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Navigating the Tax Maze: Smart Strategies for Small Businesses in India

Introduction:

Managing a small business in India is a thrilling adventure, yet it brings along its own set of obstacles, with navigating the intricate realm of taxes being a significant challenge. Although paying taxes is an unavoidable aspect of entrepreneurship, there exist strategic methods that small businesses can employ to reduce their tax obligations and optimize savings. In this article, we will explore various tax strategies and deductions specifically designed for the Indian business environment.

Choose the Right Business Structure:

The structure of your business significantly influences your tax obligations. In India, businesses can opt for various structures such as sole proprietorship, partnership, limited liability partnership (LLP), or private limited company. Each structure has its own tax implications. For instance, private limited companies enjoy certain tax benefits, including a lower corporate tax rate. Consulting with a tax professional to determine the most tax-efficient structure for your business is a crucial first step.

Leverage Startup India Initiatives:

The Indian government has introduced several initiatives to support startups, offering tax incentives and benefits. Small businesses that qualify as startups under the Startup India program may be eligible for a tax holiday for the first three consecutive years. This allows startups to plow back their profits into business expansion without worrying about immediate tax liabilities.

Take Advantage of Section 80C Deductions:

Section 80C of the Income Tax Act provides deductions for certain investments and expenses. Small businesses can explore deductions related to employee provident fund (EPF) contributions, life insurance premiums, and investments in specified financial instruments. Utilizing these deductions not only reduces taxable income but also encourages responsible financial planning.

Claiming Depreciation on Assets:

Small businesses often invest in assets like machinery, equipment, and vehicles. Claiming depreciation on these assets allows businesses to recover the cost over time, reducing taxable income. Understanding the depreciation rates and methods prescribed under the Income Tax Act is essential to make the most of this deduction.

Utilize Input Tax Credit (ITC) Under GST:

For businesses registered under the Goods and Services Tax (GST), claiming Input Tax Credit is a crucial strategy. By documenting and claiming credit for the GST paid on input goods and services, businesses can offset their tax liability. Ensuring compliance with GST regulations is essential to avoid penalties and maximize ITC benefits.

Employee-related Deductions:

Small businesses can benefit from various deductions related to their employees. For instance, contributions to employee provident fund (EPF) and employee state insurance (ESI) are not only statutory requirements but also offer tax benefits. Additionally, businesses can claim deductions for employee bonuses, gratuities, and other benefits.

Regularly Review and Update Financial Records:

Accurate and up-to-date financial records are the backbone of any successful tax strategy. Regularly reviewing your financial records helps identify potential deductions, ensures compliance with tax regulations, and allows for strategic planning to minimize tax liabilities.

Conclusion:

In the intricate landscape of Indian taxation, small businesses have the opportunity to optimize their financial health by implementing smart tax strategies. From choosing the right business structure to leveraging government initiatives and claiming eligible deductions, proactive tax planning can significantly impact a small business’s bottom line. Seeking professional advice and staying abreast of evolving tax regulations are essential steps for entrepreneurs looking to navigate the tax maze successfully. Remember, a well-thought-out tax strategy not only minimizes liabilities but also lays the foundation for sustainable business growth.

16 NovAllCompliance

Mastering Your Financial Compliance Calendar: November 2023 Checklist:

Effectively handling financial compliance obligations is essential for businesses or individuals to adhere to tax regulations, prevent penalties, and maintain seamless operations. As we enter November 2023, here’s a comprehensive guide to assist you in navigating the different due dates and necessary forms for tax and compliance, ensuring a proactive approach to financial responsibilities.

1. November 7, 2023: TDS/TCS Payment (October 2023) - Form: TDS/TCS Payment

This is the deadline for the payment of Tax Deducted at Source (TDS) or Tax Collected at Source (TCS) for the previous month (excluding government-related transactions). Ensure timely submission to avoid penalties.

2. November 10, 2023: GSTR-7 (October 2023) - Form: GSTR-7

For entities liable to deduct tax at source (TDS) under the Goods and Services Tax (GST), this is the date to file the return of TDS under GST.

3. November 10, 2023: 74 (October 2023 - Form: 74

This is the deadline for filing the return of Tax Collected at Source (TCS) under GST.

4. November 11, 2023: GSTR-8 (October 2023) - Form: GSTR-8

Entities required to collect tax at source (TCS) under GST must file this return by the due date.

5. November 13, 2023: GSTR-1 (October 2023) - Form: GSTR-1

For businesses with a turnover exceeding 5 crore or those who opt to file monthly returns, GSTR-1 must be filed on this date. Additionally, for those who opted for the Quarterly Return Monthly Payment (QRMP) scheme, the GSTR-1 for QRMP is also due.

6. November 13, 2023: GSTR-5 (October 2023) - Form: GSTR-5

This is the due date for the return by non-resident taxable persons.

7. November 14, 2023: GSTR-6 (September 2023)- Form: GSTR-6

The deadline to issue TDS certificates, such as 1941A, 1941B, or 194M, for the month of September 2023.

Tips for Smooth Compliance:

Advance Preparation: Ensure all necessary documents and data are organized well in advance to avoid last-minute rushes and errors.
Technology Integration: Consider leveraging accounting software or tools that assist in timely compliance by sending reminders and streamlining the filing process.
Regular Check-Ins: Periodically review the compliance calendar to stay updated on any changes or additional requirements.
Professional Guidance: For complex tax matters or uncertainties, seeking advice from a financial advisor or tax professional can be invaluable.

By adhering to this compliance calendar, you can avoid hefty fines and ensure a stress-free and well-organized financial schedule. Planning and staying updated on the due dates for different forms and returns are key to maintaining financial discipline and fostering a compliant business environment.

Remember, meeting these deadlines is not only about avoiding penalties but also about ensuring the smooth functioning and reputation of your business.

For personalized advice regarding your specific situation, it’s always advisable to consult with a tax professional or financial advisor. Freel free to contact us at [email protected]

[This blog aims to inform and guide individuals and businesses through the crucial compliance dates in November 2023. Adjustments may be necessary based on specific circumstances. Always consult with a professional for personalized guidance.]

09 NovAllCompliance

Bookkeeping Tips for Small Businesses

Effective bookkeeping is a crucial aspect of small business management, involving the meticulous tracking of financial transactions for accuracy and insights into the company’s financial well-being. Despite its potential challenges, implementing essential strategies can simplify and enhance bookkeeping for optimal results. This blog will delve into ten valuable bookkeeping tips tailored for small businesses, offering guidance to ensure financial stability and success.

1. Organize Your Financial Records

One of the first and most crucial steps in effective bookkeeping is to maintain an organized system for your financial records. Start by creating a dedicated filing system for all your financial documents, such as invoices, receipts, bank statements, and tax records. This system should be easy to access and should include both physical and digital copies. Using digital accounting software can help you keep your records organized and easily searchable.

2. Separate Personal and Business Finances

Many small business owners make the mistake of mingling their personal and business finances. This can lead to confusion and make it difficult to track business expenses accurately. To avoid this, open a separate business bank account and credit card. This separation will make it easier to record and categorize transactions, simplifying your bookkeeping process.

3. Choose the Right Accounting Software

Investing in the right accounting software can save you time and reduce the chances of errors in your bookkeeping. There are various accounting software options available for small businesses, such as QuickBooks, Xero, and Wave. These tools offer features like automated data entry, customizable reports, and integration with your bank accounts, making it easier to track your finances and generate essential financial statements.

4. Track Income and Expenses Regularly

Don’t wait until tax season to start organizing your financial data. Regularly update your books by recording income and expenses as they occur. This practice ensures that your financial records are up to date, making it easier to manage cash flow, make informed decisions, and meet your tax obligations.

5. Categorize Your Transactions

Properly categorizing your transactions is crucial for accurate financial reporting and tax preparation. Set up a chart of accounts with categories that align with your business operations. Make sure you assign each transaction to the appropriate category. This categorization will help you monitor expenses, identify areas for cost-cutting, and provide insights into your financial performance.

6. Reconcile Bank Statements

Reconciliation is the process of comparing your financial records, such as your accounting software, with your bank statements. Regularly reconciling your bank statements ensures that your records are accurate and that no transactions are missing or duplicated. This step is essential for identifying errors and detecting potential fraud.

7. Create a Budget

Creating a budget for your small business can be a powerful tool for managing your finances. It allows you to plan for future expenses, set financial goals, and track your progress. Your budget should include both income and expenses, and you should regularly review and adjust it as needed to adapt to changing circumstances.

8. Keep an Eye on Tax Obligations

Small businesses often face complex tax requirements, including income tax, sales tax, and payroll tax. Failing to meet these obligations can result in penalties and legal issues. Stay informed about your tax responsibilities and deadlines, and set aside funds to cover your tax liabilities. Consider working with a tax professional or accountant to ensure you comply with all tax laws and take advantage of available deductions and credits.

9. Backup Your Data

Data loss can be a significant setback in bookkeeping. To prevent this, regularly back up your financial data, both offline and online. Use cloud-based accounting software to ensure your information is securely stored and accessible even in the event of hardware failure or data loss. Implementing a robust backup strategy is essential for safeguarding your financial records.

10. Seek Professional Help

As your business grows and becomes more complex, it may be beneficial to seek professional bookkeeping or accounting services. An experienced bookkeeper or accountant can provide valuable advice, help you navigate tax regulations, and assist with financial analysis. Outsourcing these tasks can save you time and ensure that your financial records are accurate and compliant.

In conclusion, effective bookkeeping is critical for the success of any small business. By implementing these ten bookkeeping tips, you can maintain organized financial records, make informed decisions, and ensure that you meet your financial obligations. Whether you choose to handle your bookkeeping in-house or enlist the help of professionals, the key is to stay proactive and consistent in managing your finances. Remember that accurate and up-to-date financial records are the foundation of your business’s financial stability and growth.

31 OctAllTaxation

Transfer Pricing Compliance Guidelines for Fiscal Year 2022-23

Transfer Pricing Compliance Guidelines for Fiscal Year 2022-23 (Assessment Year 2023-24)

Transfer pricing involves establishing prices for transactions between entities within the same multinational conglomerate. The Income Tax Act of India, dating back to 1961, incorporates regulations concerning transfer pricing to ensure equitable and transparent pricing. Businesses operating in India are obligated to adhere to these rules, necessitating the completion of specific activities within specified deadlines in accordance with the regulations.

Transfer Pricing

Transfer pricing is the practice of establishing the prices for goods, services, or intangible assets exchanged between affiliated entities within a multinational corporation. In India, these transfer pricing guidelines are outlined in Section 92 of the Income Tax Act and the Income Tax Rules of 1962. The primary aim is to ascertain fair market prices for these transactions, ensuring the equitable allocation of profits and the accurate payment of taxes in India.

Why Transfer Pricing Compliance is important in India?

Adhering to transfer pricing regulations in India is of paramount significance for multinational enterprises conducting business in the nation. Such compliance aids in the avoidance of penalties, tax-related disputes, and potential damage to their reputation while simultaneously cultivating a positive rapport with tax authorities. Through strict adherence to the stipulated regulations and the meticulous upkeep of precise documentation, businesses can showcase their dedication to transparent and equitable pricing practices.

Transfer Pricing Compliance Roadmap for the Financial Year 2022-23 (Assessment Year 2023-24)

For the purpose of aiding businesses in adhering to the Transfer Pricing regulations stipulated within the Indian Income Tax Act of 1961 for the fiscal year 2022-23 (Assessment Year, AY 2023-24), an extensive Transfer Pricing Compliance Guide has been formulated. This guide encompasses the following key components:

- Detailed instructions on the necessary actions to be carried out.
- Pertinent legal sections for reference.
- Essential form numbers for documentation.
- Specified deadlines that entities are required to meet to ensure compliance.
The subsequent table provides precise information pertaining to each activity The following table presents the specific information for each activity:

Activity	Section	Form No.	Deadline
Transfer Pricing Audit	92E	3CEB	31-Oct-2023
Transfer Pricing Documentation	92D	–	31-Oct-2023
Return of Income (with Transfer Pricing Provisions)	139	–	30-Nov-2023
Master File	92D (4)	3CEAA	30-Nov-2023
Intimation by Designated Constituent Entity (DCE)	92D (4)	3CEAB	31-Oct-2023
Intimation by DCE	286 (1)	3CEAC	Two months before the due date for furnishing of CbCR-Form
Country-by-Country Reporting (CbCR)	286 (2)	3CEAD	One year from the end of reporting Accounting year (i.e., 30-Dec-2023)
Audit Report (with Transfer Pricing Provisions)	44AB	–	31-Oct-2023
Safe Harbour Application for International Transactions	92CB	3CEFA	30-Nov-2023
Safe Harbour Application for Specified Domestic Transactions	92CB	3CEFB	30-Nov-2023

Companies can evade penalties and showcase their dedication to ethical business conduct by adhering to the specified deadlines.

Key Activities and Deadlines

The main activities and due dates are explained below:

Transfer Pricing Audit:

Under Section 92E of the Income Tax Act, companies must undergo a transfer pricing audit. This involves reviewing and documenting their transfer pricing policies and transactions with related parties. The deadline to file Form 3CEB, which gives details of the audit, is October 31, 2023.

Transfer Pricing Documents:

Section 92D requires companies to maintain documents that prove their transactions were done at fair market prices. These documents must be ready by October 31, 2023.

Income Tax Return (with Transfer Pricing):

Companies that follow transfer pricing rules must file income tax returns under Section 139. The deadline is November 30, 2023.

Master File:

Companies meeting the criteria in Section 92D(4) and Rule 10DA must prepare and submit a Master File using Form 3CEAA. The deadline is November 30, 2023.

Intimation by Designated Constituent Entity (DCE):

Section 92D(4) and Rule 10DA say that designated companies must file Form 3CEAB by October 31, 2023.

Intimation by DCE:

Under Section 286(1) and Rule 10DB, companies must give information about the corporate group structure by filing Form 3CEAC two months before submitting the Country-by-Country Report.

Country-by-Country Report(CbCR):

Section 286(2) and (4), and Rule 10DB require companies to file Form 3CEAD for country-by-country reporting. The deadline is 12 months from the end of the accounting year, which is December 30, 2023.

Note:

Accounting Year refers to:

The previous year for companies with parent entities in India.
The annual accounting period for companies whose parent entities follow accounting standards or laws of their resident country.
Reporting Accounting Year is the accounting year for which financial and operational results must be included in the report under sub-section (2) and (4).

Companies doing international transactions must follow these deadlines to fully comply with the transfer pricing rules under the Income Tax Act. Missing these deadlines can lead to penalties under the Act. So companies should carefully plan activities as per the schedule to ensure compliance.

Penalties for Non-Compliance

Not following India’s transfer pricing rules can lead to fines and problems for companies. The Income Tax Department can impose penalties from 100% to 300% of the under-reported income due to transfer pricing adjustments. Therefore, companies must comply with the regulations to avoid penalties and risks.

11 OctAllTaxation

Say No To Cash Transaction

1. Taking or Accepting Certain Loans, Deposits

No person is permitted to accept Rs. 20,000 or more in cash
a) for any loan or deposit or
b) any amount in relation to transfer of any immovable property (even if transfer does not take place).
If any cash received from a person for any such purpose is still outstanding to be repaid, then the overall limit of Rs. 20,000/- will apply to the outstanding amount plus any subsequent receipt in cash.

The exceptions to this provision include the following:-
Sums of this nature accepted from

(a) Government;
(b) any banking company, post office savings bank or co-operative bank;
(c) any corporation established by a central, state or provincial Act;
(d) any Government company as defined in clause (45) of section 2 of the Companies Act, 2013;
(e) such other institution, association or body or class of institutions, associations or bodies which the Central Government may, by notification in the Official Gazette, specify.
(f) from a person having agriculture income, and the recipient is also having agriculture income and neither of them is chargeable to income tax.

Consequences of violation:
Penalty of an amount equal to the amount taken in cash will be levied

2. Repayment of Certain Loans or Deposits

Any branch of a banking company or a cooperative society, firm or other person is not allowed to repay any loan or deposit in cash if
(a) The amount of the loan or deposit or specified advance* together with the interest, if any, is Rs.20,000/- or more, or
(b) The aggregate amount of loans or deposits or specified advance held by such person, either in his own name or jointly with other person on the date of such repayment together with the interest, if any, is Rs.20,000/-or more.
(c) w.e.f 2019-20. TDS @ 2% to be deducted on cash withdrawals of Rs. 1 Crore in a year from bank account for business purpose.

To any person who has made
a) the loan or deposit or
b) paid the specified advance* .

This provision does not apply to- Repayment of any loan or deposit or specified sum* taken or accepted from –
(a) Government;
(b) any banking company,
post office savings bank or co-operative bank; (c) any corporation established by a central, state or provincial Act;
(d) any Government company as defined in clause (45) of section 2 of the Companies Act, 2013;
(e) such other institution, association or body or class of institutions, associations or bodies which the Central Government may, by notification in the Official Gazette, specify. (Refer Sec.269T)

*Specified advance means any sum of money in the nature of advance, by whatever name called in relation to transfer of an immovable property, whether or not transfer takes place.

Consequences of violation:
Penalty for an amount equal to the amount of such loan or deposit repaid will be levied.

3. Other Cash Transaction

No person is allowed to receive in cash an amount of Rs. 2,00,000 or more-
(a) in aggregate from a person in a day; or
(b) in respect of a single transaction; or
(c) in respect of transactions relating to one event or occasion from a person,

This provision does not apply to-
(1) any receipt by-
(a) Government;
(b) any banking company, post office savings bank or co-operative bank;
(2) transactions of the nature referred to in section 269SS;
(3) such other persons or class of persons or receipts, which the Central Government may, by notification in the Official Gazette, specify. (Refer Section 269ST)
(d) w.e.f 2019-20, Digital payments (Mode of electronic payments) is permissible in addition to account payee cheque, account payee bank draft or electronic clearing system through a bank account. Persons having business income and turnover/ receipt exceeding 50 crores in a financial year are mandatorily required to accept payment though prescribed electronic mode or other electronic mode only. In case of failure to do so, it would attract a penalty of Rs. 5000/- for every day during which such failure continues.

Consequences of violation of this provision:
Penalty u/s. 271DA is levied for a sum equal to the amount of such receipt

4. Disallowance of expenses incurred in Cash

If an individual makes expenditures for their business or profession, and the payment or cumulative payments in cash within a day exceed Rs. 10,000, 100% of such payments will be disallowed when calculating taxable income from business or profession (refer to Section 40A(3)). Nevertheless, there are exceptions outlined in Rule 6DD of the Income Tax Rules.

5. Deemed Income of Subsequent year in which payment is made

In case an allowance has been made in respect of any liability incurred by a person for any expenditure, and then during any subsequent year the person makes payment in respect thereof in cash, the payment is chargeable to income-tax as income of the subsequent year if the payment or aggregate of payments made to a person in a day exceeds Rs.10,000/-.

In case payment is being made for plying, hiring or leasing goods carriages, then limit is Rs.35000/-, instead of Rs. 10000/-.

6. Disallowance in respect of Fixed Assets i.e. Capital Expenditure

In case a person incurs any expenditure for acquisition of any asset in respect which a payment or aggregate of payments made to a person in cash in a day exceeds Rs.10,000/-, such expenditure is not included for the purposes of determination of actual cost of such asset. This means that no depreciation benefit will be available on such capital expenditure incurred in cash.

7. Cash Donations

Donation made in cash to a registered trust or political party, if exceeds Rs. 2000, are not allowable as deduction u/s 80G.

8. Premium on Health Insurance

Any payment made in cash on account of premium on health insurance facilities is not allowable as deduction u/s 80D of IT Act.

This blog should not be construed as an exhaustive statement of the law. For details-reference should always be made to the relevant provisions in the Acts and the Rules.

18 AugAllCorporate Law

Registration of an Indian Company by Foreign Entities or Foreign National or Non Resident Indian (NRI’s)

Registration of an Indian Company by Foreign Entities or Foreign National or Non Resident Indian (NRI's)

Why India:

India stands as a prime choice for investment, attracting Non-Resident Indians (NRIs), foreign nationals, and foreign companies. This allure is attributed to its burgeoning economy and abundant resources. Positioned among the world’s swiftest expanding economies, India is poised for substantial growth in the upcoming decades, brimming with ample business prospects. With regulatory reforms and a welcoming atmosphere for investors, foreign investments into India have reached unprecedented levels, with expectations of further ascent.

In this context, we look at the process and procedure for a NRI or Foreign National or Foreign Company to invest or start, manage and grow a business in India.

The Government has always tried to make it easy for not only Indian residents but also for the Non Resident Indians, Foreign Entities and Foreign Nationals. The Ministry of Commerce and Industry created the Foreign Investment Promotion Board to bypass all the difficulties of doing business in India and ensure smooth sailing to all potential foreign investors.

Types of Entities for Registration of Foreign Companies in India

Before registering a foreign company in India, it’s essential to understand the different types of business entities available. The most common structures for foreign companies are:

1) Wholly Owned Subsidiaries ie WOS., 100% Indian Subsidiary

2) Joint Ventures with other Indian Companies subjected to Foreign Direct Investment rules.

3) Liaison Office: An LO serves as a representative office for the foreign parent company in India. It’s primarily responsible for promoting the parent company’s business interests, providing information about its products and services, and facilitating communication between the parent company and Indian customers. However, an LO is not permitted to engage in any profit-making activities in India.

4) Branch Office : A BO is an extension of the foreign parent company and can engage in a wider range of business activities, including marketing, import and export, and technical support services. However, a BO is generally restricted from manufacturing and processing activities in India. Profits earned by a BO are subject to Indian taxation.

5) Other options for foreign companies include setting up a Project Office, a wholly-owned subsidiary, or a joint venture with an Indian partner. The choice of entity depends on the foreign company’s business objectives, investment plans, and risk appetite.

Shareholders & Directors:

Type of Company	Minimum Shareholders	Maximum Shareholders	Minimum Directors	Maximum Directors
Private Limited	2	200	2	15
Public Limited	7	Unlimited	3	15

According to Companies Act, 2013 there must be at least One Resident Director i.e. who is a citizen of India and stays in India for a minimum of 180 days in a calendar year. Reserve Bank of India allows 100% FDI in many of the sectors in India under the automatic route.

Minimum Capital:

There is no minimum required Paid up share capital that a NRI, Foreign Entity or Foreign National is required to invest in a company in India.

Procedure for Incorporation of an Indian Company:

Keeping in view the ease of doing business, new form SPICe+ (Simplified Proforma for Incorporating Company electronically Plus) is notified for the incorporation of a company and incidental registrations. All the new company incorporations have to be done by the online filing of SPICe+ form. The other forms that need to be filed along with SPICe+ are AGILE-PRO, SPICe+AoA, SPICe+MoA and INC-9

Governing the web form:

Sections 4, 7, 12, 152 and 153 of the Companies Act, 2013 read with rules made thereunder.

Governing the web form:Purpose of the Web form:

Web form SPICe+ deals with the single application for reservation of name, incorporation of a new company, application for allotment of Director Identification Number ie.,DIN, application for PAN and TAN. This eForm is accompanied by supporting documents including details of Directors & subscribers, MoA, AoA and Consent of Directors. Once the eForm is processed and found complete, the company would be registered and CIN would be allocated. DINs are issued to the proposed Directors who do not have a valid DIN.

Maximum three Directors are allowed to use this integrated form for filing application for allotment of DIN while incorporating a company. Also PAN, TAN, GST registration, EPFO, ESIC and Opening of Bank account would get issued to the Company.

SPICe+ has been divided into two parts viz., SPICe+ Part A and SPICe+ Part B. SPICe+ Part A represents the section wherein all details with respect to name reservation for a new company has to be entered. Name reserved shall be valid for 20 days from the date of allotment.

SPICe+ Part B represents the section wherein all remaining details required for incorporation of a company have to be entered.

Documents Required for Registration by Foreign Entities:

Below are the documents required while registering a foreign company in India:
1) Proof of the foreign company’s existence, such as a Certificate of Incorporation or equivalent document
2) MoA and AoA of the foreign companies.
3) Board resolution authorizing the establishment of the Indian entity.
4) Name of Nominee’s in case of incorporation of WOS
5) Identity proof and address proof of the directors and authorized representative
6) Digital Signature certificate of authorized representative
Note: that all foreign documents must be notarized and apostilled in the country of origin, and translated into English if they are not in English.

Documents Required by Foreign National/Non Resident Indian:

Documents Required by Indian Director

1.KYC of Member and Nominee ie., PAN and AADHAR
2.Address Proof ie., any one of Latest Bank Statement/ Latest Electricity Bill/ Latest Mobile Bill/ Telephone Bill which is Not older than 60 days
3. Identity proof: Voter ID Card/ Driving License/ Passport Copy
4. Photograph of the promoters/ Directors
5. Email ID and Contact Details.
6. Digital Signature certificate (DSC)

Other Requirements:

1. Main Object or activities carried out by the Company.
2.Proof of Registered office address – Rent agreement/ Conveyance deed/Lease agreement.
3.Utility Bills of registered office address- Electricity Bill/ Water Bill/Telephone Bill which is not older than two months.
4. No Objection certificate from owner of the premises, if property is rented/ leased.

Process for Apostille and Notary of Documents:

The Companies Act, 2013 requires the signatures of subscribers and identity or address proof to be notarized before a Notary public of that country and then apostilled as per the Hague Convention if both foreign nationals provide documents issued by the country.

All the original documents shall be Notarized before apostille.
Notarized documents shall be submitted with the Embassy or Consulate (Issuing office) of the Country for apostille.
The issuing office shall validate the documents after making payment.
After Validation of documents, issuing office shall issue apostilled documents

Post-Registration Compliance

Once foreign company is registered in India, it’s essential to
maintain compliance with the country’s regulatory requirements, such as:
1) Declaration for the Commence of business in Form INC-20A is to be filed with Registrar of Companies within 180 days of the date of incorporation of the company.
1) Filing annual financial statements and returns with the MCA
2) Complying with Indian tax laws and filing tax returns on time
3)Maintaining proper accounting records and statutory registers
4) Complying with labor laws, environmental regulations, and other sector-specific requirements.

FEMA Compliances:

Procedure for receiving Foreign Direct Investment in an India Company

An Indian company may receive Foreign Direct Investment under the two routes as given under:

i) Automatic Route:
FDI up to 100% is allowed under the automatic route in almost all the activities/sector. FDI in sectors /activities to the extent permitted under the automatic route does not require any prior approval either of the Government or the Reserve Bank of India. Sectors or Activities not permitted under automatic route have to take approval from FIPB ie., Government Route for investing in India.

ii) Government Route: FDI in activities not covered under the automatic route requires prior approval of the Government which are considered by the Foreign Investment Promotion Board Department of Economic Affairs, Ministry of Finance.

Indian companies having foreign investment approval through the FIPB route do not require any further clearance from the Reserve Bank of India for receiving inward remittance and for the issue of shares to the non-resident investors.

The Indian company having received FDI either under the Automatic route or the Government route is required to report in the Form FCGPR, the details of the receipt of the amount of consideration for issue of equity instrument viz. shares or fully and mandatorily convertible debentures or fully and mandatorily convertible preference shares through an AD Category –I Bank, together with copies of the FIRC evidencing the receipt of inward remittances along with the Know Your Customer report on the non-resident investors from the overseas bank remitting the amount, to the Regional Office concerned of the Reserve Bank of India within 30 days from the date of receipt of inward remittances.

However, Companies Act, 2013 specifically provides for allotment of shares within 60 days from the date of inward remittance. Thus, it may be inferred that allotment shall be made within 60 days of inward remittance and FCGPR shall be filed within that duration.

After issue of shares ie., fully and mandatorily convertible debentures or fully and mandatorily convertible preference shares, the Indian company has to file the required documents in Form FCGPR with the bank in which funds were received. Bank will forward the FCGPR and the documents to the Regional office of Reserve Bank of India.

Sectors for which FDI is not allowed in India under the Automatic Route as well as under the Government Route: FDI is prohibited under the Government Route as well as the Automatic Route in the following sectors: 1)Lottery Business including Government, private lottery, online lotteries, etc. 2)Gambling and Betting including casinos etc. 3)Chit funds 4)Nidhi company 5)Trading in Transferable Development Rights 6)Real Estate Business or Construction of Farm Houses 7)Manufacturing of Cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes 8)Activities or sectors not open to private sector investment

Atomic energy and
Railway operations (other than permitted activities mentioned in entry 18 of Annex B).

Note: Foreign technology collaboration in any form including licensing for franchise, trademark, brand name, management contract is also prohibited for Lottery Business and Gambling and Betting activities.

Procedure after investment is made under the Automatic Route or with Government approval

a) On receipt of share application money:
Within 30 days of receipt of share application money/amount of consideration from the Foreign Entities or Foreign National or Non Resident Indian, the Indian company is required to report to the Regional Office concerned of the Reserve Bank of India, under whose jurisdiction its Registered Office is located, through bank in which funds have been received in Form ARF ie., Advanced Remittance Form.

b) Issue of shares:
Within 30 days from the date of issue of shares, a report in Form FCGPR should be filed with the Regional Office concerned of the Reserve Bank of India through the bank in which investment has been received.

Refund of Investment amount: In case, equity shares are not issued within 60 days of receipt of funds, the amount shall be refunded immediately to the non-resident investor.

Filing FLA Return: Every Indian company receiving FDI has to file Annual Return of Foreign Liabilities and Assets by 15th July of the relevant year. Non-filing of the return before the due date will be treated as a violation of FEMA and a penalty clause may be invoked for violation of FEMA.

Consequences of failure to comply with the above requirements
If any person contravenes any provision of this Act, or contravenes any rule, regulation, notification, direction or order issued in exercise of the powers under this Act, or contravenes any condition subject to which an authorization is issued by the Reserve Bank, he shall, upon adjudication, be liable to a penalty up to thrice the sum involved in such contravention where such amount is quantifiable, or up to two lakh rupees where the amount is not quantifiable, and where such contravention is a continuing one, further penalty which may extend to five thousand rupees for every day after the first day during which the contravention continues.

Process for Notary and Apostille of documents:

The Companies Act, 2013 requires the signatures of subscribers and identity or address proof to be notarized before a Notary public and apostille with Secretary of State’s office of that country as per the Hague Convention if both foreign national provides documents issued by the country.

Steps for Notary and Apostille of Documents:

Step 1: Obtain a certified true copy of the document: Before getting apostille, all the original documents shall be verified as a true copy by a government agency or Notary public.
Step 2: Contact the Secretary of State’s office in the state where the document was issued with all the certified true copy of the document. The Secretary of State’s office is responsible for issuing apostilles.
Step 3: Submit the document and pay the fee. The apostille Fee Varies by State to State.
Step 4: Once the apostille has been issued, it will be attached to the certified copy of the document and collect the apostille documents.

05 AugAllMinistry

Ministry of Corporate Affairs Notification Dated 18th August 2022

Ministry of Corporate Affairs Notification Dated 18th August, 2022

In exercise of the powers conferred under various Section of the Companies Act, 2013 the Central Government hereby makes the following rules further to amend the Companies (Incorporation) Rules, 2014, namely:-

Ministry of Corporate Affairs vide Notification no. GSR 643(E) dated 18thAugust 2022 had inserted a Rule 25B in the Companies (Incorporation) Rules, 2014.

Rule 25B specifies the procedure to be adopted by the officer during physical verification and the documents to be collected by the officer at the time of physical verification. Such verification might be conducted before the grant of incorporation or for existing companies.

Rule 25B : Physical verification of the Registered Office of the company.-

(1) The Registrar, based upon the information or documents made available on MCA 21, shall visit at the address of the registered office of the company and may cause the physical verification of the said registered office for the purposes of sub-section (9) of section 12, in presence of two independent witness of the locality in which the said registered office is situated and may also seek assistance of the local Police for such verification, if required.

(2) The Registrar shall carry the documents as filed on MCA 21 in support of the address of the registered office of the company for the purposes of physical verification and to check the authenticity of the same by cross verification with the copies of supporting documents of such address collected during the said physical verification.

(3) The Registrar shall take a photograph of the registered office of the company while causing physical verification of the same.

(4) The report of the physical verification shall be prepared in the following format namely:- Report on Physical Verification of the Registered Office of the Company:

Report on Physical Verification of the Registered Office of the Company:

Details of the Company

Name and CIN of the company:-

Latest address of the registered office of the company as per MCA 21 record:-

Location details along with Landmark

Details of officer conducting physical verification

Date of authorisation letter issued by the Registrar of the Companies

Name of the Registrar of Companies:-

Date and Time of visit for physical verification of the registered office:-

Details of the person available at the time of visit

Name:-

Father’s Name:-

Residential address:-

Relationship with the company, if applicable:-

Documents attached:-

Copy of the agreement/ownership/rent agreement/No Objection Certificate of the registered office of the company from owner/tenant/lessor:-

Photograph of the registered office:-

Self-Attested ID-Card of the person available, if any:-

Any other document(s):-

(5) Where the registered office of the company is found to be not capable of receiving and acknowledging all communications and notices, the Registrar shall send a notice to the company and all the directors of the company, of his intention to remove the name of the company from the register of companies and requesting them to send their representations along with copies of relevant documents, if any, within a period of thirty days from the date of the notice before taking further actions in accordance with the provisions of section 248 of the Act.”.

Ministry of Corporate Affairs Notification Dated 24th August, 2022

Notification 655(E)

The Central Government hereby makes the following rules to amend the Companies (Removal of Names of Companies from Register of Companies) Rule, 2016

Notification 655(E)

The Central Government hereby makes the following rules to amend the Companies (Removal of Names of Companies from Register of Companies) Rule, 2016

Registrar of Companies can issue notice to companies for Strike off the Companies if they found on physical verification carried out under section 12 of Companies Act, 2013 that Companies are not carrying any business or operations

Asper Section 94 of Companies Act, 2013: Place of keeping and inspection of registers, returns, etc.—

(1) The registers required be keeping and maintaining by a company under section 88 and copies of the annual return filed under section 92 shall be kept at the registered office of the company.

Asper Section 94 of Companies Act, 2013: Place of keeping and inspection of registers, returns, etc.—

As required under various Act and Good Corporate Governances

Every company shall Paint or Affix its Name Board of the Company showing

Name, Corporate Identification Number (CIN), GSTIN, Complete address, E-Mail id, Telephone, and website details, if any.

– Need to be displayed in Local Language of the City and in English.

Have its name engraved in legible characters on its seal, if any

Register and Documents to be maintained at Registered Office:

Other Documents

Notice and Minutes of Board meeting, Extra Ordinary General Meeting and Annual General Meeting and Minutes of Committee if any.
Declaration from Directors and Key Managerial personnel.
Books of account and other relevant books and papers and financial statement, Annual Return for every financial year.

Book and paper: include books of account, deeds, vouchers, writings, documents, minutes and registers maintained on paper or in electronic form.

Books of accounts: includes records maintained in respect of—

(i) all sums of money received and expended by a company and matters in relation to which the receipts and expenditure take place;

(ii) all sales and purchases of goods and services by the company;

(iii) the assets and liabilities of the company; and
(iv) the items of cost as may be prescribed under section 148 in the case of a company which belongs to any class of companies specified under that section;

05 AugAllMinistryUncategorized

Ministry of Corporate Affairs Notification dated 15th September, 2022

Notification no: G.S.R. 700(E) In exercise of the powers conferred by sub-sections (1) and (2) of section 469 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following rules further to amend the Companies (Specification of Definition Details) Rules, 2014, namely:-

New Definition of a Small Company [Section 2(85)] of Companies Act 2013

The limit of paid up capital and turnover for the small company has been increased to Rs. Four Crore (Previous Limit Rs.2 Crore) and Rs. Forty Crore (Previous Limit Rs.20 Crore) respectively.

New Small Company Threshold Limit:

Paid up capital-Rs. 4 Crores
Turnover-Rs. 40 Crores

But following companies do not falls under the category of small company even though they comply above 2 conditions

A holding or a subsidiary company.
A company registered under section 8.
A body corporate or company governed by any special act.

Advantages of Small Companies:

The Companies Act, 2013 provides advantages in the form of relaxation in compliance, thus new threshold limits reduces the burden on these companies. The benefits to small companies under the Act are as follows:

Board Meetings: –small companies may hold only 2 board meetings in a calendar year, i.e. one Board Meeting in each half of the calendar year with a minimum gap of ninety days between the two meetings.

Rotation of company auditors: –It is not necessary for small companies to follow the condition laid in Section 139(2) of the Company Act 2013, which mandates the rotation of auditors every 5 years (individual auditors) and every 10 years (firm of auditors).

Exemptions for Board’s Report: – Matters to be included in Board’s Report mention in Rule -8 of companies (Accounts) Rules, 2014 not apply for small company.

Annual Return: – Annual Return of a Small Company can be signed by the company secretary alone, or where there is no company secretary, by a single director of the company.

Remuneration details in Annual Return: – As per section 92 of companies Act, 2013 private companies are require to give a details of remuneration of directors and key managerial personnel , but in small companies only “aggregate amount of remuneration drawn by directors” is required in annual return.

Cash Flow Statement: – A small company needs not to include Cash Flow Statement as part of its financial statement.

Exemptions for Audit Report: – small companies are not required to give report on internal financial controls with reference to financial statements and the operating effectiveness of such controls in audit report.

Fees and Charges:

In the case of a Small Company, the Act prescribes lesser penalties compared to other private or public companies. It also provides less fees for filing forms with the ROC compared to the fees of other companies.

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Navigating the Tax Maze: Smart Strategies for Small Businesses in India

Introduction:

Choose the Right Business Structure:

Leverage Startup India Initiatives:

Take Advantage of Section 80C Deductions:

Claiming Depreciation on Assets:

Utilize Input Tax Credit (ITC) Under GST:

Employee-related Deductions:

Regularly Review and Update Financial Records:

Conclusion:

Mastering Your Financial Compliance Calendar: November 2023 Checklist:

1. November 7, 2023: TDS/TCS Payment (October 2023) - Form: TDS/TCS Payment

2. November 10, 2023: GSTR-7 (October 2023) - Form: GSTR-7

3. November 10, 2023: 74 (October 2023 - Form: 74

4. November 11, 2023: GSTR-8 (October 2023) - Form: GSTR-8

5. November 13, 2023: GSTR-1 (October 2023) - Form: GSTR-1

6. November 13, 2023: GSTR-5 (October 2023) - Form: GSTR-5

7. November 14, 2023: GSTR-6 (September 2023)- Form: GSTR-6

Tips for Smooth Compliance:

Bookkeeping Tips for Small Businesses

1. Organize Your Financial Records

2. Separate Personal and Business Finances

3. Choose the Right Accounting Software

4. Track Income and Expenses Regularly

5. Categorize Your Transactions

6. Reconcile Bank Statements

7. Create a Budget

8. Keep an Eye on Tax Obligations

9. Backup Your Data

10. Seek Professional Help

Transfer Pricing Compliance Guidelines for Fiscal Year 2022-23 (Assessment Year 2023-24)

Transfer Pricing

Why Transfer Pricing Compliance is important in India?

Transfer Pricing Compliance Roadmap for the Financial Year 2022-23 (Assessment Year 2023-24)

Key Activities and Deadlines

Transfer Pricing Audit:

Transfer Pricing Documents:

Income Tax Return (with Transfer Pricing):

Master File:

Intimation by Designated Constituent Entity (DCE):

Intimation by DCE:

Country-by-Country Report(CbCR):

Note:

Penalties for Non-Compliance

Say No To Cash Transaction

1. Taking or Accepting Certain Loans, Deposits

2. Repayment of Certain Loans or Deposits

3. Other Cash Transaction

4. Disallowance of expenses incurred in Cash

5. Deemed Income of Subsequent year in which payment is made

6. Disallowance in respect of Fixed Assets i.e. Capital Expenditure

7. Cash Donations

8. Premium on Health Insurance

Registration of an Indian Company by Foreign Entities or Foreign National or Non Resident Indian (NRI's)

Why India:

Types of Entities for Registration of Foreign Companies in India

Shareholders & Directors:

Minimum Capital:

Procedure for Incorporation of an Indian Company:

Governing the web form:

Governing the web form:Purpose of the Web form:

Documents Required for Registration by Foreign Entities:

Documents Required by Foreign National/Non Resident Indian:

Documents Required by Indian Director

Other Requirements:

Process for Apostille and Notary of Documents:

Post-Registration Compliance

FEMA Compliances:

Procedure for receiving Foreign Direct Investment in an India Company

Procedure after investment is made under the Automatic Route or with Government approval

Process for Notary and Apostille of documents:

Steps for Notary and Apostille of Documents:

Ministry of Corporate Affairs Notification Dated 18th August, 2022

Ministry of Corporate Affairs Notification Dated 24th August, 2022

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