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.

Rajput Jain and Associates 

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)

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)

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.

CS Akshay Gupta is a diligent and innovative qualified Company Secretary, striving in matters related to Corporate Law. Akshay takes a deep interest in corporate, NBFC and FDI matters and his specialization includes corporate Compliance, FEMA Compliances, and NBFC Registration. As a Company Secretary, Akshay is passionate about matters relating to corporate funding, NBFC, and its compliances.

Don’t Worry! Our experts are here to help you. Get in Touch with our team for easy filing of SMF Form FCGPR.

Write to RAJPUT JAIN & ASSOCIATES  or call us on 9555555480

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)

Complete Overview of Tax Residency Certificate (TRC)

What is the Tax Residency Certificate (TRC)?

www.carajput.com; Tax Residency Certificate

www.carajput.com; Tax Residency Certificate

With effect from 1st April 2013, A person residents of India who receive income from countries with whom India has a Double Taxation Avoidance Agreement can acquire a tax residence certificate from the Department of Income Tax. The same can be sent to the payer for the Double Taxation Avoidance Agreement benefit. Double Taxation Avoidance Agreement can acquire a tax residence certificate from the Income Tax Department. The same can be sent to the payer for the DTAA benefit.

The government has now issued notification No. NOTIFICATION No 39/2012, DATED 17-9-2012, published the following forms, which shall apply w.e.f 1st April 2013 and onwards:-

  • FORM No. 10FA – Filling an Application for a Certificate of Residency according to Sections 90 & 90A of the I T Act, 1961
  • FORM No. 10FB – Get the TRC for the purposes of Sections 90 and 90A of the I T Act 1961,

In order to receive a certificate of residency for the purposes of the arrangement referred to in Section 90 and Section 90A, the assessee, being a resident of India, shall make an application to the assessing officer in Form No. 10FA.

The AO shall, upon receipt of the application referred to in sub-rule (3) and fulfilled in that regard, grant the certificate of residency for the assessee in Form No. 10FB.

Kind of Abroad income to which the Double Taxation Avoidance Agreement applies: 

Here are the various kinds of foreign income that DTAA refers to:

  1. Income from Interest on FD
  2. capital gains on the selling of property
  3. Lease of assets
  4. Salary-Income from India is to be filed in form 1040 of the tax return. If you receive a tax credit, please fill out Form 1116. or  Income from Salary earned in foreign countries
  5. Agricultural revenue
  6. Share and mutual fund dividends
  7. Any income earned for freelance or consultancy work in India
  8. Interest in bank deposits, as well as other securities held in India and Income, earned as Interest on Savings bank Account
  9. Income from Capital income gained in foreign countries

Tax Residency Certificate for claiming relief under an agreement referred to in sections 90 and 90A is specified under rule 21AB of the Income Tax Rules.

Tax Residency Certificate needed to be acquired by non-residents: the new law specified that the TRC should be acquired by a non-resident from the Government of the country or designated territory of which he/she is resident and should include the following information:

  • Name of the taxpayer.
  • The status of the assessee (individual, corporation, firm, etc.)
  • Citizenship (in the case of individuals)
  • Country or designated territory of incorporation or registration;
  • The tax identification number of the assessor in the country or designated territory of residence or, in the event that such number does not exist, the specific number on the basis of which the person is known by the Government of the country or designated territory of residence.
  • Residential status for tax purposes as specified in the certificate referred to in sub-section (4) of section 90 or sub-section (4) of section 90A, is applicable;
  • The period of validity of the certificate
  • Address of the assessee for the period of validity of the certificate

Steps/Process to be followed to acquire Tax Resident Certificate (TRC) in India

In this situation, a completely manual procedure is implemented.

You can need to visit the Office of the Assessing Officer (AO) at least 2-3 times.[Rule 21AB]

Step 1: Find your appraisal officer online via the e-filling website by entering the PAN and the registered mobile number. [Left corner of the page under the Quick Link tab]

Step 2:

  • Create a document describing your travel in and out of India with a stamped passport.
  • In the circumstance of an electronic check-in or check-out via smart gates, an air ticket should be saved to clarify to the Evaluating Officer. [Happens primarily in the UAE]
  • Add days in foreign land and make your stay in Indian soil transparent for the remaining number of days in the financial year.

Step 3:

  • Download Form 10FA and send the completed form to the appraisal officer (AO).
  • It is clear that the object of the tax resident certificate is revealed. Example: to subtract the sum of the tax withheld from the income earned abroad. [Form 10FA of paragraph (x) of 2]
  • Attach a copy of the passport and display all the arrival and departure stamps as shown in step 2.

 Step 4:

  • The Assessing Officer (AO) may ask you to visit his office to discuss your application.
  • The satisfaction of Assessing Officer is required to receive the Tax Resident Certificate (TRC).
  • Upon being assured, TRC will be provided in Form 10FB.

Tax Residency Certificate required to be obtained by residents of India:

A resident taxpayer can send an application to the Assessing Officer (‘AO’) in Form 10FA to acquire a TRC in India. According to the provisions of sub-rule (2), for the purposes of  Section 90(5) and Section 90A(5), the following details shall be given by the assessee in Form No. 10FB:—

  • The status of the assessee (individual, corporation, firm, etc.)
  • Name of the assessee (taxpayer)
  • E-mail Address
  • Permanent Account Number / Tax Deduction Account Number (where applicable)
  • Citizenship (in the case of individuals)
  • The basis on which the status of resident in India is asserted
  • Purpose to receive the Tax Residency Certificate
  • The period of validity of the certificate
  • Address of the assessee for the period of validity of the certificate
  • Some more information

The application form, along with supporting documentation, must be sent to the Assessing Officer. The New Rule specifies that, upon receipt of the application and on the fulfillment of the particulars found therein as in sub-rule(3), the Assessing Officer shall grant the Tax Residency Certificate to the resident taxpayer in Form 10FB.

How to get the Form 10FB Indian Tax Resident Certificate-

Impacts/ advantages of the Tax Residency Certificate:

  • In order to prevent foreign tax deductions, all Indian residents are expected to apply a resident tax certificate to their foreign tax authorities.
  • Indian citizenship is not applicable to this certificate. This can also be acquired by a foreign national such that he fulfills the required requirements.
  • The specified format would make it possible for international residents to know in advance what is appropriate to receive tax credits. This would speed up the whole payment process.
  • The Tax Residency Certificate provision gives the tax authorities the right to test the tax beneficiary under these treaties.
  • In this post, we will discuss different aspects of the tax-resident certificate and the process by which it may be issued.
  • Save the tax!

TRC & TIN are required to claim exemption from higher withholding tax

  • Tax Residency Certificate and Tax Identification Number to demand exemption from higher TDS (for those who do not have PAN) u/s 206AA of the I Tax Act
  • CBDT brings additional Rule 37BC providing for information to be provided by a non-resident payee for relief from tax deduction at a higher percentage u/s 206AA of the I Tax Act
  • Latest Rules specifies that a non-resident deductee is not subject to the high tax on payments of ROYALTY, INTEREST, Charge FOR TECHNICAL SERVICES AND TRANSFER OF CAPITAL ASSETS,
  • In addition, it was stated that in the case of a deductee protected by current Rules 37BC, “PAN NOT AVAILABLE” should be indicated in Form 27Q when filing the TDS return.

What happens when non-residents do not have Tax Residency Certificate?

TRC from a non-resident or a foreign person for the purpose of getting advantages the DTAA/tax treaty

In cases where non-residents must provide Tax Residency Certificate or delays occur, the paying entity can withhold taxes at higher rates instead of applying the beneficial provisions of the Treaty. In that scenario, a non-resident will have to apply for refunds in India by filing his Income-tax Returns.

Even in cases of net financial dealings where the tax is paid by the Indian individual, they will have to look for consideration of those specifications.

Few Basic Question and Answer on TRC

S. No. Questions answers.
i if in addition to the tax residence certificate, the development of other fair proof is required for proper compliance with the residence test Yes
ii if the creation of other reasonable facts, even without a tax residence certificate, providing proof of residence of the payer would make the payer liable for the benefit of the Treaty? Yes
iii Does this indicate that the Tax Residency Certificate is just one of the proofs, but not definitive proof of the residence of the payer? Yes
iv if the tax residence certificate of the payer U/S 90(4) is a necessary condition for the payer to be qualified for the benefit of the Treaty? No
v Whether the generation of the Tax Residency Certificate by the payer alone is appropriate No

To reach the conclusion:

therefore before paying to non-residents or foreign organisations, it is compulsory to the corresponding non-residents for a tax residence certificate in order to benefit from the tax treaties. Besides that, instead of asking for the specified details in the Tax Residency Certificate itself, the government can now apply for the same data independently by other information and documents. This is a good development as investors from some countries have been faced with a problem because their governments have declined to change the Tax Residency Certificate format simply to fulfill the standards of the Indian Government. International investors are and will continue to be an important part of Indian markets. Steps must be taken to ensure that the flow of FDI continues to rise in India.

For complete solution and find out the complete answer of the following question you may contact us on 9555 5555 480

  • Whom to apply for Tax Residency Certificate and How to apply for Tax Residency Certificate?
  • Is there any form of application?
  • Is there any time limit for the issue of Tax Residency Certificate?
  • This content is for annual members only.

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)

Overview of Overseas investment by NBFC

Overview of Overseas investment by NBFC

www.carajput.com; NBFC

www.carajput.com; NBFC

NBFC has become an integral part of our financial sector in India. Now, NBFC is taking lead in the financial sector to fulfill the financial needs of the people along with banks.

One of the questions that arise in the context of NBFC is whether it can extend its operations abroad also?

The answer is yes, but it has to follow certain compliances for doing the same.

No Objection Certificate for Overseas investment by NBFC

NBFC’s proposing to make overseas investment must, first of all, obtain the “No Objection Certificate” (NOC) from DNBS from the regional office within whose jurisdiction the registered office of the NBFC is situated before making any kind of overseas investment.

Also, the application made for obtaining NOC must state the activities undertaken by the overseas entity.

Further, the NBFC is not allowed to make any direct investment in the overseas entity engaged in activities that are not approved under FEMA.

Opening of Branch/Subsidiary/Joint Venture/ Representative Office abroad by NBFC

An NBFC can open a Branch/Subsidiary/Joint Venture/ Representative Office abroad only with the prior approval of the RBI.

An NBFC cannot open such an office abroad without prior permission of RBI.

General Conditions for permission of RBI.

  • NBFC shall not invest abroad in the Non-Financial sector.
  • NBFC is not allowed to make any direct investment and activities/Sectors which are prohibited under FEMA.
  • NBFC can invest in those entities abroad whose core activities are regulated by the financial sector regulator in the host country
  • The limit for aggregate overseas investment by NBFC is a maximum of 100% of NOF
  • NBFC cannot invest more than 15% of its owned funds in a single entity overseas including its step down subsidiaries, either by way of equity or in fund based commitment.
  • multi-layered, cross-jurisdictional structures should not be involved in Overseas investment, only a single immediate holding company is permitted
  • NBFC must maintain required NOF even after making o=investment overseas
  • The net NPA of NBFC should not be more than 5% of net advances
  • NBFC should be profit-making during the last three years before making overseas investment
  • FEMA regulations in place must be complied with by NBFC while making overseas investment
  • If NBFC holds any public deposit then it must comply with regulatory compliances as applicable.
  • KYC Norms must be complied with by NBFC
  • SPVs set up abroad or acquisition abroad shall be treated as investment or subsidiary/joint venture, depending upon the percentage of investment in an overseas entity
  • NBFC shall submit an Annual certificate with the regional office of the RBI regarding compliance with these guidelines
  • NBFC shall also submit a quarterly report with the regional office of the RBI and Department of Statistics and Information Management (DSIM) regarding overseas investment
  • RBI can withdraw the permission if any adverse features came to the notice of RBI relating to this transaction.

Read why RBI cancels the NBFC Registration?

 Opening of branch office of NBFC – Some specific Conditions

NBFC shall not be allowed to open a branch office abroad. But existing NBFC which has already set up their branches for financial business abroad can carry on operating those branches subject to compliance with the above guidelines.

Opening of a subsidiary abroad of NBFC – Some specific Conditions

NBFC must comply with the above conditions for opening a subsidiary abroad, apart from that the following shall also comply:

  • The parent entity shall not provide any guarantee, either implicit or explicit on the overseas subsidiary’s behalf
  • NBFC cannot give any letter of comfort on an overseas subsidiary’s behalf
  • NBFC liability shall be restricted to equity or fund based commitment in overseas subsidiary
  • The overseas subsidiary must not be a shell company.

Note: Subsidiary undertaking financial consultancy and advisory services with no significant assets shall not be considered as shell companies;

  • Overseas Subsidiary shall not be used as the vehicle should be used as a model for creating an asset in India for Indian operations
  • The parent company must obtain a periodical report/audit report from an overseas subsidiary and submit it to RBI for inspection
  • RBI can review/recall approval, in case the overseas subsidiary is not having any operations or not providing a periodical report
  • The permission granted for setting up of overseas subsidiary shall be subject to the condition that the subsidiary company shall disclose in its balance sheet that the liability of the parent entity is limited to either equity or fund based commitment.
  • The overseas subsidiary operations shall be subject to host country regulations

 Opening of Representation office abroad of NBFC – Some specific Conditions

The NBFC can open a representative office abroad for liaison work, undertaking market study and research.

It shall be noted that representative office abroad cannot undertake any activity which involves an outlay of funds.

The representative office shall be subject to regulation by the host country

The parent NBFC shall also obtain periodical reports from such representative office abroad and if not provided the approval may be recalled or reviewed by RBI.

RBI may also recall or review the approval of the representative office is not carrying on any operations abroad.

Read about NBFC-MFI in India

FAQ’s on Overseas investment by NBFC

Q 1 Is there any permission required by NBFC for making the overseas investments?

Ans Yes, NBFC Is required to obtain NOC from RBI before making any overseas investment.

Q 2 is it mandatory for overseas branch/ subsidiary to comply with host country regulations along with compliance of RBI regulation for the Parent company?

Ans. Yes, the overseas entity must comply with the host country laws.

 Q 3 Can RBI recall the permission given for overseas investment/opening of offices abroad?

Ans. Yes, in case the overseas entity does not have any operations or is not providing a periodical report to the parent entity, then RBI may recall or review the approval.

Q 4 Can NBFC make overseas investments in the Non-Financial sector?

Ans No

The blog is posted by CS Akshay Gupta expert of RAJPUT JAIN & ASSOCIATES

CS Akshay Gupta is a diligent and innovative qualified Company Secretary, striving in matters related to Corporate Law. Akshay takes a deep interest in corporate, NBFC and FDI matters and his specialization includes corporate Compliance, FEMA Compliances, and NBFC Registration. As a Company Secretary, Akshay is passionate about matters relating to corporate funding, NBFC, and its compliances.

Don’t Worry! Our experts are here to help you. Get in Touch with our team for easy filing of SMF Form FCGPR.

Write to RAJPUT JAIN & ASSOCIATES  or call us on 9555555480

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)

General Preventive Measures & revised Covid-19 Quarantine Guidelines for All RWA Society

General Preventive Measures & revised Covid-19 Quarantine Guidelines for RWA premises at all times during COVID-19

www.carajput.com; COVID-19

www.carajput.com; COVID-19

Revised Covid-19 Quarantine Guidelines & Rules across India: With states revising their quarantine and self-isolation guidelines for travelers from time to time, here are the updated rules in Delhi, Maharashtra, Kerala, Tamil Nadu, West Bengal, Andhra Pradesh, etc

We hope all of you are staying safe and healthy. We would like to share some generic preventive and care measures that are to be followed to reduce the risk of COVID-19. These measures need to be observed by all in RWA premises at all times. Also attached are GOI guidelines on Home Quarantine and a message about the importance of Wearing Masks.

GENERAL PREVENTIVE AND CARE MEASURES- COVID-19

  • The physical distancing of at least 6 feet to be followed as far as feasible.
  • Use of face covers/masks is mandatory when stepping out of the apartment, walking/running/playing in the common area.
  • Practice frequent hand washing with soap even when hands are not visibly dirty.
  •  Respiratory etiquettes to be strictly followed. This involves the strict practice of covering one’s mouth and nose while coughing/sneezing with a                    tissue/handkerchief/flexed elbow and disposing off used tissues properly.
  • Spitting in a common area is strictly prohibited.
  • Persons above 65 years of age, persons with comorbidities, pregnant women, and children below the age of 10 years are encouraged to stay at home only and keep contact with visitors/guests to a minimum.
  • Avoid assemblies and congregation to maintain a safe distance from other people.
  • Try and avoid visiting or meeting with anyone who has a recent history of having traveled back from a corona-affected region.
  • Self-monitoring of health by all is very important. If you have, by chance, come into contact and show certain symptoms, quarantine yourself till you feel alright and the lab results are negative.

PRACTICES TO BE FOLLOWED BY RESIDENT/FAMILY MEMBERS OF A PERSON INFECTED BY CORONAVIRUS

  • When a family member is tested positive for COVID-19, it is important that all other family members also quarantine themselves for a period of 14 days even though there may not be any symptoms. If there are symptoms, immediately get yourself tested too.
  • Self-declare the condition to your EC/RWA so that you do not have any visitors during such a period.
  • Only one family member should help the infected person if the latter needs help.
  • Do not handle the used clothes of such a patient directly with your hands. Do not wash these in the washing machine along with clothes of other family members.
  • All items and surfaces touched by the infected person should be disinfected. This includes table, chairs, shelves, toilets, clothes, utensils, etc.
  • Separate personal care items like soaps, shampoo, towels. Do not use the same bathrooms, if possible.
  • In case of an emergency, call on the coronavirus helpline number in your city/state for the way forward.

MEASURES TO BE TAKEN ON OCCURRENCE OF CASE(S)

  • If residents/s show symptoms they should facilitate their testing, isolation and quarantine of contacts.
  • The resident/should inform their positive test result to EC/RWA so that information can be shared with all residents and staff to ensure prevention and sanitization practices are followed.
  • RWA will provide support and avoid stigmatization of COVID-19 affected individuals and families.
  • A risk assessment will be undertaken by the designated public health authority/personnel (or treating physician) and accordingly, further advice shall be made regarding the management of the case, his/her contacts, and the need for disinfection.
  • If a decision is taken for home quarantine of contacts/ home isolation of patients, RWA will facilitate those under home quarantine/home isolation to remain within their homes.
  • Duration of home quarantine is for 14 days from contact with a confirmed case (please see attached Home Quarantine Guidelines).
  • Installation & use of Aarogya Setu App by COVID-19 affected individuals and families.
  • Residents may help by giving provisions or any medical supply, to the family. Just leave it at their doorstep. Don’t enter the premises.
  • Quarantine is just physical isolation. Do keep in touch with the family by means of other mediums such as WhatsApp or phone calls.

Details Revised Covid-19 Quarantine Guidelines 

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)

How to reduce your Loan burden smartly?

How to reduce your Loan burden smartly?

www.carajput.com; Personal Loan

www.carajput.com; Company Strike off

As the name suggests, a top-up credit is advantageous to the applicant well above the previously existing debt. The tenure period for such advancement usually varies from 5 to 10 Yrs. Banks include borrowers who have a current home loan or personal loan with this kind of advance. Well, it is easy to use these loans, but banks have certain conditions for accepting this form of a loan. If your bank does not offer top-up loans, you can select a payment method with a lender that also provides a top-up loan. You need to be consistent for your current loan payments to get accepted for the same kind of top-up loans and you can do so with a unique amount of Equated Monthly Installments. For those that have current loans and are searching for monetary assistance at the same time, top-up loans are best. It will satisfy all of your criteria for personal and short-term business. It’s cheaper than most loans for corporate use.

Characteristic of a top-up loan

www.carajput.com; Top-up Loan

www.carajput.com; Top-up Loan

  • The credit amount authorized for your top-up loan will be decided by your pending home loan / personal loan.
  • Your debt experience plays a great part in your top-up loan acceptance for the current loan and your CIBIL.
  • Top-up loans are normally available at the same interest rate as you have your existing loan.
  • The duration can vary from five to ten years if it’s a home loan top-up, and if it’s a personal loan top-up, the duration can go up to two years.
  • Only if you have a current home loan or personal credit facilities from the same provider then you can qualify for a top-up loan.

Home loan tops are normally only given for housing construction, repair, purchasing, etc., while a personal loan top-up may be used for multiple criteria, including-

  • When you are searching for a short term finance solution for your business needs.
  • When you are searching for low-interest rates with long-duration resources.
  • To cover your wedding costs, holidays, etc.
  • When you need immediate funds to deal with your personal requirements.
  • A loan with limited paperwork is required.

Various factors and advantages of a top-up loan

  • It may be used for a number of professional or personal purposes.
  • The reasonable interest rate in comparison with other commercial loans.
  • The easy option for repayment.
  • Minimum paperwork and fast loan processing are expected as you already have an existing link with the lender they previously have your information.
  • Longer-term of loans

Way out of reducing your burden of loan efficiently 

www.carajput.com; Loan Burden

www.carajput.com; Loan Burden

Loans are, without a doubt, one of the most essential elements of life. Many of us have taken advantage of this to solve the financial crisis we face from time to time. Loans, however, may also prove to be a liability since they need to be repaid within a defined time period and with interest. With careful management, though, one can easily reduce the load pressure and lead a life that is essentially stress-free. Go through the write-up and learn for yourself some of the ways to smartly reduce your loan load.

1.Loan modification offers a great choice

Loan modification or the transfer of the balance will not only decrease interest but will also greatly minimize the loan burden. It implies that for a new loan that can be used by the same lender or some other one, one can pay off the current loan. In situations where the borrower has an existing loan that he has used at a high-interest rate, unwanted terms, etc., refinancing will prove to be beneficial because various lenders offer the same loan in improved conditions. The creditor would have to file for a balance transfer with the new lender and choose for a loan modification, who would refund the money back to the former leader, who will then close his loan account when accessing his new account with the new lender.

2. In order to minimize loans, existing resources should also be used

Borrowers may use bonds to redeem their debt against savings such as Public Provident Fund, life insurance premiums, etc. It is worth noting here that the Public Provident Fund requires the lender to take advantage of the loan from the investment’s third financial year, which will then be repaid over the next three years. Up to 25% of the balance can be the maximum amount that may be taken as a loan from the Public Provident Fund. The interest charged on loans is 2 percent more than the existing Public Provident Fund interest rate. If one accepts the above points, so there would be no shadow of evidence that he will be able to repay his loan amount without any trouble, every time and in his life, there will be nothing like the loan burden.

3.Anytime appropriate, opt for pre-payment or part-payment

Pre-payment and part-payment allow the borrower to pay off the balance of the loan and the interest before the deadline stated. The pre-payment of the loan reduces the remaining principal balance, which reduces the EMIs in exchange. But on the other side, there are times that the applicant has a surplus number. He will then take this option to pay in half for the home loan. The principal balance is decreased by these conditional installments on the home loan and the EMIs and interest paid on it are reduced. The financial pressure on the applicant is minimized by both non- and part-payments. At the very beginning, it is necessary to explain whether the lender provides pre- and part-payment facilities or not.

4.Choose for reasonable cost Equated Monthly Installment

www.carajput.com; EMI

www.carajput.com; EMI

If the lender fails to the repayment of the regular EMI, his credit score gets a beating that destroys his record and adversely affects his potential borrowing opportunities. Thus it is important for him to choose for a reasonable cost Equated Monthly Installment that can be quickly repaid. One should obtain the aid of the online EMI calculator to know about the EMI that he will have to spend on the loan he plans to take. This will allow the creditor to consider the Equated Monthly Installment he would have to spend and whether he would be able to afford it.

5.Rising the amount of repayment with a rise in your earnings

If you’re earning increases, then it is suggested that you should also raise your monthly EMI amount. Doing that will make sure that the loan is clear before the specific timeframe and that you are free to take care of more essential items in life. If one needs to clear more than one debt, so he can first aim to clear the highest interest debt. On the other side, if one has established credit card debt as well, then he can make it known that the first.

What is the Credit Utilization Ratio?

For each credit bureau, the procedure of determining the credit score is different, but basically, the variables remain the same. Your payment background is the most significant aspect that decides your credit score. A lower credit score will result from any defaults on your EMI and credit card payments. The Credit Utilization Ratio is the second most relevant aspect taken into consideration when determining the credit score. Let’s see what makes this ratio so important and how we can keep it under control—

How to calculate the credit utilization Ratios?

www.carajput.com; credit utilization Ratio

www.carajput.com; credit utilization Ratio

The credit utilization ratio is the ratio, as a proportion, of the total balance you used on your credit card and the overall credit balance you were given. In a way, this calculation indicates the amount of credit you use, hence the term, the calculation of credit utilization Ratio.

What is the perfect Credit Utilization Ratio? 

An optimal ratio of credit utilization will be Zero.  However, since not having a credit card is not ideal for your credit score, you need to use your credit card from time to time, which means that a credit utilization ratio of 0 is not feasible. It is also prudent to try to keep the credit utilization ratio as low as possible and to manage it. Anywhere below 30 percent is a good credit utilization ratio. If you use less than 30 percent of your credit cap, possible investors will deem you a prudent borrower.

How to get lower credit Utilization ration

It is no rocket science to decrease and retain your credit utilization ratio. You just have to take a close look at the new credit management plans and, appropriately, make the required adjustments. Here are a couple of guidelines to support you do it—

  1. Increase in credit card limit

www.carajput.com; Credit card limit

www.carajput.com; Credit card limit

This one is rational sufficient. If you expect the ratio to decline, raise the fraction denominator. Your credit usage ratio will decline immediately as you increase your credit cap. In order to get notifications on the changes or improvements available on your credit card, call your credit card company. Invite them to lift the credit cap. If you have got a pay increase lately, etc., you will use it to get a higher credit cap.

  1. Get multiple cards

It benefits you in several ways to have many credit cards, but it goes with a key difference that you must be very alert about them. Only because you can, do not engage in overspending. When you plan to have many credit cards, distribute your payments among them so that your credit usage percentage can be reduced. To retain a decent credit score, make sure you pay the dues on all credit cards on time. Bonus: you should synchronize the billing times in order to take full advantage of the credit card grace periods.

  1. Decrease the use of credit card

This is pure mathematics. If you want to decrease the ratio, lower the numerator. Decrease the amount of money you use on your credit card if you can. Try to control your payroll payments and just use your credit card when you really use it or only to keep it in use. For some time, at least, before your ratio increases and your credit score finally increases.

So, that now you understand why this ratio is an important element in your credit score estimation, make sure you measure your credit score.

Regards

Rajput Jain & Associates

Rajput Jain and Associates Blogs has been selected by https://www.feedspot.com/ as one of the Top 30 Indian Tax and Accounting Blogs on the web.

https://blog.feedspot.com/indian_tax_and_accounting_blogs/

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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)

TAX AUDIT CEILING U/S 44AB FROM RS 1 TO RS 5 CR APPLIES W.E.F AY 2020-21

TAX AUDIT CEILING U/S 44AB FROM RS 1 TO RS 5 CRORE APPLIES WITH EFFECT FROM AY 2020-21

www.carajput.com; Tax Audit

www.carajput.com; Tax Audit

There might be some uncertainty between specialists as to the assessment year from which the modification to raise the tax audit ceiling under section 44AB from Rs 1 crore to Rs 5 crore applies, i.e. whether the amendment means with effect from AY 2020-21 (for accounts for the financial year 2019-20) or from AY 2021-22 (The financial year 2020-21).

Pursuant to paragraph (a) of Section 44AB, as it stood before the Finance Act of 2020, any person engaged in the company was required to have audited accounts if the overall sales, turnover or total receipt in business exceeds Rs.1 crore. The Finance Act, 2020 raised this ceiling to receive audited accounts from Rs.1 crore to Rs.5 crore in those situations where the sum of all collections in cash during the year and the sum of all payments rendered in cash over the year does not cross 5 % of total receipts and total payments, respectively.

Who is a binding and required Compulsory Tax audit?

A taxpayer is expected to carry out a tax audit if revenue, turnover, or gross business receipts surpass Rs 1 in the financial year. However, under some other cases, a taxpayer might be forced to have their accounts audited. In the tables below, we have classified the different circumstances:

POINT TO BE NOTED: The requirement of Rs 1 crore for a tax audit is expected to be raised to Rs 5 crore with effect from AY 2020-21 (FY 2019-20) if the taxpayer’s cash receipts are restricted to 5 percent cent of the gross receipts or turnover and if the taxpayer’s cash payments are restricted to 5 percent of the aggregate payments. Below are different categories of taxpayers below:

www.carajput.com; Tax Audit Applicability

www.carajput.com; Tax Audit Applicability

Category of person Threshold
Business

 

www.carajput.com; Tax Audit Applicability

www.carajput.com; Tax Audit Applicability

Carrying on business (not opting for presumptive taxation scheme*) Total sales, turnover or gross receipts exceed Rs 1 crore in the FY
Carrying on business eligible for presumptive taxation under Section 44AE, 44BB or 44BBB Claims profits or gains lower than the prescribed limit under the presumptive taxation scheme
Carrying on business eligible for presumptive taxation under Section 44AD Observes taxable income below the limits specified by the presumptive taxation system and has income that exceeds the basic limit.
Carrying on business and is not eligible for presumptive taxation under Section 44AD by opting for presumptive taxation in any one financial year of the lock-in period, i.e. 5 consecutive years from the date on which the presumed taxation system was implemented. If the income reaches the permissible amount not to be paid for tax in the following five successive tax years from the financial year in which the assumption of tax was not introduced,
Carrying on business which is declaring profits as per presumptive taxation scheme under Section 44AD If the overall revenue, turnover, or gross receipts for the financial year do not exceed Rs 2 crore, the tax audit would not apply to such entities.
Profession

 

Who Carrying on the profession Total gross receipts exceed Rs 50 lakh in the FY
Who Carrying on the profession eligible for presumptive taxation under Section 44ADA 1. Claims for profit or gains below the permissible level under the presumptive taxation scheme

2. Profits increases the permissible sum not to be paid for taxation

www.carajput.com; Tax Audit Applicability

www.carajput.com; Tax Audit Applicability

Business loss

In case of loss from carrying on of business and not opting for a presumptive taxation scheme Total sales, turnover or gross receipts exceed Rs 1 crore
If the gross income of the taxpayer exceeds the basic threshold but has suffered a loss from carrying on a business (not opting for a presumptive taxation system) In case of loss from business when sales, turnover, or gross receipts exceed 1 crore, the taxpayer is subject to tax audit under 44AB
If continuing on business (opting a presumptive tax scheme under section 44AD) and making a business loss but with profits below the basic level In this Tax audit not apply
If going on business (presumed tax scheme under section 44AD applicable) and making a business loss but with profits above the basic threshold Declares taxable income far below limits specified by the presumed tax scheme and has income that exceeds the basic level.

It should be observed that there is no uncertainty in the amendment on this subject. It is explicitly mentioned in the amendment that it is valid from AY 2020-21 (FY 2019-20). In this regard, it is necessary to notice that the Memorandum of Understanding on the provisions of the Finance Bill 2020 and the Clauses Notes created as part of the Finance Bill 2020 clearly state that ‘These amendments will take effect from 1 April 2020 and will therefore apply in reference to the assessment year 2020-2021 and corresponding assessment years.’

As a result, the amendment made to section 44AB will apply from AY 2020-21 (Financial Year 2019-20) itself and no individual engaged in business will be allowed to obtain the accounts audited for FY 2019-20 if the revenue does not cross Rs 5 crore during that year given that the specified condition is met, i.e. the total of all cash receipts and the combination of all payments.

For effective from 01/04/2020, that is to say from the assessment year 2020-21, this requirement is changed as follows:

The threshold limit has been updated in order to increase it for an individual engaged in business from Rs . 1 crore to Rs . 5 crores if the following criteria are satisfied.

www.carajput.com; Thresshold limit for Business Assesse

www.carajput.com; Threshold limit for Business Assess

  • The sum of all receipts in cash in the preceding year shall not exceed 5 percent of such revenues.
  • The sum of all payments in cash during the previous year does not exceed 5 percent of all expenditures.

Through AY 20-21 the stated date shall be one month before the due date for the income tax return referred to Section 139(1). Thus, I inform you that the 44AB limit is still 1 crore (except as indicated above) and the 44AD limit is Rs . 2 crores. Also, there is NO Improvement IN FINANCE BILL 2020 in Section – 44AD, which deals with a special provision for calculating income and earnings of industry on a presumptive basis. ​

As a result of such an amendment, some strange situations could arise which CBDT should explain.

It should be noted that the modification of the increased threshold extends to any ‘person’ engaged in business and, thus, the value of the modification is available to all individuals, corporations, LLP, Firms, etc. engaged in business.

However, it should be explained that the amendment made is only applicable to an individual engaged in ’employment’ and thus an individual engaged in ‘profession’ would continue to be allowed to have audited accounts if the gross receipt in the profession exceeds Rs.50 lakh in the year.

Due to the planned amendment under the 2020 budget, the scenario is as follows:

– For assesse who have TO>2 crores (but less than 5 crores and have cash receipts and cash payments not exceeding 5 percent), they are NOT liable for a tax audit. This holds true regardless of whether the assessee shows income of up to 6 percent or 8 percent in 44AD or not.

– For assesse who have TO<2 crores (but have cash receipts and cash payments not exceeding 5 percent), they are liable for tax audit if they do not have an income of up to 6 percent or 8 percent as per 44AD.

Regards 

Rajput Jain & 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)