ANALYSIS OF LIMITATION ACT & IBC INTERCONNECTION WITH RELATED JUDGMENTS

ANALYSIS OF LIMITATION ACT AND IBC INTERCONNECTION AND RELATED JUDGMENTS

This application filed by Corporate Debtors to restructure the debt or payment of the interest doesn’t amount to an acknowledgment of debt.

(C. Shiv Kumar Reddy Vs. Dena Bank and Other, 2019)

The minutes of the board meeting of the Corporate Debtors can be considered as an acknowledgment u/s 18 of the Limitation Act, 1963.

(Rupesh Kumar Gupta vs. PNB (NCLAT), 2020)

One time settlement letters, the Corporate Debtors accepted the jural relationship between the Creditor and Debtor than the Financial Creditors, and thus, it is the acknowledgment of debt.

(Ashish Kumar vs. Vinod Kumar Pukhraj Ambavat, 2020)

An acknowledgment must be made before the deadline of the limitation duration as mentioned under section 18 of the Limitation Act, 1963.

(Vivek Jha vs. Daimler Financial Services India, 2020)

The application of the recovery proceeding before the Debts Recovery Tribunals and the eventually decreed claim does not change the default date.

(Rajendra Kumar Tekriwal vs. BOB, 2020)

Steps were taken under subsection (2) under Section 13 of the ‘SARFAESI Act, 2002’ can’t be counted for the purpose of exclusion the limitation period under sub section (2) under Section 14 of the Limitation Act, 1963.

(Ishrat Ali vs. Cosmos Cooperative Bank Ltd. 2020)

The default period is extended by the debit confirmation letters assured by the borrower from the CD to the o/s debt.

(Yogesh kr. Jashwantlal Thakkar vs. IOB, 2020)

A keeping that balance sheet entries would not amount to an acknowledgment of responsibility for the purpose of limitation, the position of law which has long been acknowledged by separate courts and tribunals has been disturbed. The dissenting view of Hon’ble Justice AIS Cheema is in line with the established example for the acknowledgment of debt for restriction in respect of balance sheet/annual return entries as well as in the one-time settlement proposal. Thus, the Reflection of the Debt in the BS/Annual Return of the Corporate Debtors can’t be considered as an acknowledgment under Section 18 of the Limitation Act, 1963.

(V. Padmakumar vs. SASF, 2020)

Steps were taken under subsection (2) under Section 13(2) of the ‘SARFAESI Act, 2002’ can’t be counted for the intention of exclusion the restriction period under subsection (2) under Section 14 of the Limitation Act.

(Ishrat Ali vs. Cosmos Cooperative Bank Ltd., 2020)

Applicability of Limitation Act to Insolvency and Bankruptcy Code

“The purpose of the Code should not have been to grant a new lease of life to debts that are time-barred. It is established law that, since the debt is restricted by time, the right to remedy is time-barred.

The provisions of the Limitation Act, 1963 shall, as far as possible,  apply to proceedings or appeals before the Adjudication Authority, the NCLAT, the DRAT, as the case may be.’-Section 238A of IBC

“The Limitation Act is applicable to applications submitted Under section 7 and section 9 of the IBC Code from the inception of the Code and same would be filed within three years from the date of default” –

(Supreme Court in B.K. Educational Services, Jignesh Shah, Gaurav Hargovindbhai Dave, Babulal Vardhaji Gurjar)

An application under section 10 of the insolvency and bankruptcy Code can’t be made applicable as the ‘Corporate Applicant’ does not clam money buts prays for Initiation of ‘Corporate Insolvency Resolution Process’ against itself, having defaulted to pay the dues of creditors” –

(NCLAT in B.K. Educational Services vs. Parag Gupta)

The notion of the limitation Act  

The Law of limitation is based on the fundamental principle of fixing or prescribing a time limit for barring legal action beyond such duration.

Fundamental Principles/concept of Limitation Act

  • A fresh period of limitation starts to run at every moment of the time period at which the breach of offense continues.
  • The Limitation Act does not extinguish a right, hence its only solution to behind the bars
  • Duration of stay is excluded
  • Limitation duration to start afresh from the period when the acknowledgment was made,
  • Any payment/ interest made towards a legacy, then fresh limitation period begins

Although the limitation Act does not extinguish a right would be a time-barred claim filed by the Financial Creditor/Operational Creditors be allowed during the Corporate Insolvency Resolution Process? If yes, is it not a matter of granting a new lease of life to a time-barred claim?

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

Blocking/Unblocking the E-Way Bill creation system if fails to file GSTR-3B: GSTN

Blocking the E-Way Bill creation system if the taxpayer fails to file GSTR-3B returns:

  • The E-Way Bill (EWB) creation system of the taxpayer is entitled to be limited in the situation that the taxpayer fails to file FORM GSTR-3B returns/FORM GST CMP-08 for tax periods of 2 or more. the Taxpayers’ E-Way Bill generation facility will be canceled. Above said blocking will be effective 1. Dec 2020 onwards.
  • The blocking will take place on a periodic basis from 1 December 2020 onwards regardless of the Aggregate Annual Turnover (AATO) of taxpayers.
  • The E-Way Bill (EWB) generation facility system will confirm the position of the returns submitted in the form GSTR-3B or the statements filed in the form GST CMP-08 for the class of taxpayers to which it applies and limits the generation of the E-Way Bill (EWB) in the event of (w.e.f 1 December 2020) and the restriction put on it.
    1. Form GSTR 3B: non-filing of two or more returns for the months up to October 2020;
    2. Form GST CMP-08: non-filing of 02 or more quarterly statements by July to September 2020

  • To entitle the continuous E-Way Bill creation system on EWB Portal, you are therefore advised to file your pending GSTR 3B returns/GST CMP-08 statements immediately.
  • Blocking the facility of issuing of E-Way Bill (EWB) for taxpayers with Total Annual Turnover over Rs 5 Cr., after October 15, 2020.”
  • The validity of the e-way bill has been postponed by the CBIC till 30 November, while the deadline for the special agreements under customs, central excise, and service tax legislation has been extended to the same date.
  • “The E-Way Bill of Validity issued on or before March 24, 2020, expiring between March 20, 2020, and April 15, 2020, has been extended to May 31, 2020.”
  • For information on blocking and unblocking the EWB, follow the button below.

https://docs.ewaybillgst.gov.in/Documents/faq_block_latest.pdf  or

https://docs.ewaybillgst.gov.in/Documents/Unblockver1.pdf or

https://tutorial.gst.gov.in/userguide/returns/index.htm#t=FAQs_unblockingewaybill.htm

Note: When you’re not enrolled on the EWB portal, please just ignore this change.

How do I unblock the e-way bill?

A. GSTR-3B Filing

Until the default taxpayer files are GSTR-3B for the default duration, the GSTIN will be unblocked automatically the very next day.

Taxpayers can also make an e-way bill shortly after submitting his return by following the following steps:

  1. Visit the EWB portal then choose the ‘Search Update Block Status’ selection.
  2. Access the GSTIN, CAPTCHA Code, then press the Go’ button.
  3. Tap on ‘Check Unblock Status from GST Popular Portal;’ this will represent the status of the recent file.
  4. If this doesn’t work, a taxpayer will hit the GST Support Desk and get the situation resolved.

B. Unblocking the Compliance Officer

Even just a compliance officer can unblock GSTIN online on the basis of the taxpayer’s manual representation (this facility is not accessible for now).

C. Unblocking by online application in the EWB-05

EWB-05 may be filed by presenting an appropriate reason for non-filing of GSTR-3B. Such an application cannot be refused without providing an appropriate chance to be heard (so for now, this online application service is not effective).

The actual effect on taxpayers

The main problem of the taxpayer with this new structure is that he/she cannot deliver/receive items without an e-way bill. If the goods are transported without an e-way bill, the authority can levy a fine equal to the amount of the tax due. Such goods may also be seized or kept in detention, and the goods would only be released on payment of the value of the tax also with a penalty.

If the products are not distributed on time the company can come to a standstill. Therefore in order to prevent such a scenario, the taxpayer must be compliant and file returns on time. This would lead to an overall increase in GST sales and as a result, the whole system will become more compliant.

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Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

GSTN enable details to be auto-populated in E-invoice into GSTR-1

GSTN enable auto-populated in the E-invoice information into GST Return -1

GST E-Invoicing

GSTN made aware on 13 Nov 2020 that the details of the E-invoice would be auto-populated in GSTN-1. The document in its full is as follows:

  1. Some informed taxpayers must plan and file their invoices by receiving an Invoice Reference Number (IRN) from the Invoice Registration Portal (IRP) (commonly referred to as ‘e-invoices’).
  2. Upon the effective generation of IRN, the descriptions of such e-invoices will be auto-populated in the respective GSTR-1 tables. Information of available e-invoices for auto-population along with auto-population status can also be downloaded as an excel file. For this purpose, certain tabs/labels are added to the GSTR-1 dashboard and screens (Those taxpayers for whom e-invoicing is not applicable may ignore these changes).
  3. For the duration in the month of October 2020, the details of the e-invoice will be issued on a gradual basis from 13 November 2020. The processing of the e-invoices/IRNs generated until 31 October 2020 is supposed to take up to 10 days.
  4. The processing of documents dated Oct 2020 has no effect on the filing of GSTR-1 for October. Taxpayers are suggested not to wait for self-population, but to file GSTR-1 for October, on their own (if it hasn’t already filed). But you may download the details of the October-dated documents via the excel file: ‘Download details from the e-invoice (Excel)’ button (available at the bottom of the GSTR-1 dashboard).
  5. Taxpayers are needed to check the below documents in excel & to share feedback on the GST Self Service Common Portal, below:
  • All of the specifics of the document are correctly stored
  • The status of each e-voucher/IRN is correct
  • All documents reported to the IRP are in excel.
  1. For the period of November 2020, the produced e-invoices (i.e. memos dated the month of November) will be auto-populated into GSTR-1 on an incremental basis and the whole month process will be done by 2 Dec, 20 (i.e. on a T+2 basis).

The Below fields must be mandatory be declared in an e-invoice:  

Sl. no. Name of the field Particular List of Choices/ Specifications/Sample Inputs
1 Document Type Code Type of document must be specified Enumerated List such as INV/CRN/DBN
2 Supplier_Legal Name The legal name of the supplier must be as per the PAN card String Max length: 100
3 Supplier_GSTIN GSTIN of the supplier raising the e-invoice Max length: 15  Must be alphanumeric
4 Supplier_Address Building/Flat no., Road/Street, Locality, etc. of the supplier raising the e-invoice Max length: 100
5 Supplier_Place Supplier’s location such as city/town/village must be mentioned Max length: 50
6 Supplier_State_Code The state must be selected from the latest list given by GSTN The enumerated list of states
7 Supplier Pincode The place (locality/district/state) of the supplier’s locality Six digit code
8 Document Number For unique identification of the invoice, a sequential number is required within the business context, time-frame, operating systems, and records of the supplier. No identification scheme is to be used Max length: 16 Sample can be “ Sa/1/2019”
9 Preceeding_Invoice_Reference and date Detail of original invoice which is being amended by a subsequent document such as a debit and credit note. It is required to keep future expansion of e-versions of credit notes, debit notes, and other documents required under GST Max length:16 Sample input is  “ Sa/1/2019” and “16/11/2020”
10 Document Date The date when the invoice was issued. However, the format under explanatory notes refers to ‘YYYY-MM-DD’. Further clarity will be required. Document period start and end date must also be specified if selected. String (DD/MM/YYYY) as per the technical field specification
14 Recipient’s State Code The place of supply state code to be selected here Enumerated list
15 Place_Of_Supply_State_ Code The state must be selected from the latest list given by GSTN An enumerated list of states
20 Shipping To_State, Pincode and State code State pertaining to the place to which the goods and services invoiced were or are delivered Max length: 100 for state, 6 digit Pincode and enumerated list for code
21 Dispatch From_ Name, Address, Place and Pincode Entity’s details (name, and city/town/village) from where goods are dispatched Max length: 100 each and 6 digit for Pincode
25 HSN Code The applicable HSN code for particular goods/service must be entered Max length: 8
26 Item Price The unit price, exclusive of GST, before subtracting item price discount, can not be negative Decimal (12,3) Sample value is ‘50’
27 Assessable Value The price of an item, exclusive of GST, after subtracting item price discount. Hence, Gross price (-) Discount = Net price item, if any cash discount is provided at the time of sale Decimal (13,2) Sample value is ‘5000’
28 GST Rate The GST rate represented as a percentage that is applicable to the item being invoiced Decimal (3,2) Sample value is ‘5’
29 IGST Value, CGST Value, and SGST Value Separately For each individual item, IGST, CGST and SGST amounts have to be specified Decimal (11,2) Sample value is ‘650.00’
30 Total Invoice Value The total amount of the Invoice with GST. Must be rounded to a maximum of 2 decimals Decimal (11,2)
16 Pincode The place (locality/district/state) of the buyer on whom the invoice is raised/ billed to must be declared here if any Six digit code
17 Recipient Place Recipient’s location (City/Town/Village) Max length: 100
18 IRN- Invoice Reference Number At the time of the registration request, this field is left empty by the supplier. Later on, a unique number will be generated by GSTN after uploading of the e-invoice on the GSTN portal. An acknowledgment will be sent back to the supplier after the successful acceptance of the e-invoice by the portal. IRN should then be displayed on the e-invoice before use. Max length: 64 Sample is ‘a5c12dca8 0e7433217…ba4013 750f2046f229’
19 ShippingTo_GSTIN GSTIN of the buyer himself or the person to whom the particular item is being delivered to Max length: 15
11 Recipient_ Legal Name The name of the buyer as per the PAN Max length: 100
12 Recipient’s GSTIN The GSTIN of the buyer to be declared here Max length: 15
13 Recipient’s Address Building/Flat no., Road/Street, Locality, etc. of the supplier raising the e-invoice Max length: 100
22 Is_Service Whether or not the supply of service must be mentioned String (Length: 1) by selecting Y/N
23 Supply Type Code Code will be used to identify types of supply such as business to business, business to consumer, supply to SEZ/Exports with or without payment, and deemed export. The enumerated list of codes Sample values can be either of B2B/B2C/ SEZWP/S EZWOP/E XP WP/EXP WOP/DE XP
24 Item Description Simply put, the relevant description generally used for the item in the trade. However, more clarity is needed on how it needs to be described for every two or more items belonging to the same HSN code Max length: 300 The sample value is ‘Mobile’ The schema document refers to this as the ‘identification scheme identifier of the Item classification identifier’
  1. Comprehensive advice on self-population methodology etc is made available on the GSTR-1 dashboard (‘e-invoice advisory’) and e-mailed to the relevant taxpayers.

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Reference link: https:/www.gst.gov.in/newsanddates/read/414

 

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

GSTN: Summary of Quarterly Payment Return Scheme (QRMP)

Latest GST Quarterly Return Monthly Payment Scheme (QRMP)

At its 42nd meeting held on 05.10.2020, the GST Council suggested that a registered person with a gross turnover of up to five (5) crore would be authorized to make a return on a quarterly basis, along with monthly tax payment, effective from 01.01.2021.

Summary of Quarterly Return Filing & Monthly Payment of Taxes (QRMP) Scheme

Effective Date – The scheme will be introduced with effect from 01 January 2021.

Eligible to apply for the QRMP Scheme:

  • Taxpayers with a gross turnover of up to Five Crore Rupees in the previous financial year.
  • The proposed scheme will be effective from 1 January 2021. The GSTN framework will itself measure the gross yearly revenue of the taxpayer
  • For the purposes of notification No. 84/2020-Central Tax, dated 10.11.2020, a registered person who is required to make a return in FORM GSTR-3B and who has a cumulative turnover of up to 5 crore ropes in the previous financial year is qualified for the QRMP scheme.

Ineligibility for the QRMP Scheme:

In the event that the total turnover exceeds 5 crore ropes in any quarter of the current financial year the registered person shall not be liable for the scheme in the next quarter.

When a person may opt for the scheme:

  • This facility can be used throughout the year, in any quarter.
  • Open The QRMP Scheme option, once activated, will continue until RP revises the option or its AATO crosses Rs 5 Cr.
  • RPs migrated by default can choose to remain out of the scheme by exercising their option from 5th, 2020 till 31st Jan., 2021.
  • The RPs opting for the scheme can avail the facility of Invoice Furnishing Facility (IFF), so that the outward supplies to registered person is reflected in their Form GSTR 2A & 2B.

Exercise Option- When a person can opt for the scheme:

  • The facility can be used during the year, across every quarter of the year.
  • The QRMP Scheme option, once exercised, will continue until RP revises the option or its AATO reaches Rs 5 Cr.
  • RPs that have been migrated by default can choose to remain outside the scheme by using their option from 5 January 2020 to 31 January 2021.
  • Please be aware: RPs opting for the scheme may make use of the Invoice Furnish Service (IFF) facility so that the outward supplies to the registered person are expressed in their Forms GSTR 2A & 2B.
  • Taxpayers may opt, on any quarter during the first day of the second month or the corresponding quarter, for the last day of the first month of the quarter.
  • The scheme is not expected to be chosen individually for each quarter. Once it has been exercised, it will be valid for potential tax periods
  • Please note that in order to exercise that option, the registered person must have given the last return as required on the date of exercise of that choice.
  • Registered persons are not expected to exercise this option on a quarterly basis.

Criteria

  • The taxpayer must have given the last return as required on the date of the exercise of that option.

The choice used once exercised

  • Taxpayers are not required to exercise the option on a quarterly basis, have a return unless they amend the option.

Period of time

  • For the first quarter of the scheme, from January 2021 to March 2021, GSTR-3B filed for the month of October 2020 by 30 November 2020.

Migration

  • Taxpayers who do not file a GSTR-3B return for October 2020 by 30 November 2020 shall not be transferred to the common portal.

Opt-Out of the turnover scheme crosses Rs 5 Crores:

  • In the event that the overall turnover exceeds 5 crore ropes in any quarter of the current financial year the registered individual shall not be liable for the scheme from the next quarter. Such registered individuals, whose cumulative turnover exceeds 5 crore ropes over a quarter of the current financial year shall opt for the provision of returns on a monthly basis, online, on the national portal, from the next quarter.

Will a registered person go back to the prospect of submitting a monthly return when he has chosen for the QRMP scheme?

  • Yes, a registered person can move back to the option of submitting a monthly return when he has opted for the QRMP scheme. The provision to opt out of the scheme for a quarter will be accessible from the first day of the second month of the previous quarter to the last day of the first month of the quarter.

Quarterly furnishing of outward supply information with the Invoice Furnished Facility

  • Registered persons selecting for the scheme will be expected to include the outward supply information in the form GSTR-1 on a quarterly. The Invoice furnishing facility (‘IFF’) was developed for the reporting of invoices for the details of the supply rendered to registered persons for the very first time.
  • Two months in a quarter. This IFF facility is discretionary
  • The facility for the furnishing of invoice information in the Invoice furnishing facility( IFF) has been established in such a manner that
  • The system for the furnishing of invoice information in the IFF has been given in such a way that Such supplies shall be properly reflected in the form GSTR-2A and the form GSTR-2B of the recipient concerned.

Tax Payment under the Quarterly Return Monthly Payment Scheme (QRMP) Scheme :

Sr. No. Kind of Registered persons   Monthly Tax payment    Class of Returns
1. Sales of up to INR 1.5 Crore and have filed GSTR-1 on QTRly basis in the Present Financial Year Fixed sum method Quarterly return
2. Sales of more than INR 1.5 Crore and up to INR Five crore in the last Financial Year Deposit in PMT — 06 by
25th day of the month
next such month
Quarterly return
3. Sales of up to INR 1.5 Crore and have filed GSTR-1 on monthly basis in the Present Financial Year Pay tax due in each of
the first two months of
the quarter
Monthly return
  • RPs need to pay the tax due in each of the first 2 months (by the 25th of next month) in Qtr, by choosing “Monthly payment for quarterly taxpayers” as the explanation for generating Challan.
  • RPs can use either the Fixed Sum Method (Pre-filled Challan) or the Self-Assessment Method (Real Tax Duty) for the monthly payment of tax for the first two months after the ITC has been adjusted.
  • No payment is required for a month when there is no tax liability.
  • The tax deposited for the first 02 months may be used to change the qtr liability. In the form, GSTR-3B and will not be used for any other reason until the return for the qtr has been submitted.
  • Press here for the Notification and CBIC Circular description.

How and in what manner the payment of tax Monthly is to be made under the Quarterly Return Monthly Payment Scheme (QRMP) Scheme?

The registered person under the QRMP scheme will be allowed to pay the tax due to each of the first two months of the quarter by depositing the due sum in FORM GST PMT-06 on the twenty-fifth day of the month following that month. When generating the villain, taxpayers should choose “Monthly payment for quarterly taxpayers” as the explanation for generating the villain. Process for calculating the monthly payment of the tax the taxpayer is eligible to use one of the following 2 choices given below for the monthly payment of the tax in the first two months:

1.       Fixed sum method 2 Self-assessment System
·         A taxpayer who’s already made a quarterly return in the preceding quarter may decide to pay 35 percent of the tax paid in cash in the previous quarter.

·         An shared to thirty-five percent of the tax paid in cash in the previous quarter where the return was filed quarterly or equal to the tax paid in cash in the last month preceding the quarter where the return was submitted monthly.

·         The facility will be made accessible on the portal to generate a before the callan in the form of GST PMT-06.

·         Non-availability of monthly tax payment facility: monthly tax payment by this form will not be applicable to registered persons who did not provide the return for the entire tax immediately prior that month. The full tax period shall be the tax period in which the person is registered on the first day of the tax period to the last day of the taxable period.

·         The registered individual may pay the tax due by taking into account the tax liability for inward and outward supplies and the tax credit available.

·         In order to enable the determination of the available ITC for a month, a self-produced input tax credit estimate has been made accessible for each month in FORM GSTR-2B.

 

Applicability of late fees

  • Late fees shall apply in respect of delays in the furnishing of returns/details of outward delivery as provided for in Section 47 of the CGST Act. Late fees will refer to delays in the furnishing of the said quarterly return/details of the outward supply.
  • It is explained that there is no late payment penalty for late payment of the tax in the first two months of the year.

What are the conditions for setting the annual turnover rate – PAN or GSTIN?

The option to make use of the QRMP Scheme is GSTIN wise and therefore separate persons as specified in Section 25 of the CGST Act (different GSTINs on the same PAN) have the option to make use of the QRMP Scheme for one or more GTINs. In other words, some GSTINs for that PAN may opt for the QRMP Scheme and the remaining GSTINs may not opt for the Scheme.

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Rajput Jain and Associates 

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

Key takeaways on conversion of Partnership Firm into LLP

Understanding on the conversion of Partnership Firm into LLP

The move from traditional partnerships to Liability Partnerships (LLPs) has increased dramatically. The explanation for this is that LLPs offer more versatility, limitless partners, and the like. But the main driving force behind the change is the fact that LLPs offer a big benefit in terms of limited liability. As far as LLPs are concerned, the burden on the personal assets of the partner is put to rest as they are combinations of both a partnership and a private limited company. Small and medium-sized companies find this form of organisational structure very well suited to their needs.

The benefits of the structure of the Limited Liability Partnership (LLP) are greater than those of the conventional partnership. Limited liability, permanent succession, and limitless partners are crucial incentives for a partnership to turn itself into an LLP.

Reason for Conversion of Partnership Firm into LLP

Two members are the minimum requirement to form an LLP, whereas no limitations are put when it comes to the maximum number of partners who can participate.

There are certain people like individuals, limited liability partnerships, companies, Foreign Limited Liability Partnerships, and foreign companies who can participate.

Basic Requirements for Converting a Firm to LLP

– The conversion of a partnership to LLP shall be effected in compliance with the provisions of Section 55 of the LLP Act 2008, as set out in Schedule II of the Act.

– All partners of the company shall be partners of the LLP, which ensures that there shall be no new partners or that the current partners cannot cease to be partners when making an application.

– The LLP must have the same members as the partnership firm. Any partner wishing to be excluded from the LLP will be removed after the conversion has been completed.

– DIN/DPIN must be collected from all Designated Partners.

– Both partners must hold a valid DSC and at least 2 partners must have a DPIN before making such an application.

– The partnership to be converted must be registered in compliance with the Partnership Act, 1932.

– The approval of both partners must be sought.

The partnership can be converted into LLP. This is done due to the following reasons-

Limited Liability for Partners:  This accounts to be one of the most important drawbacks. This is why most people are scared to participate in it. On the other hand in the LLP it is seen the partners to be responsible or liable for their contribution to the firm, They are not awarded individually.

Perpetual Existence: There stands to be a perpetual existence of the partners. The existence of the partner is not at all dependent on other partners. There occurs a change in the partners who participate in the LLP. Therefore the conversion of the partnership is essential which helps to maintain individualism.

Unlimited partners: This is another major cause of conversion. The minimum number is always fixed the participation can exceed any level.

Better credit access: Easier bank loans are provided to the partners. They are given their assets are credits equally and they get their awards for their contribution. They also have a much efficient system of management which is essential in Limited Liability Partnership. Therefore is always preferred.

Potential Growth: The amalgamation and merger of the business greatly help to unlock many business strategies. The LLP, in turn, can also easily merge with other LLP which helps in a notable amount of growth in the business profits.

Step By Step Procedure for Conversion of a Firm to LLP

Step I – Apply New Name Approval for LLP & Digital Signature Certificates

Step II – Apply Filing of the Forms with the RoC – Form 17 (Application and Statement for conversion of a firm into LLP)

The below Accompanied by provided following attachments along with form 17

  • Details of all the secured creditors along with their consent.
  • Copy of BS of the firm certified by a CA in practice.
  • Latest ITR Return copy.
  • Affirmative Statement of Consent of Partners of the firm.
  • Any other required information or documents.

Step III – Apply Form FiLLiP (Form for incorporation of LLP)

Accompanied by the provided following are:

  • Copy details of any LLP/Company where a designated partner is also a director/partner.
  • Copy of address & Proof of identity of the applicants.
  • In case the Name of the LLP is identical to any existing Company/LLP, a copy of the Board Resolution or Consent of the existing LLP serving as a No Objection Certificate.
  • Copy Proof of address of the registered office of the LLP.
  • Copy of Subscriber’s consent.
  • Copy of NOC from the property’s owner and copy of utility bills (latest by 2 months).
  • Copy Approval of any regulatory authority, if required.

Both forms must be e-signed by the proposed appointed partners and accredited by the ICWA, the CS or the CA or either of them must be in full-time practice. The fee to be paid varies with respect to the value of the capital contribution.

Step IV – ROC will Issue of Registration Certificate of the LLP

Step IV – Apply for Limited Liability Partnership Agreement

The Limited Liability Partnership Agreement has to be submitted in Form LLP – 3 within thirty days of formation /Conversation of the LLP.

Step V – inform to the Registrar of Firms in Form – 14

This form-14 has to be attached accompanied by:

– scan copy of the LLP Incorporation Certificate.

– scan copy of the formation documents submitted in Form FiLLiP.

Impact of the LLP Registration process

  • The LLP shall come into existence by the name specified in the certificate of registration.
  • All properties, liabilities, rights, and privileges which have been given to the firm shall be invested in the LLP.
  •  The firm shall be dissolved and if it has been licensed under the Indian Partnership Act, shall be excluded from the records kept.
  •  All cases which have been brought against the company can be brought against LLP.
  •  Any order or decision, either for or against the company, maybe implemented against the LLP.
  •  All current contracts and agreements under which the company was a party shall continue to be in effect with the LLP as the party to the contract.
  •  Any current appointment of the firm or authority conferred on the firm shall be as if it had been conferred on the LLP.

Responsibility of partners before conversion: Each partner would be collectively and severally responsible for all the liabilities and obligations of the company that were incurred prior to such conversion. If a partner dissolves the duty, it shall be paid by the LLP.

Notice of conversion

The Limited Liability Partnership must provide that period of 12 months starting on a date not later than 14 days after registration:

– a declaration that it has been converted from a corporation to a Limited Liability Partnership as of the date of registration listed and

– Name and registration number(s) of the corporation from which it has been converted in each official communication of the Limited Liability Partnership.

In the event that the Limited Liability Partnership contravenes the above clause, it shall be disciplined with a minimum fine of Rs 10,000 and a maximum fine of Rs 1,000,000. In the event of continuous default, the minimum fine shall be Rs 50 per day and the maximum amount shall be Rs 500 per day.

Now use CA Rajput’s Expert & Legal Services to register Your LLP or Conversation your LLP. Our experts can handle your LLP compliance and Company/ LLP while you are doing what you do best! Contract us for more details

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

Kind of business structures can be made in India

Kind of business structures for setting up an entity in India 

The most important thing to do when beginning your own company is to comply with the legal requirements to ensure the safe functioning of your business enterprise. Registration of a corporation is the first step in the process that gives you legal permission to operate a business. It requires compliance with a set of regulations set out in the Companies Act.

Company incorporation is the primary method that all company owners need to conduct. The Companies Act 2013 sets out the various forms of companies that can be established in India.

So before you move on to the company registration process, take a look at the various types of companies in India that you can register.

1) One Person Company

One Person Company is the new entrant to various types of companies registered in India. It was implemented under the Companies Act 2013 for the benefit of entrepreneurs who have the capacity to operate a company on their own but successfully. The minimum paid-up capital of the shares in the OPC shall be INR 1 Lakh.

List of following details or documents are required for the One Person Company Registration

FOR THE REGISTERED OFFICE

  • Copy of Latest bank statement or mobile bill or phone or gas bill. or electricity
  • Copy of Notarized Rental Agreement.
  • Copy of NOC from the property owner.
  • Copy Sale Deed/Property Deed in English (for the owned property).

List of below documents required to Submitted by OPC member

  • Copy of PAN Card or passport (Foreign Nationals and NRIs).
  • Copy of Aadhar Card/ Voter’s ID/Passport/Driver’s License.
  • Copy of current Bank Statement or Telephone or Mobile Bill or Electricity or Gas Bill.
  • Copy of passport-sized photo.
  • Copy of Specimen autograph or impression.

This latest addition to the various kind of companies in India was a welcome change in India, as it allowed a single individual to take over the affairs of the company, while other types of companies needed at least two persons to serve as representatives of any company.

It is very useful for small businesses that do not need partners. Much in the same way, One Person Company is considered to be a separate legal body from its members. Shareholders here have limited liability rights and this type of business is easy to incorporate.

2) Sole Proprietorship

Sole Proprietorship is a kind of company registration in which a single individual controls the entire business management. The Proprietorship and the owner shall be regarded as one identity and shall bear himself the benefit or loss made therein.

List of below documents required for Sole Proprietorship

  • KYC documents of the Bank.
  • Utility Bill of the business place.
  • License issued through the Shops and Establishment Act.
  • Income Tax Returns of the Proprietor.
  • Any 2 of the documents could be submitted for the Bank Account opening with the Identity and Address Proof of the proprietor.

The Business in Proprietorship is registered only on behalf of one single Individual. All accounting shall be conducted on the owner’s account for income tax and GST compliance purposes under the pan no of the owner. In this scenario, the owner must bear unlimited business liability.

(3) Partnership

This is one of the different types of firms where company deals and transactions are done by partners. The legal partnership agreement specifically specifies the obligations, positions, and number of shares withheld by the two parties.

List of following details or documents are required for the partnership firm Registration

  • The date when each partner joined the corporation.
  • The complete names in full & addresses of the partners.
  • The place or principal place of business of the corporation.
  • The names of any other places where the partnership carries on the entity
  • The duration of the partnership and other details as below
    • Proof of ownership or rent/lease of the location of the business.
    • PAN Card copy of partners.
    • Aadhaar Card/ Voter identity card Copy.
    • required a Statement in Form 1 with the prescribed fees.
    • Notarized True Copy of the Partnership Deed declaring:
    • Name of the firm.
    • The nature of the business of the corporation.
  • The Statement should be signed by all the partners of the corporation and need to be verified by affidavit in a specified manner.
  • As specified in the agreement, the gains or losses sustained by the company are split among the partners.

(4) Limited Liability Partnership (LLP)

The Limited Liability Partnership includes a minimum of 2 partners. It is also a recently launched corporate business arrangement that incorporates the words ‘Company’ and ‘partnership firm.’ The LLP is a distinct legal entity that distinguishes among relationships and personal & business properties.

List of following details or documents are required for the LLP Registration

Documents required by Limited Liability Partnership:

  • Proof of the address of the registered office: proof must be given during registration or within 30 days of its incorporation. A tenancy contract or No Objection Letter from the landlord must be sent to the registered office for leasing.
  • The liability of the partners shall be determined by the number of their share capital. Compared to Sole Proprietorship and Partnership, the Limited Liability Partnership is more trustworthy among its investors. This is due to the proper maintenance of incorporation documents, financial records, and tax records.

Below Documents required from the partners of Limited Liability Partnership:

  • Copy of Current bank statement, phone bill, telephone bill, or gas bill must be submitted as proof of residence by the Partners.
  • Copy of Partners must also have a photo of their plan background passport size.
  • Copy of PAN card or ID Partner proof.
  • Copy of Address proofs of partners, such as Voters ID, Passport, Driver’s License or Aadhar Card. Proof of identities, such as a driving license, bank statement, residence card or any government-issued identification card that contains an address, is necessary for all foreign nationals who wish to register as a partner in the Limited Liability Partnership.
  • Copy of Passport is required for NRIs. and foreign nationals.

(5) Private limited company

A Private Limited Company is a privately owned company registered for small companies. According to the requirements of the Companies Act 2013, a minimum of 2 members and a maximum of 200 members may be members of a corporation. In this type of business, there is a group of shareholders, and the total capital is composed of shares owned by each member.

Below details and documents required for Private Limited Company Registration

  • Aadhaar Card/ Voter Id card copy of directors.
  • Rent agreement copy (for the rented property).
  • PAN Card copy of directors.
  • Scan copy Property papers (for the owned property).
  • Attached Landlord NOC.
  • Copy of Electricity/ Water bill (Business Place).
  • Copy of Passport size photo of directors.

In a private limited company, the liability of the shareholders is limited to the number of shares owned by the members. Company assets and personal assets shall be handled separately. Shares of a private limited company can be sold or transferred to persons who in turn, become shareholders of the company. Shares, however, cannot be publicly traded. Private Limited Company could be further listed as:

(a) Company limited by shares

It is the most general type of a private limited company. Here the liability of the shareholders is limited by a memorandum to the amount, if any, not paid on the shares owned by themselves.

(b) Company Limited By Guarantee

In this form of a private limited company, the liability of the shareholders is limited by the memoranda to the amount that the members may contribute to the company’s assets in the event of bankruptcy.

(c) Unrestricted Business

There is no limit to the liability of the members in this type of company. This ensures that in the case of a loss if the assets of the corporation fall short of paying off the creditors, the private assets of the owners are then consumed for debt relief. The risk factor here is exceptionally high.

6) Section 8 Company

This form of company registration is a non-profit organisation (NPO). The purpose of the NPO is primarily to promote the arts, trade, and different aspects of social welfare in the form of education, charity, religion, and environmental protection, to name but a few. Any income, if produced, shall be used here for the achievement of the aforementioned purpose. Dividends shall also not be charged to their shareholders.

List of following details or documents are required for the Section 8 Company registration

For the Registered Office

  • Copy of Latest bank statement or mobile bill or phone or gas bill. or electricity
  • Copy of Notarized Rental Agreement.
  • Copy of NOC from the property owner.
  • Copy Sale Deed/Property Deed in English (for the owned property).

Below details and documents required for Section 8 Company limited registration

  • Copy of Aadhaar Card/ Voter Id card copy of directors.
  • Copy of Rent agreement copy (for the rented property).
  • Copy of PAN Card copy of directors.
  • Copy of Property papers (for the owned property).
  • Copy of Attached Landlord NOC.
  • Copy of Electricity/ Water bill (Business Place).
  • Copy of Passport size photo of directors.

7) Public Limited Company

Public Limited Company shares can be owned by the general public. The company must have three directors and a minimum of seven shareholders. There is no limit on the number of shares in the Public Limited Company.

Below details and documents required For Public Limited Registration

  • Aadhaar Card/ Voter Id card copy of directors.
  • Rent agreement copy (for the rented property).
  • Attached Landlord NOC.
  • Copy of Electricity/ Water bill (Business Place).
  • Copy of Passport size photo of directors.
  • PAN Card copy of directors.
  • Scan copy Property papers (for the owned property).

The shares are listed on the stock exchange and can be freely exchanged. These corporations are owned by their founders. Companies in this group need a ROC certificate before beginning their business operations.

In India, no enterprise registration can be considered as a company unless it is registered with the company registrar under the Companies Act 2013. Only after incorporation does a corporation become a distinct legal entity from its owners.

Business registration is therefore an important and vital step in realising your dream of being a prosperous entrepreneur. Use this information and get started!

What is Process Private Limited Company Registration in Delhi?

  • We must apply to the DSC for the Private Limited Company Registration in Delhi.
  • The next step must apply for the DIN for the Private Limited Company Registration in Delhi.
  • Next step we must apply for approval by the ROC of the Pvt Limited Company Registration in Delhi.
  • Next step we must apply for registration with the latest SPICe Plus forms for registration of a Pvt limited company in Delhi.
  • Get the Registration Certificate (COI) after completion of the registration process of the company.

Here seem to be a couple more posts relevant to business registration for the purpose of brushing up your knowledge:

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

Process of Company setting up in India

Process of Company registration in India

The company forming mechanism in India can be described in the following steps:

It is regulated by:

The process for the establishment of a private limited company is regulated by the Companies Act, 2013.

Minimum criteria for private limited companies

  • DIN for both directors;
  • Agree to the Subscriber or Director
  • Proof of registered address;
  • NOC of the owner of the premises
  • Digital signatures for all directors;
  • Minimum of two directors
  • Minimum of two shareholders (Directors & Shareholders can be the same)
  • Minimum paid-up capital of Rs. 1 lakhs

The process for the registration of companies is described as follows:

Get Digital Signatures certificate

  • One director must apply for the Digital Signature Certificate, which is required for the filing of company registration papers. Just a few scanned documents and details will be needed for this. It is mandatory to obtain a Digital Signatures certificate for at least one director to sign E-forms relating to the Formation Life Form INC-1 and other documentation.

Application for DIN in DIR-3 form

  • Each person proposing to be appointed as director of a company shall file an application to the Central Govt for the assignment of the Director Identification Number in the form DIR-3 in the prescribed manner specified and in accordance with such fees as may be specified.

Check availability of company name

  • Choose, in order of choice, not less than four acceptable names, indicating the main objectives of the organisation. Ensure that the names chosen do not match the names of any other organisation already registered and do not infringe on the requirements of the Emblems and Names (the prevention of improper use) Act, 1950.

Availability of Name Request

  • Apply to the Registrar of Companies concerned to ascertain the availability of the company name in the INC-1 form part of the General Rules and Forms, along with a fee. If the proposed name is not accessible, the digital signature of the applicant proposing the company must be attached in the form to apply for a new name on the same document. Ministry of Corporate Affairs has developed explicit rules regulating the process of availability of names, so it is advisable to review these guidelines before applying for a company name. Refer to Rule 8 of the Companies (Incorporation) Rules, 2014.
  • Following the applicant’s requested approval of the new company, the Registrar of Companies will issue the name availability Letter of proposed Company w.r.t. to authorise the availability of the name. The name will be valid for sixty days from the date on which the reservation request has been made. The applicant may apply for registration of the new company by submitting the appropriate INC-1 forms within 6 months of the date of approval of the name.

MOA & AOA Drafting

  • Provision for the preparation of the MOA and AOA by the client and for the checking and print of the same by Registrar of Companies.
  • Provision for the stamping of the MOA and AOA with the required stamp duty.
  • Get the MOA and AOA submitted by at least 2 subscribers in their own hands, the names, occupations, and addresses of their fathers, and finally, the number of shares subscribed. This documentation must be witnessed by at least 1 person.
  • Make sure the date of stamping of the MOA and AOA document is later than the date of stamping.
  • The main objectives should be aligned with the objectives set out in the INC-1 e-form.
  • The MOA should be as applicable to an organisation in the respective forms as set out in Tables A, B, C, D and E of Schedule 1.
  • AOA should be in the respective forms as set out in Tables F, G, H, I and J of Schedule 1 as specific to a corporation.

Filing of various forms in Registrar of Companies

  • The applicant’s affidavit for a memorandum in Form INC-9;
  • Verification of the signatures of the subscribers on the INC-10 form
  • The aforementioned records must be filed with the ROC:
  • MOA (duly stamped) and duplicate
  • AOA (duly stamped) and a copy thereof;
  • e-Form No. 1 (with the appropriate stamps) for the registration of the company.
  • Receipt of payment of the prescribed filing and filing fee.
  • Copy of Proof of domicile;
  • Copy of Identity proof
  • Required Professional declaration in the INC-8
  • Letter from the ROC specifying the availability of the company’s proposed name;

Payment of formal fees and stamp duty

  • After filling out forms on the MCA online system, the required fees have to be paid.

ROC shall check the forms & attachments

  • After receipt of the forms together with the relevant payments, ROC reviews and verifies all documentation and attachments and recommends any adjustments, if necessary.

ROC issues an Incorporation Certificate

  • If the Registrar is satisfied that the company has complied with all the conditions, he shall register the company and issue a Certificate of Incorporation. The date stated on the certificate shall be the date of registration of the company.

Rajput Jain and Associates is a leading business and legal services platform that allows clients to reduce the procedures for all categories of registration, implementation, tax issues, and any additional legal enforcement and business-related services in India.

Get complimentary consulting services for any registration with our top qualified experts. Visit our website at www.carajput.com

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

How to check the status of TAN Application

How to check the status of TAN Application on the TIN NSDL Portal

You monitor the status of the TAN Application on the TIN NSDL Website

The Payer / Deductor can use the 14-digit acknowledgment number to check the TAN status of the TIN NSDL. The status of the TAN application represents the status of the TAN application after 3 days of submission of the TAN application.

There are three ways to interpret the TIN NSDL position:

  1. Using the NSDL TIN track status facility,
  2. Calling the TIN-FC Call Center,
  3. By sending a Text message to the NSDL number of the TIN.

How do I know the status of my TAN application?

Following Steps to be followed for viewing TAN Application status on TIN NSDL Portal. You have to take the procedures below.

Step 1:  Visit the NSDL-TIN website.

Select the “TAN” link from the “Services” drop-down list on the TIN-NSDL Portal screen.

Pick “Know Status of Your Application”

Step 2:  Select “Know Status of Your Application” from the “TAN” segment. TIN-NSDL-Track TAN Status Link.

Step 3:  Select the option “TAN – New / Change Request” from the drop-down list “Application Form”

Insert the 14-digit acknowledgment number in the chosen fields. TIN-NSDL-Track your TAN position

Step 4:  Press on the option “Submit”

Before sending, enter the captcha code from the given image.

Thus, when you click on the “Send” button, the Position of your TAN will be shown.

TAN STATUS ONLINE

  • Generally, it takes 5 to 10 days to obtain your TAN after an application has been submitted. Often, due to inadequate documentation, it can be postponed. Learn how to check your TAN status online at the tin-nsdl portal. The progress check will allow you to know if your TAN application has been postponed for some reason.
  • The revenue tax agency provides online facilities to TAN and PAN holders. Users may apply for a PAN card or a TAN number online. Learn how to monitor the status of TAN applications online in just a minute. We’ve shown here how to monitor the progress of TAN after submitting.

 Contact NSDL in Case of any Further Information

In case you need more information, you cn contact NSDL at the following sources:

Call PAN/TDS Call Centre at 020 – 27218080; Fax: 020 – 27218081

e-mail us at: tininfo@nsdl.co.in

SMS NSDLTAN <space> Acknowledgement No. & send to 57575 to obtain application status

What is the NSDL TAN ADDRESS?

If you have not made a payment online, sign this acknowledgment and return it with a check or DD. A DD or check should be made payable to Mumbai for the benefit of NSDL – TIN. Send it to the NSDL address given below:

  • Write to: NSDL e-Governance Infrastructure Limited, 5th floor, Mantri Sterling, Plot No. 341, Survey No. 997/8, Model Colony, Near Deep Bungalow Chowk, Pune-411016

Remember to superscribe this envelope as ‘TAN APPLICATION – (note your acknowledgment number)’

If you have paid online, just send the receipt of the confirmation. Please ensure that it reaches NSDL, Pune, within 15 days from the date of the online application. Your TAN application will be processed upon receipt of payment and acknowledgment.

What is the process to know your TAN Jurisdiction building?

To know the name of the TAN jurisdiction building, follow the following steps:

  • In the first place, visit www.incometaxindia.gov.in.
  • Now, under the ‘Important Ties’ tab, select ‘Jurisdiction.’
  • Next, pick your state.
  • You are now being routed to a PDF file. Find the name of the TAN jurisdiction building in the table.

TIN Support Desk
NSDL (National Securities Depository Limited)
Trade World, ‘A’ Wing, 4th floor; Kamala Mills Compound
Senapati Bapat Marg; Lower Parel; Mumbai – 400 013

How to File an Application for Cancellation of TAN?

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

NBFC – Microfinance Institution (NBFC-MFI) in India

Introduction

www.carajput.com; NBFC-MFI

www.carajput.com; NBFC-MFI

An NBFC – Microfinance Institution (NBFC-MFI) is a non-deposit taking NBFC (which is not a company licensed under Section 25/8 of the Indian Companies Act, 1956/2013) fulfilling the following conditions: One of the most emerging types of NBFC nowadays is NBFC – Microfinance Institution (NBFC-MFI).

  1. Minimum NOF of INR .5 cr. (For NBFC-MFIs registered in the North Eastern Region of the country, the minimum NOF requirement shall stand at INR. 2 cr).
  2. Net assets of not less than 85% of which are in the nature of “qualifying assets.”

So, any NBFC proposing to carry on the business as NBFC-MFI shall fulfill the above criteria to apply for registration as NBFC-MFI with RBI.

www.carajput.com; NBFC-MFI

www.carajput.com; NBFC-MFI

Entry Point for NBFC- Microfinance Institution

For North Eastern Region, the minimum NOF limit is INR 2 Cr. Any new company proposing to get registered as NBFC – Microfinance Institution (NBFC – MFI) must have a minimum NOF of at least INR 5 Cr.

Capital Adequacy Ratio for NBFC– Microfinance Institution

Every new NBFC – MFI must maintain a Capital adequacy ratio of at least 15% of its aggregate risk-weighted assets, which shall include Tier I and Tier II Capital.

Also, it must ensure that the total of Tier II Capital shall not be more than 100% of Tier I Capital at any time.

 Assets Classification Norms for NBFC- Microfinance Institution

Non-performing asset (NPA): Asset shall be classified as NPA if either interest or principal payment becomes overdue for 90 days or more for those assets. Standard Asset: Those Assets are classified as standard assets in whose respect there is no default either in principle or interest payment and which does not disclose any problem and also those do not carry any risk other than risk attached to a business.

Provisioning Norms for NBFC- Microfinance Institution

NBFC–MFI at any point of time shall maintain an aggregate loan provision of not less than the higher of the following:

  1. 1% of the outstanding loan portfolio or
  2. 50% of the aggregate loan installments which are overdue for more than 90 days and less than 180 days and 100% of the aggregate loan installments which are overdue for 180 days or more’.

The other provisions must be made by the NBFC-MFI as per the relevant Prudential Norm applicable to the company.

Pricing of credit by NBFC-MFI

MFI Type Loan Portfolio Margin Cap
Large MFI More than 100 Cr Not exceeding 10%
Other MFI Less than or equal to 100 Cr Not exceeding 12%

Margin Cap: The margin cap for NBFC-MFI is as follows

 Interest Rates:

  • NBFC-MFI can charge the interest rates by its borrowers from the lower of the following:
  1. The fund’s cost plus margin rate; or
  2. The average base rate of the largest five commercial banks by assets multiplied by 2.75. The average of the base rates is notified by RBI on the last working day of the previous quarter.
  • Interest rates of loans given by NBFC-MFI must not exceed the average borrowing cost plus margin during that financial year.
  • The rate of interest on the individual loan may be more than 26%, but the variance in the interest rate for minimum and maximum rate for an individual loan shall not be more than 4%
  • The average interest charged by the MFI and paid on borrowings are to be calculated on average monthly balances of outstanding borrowings and loan portfolios respectively. The figures for interest rates may be certified annually by Statutory Auditors and also disclosed in the Balance Sheet.

 Insurance cost by NBFC-MFI

NBFC-MFIs shall recover only the actual cost of insurance for g life, health, group, or livestock for borrower and spouse.

Administrative charges if any, recovered, shall be as per IRDA guidelines.

Processing fees to be charged by NBFC-MFI

The Processing charges for any loan shall not exceed 1 % of the gross loan amount. Also, Processing charges must not be included in the interest cap or margin cap.

Annual Statutory Auditors Certificate Submission

The annual Statutory Auditor certificate as required to be submitted by every NBFC concerning the Company’s position as of March 31 every year, must also be submitted by NBFC-MFI, which shall also specify that the company fulfills all the conditions as prescribed to be classified as NBFC-MFI. Annual Statutory Auditors certificate Submission

Know  About Overview of oversea investment by NBFC

Frequently Ask Question( FAQ)

Q 1; What is the minimum NOF Required for NBFC – Microfinance institution?

Ans. The Minimum NOF required for NBFC – Microfinance institution is INR 5 Cr.

Q 2; Is there any relaxation in NOF for NBFC – Microfinance institution proposed to be registered in the North Eastern Region?

Ans. Yes, the NOF required for NBFC – Microfinance institution proposed to be registered in the North Eastern Region is INR 2 Cr.

Q 3; Is there any limit on processing fees to be charged on loans by NBFC-MFI?

Ans. Yes, the maximum processing fees that NBFC-MFI can charge is 1% of the loan amount.

Q 4 Does RBI regulate Microfinance institutions registered under section 25/8 of companies act 1956/2013?

AnsNo, those Microfinance institutions are regulated by ROC only.

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