Bankruptcy Code, 2016

4. Startup Patent Application & IPR Protection: Fast track patent application with up to 80% rebate in filing patents

5. Easier Public Procurement Norms: Exemption from requirement of earnest money deposit, prior turnover and experience requirements in government tenders

6. SIDBI Fund of Funds: Funds for investment into startups through Alternate Investment Funds

Documents required for registration under Startup India

Registration certificate either under:-

A Partnership Firm – To Know more Click on https://www.mycorporation.in/

B Limited Liability Partnership Firm – To know more click on https://www.mycorporation.in/india/llp-register-limited-liability-partnership

C Private Limited Company – To know more click on https://www.mycorporation.in/india/private-limited-company-register-start-pvt-ltd

Pan Card
Address Proof of Business
Details of Director and Partners – PAN, Aadhaar and address proof
The Startups may self-certify compliance in respect of following 6 Labour Laws:

Other Constructions Workers’ (Regulation of Employment & Conditions of Service) Act, 1996

The Payment of Gratuity Act, 1972
The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
The Inter-State Migrant Workmen (Regulation of Employment & Conditions of Service) Act, 1979
The Contract Labour (Regulation and Abolition) Act, 1970
The Employees’ State Insurance Act, 1948

Startup Recognition and Tax Exemptions

Startup Recognition:

Under the Startup India Action Plan, startups that meet the definition as prescribed under the G.S.R. notification 501 (E) are eligible to apply for recognition under the program. The Startups have to provide support documents, at the time of application.

Eligibility Criteria for Startup Recognition:

The Startup should be incorporated as a private limited company or registered as a partnership firm or a limited liability partnership
Turnover should be less than INR 100 Crores in any of the previous financial years
An entity shall be considered as a startup up to 10 years from the date of its incorporation
The Startup should be working towards innovation/ improvement of existing products, services and processes and should have the potential to generate employment/ create wealth. An entity formed by splitting up or reconstruction of an existing business shall not be considered a “Startup”

Startup India: 80 IAC Tax exemption:

Post getting recognition a Startup may apply for Tax exemption under section 80 IAC of the Income Tax Act. Post getting clearance for Tax exemption, the Startup can avail tax holiday for 3 consecutive financial years out of its first ten years since incorporation.

Eligibility Criteria for applying to Income Tax exemption (80IAC):

The entity should be a recognized Startup
Only Private limited or a Limited Liability Partnership is eligible for Tax exemption under Section 80IAC
The Startup should have been incorporated after 1st April, 2016

Startup India: Tax Exemption under Section 56 of the Income Tax Act (Angel Tax)

Post getting recognition a Startup may apply for Angel Tax Exemption.

Eligibility Criteria for Tax Exemption under Section 56 of the Income Tax Act:

The entity should be a DPIIT recognized Startup
Aggregate amount of paid up share capital and share premium of the Startup after the proposed issue of share, if any, does not exceed INR 25 Crore.

Procedure of registration under Startups

Registering a profile on the Startup India website is a fairly simple process.

Here is the link for registration https://www.startupindia.gov.in

1. Simply click on ‘Register’ and fill in the details as required in the registration form. An OTP will be sent to your registered email address, post submitting which your profile will get created.

2. You will have an option to select your profile type. For ‘Individuals’, the profile goes live immediately, whereas for ‘Startups’, the profile goes under moderation for 24-48 Hrs, post which you will be able to avail all benefits on www.startupindia.gov.in.

FAQs

What is Startup India?

Can a Foreign company register under Startups?

Any entity having atleast one registered office in India is welcome to register on ww.startupindia.gov.in.

What Qualifies as a Startup under Startup India Scheme?

An entity shall be considered as a Startup:

1. If it is incorporated as a private limited company or registered as a partnership firm or a limited liability partnership in India

3. If its turnover for any of the financial years since incorporation/registration has not exceeded INR 25 Crores

Note: An entity formed by splitting up or reconstruction of a business already in existence shall not be considered a ‘Startup’.

CONSULTANCY

What is consultancy?

Consultancy means offering an expert opinion in a particular field. Consultants and consultancy firms are the common terms used with regards to professionals who provide wide knowledge on a particular subject. There is an increasing demand for the consultant for Chartered Accountant firm owners. This is mainly because consultants have good foresight to predict possibilities of the future. They can provide good assistance with respect to day-to-day operations of upcoming opportunities.
For instance, they can recommend consultancy with respect to audit processes.

What can consultancy at the workplace provide?

In a hectic workplace, creating consultancy can present a challenge. Working to establish a workplace in which policies, procedures, and practices are consistent, however, has its benefits. There are a number of reasons why consultancy is a goal toward which you should work. Take these reasons into consideration when determining how much effort you want to dedicate to establishing this principle within your business space.

Importance of consultancy?

1. Consultancy build trust in the workplace

2. Respect and consultancy go hand-in-hand. You command respect from those who aren’t brave enough to express their own views.

3. Consultancy breeds credibility. A manager’s reputation is built on the policies he/she enforces, actions he/she rewards and pursuits she funds.

4. Positive workplace decisions stem from rational and reliable behavior. The information technology leadership website CIO Update advises that the ability to eliminate emotional decisions, as opposed to haphazard and inconsistent behavior, can make a difference in a company’s long-term survival.

Power of consultancy?

1. Consultancy allows for measurement.
2. Consultancy creates accountability.
3. Consultancy establishes your reputation.
4. Consultancy makes you relevant.
5. Consultancy maintains your message.

To initiate any activity to add growth in a business the first question rises up in our mind how does it benefit to my business.
To identity more opportunities for business growth and access a risk, ISO helps to allow a strategic tool for management. It is processed to review the management system of a company and process to identify weaknesses in the system. This process helps your management team to understand how quality control works and to make improvements. The benefit of ISO are beyond to your every aspect of your business ie: sales, marketing, operations, team engagement.

Benefit to Company

Every Business is customer-focused; ISO helps an organization to understand that its activity is customer-focused and continually improving products and services to meet the expectation of the customer.

ISO ensures your customer that your product and services are measured, monitored and improved by QMS Body and assessment helps to achieve these goals, productivity ultimately profits and improve efficiency.
The customer feels more confidence working with ISO certified company which can provide reliable products or services to their consumers. Which ultimately helps in customer retention and acquisition. ISO is beneficial for both small and large organizations. ISO helps an organization to focus on the important areas of business and improve the efficiency of the team.

It helps to prevent from occurring quality issue on first place to deal with the quality issue, identify the risk to your business and find the solution to control in a structured manner. The external training trends the employee of an organization to take a more effective decision, to improve efficiency and to make a better relationship with the supplier.

An organization often repeat the mistakes due to having such no record of the difficulties occurred in history. ISO guidelines trained your management team to maintain a system to keep a recording of problems the company faced in past and seek out the root cause and find the potential solution.

ISO trained your management system to measure, analyse, monitor and evaluate the potency of your management system.

It helps employees to know that organization is committed to eliminating the waste and producing the best quality products and services. If you have ever noticed you might realise that how many times you have seen a print advertising on a product marked with ISO CERTIFIED, on the website of the companies and on a banner outside of the companies. When you know that the product and services are certified by ISO you feel confident while consuming them. ISO boost your marketing and it is the best way to advertise your product or service’s’ quality. It helps your employee to understand how to maintain quality and raise awareness amongst the quality of product and services.

Benefit to Customer

As ISO is recognized worldwide and most of the customer only works with companies that certified with ISO because it ensures them that your management systems are constantly assessed and approved. ISO ensures your customer that your product and services are reliable and quality checked.

A consumer always prefers a product and service with high safety and quality and it is his right too and ISO support basic consumer rights .i.e Right to be Informed, right of the safety, right to get the best quality in product and services.

To know more about the ISO or take the ISO certificate please click here https://www.mycorporation.in/india/iso-certification-consultant-standard-9001-2008

BRIEF OF INDIAN INCOME TAX SYSTEM

Tax is a financial charge imposed on the taxpayer. Through this, the Government revenue is raised for the betterment of society and improving the economic situation of a country. Indian government generates major of its revenue from this tax system.

Indian Taxation System is categorized into 2 main parts: – Direct Tax and Indirect Tax.

Direct Tax is a tax that a person pays directly to the government on its own. Unlike Direct Tax, the tax in Indirect Tax is collected by some other on your behalf and paid indirectly to the government.

Income tax is a part of the Direct Tax system, in which the assessee pays taxes and furnishes their return of income to the Income Tax Department.

The power has been given in the constitution of India – Schedule VII – Union List – Entry 82 to the Central Government to levy a tax on any income other than agriculture income.

The Indian Income Tax Law consists of Income Tax Act 1961, Income Tax Rules 1962, Notification and Circulars issued by Central Board of Direct Taxes (CBDT), Annual Finance Acts and judicial pronouncements by the Supreme Court and High Courts.

The Income Tax Department is a part of the Department of Revenue under the Ministry of Finance, Government of India. The Income tax department is administered by the the Central Board of Direct Taxes (CBDT).

WHEN AN INCOME TAX RETURN (ITR) IS REQUIRED TO FILE?

As per the Income Tax Act, in case of Individual, any person who is less than 60 years of age (Normal Individual) and has annual income of more than Rs. 2.5 Lakhs has to file the Income Tax Returns. For senior citizens, the limit is Rs. 3 Lakhs, and for who are more than 80 years old (Super Senior Citizens), the same exemption limit is Rs. 5 Lakhs.

In case of HUF/AOP/BOI, the exemption limit to file the ITR is Rs. 2.5 Lakhs.

(Even if your income does not exceed the above exemption limit, you can file the ITR voluntarily)

But there is no exemption limit in case of company and firms/LLPs. Therefore, it is mandatorily to file the Income Tax Returns in case of Company and Firms.

WHERE TO FILE THE INCOME TAX RETURNS?

The process to file the ITR is referred to as Income Tax filing. A taxpayer can file the ITR online through E-portal of the Income Tax Department. Taxpayers can find the Income tax return forms on the official website of the Income tax department.

To download the same,

-Visit the Income Tax Website: – https://incometaxindiaefiling.gov.in

– On the homepage, click on the link “IT Return Preparation Software” under download tab.

-Select the appropriate “Income Tax Return Form” option from the drop-down menu list.

The income tax department also notifies ITR forms for every assessment year. Assessment year is the year immediately following the financial year for which the return is to be filed i.e For FY 2019-20, the assessment year is 2020-21.

ITR can be filed by downloading the in Excel or Java utility file. But taxpayers who are eligible to file ITR-1 and ITR-4 also have the option to file it online on Income tax portal without downloading any software utility.

If you are eligible to file ITR-1, then you can use option ‘Prepare and submit online’ after login into your income tax user id on the income tax portal.

You can also read my following suggested articles on Income Tax: –

Step by Step procedure for registration at Income Tax Portal.
What is annual income or what types of income to be shown in ITR?
Which ITR Forms to be selected for different types of Income?

The Foreign Contribution (Regulations) Act started with an objective to regulate the acceptance and utilisation of foreign contribution or foreign hospitality by certain individuals or associations and It prohibits the acceptance and utilisation of foreign contribution or foreign hospitality for the activities can be harmful to the national interest.
Foreign Contribution Regulation Act, 2010 came into force with effect from 11^th May 2011. The Act involves safeguarding national security.

“Foreign Contribution” means any donation or contribution or hospitality receives from any Foreign Source. It includes the following items:

Any Gift or an Article given to a person for personal use.
Any currency whether foreign or Indian in the form of donation or contribution.
The amount received, by way of fee exp. Indian Institute receives a fee from foreign student

Who are eligible to receive foreign contribution?

Any Person registered with FCRA 2010, must have a definite cultural, economic, educational, religious or social programme.
Any Non-Governmental Organization registered with FCRA can receive foreign contribution or donation from foreign sources.

Foreign Contribution is prohibited for:

Election candidate, columnist, cartoonist, editor, owner, printer or publisher of a registered newspaper, Judge, Government servant or Govt. Employee, Any Legislature Member, political party
An association or company deals in the production or broadcast of audio news or audiovisual news through any electronic mode, Person resident of India or a Person citizen of India residing outside of India.

Refer to Section-3 of FCRA Act 2010.

Some Clarifications:

A contribution made by a person who is an Indian citizen and lives outside of India not on behalf of any foreign organization but from personal saving shall not be treated as foreign contribution.

Any contribution receives from a person is the origin of India but a citizen of other countries shall be treated as foreign contribution and same is applicable on PIO and OCI cardholder.

Any help receives from a relative in the form of money from the foreign source shall not be treated foreign contribution but any person receiving foreign contribution in excess of one lakh rupees in one financial year needs to inform the Central Government within thirty days from the date of receipt. This form is available on the website: fcraonline.nic.in

Fee receives by any foreign delegate/ participant for attending a seminar/conference/event organized in India and this is going to utilize for meeting the expenditure of hosting organization shall not be treated as foreign contribution.

Any article or gift receives from foreign source for the personal use whose market value in India on the date of such gift exceeds rupees 25000/- shall be treated as foreign contribution.

Who will be called as Foreign Source under the act:

The government itself or Agency of Govt. body of any foreign country or territory.
Any International agency but excludes United Nations, The World Bank, International monetary fund or agencies time to time specify by central govt.

Any Corporation formed in a foreign country whether not being a foreign company.

Any company registered here in India under the act 1956 of companies act, its share capital held, either in singly or aggregate by Govt. of a foreign country, The citizen of a foreign country, Trusts, Societies or other associations of individuals.

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