What is Cost Audit and how to get it done

October 7, 2022
No Comments

What is Cost audit and When it is required Cost Audit: – It represent the authenticity of cost accounts and cost records which…

07 Oct 22

What is Accounting?

No Comments

ACCOUNTING What is Accounting? Accounting is an art of classifying, recording, summarising in a significant manner. It is a systematic process of…

October 7, 2022
No Comments

How to Handle Financial Crisis? Index: Why do you enter into Financial Crisis? Is knowledge of Finance Compulsory? Handling of Financial Crisis?…

October 7, 2022
No Comments

Earnings per Share (EPS) What is Earnings Per Share? Earnings per share are the net result of the company earned on one…

07 Oct 22

Equalisation Levy

No Comments

Equalisation Levy 1.Introduction Equalisation Levy was introduced in India in 2016, via, Chapter VIII OF THE FINANCE ACT 2016. This act is…

07 Oct 22

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

No Comments

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?

No Comments

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?

No Comments

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

No Comments

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.

No Comments

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

What is Cost audit and When it is required

Cost Audit: – It represent the authenticity of cost accounts and cost records which is maintain by the companies who are required to get the cost audit done. Cost audit ascertain the accuracy of cost accounting records and ensures that they are in conformity with cost accountings principles, Cost accounting standards, plans, procedure and objectives.

Cost Records:-Meaning of Cost records define in rule 2 (e) of companies (cost record & audit) rules 2014, cost records are those document which represent the utilisation of material ,labour and other items of cost applicable to the production of Goods or provision of services as provided in sec 148 of companies (Cost record and audit) rules.

When preparation of cost records is necessary:-

According to rule 3 of the companies rules 2014 (Cost records and audits) rule contains two table namely Table A i.e. Regulated sectors & Table B i.e. Non Regulated sectors.

Cost records are required to maintain when companies engaged in the production of goods and provision of services & they are covered under the Table A or Table B and total turnover from all of its production or services in more than INR 35 Crores during the preceding financial year.

In simple words we can say that if products or service covered under table A or table B and its total value crosses INR 35 Crore then cost records are compulsorily maintain by company and it’s become the mandatory part of books of accounts.

Applicability of cost Audit:-

Provision of cost audit are applicable if these conditions are fulfilled:-

Condition Regarding TABLE A:-

1. Overall annual turnover of the company from all the products and service is Rs. 50 Crore or more; and

2. Aggregate turnover from the products and service for which cost records are required to maintain is Rs. 25 Crore or More

Condition Regarding Table B:-

1. Over all annual turnover of the company from all products and services is Rs. 100 Crore or more and;

2. Aggregate turnover from the individual products or service for which cost records are require to be maintain is Rs.35 Crore or more.

It must be noted the for checking the threshold limit year should be preceding financial year

Cost audit will not applicable if following conditions fulfilled:-

Revenue from exports is more than 75% of total revenue and revenue must be in foreign exchange.
If Company operating from special economic zones.
Company engage in generation of electricity for captive consumption through captive generating plants.

Time limit for appointment of Cost auditor:-

Cost audit as mentioned in sec 148(2) of companies act, will only conduct by practicing cost and management accountants (CMA), who is appointed by the board of director of company within 180 days of the commencement of every financial year.

Meaning of Cost and Management accountants (CMA):-

As per the rule 2(b) & 2(c) of the rules mentioned in the cost and work accountants act 1959, Cost accountant in practice define. Cost Accountant in practice means a cost accountant u/s 2(1) (b) of the cost and work accountant act 1959 who hold valid certificate of practice and it include firm and LLP also.

Who can perform cost audit:-

Cost audit exclusively perform by cost auditor who is cost & Management accountants in practice (CMA).

Author: – CMA Praveen Kumar Tiwari

Websites: – https://www.mycorporation.in/

ACCOUNTING

What is Accounting?

Accounting is an art of classifying, recording, summarising in a significant manner. It is a systematic process of identifying, recording, measuring, classifying, verifying, summarizing, interpreting and communicating financial information. It reveals profit or loss for a given period, and the value and nature of a firm’s assets, liabilities and owners’ equity.

Accounting provides information on the resources available to a firm, the means employed to finance those resources, and the results achieved through their use.

Why you need Accounting?

Accounting is essential if you want to be able to grow your business in a way that can be measured and predicted. Having a system of tracking your business assets, liabilities and income lets you make smart, informed business decisions based on the past performance and present financial health of your company. With a clear, organized accounting system you can not only analyze your company’s financial data but also help it grow and profit.

Sound accounting also helps you satisfy your customers. Knowing where your company stands financially in terms of income and expenses will help you better understand what you need to do in the future to maintain that level of customer satisfaction and your business.

Advantages

It helps in the preparation of financial statements.
Accounting information is also used to compare the result of the current year with the previous year to analyze the changes.
It helps the managers in the decision making process.
It provides information to other interested parties such as shareholders, creditors, investors, customers, government, employees.
It helps in taxation matter
Accounting information can be produced as evidence in the legal matter.
It helps in the valuation of the business.

Disadvantages

The items expressed in monetary terms are recorded in the accounting whereas the items which are non monetary nature not recorded.
Sometimes accounting data are recorded on the basis of estimates and which could be inaccurate.
Fixed accounting are recorded as the original cost.
Value of money does not remain stable so accounting value does not show true financial results.
Accounting can be manipulated and biased.

Process
Analysis of the transaction.
Prepare the transaction in source documents such as purchase order or invoice.
Qualify the transaction in monetary terms.
Record the transaction by making entries in the appropriate journal.
Post journal entry to ledger accounts.
Prepare trial balance to make sure that debit equal to the credit account

How to Handle Financial Crisis?

Index:

Why do you enter into Financial Crisis?

Is knowledge of Finance Compulsory?

Handling of Financial Crisis?

Some General Tips

Why do you enter into Financial Crisis?

Finance ……. a term that is linked to numbers, but are they only numbers from 0 to 9?

Take a moment and think about it.

Yes, it is related to numbers, of course, but the range is much wider than just overlooking numbers.

It is more about planning, a deeper understanding of your needs and goals rather than believing in these schedules to double your money overnight.

Believe me, no one and no one can become a millionaire overnight.

It takes a lot of hard work in the right direction, determination, sleepless nights, postponement of death and adopting an ideal and healthy lifestyle.

Getting into these false pitfalls set up for us in a very attractive way, we end up doing things or buying things that don’t really make sense.

In other words, as our oldest says, spread your legs according to your sheets.

Some examples of this include buying fancy shoes, dresses, and other accessories that you think will be needed in your everyday lifestyle are dumped into your wardrobe and result in your waste of money.

Another example is excessive use of credit cards, especially by young people.

(Reply if you need an article explaining it)

With this we can conclude that Finance is a deeper understanding of numbers to make the right decision at the right time, which helps to grow our resources.

So first create different sources of income and build a nice portfolio of asset management and then spend it on your luxury items.

Is knowledge of Finance Compulsory?

This doesn’t mean you can’t become a millionaire at all if you haven’t done a specialization in Finance. In our society there is a clan called “Baniyas”, we consider them the most knowledgeable person in dealing with their finances.

Did they study finance?

Have they graduated from the top Business School?

Are their spirits specially designed from birth?

Answers to the above questions will certainly be ‘No’, what is the reason behind it?

The reason behind their knowledge of Finance is their careful observation of how things work in the market, that is, observing the supply and demand of money in the market and making predictions based on it, which often turn out to be correct because they are not made on the basis of gambling or intuition, it is made on the basis of realistic grounds.

Handling of Financial Crisis?

The above points should be addressed in the future, but if you end up in such a debt trap now, here is the way out.

Of course, the method of dealing with a crisis depends on examining the situation. So here’s the general way out to just give you the sketch that can help you in your situation.

Make a journal of all of your available assets (i.e. liquid assets or in the worst case, you can afford to sell out).

On the other hand, in the same way, list all of your debts to be paid off and your current obligations (such as monthly home expenses, child expenses, or your parents’ medical expenses).

First, settle the short-term liabilities with the most liquid assets and keep a reserve for the next six months as pregnancy time to recover from this crisis.

Then try to cover as much debt as possible with the remaining assets.

Finally, when all your available assets have been cleared and your obligations still exist, try to find with the calm mind (since stressful decisions cannot be treated with stress) the means by which you can afford the same.

Make sure that the resources you choose must be authentic and reliable. Stop taxing yourself by taking out a loan from informal sources.

I know formal sources have their procedures, documentation and regulations, but this rush is worth being threatened by informal sources.

Some General Tips

Here are some general tips, finally, to reduce your monthly expenses and your emotional burden that has nagged you for so long.

Communicate it with your family. (This will certainly act as a double sword)

First, they will act as your path leaders and moral supporters

Second, they will contribute to your struggle to keep everything intact.

Please don’t trust anyone else as they may be looking for the moment just to take advantage of yours. There is also a saying in this regard, “Don’t judge a book by its cover.”

Try cutting out all the beautiful things in your lifestyle, such as a meal at a gourmet restaurant and family trips to vacation destinations.

PS: I hope you like my little initiative to calm your stress level. Reply and let me know your reviews if they are negative too, I would appreciate them.

Earnings per Share (EPS)

What is Earnings Per Share?

Earnings per share are the net result of the company earned on one share. It is an important and widely used measure that audited the financial reports of the companies and also mentions in particular in most countries. In other words, it expresses the earning power of the company, if divided by the value of one share. We usually call it return on equity. The higher the EPS, the better the company’s performance and outlook. EPS ‘multi-year track record reflects the company’s growth rate and potential investors look forward to investing in the company if they see an upward trend.

Formula For Calculating Earnings Per Share

The Formula used for earnings per share ration is as follows

Earnings per Share = Profits/Earnings after taxes (EAT) – Preference Shares Dividend/Number of Equity shares Outstanding

The steps for calculating post-tax earnings / gains less deduction of preferred stock dividend (also known as earnings available to shareholders whether or not distributed as dividends) are as follows:

Net Profit: Take the net profit / loss for the year from the company’s income statement. Audited financial data is preferred because it ensures proper compliance with all accounting standards and generally accepted accounting principles. Net profit here means that the profit has arrived after deduction of taxes. The tax rate would differ for different countries according to the respective laws.

Deduct Preference Shares Dividend: Regarding preference shares, the dividend for cumulative preference shares is deducted even if not distributed, but for non-cumulative preference shares, the dividend is deducted only when distributed.

A number of outstanding shares

The number from existing shareholders. If the number of shares changes in the financial period, a weighted average of shares is calculated. Weights are given according to the number of days or months outstanding during the year.

DILUTED PROFIT PER SHARE

The diluted EPS is the EPS, assuming that all convertible securities have already been converted into shares. Convertible securities such as employee stock option, convertible preferred share, convertible bonds, etc. It is the EPS after giving the effect of such securities on both the numerator and the denominator of the EPS. The numerator is increased by the amount of dividend or interest that is not paid in the event of conversion of such securities. The denominator increases with the no. of shares issued as a result of such conversion.

So the formula becomes

Diluted Earnings Per Share = (EAT- Preference Dividend+ Expenses because of conversion of Equity Shares) / (Weighted Avg. No. of Equity Shares+ Weighted Avg. Converted Equity Shares)

ADJUSTED EARNINGS PER SHARE

Adjusted earnings per share are the ratio of net income from regular activities available to shareholders of shares. It does not affect the following:

Extra ordinary items: items that appear suddenly without prior notice, such as windmill profit or loss from natural disasters, etc.

Irregular Activities: Activities that are not part of the day-to-day business of the company, such as asset sales, loss through fire, etc.

Adjusted EPS mainly serves for comparisons between Intra Company and Intercompany.

NEGATIVE EARNINGS PER SHARE

Sometimes companies incur losses, i.e. negative profits, which make the EPS negative. Negative EPS shows how much money the company has lost per share. Shareholders do not have to pay the loss share directly to the company, but suffer indirectly. The net loss decreases the value of the company, which in turn decreases the value of the shares. Negative EPS is not always a reason to panic. Sometimes it is also a good sign. For example, when a company develops new products, or when it incurs large one-off costs, the negative EPS for a certain period is a temporary phenomenon.

INTERPRETATION / ANALYSIS OF EARNINGS PER SHARE

Earnings per share are most frequently present in financial statements and are a very reliable figure for investors. It is useful for existing and new equity shareholders for forecasting the value of the shares in the future. A high EPS is a sign of better earnings, strong financial position and therefore a reliable company to invest in. The EPS for several years indicates the growth pattern of the company. It also helps in comparison to figures of different companies in the same industry.

Equalisation Levy

1.Introduction
Equalisation Levy was introduced in India in 2016, via, Chapter VIII OF THE FINANCE ACT 2016. This act is applicable to the whole India except J&K. The main reason for introducing this section to impose a tax on google who generate revenue of Rs. 4108 in 2014-15 and Facebook also generate Rs. 123.5 crores during the same period which was not taxed earlier. Due to this govt. will collect a higher amount of Tax.

2.Applicability of Equalisation Levy
Equalisation Levy will be charged only when the below two conditions will be satisfied.
a. The payment should be made to non-resident service providers and
b. The annual payment made to one service provider exceed Rs.1,00,000 in one financial year

3.Charge of Equalisation Levy
As per section 165 of Income-tax act equalisation Levy will be charged @6% of the amount of consideration for any service received by the service receiver from the service provider subject to-
such a person is a non-resident Indian.
Example:

Ramparsad Yadav has advertised on Facebook to expand his business. He has to pay Rs. 2,00,000 in FY 2017-18 to Facebook for the advertising services availed.

Solution:

Facebook will bill Ramparsad Yadav for an amount of Rs. 2,00,000/-

Ramparsad Yadav will deduct TDS at the rate of 6% of Rs. 2,12,765.9 = Rs. 12,765.9 and pay the balance of Rs. 2,00,000 ( Rs. 2,12,765.9 – Rs. 12,765.9) to Facebook and deposit the tax amount before 7^th of the next month by using challan 285.

4.Collection and payment of Equalisation Levy
As per section 166 of Income-tax act equalisation levy deducted during any calendar month is to be paid by the seventh (7th) of the month immediately following the calendar month by using the challan no. 285.

5.Furnishing of annual return/statement of specified services
As per section 167 of Income-tax act statement of specified service is required to be furnished electronically in FORM NO.1 (verified through either a digital signature or an electronic verification code by an authorized signatory) on or before 30 June immediately following that financial year. The Tax Officer has been empowered to issue a notice for furnishing such a statement, which then has to be furnished within 30 days from the date of serving of such notice, where the same is not filed within the prescribed timeline

6.Interest on delay payment of equalisation levy
As per section 170 every assesses who fails to deposit the tax shall be liable to pay interest @ 1% per month or part of the month.

7.Penalty for not- filing of Levy return
Every assessee who fails to furnish the statement within the time prescribed u/s 167, he shall be liable to pay a penalty of 100 per day during which the failure continues.
Disallowance of expense
In case the tax does not deposit then the amount of expenditure shall be disallowed in the hand of the payer(unless the defect is rectified).

Prosecution
If the false statement has been filed the person may be subject to imprisonment for a period of 3 years and a fine.

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

BUSINESS FORMATION SERVICES

OTHER REGISTRATION SERVICES

COMPANY CHANGES

LLP CHANGES

TAX RECORD CHANGES

RETURNS

ANNUAL FILINGS

RBI FILINGS

COMPANY

BUSINESS REGISTRATION

TAX REGISTRATION

COMPLIANCES

Official info:

Follow Us:

What kind of business do you want to register ?*

Why do you want to register?*

Where would you like you Register your Company ?*

How much do you want to invest in your company?*

How many Business partners do you have ?*

Do you need assistance in opening a Current Account?*

Organisation Name

Name*

Email*

Phone*

What is the nature of your business?

Where would you like you Register your Company ?

Do you need assitance in opening a Current Account?

Organisation Name*

Our Packages*

Name*

Email*

Contact*

What is the nature of your business?

Where would you like you Register your Company ?

Do you need assitance in opening a Current Account?

Organisation Name*

Our Packages*

Name*

Email*

Contact*

What is the current name of your company?

What is the proposed name of the company?

Do you need assitance in opening a Current Account?

Organisation Name*

Our Packages

Name*

Email*

Contact*

What is the current name of your company?

What is the proposed name of the company?

Do you need assitance in opening a Current Account?

Organisation Name*

Our Packages

Name*

Email*

Contact*

Which of the following best describes you?

What would you consider yourself to be one of the following?

Our Packages

What kind of entity do you have?

Organisation Name

Name*

Email*

Contact*

Which of the following best describes you?

What would you consider yourself to be one of the following?

Our Packages

What kind of entity do you have?

Organisation Name

Name*

Email*

Contact*

Why do you need ISO certificate ?

Select your preference

What is the nature of your business ?

Which ISO Certificate are you looking for ?*

Name*

Email*

Contact*

Why do you need ISO certificate ?