How to incorporate the company

Image result for company incorporationSteps for incorporating the company:-

  • The first step of getting a company incorporated is obtaining the approval of name from Registrar of Companies. A company may adopt any name which is not prohibited under the Emblems and Names (Prevention of Improper Use) Act, 1950.The government has launched a web service RUN (Reserve Unique Name) for reserving name of a proposed company. We can directly submit the application for reserving name online within few minutes (there is no requirement to download e-form like INC-1, and attaching DSC), has been launched for reserving name of new company or for change in name of existing company earlier there was INC-1 for reservation of name of new company or for change in name of existing company. Application form fee shall be Rs.1000/- per form for reservation of name by using RUN web-form.

                    APPROVED NAME IS VALID FOR A PERIOD OF:

20 days from the date of approval (in case name is being reserved for a new company) or

60 days from the date of approval (in case of change of name of an existing company)

  • The preparation of MOA is the next step in the incorporation of a company. It is the law of the company, which states its objects and scope and the company relation with outside world.
  • Other than MOA, the promoters will also prepare AOA of the company. It contains rules and regulations relating to the internal management of the company.

Following other documents are also prepared:

  • Taking consent from directors and filed it with ROC.
  • Promoters have to execute power of attorney in favor of one of them.
  • Form of DIN, PAN & TAN.
  • Form for first director.
  • Form for address of registered office.
  • At the time of registration, prescribed registration fees and filing fee for each document filed for registration are to be paid at the Registrar’s office.

Also we can incorporate company in India through the

 Simplified Performa for Incorporation Company Electronically (SPICE)

MCA will bring new specified procedures for incorporation of company under companies act, 2013. Ministry of corporate affairs introduces E- Form INC-32 by a notification under SPICE Scheme. SPICE means Simplified Performa for Incorporating Company Electronically.

The SPICE form will introduced to bring facility of preparing Electronic MOA & Electronic AOA. This facility is introduced first time in Indian history for incorporation of company. Now there is no need to prepare manual MOA & AOA.

Before of this SPICE form if any person want to incorporate any company then he has to apply by filing different form for DIN, PAN, TAN, approval of name availability, registered office address, first director form etc.

Now it is mandatory to file E-Form INC-32 for incorporation of company in India. If the company is Producer Company and having more than 7 subscribers then E-Form INC-7 have to be filled and if subscribers of Producer Company are less than 7 then it has to filed E-Form INC-32 for incorporation.

According to the notification given by MCA, companies who are incorporated by filing E-Form INC-32 then that company cannot incorporate by filing E-Form INC-7 on or after 29th December, 2016. So, it is compulsory to file E-Form INC-32 for incorporation of company from the date 29 December, 2016.

SPICE Form (INC-32) has following features:-

  • Maximum number of allowed subscribers is seven. If subscribers are more than seven then E-Form INC-7 is filled and normal incorporation procedures of E-Form INC-7 are applied.
  • Maximum twenty directors are allowed.
  • Maximum three directors are allowed for filing application for Director Identification Number.
  • In this form name of company can also be applied.
  • DSC of subscriber is affixed on the INC-33 (E-MOA) For automatically generating date of sign by the form.
  • Applying for PAN / TAN will be compulsory for all the company who are incorporated through SPICE form.

Following difficulties are faced while filing SPICE Form (INC-32):-

  • For foreign subscribers it is difficult to incorporate the company without violating the rule 13 of the companies’ rules, 2014.
  • If company name is approved already in E-Form INC-1 then whether company can apply for incorporation in E-Form INC-32 or not
  • If both the person doesn’t have DIN No. whether they can apply for the incorporation of Company. Or one person mandatorily requires having DIN for filing of this form
  • For incorporation of producer company this form is filled or not.
  • If any company want to incorporate through INC-7 then how the company can do so.

Following documents are attached with the SPICE E-Form (INC-32):-

  1. E-MOA & E-AOA required to be attached.
  2. INC-9 Affidavit and declaration by first subscriber and director (on duly authorized Stamp Papers).
  3. DIR-2 declaration from first Directors along with Copy of Proof of Identity and residential address.
  4. NOC from the owner of the property.
  5. Proof of Office address (Conveyance/ Lease deed/ Rent Agreement etc. along with rent receipts);
  6. Copy of the utility bills (not older than two months)
  7. Declaration from the director non acceptance of Deposit. (On duly authorized Stamp Papers).
  8. In case of subscribers/ Director does not have a DIN, it is compulsory to attach Proof of identity and residential address of the subscribers
  9. E- 49A and E-49B will be filed through MCA website (filed form will be generate by the SRN of INC-33 E-MOA).

Incorporate a new company in a progressive country like India and take following benefits:-

  • In country like India, you have complete ownership of your company.
  • You can also take exemption from taxes in startups companies if eligible.
  • For the foreign person one special benefit is he does not have to require physically present in India he can operate from outside the India except one time present at the time of incorporation.
  • For incorporation you have to open a bank account and you have benefit that ownership of bank account is your own company name.
  • In country like India, Privacy of your all operations is maintained.
  • Annual fees is nominal in India.
  • You have permission to be traded in foreign or can do international business easily.
  • You can purchase properties in India in your company name.
  • Even you can easily set up a operation of an international company.
  • For foreign people one more benefit is they can easily get the business visa for India residency.

You can get above benefits by incorporating your entity in a progressive country like India and also you can get extra benefits in setting up your corporate bank account easily through Rajput Jain& associates.

How Rajput Jain & associates offers services for helping you in formation of company in India it is a one step solution for you:-

  • Get the most comprehensive and perfect Company Formation advice.
  • Helping in set-up your branch company out from your Global entity structure easily.
  • Helping in getting your Commercial License and acquire your India residence visa
  • You can take advantage of Accounting & GST / Tax Consultancy & Advisory Services
  • Easily get Tax Agency Appointment
  • You can get easily perfect Financial Auditor for your existing company
  • You can get all the services before and after the incorporation of company.

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. The author is a Chartered Accountant and the Chief Gardener & Founder Director of Rajput Jain & Associates , a leading Tax & Investment Planning Advisory Service Provider. His blog can be found at https://carajput.com/blog/For any query you can write to info@carajput.com. 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)

CORPORATE AND PROFESSIONAL UPDATE AUG 22, 2016

Professional Update For the Day:

Untitled5

DIRECT TAX:

  • ITAT Chennai held that exemption U/s. 54F will be allowed despite of delayed investment in Capital Gain Account Scheme. The provisions of section 54F are beneficial provisions and are to be considered liberally in the aspect of limitation period [ ACIT vs. Smt. Umayal Annamalai].
  • Allahabad HC upholds penalty levy u/s 272A(2)(k) for assessee’s failure to furnish e-TDS quarterly statements within prescribed time for 5 years and also after issue of notice from the IT Department. Further notes that despite various show cause notices issued by AO, it was only before CIT(A) that assessee, for the first time, offered an explanation for such default, remarks that “that adequate opportunity had been granted to the appellant but the appellant failed to utilize the opportunities.[TS-445-HC-2016(ALL)]
  • CBDT issues Clarifications on Income Declaration Scheme, 2016. CBDT Circular No.29 of 2016 dated 18.08.16.
  • Deduction U/s 35AC available only up to the previous year ending 31-03-2017.
  • CBDT has issued a press release regarding the approval of Eligible Projects or Schemes under section 35AC of the Income Tax Act, 1961 dated 19/08/2016. Section 35AC of the Income Tax Act, as amended by the Finance Act, 2016, provides that no deduction under this section shall be allowed in respect of any assessment year commencing on or after 1st April, 2018.(Click here to view)
  • In the below citied case it was held that benefit of carry forward losses cannot be denied due to belated receipt of ITR-V acknowledgement-(Fibres & Fabrics International (P.) Ltd. v. Deputy Commissioner of Income-tax, Circle 11(3), Bangalore)

INDIRECT TAX:

  • Transfer of goods by way of hiring, leasing, licensing or in any such manner without transfer or right to use such goods is a “declared service” and hence liable to service tax.
  • Delhi High Court held that service Tax on manufacture of alcoholic liquor for human consumption on job work basis with effect from 1st June 2015 is Constitutionally Valid. ( Carlsberg India Private Limited Vs. Union Of India & Ors)
  • Airport runways aren’t roads, their repair and maintenance is liable to service tax. Commercial or industrial construction service was introduced as taxable service under the head “construction service” with effect from 10th September, 2004. The same service was renamed as “commercial or industrial construction service” with effect from 16th June, 2005. Though it refers to repair, alteration, renovation etc., but that does not include such services provided in respect of roads, airports, railways, transport terminal (P. Jain & Company Infrastructure (P.) Ltd. v. Union of India)
  • Refund denial business support service services received inside the port Held that – there is no dispute that the services are with reference to export of goods rendered inside the port, the claim cannot be denied on the ground that tax has been paid under different classification by the provider of service. The Board also clarified that there is no requirement of verification of registration certificate of the supplier of service refund allowed.(Natural Slate & Sandstone Exports Pvt. Ltd. Versus C.C.E., Jaipur I – 2016 (8) TMI 547 – CESTAT NEW DELHI – Service Tax
  • Disallowance made on account of survey charges – Tribunal deleted addition – Held that – We find that the impugned order of the Tribunal has deducted the disallowance on a finding of fact that the tax has already been offered on the same for the Assessment Year 1999-2000 on receiving it from the successful bidder.(The Commissioner of Income Tax-3 Versus Sicom Ltd). – 2016 (8) TMI 610 – BOMBAY HIGH COURT – Income Tax

FAQ ON GST

Start of GST regime

How will imports be taxed under GST?

Answer : The Additional Duty of Excise or CVD and the Special Additional Duty or SAD presently being levied on imports will be subsumed under GST. As per explanation to clause (1) of article 269A of the Constitution, IGST will be levied on all imports into the territory of India. Unlike in the present regime, the States where imported goods are consumed will now gain their share from this IGST paid on imported goods.

How will be Inter-State Transactions of Goods and Services be taxed under GST in terms of IGST method?

Answer: In case of inter-State transactions, the Centre would levy and collect the Integrated Goods and Services Tax (IGST) on all inter-State supplies of goods and services under Article 269A (1) of the Constitution. The IGST would roughly be equal to CGST plus SGST. The IGST mechanism has been designed to ensure seamless flow of input tax credit from one State to another. The inter-State seller would pay IGST on the sale of his goods to the Central Government after adjusting credit of IGST, CGST and SGST on his purchases (in that order). The exporting State will transfer to the Centre the credit of SGST used in payment of IGST. The importing dealer will claim credit of IGST while discharging his output tax liability (both CGST and SGST) in his own State. The Centre will transfer to the importing State the credit of IGST used in payment of SGST.Since GST is a destination-based tax, all SGST on the final product will ordinarily accrue to the consuming State.

FAQ ON COMPANY LAW:

 Query:   Whether independent director of a company could be appointed by the shareholders in general meeting under the Companies Act, 2013?

Answer:   Appointment of Independent Directors- In terms of paragraph IV of schedule IV of the Companies Act, 2013, appointment of independent directors has to be made by the Board of Directors and approval by the shareholders in general meeting

Query:  Can partly paid shares be issued by the way of preferential issue of shares as per Companies Act 2013?

Answer: The Companies (Share Capital and Debenture) Amendment Rules, 2016 have done away with the requirement of shares allotted under preferential allotment to be fully-paid up at the time of allotment. Accordingly, now partly-paid securities can be allotted by means of a preferential issue.

Query: In case of change in Registered office of LLP within state, whether we are required to file Form 3 as well?

Answer: Yes, you are required to file Form 3 in case of change in Registered office of LLP within state enclosing the copy of Supplementary LLP Agreement.

RBI UPDATE

  • SEBI has issued Frequently Asked Questions (FAQs) on SEBI (Alternative Investment Funds) Regulations, 2012.
  • Eminent economist and RBI Dy. Governor, Mr. Urjit Patel replaces Raghuram Rajan as RBI Governor.
  • SEBI has launched electronic mode for payment of penalties, disgorgement as well as settlement amounts.
  • SEBI vide Circular on mutual funds increased the additional exposure limits provided for housing finance companies (HFCs) in financial services sector from 5% to 10%.

Key Dates:

  • Issue of DVAT certificate for deduction made for the month of July-22/08/2016
  • Payment of ESI for the month of July-21/08/2016
  • E-Payment of DVAT & CST tax for the month of July-21/08/2016

The cost of leadership is self-interest.      -Simon Sinek

“Success has only one amazing formula, stop thinking in terms of limitations and start thinking in terms of possibilities.”

“You may only succeed if you desire succeeding; you may only fail if you do not mind failing.”

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Disclaimer:
All efforts are made to keep the content of this site correct and up-to-date. But, this site does not make any claim regarding the information provided on its pages as correct and up-to-date. The contents of this site cannot be treated or interpreted as a statement of law. In case, any loss or damage is caused to any person due to his/her treating or interpreting the contents of this site or any part thereof as correct, complete and up-to-date statement of law out of ignorance or otherwise, this site will not be liable in any manner whatsoever for such loss or damage.
The visitors may visit the web site of Government site Like Income Tax Department, Services Tax, Excise, Etc for resolving their doubts or for clarifications.

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RETURNS UNDER GOODS & SERVICES TAX :

RETURNS UNDER GST : EIGHT FORMS: GSTR-1 TO GSTR-8

Image result for rETURN UNDER gst

 GSTR-1

(Sales Register)

  • This is a sales register of goods and services
  • we can enter the details of sales and services there.
  • For each transaction it is important to classify the goods or services with his SAC or HSN code.
  • (Later on we will discuss abt SAC or HSN CODE)

 

 GSTR- 2

(Purchase Register)

  • This is a purchase register. Here we can enter the data of both purchase of service and goods.
  • In GSTR-2 the data of the goods purchase from register dealer including debit/credit note will automatically populated there as the respective dealers upload there sales register on due date. Due to this we can match our purchases against the sales register and the impact of this in current scenario where tax credit mismatch is hard to match and a time taking process, in GST there we will check our data as per seller return so mismatch issues will be solve easily
  • As well as here we will amend our purchase bill too as we received in earlier periods
  • Here a separate details information will be required for input service distributors
  • Due date of filling the return is 15th of the next month. But we can upload our data on daily, fortnight, weekly too. Soon the last date of return filing the workload should be lesser than before

 

GSTR-3

(Monthly Return Form)

  • In this GST return form maximum data of this return is auto populated from purchase and sales registers.  Only adjustment entries and challan information will enter after these entries
  • Here cash ledger (tax deposit in cash and TDS/ TCS) will made separately for CGST, SGST and IGST
  • Basically its looks like PLA register of Excise and Service tax

 

 GSTR-4

(Quarterly return for compounding dealers)

  • For those compounding dealers  assesses whose turnover is less than Rs. 50 lacs and there is no interstate transaction )
  • File return on and before 18th of the month after the quarter
  • In this return, data will be automatically populated after filing of GSTR-1

 GSTR-5

(Return file by the Non-Resident)

  • This will be a monthly return filed by the non –resident within 18th day after end of the month and within the 7 days after expiry of registration ( plz refer registration rule or will be shared with u later on)
  • In this return HSN/SAC code should be mention because these are classify the transaction as a sales and purchase of goods and services

  GSTR-6

(Return for Input Service Distributor)

  • This return will be filed by the Input Service Distributors within 15 days after end of the month
  • In this return form input service distribution ledger will be maintained. In this ledger credit of CGST, SGST, IGST  will maintain separately of each tax amount

GSTR-7

(TDS Return)

  • Tax deductor will be liable to file this TDS return within the 10 days after end of the month
  • This return form is almost similar to TDS return of income tax (26Q/24Q etc) as in this return deductee information and transaction information is mention with the related challan in which the TDS amount is paid to department

 GSTR-8

(Annual Return)

  • This return form will be filed on or before 31st December of the next financial year
  • In this return the total annual returns information will be matched by the department with the monthly /quarterly return filled by the assesse
  • In this return auditors information will submitted
  • In this return all the transaction will bifurcated within goods and services. This bifurcation should be match with the HSN/SAC code given by the assessee in his monthly/ quarterly return

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GST RATE IN COUNTRIES

ABOUT GST RATE IN DIFFERENT COUNTRIES:

Are-you-ready-for-GST-in-Malaysia-2The combined GST rate is being discussed by government. The rate is expected around 18% to 22%. After the Total GST Rate is arrived at, the States and the Centre will decide on the CGST and SGST rates.

GST Rates on Goods & Services  – to be based on Revenue Neutral Rate (RNR) There will be Four rates:

Merit rate for essential goods and services,

Standard rate for goods and services in general,

Special rate for precious metals, &

NIL rate

Current Rate of GST in some other countries are :

🏻Australia 10%,

🏻France 19.60%,

🏻Canada 5%,

🏻Germany 19%,

🏻Japan 8%,

🏻Singapore 7%,

🏻Sweden 25%,

🏻New Zealand 15% &

🏻Pakistan17%

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CORPORATE AND PROFESSIONAL UPDATE AUG 11, 2016

Professional Update For the Day:

1

DIRECT TAX:

  • Gujarat High Court held thatTDS u/s 194LA – The buildings do not form part of the agricultural lands or at any rate have not been shown to be in the nature of small farm houses or go downs for agricultural operations. The Tribunal therefore, committed an error in reversing the orders of the revenue authorities with respect to the applicability of section 194LA qua the compensation for the buildings –[Gujarat High Court in case of [CIT (TDS) Vs. Special Land Acquisition Officer]
  • Roads and boundaries, railway sidings, jetty pire, bouys, mooring and navigation structure can be considered as plant and machinery for the purpose of granting of depreciation under Sec. 32– [Gujarat High Court in case of [CIT Vs. Kandla Port Trust] ]

INDIRECT TAX:

  • CESTAT grants exemption benefit under Notification No. 21/2002-Cus on import of heavy duty crane cum pipe laying ship, notes that said Notification exempts goods required in connection with petroleum operations undertaken under petroleum exploration licenses or mining leases, as granted by the Govt. of India to ONGC or OIL on nomination basis[TS-305-CESTAT-2016-CUST]
  • CESTAT sets aside order which rejected service tax exemption under Notification 4/2004-ST to assessee for logistic services rendered to SEZ unit on the ground that services were not consumed within the Zone [TS-300-CESTAT-2016-ST]

COMPANY LAW:

MCA Update: Amendment in Incorporation Rules dated 27.07.2016. Ministry of Corporate Affairs has issued a notification dated 27th July, 2016 to amend Companies (Incorporation) Rules, 2016. Following are the major amendments mentioned in the Notification:

  1. Subscription Sheet of Incorporation: Now, the type written or printed particulars of the subscribers and witnesses shall be allowed as if it is written by the subscriber and witness so long as they appends his or her signature or thumb impression.
  2. Proofs of Subscribers* : In case the subscriber is already holding a valid DIN, and theparticulars provided therein have been updated as on the date of application, and the declaration to this effect is given in the application, the proof of identity and residence need not be attached.
  1. Form INC-10 is omitted.: Now, no need to attach Form INC-10 in Incorporation application.
  2. Publication of name by Company: Every company which has a website for conducting online business or otherwise, shall disclose/publish its name, address of its registered office, CIN, etc. on the landing/home page of the said website.
  3. Shifting of RO from One state to another:
  4. NOC from RBI to be attached with Form INC-23, in case Company is registered NBFC.
  5. In case of Listed Company, now no need to serve notice alongwith copy of application to SEBI.

Copy of notification can be accessed at below link:

http://www.mca.gov.in/Ministry/pdf/CompaniesThridAmendementRules_28072016.pdf

OTHER UPDATE  –

FDI IN NBFCS

  • Yesterday, the Cabinet approved liberalization of foreign investment norms for the non-banking finance companies (NBFCs), in yet another measure aimed at improving the ease of doing business.
  • At present, only investments in 18 specified NBFC activities are permitted under the automatic route.
  • Foreign investment (FDI) in all NBFC activities can now come under the automatic route provided they are regulated by any of the financial sector regulators.
  • Entities not regulated by any of the regulators will need approval from the Foreign Investment Promotion Board (FIPB).
  • The Cabinet also did away with minimum capital requirements, saying that such requirements are already imposed by regulators.

Key Dates:

  • Extension to 29.10.2016, of Last Date of filing of e-forms AOC-4 , AOC-4 XBRL, AOC-4 (CFS), & MGT-7. Circular No.08/2016 Dated 29.07.2016.
  • Public Servants Annual Assets Liabilities Return Filing due date extended to 31.12.2016
  • 15-08-16 is the last date for Issue of TDS certificates in form 16A for quarter ended 30-6-16 by all deductors.
  • Be honest when in trouble, be simple when in wealth, be polite when in authority and be silent when in anger.
  • “People Reach great heights in life only if they have great depth. The tallest building has the strongest foundation.”
  • Don’t find fault, find a remedy.     -Henry Ford

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CORPORATE AND PROFESSIONAL UPDATE Aug 10, 2016

Professional Update For the Day:

Untitled5

DIRECT TAX:

  • Gujarat High Court allows  Interest u/s 244A on principal claim of refund of tax – AO has not made out the case of delay in refund for any period attributable to the assessee disentitling for interest – officer has no escape from granting interest to the assessee in terms of section 244A(1)(a) of the Act .     [ Gujarat High Court in case of [Ajanta Manufacturing Limited Vs. DCIT]
  • Delhi High Court in the below citied case held that Section 80IA(2A): As the words “derived from” are absent, there is no requirement to prove “first degree nexus” of the receipts with the eligible business. All receipts of the undertaking are eligible for 100% deduction. (Pr. CIT vs. Bharat Sanchar Nigam Ltd (Delhi High Court)

Indirect Tax:

  • CESTAT NEW DELHI Held that – Central Excise Cenvat credit – availability – duty paid on various iron and steel items used for fabrication of capital goods – Held that – the issue stand covered by the recent decision of Hon ble High Court of Gujarat in the case of Mundra Ports & Special Economic Zone Ltd. vs. CCE & Cus 2015 (5) TMI 663 – GUJARAT HIGH COURT and by the precedent decision of same assessees case. Therefore, in any case, even if the said items are held to be used as supporting structures, the cenvat credit cannot be denied. (Commissioner of Central Excise Versus M/s. Monnet Ispat & Energy Ltd. – 2016 (8) TMI 349 – CESTAT NEW DELHI)

FAQ on Company Law:

  • Query:   We have a query regarding the regularization of Additional director in a Private Limited Company. We want to change designation of a person from additional director to Director Are we required to re appoint him as the  Director in the Annual General Meeting of the Company as he is suppose to retire in the ensuing Annual General Meeting or else. Please advise us that how can we change his designation from additional director to Director?

Answer:  You shall have to convene an Extra ordinary General meeting of the Company or you may regularize him in the ensuing Annual General Meeting also, for the purpose. Thereafter, you need to file Form DIR-12 and purpose selected should be “Change in Designation” and attach the copy of Resolution passed in the General Meeting of the Company with the Form.

OTHER UPDATE :

  • Co-operative bank is also a banking company; not liable to pay tax on NPA interest on accrual basis Principal Commissioner of Income-tax-5 v. Shri Mahila Sewa Sahakari Bank Ltd. [2016] 72 taxmann.com 117 (Gujarat)
  • Provision made by insurer for IBNR claims held as ascertained liability as it was made on basis of scientific method Deputy Commissioner of Income-tax, Circle-6, Kolkata v. National Insurance Co. Ltd. [2016] 72 taxmann.com 116 (Kolkata – Trib.)
Key Dates:
 ·         Extension to 29.10.2016, of Last Date of filing of e-forms AOC-4 , AOC-4 XBRL, AOC-4 (CFS), & MGT-7. Circular No.08/2016 Dated 29.07.2016.
·         Public Servants Annual Assets Liabilities Return Filing due date extended to 31.12.2016
·         15-08-16 is the last date for Issue of TDS certificates in form 16A for quarter ended 30-6-16 by all deductors.
·         Excise return in form ER-1 for NON SSI assessee for the month of July: 10/08/2016
·         Return by EOU in the ER-2 form for the month of July-10/08/2016
 Angry people are not always wise.           -Jane Austen
The road to success and the road to failure are almost exactly the same.

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THE GST BILL ADOPTED BY THE RAJYA SABHA & LOKE SABHA

THE GST BILL ADOPTED BY THE RAJYA SABHA & LOKE SABHA

 Capture

KEEPING GST RATE FIXED AT 18% AND BRINGING GST AS A FINANCIAL BILL AND NOT MONEY BILLS,

After a long period of histrionics and haggling, the Goods and Services tax(GST) bill was finally passed in the Rajya Sabha & Loke Sabha by amending the constitution which can be considered as a historic day in the Rajya Sabha and leter on in Loke Sabha. This would pave the way for the “one country, one tax” concept.

With all the parties pledging support except for the AIADMK, the Rajya Sabha has passed GST which is a constitutional amendment by taking in two thirds of majority. The amendments kept forward by the finance minister, Mr. Arun Jaitley were also taken into consideration. The bill shall now be sent back to the lower house for its approval.

This constitutional amendment of GST shall now enable both central and the state governments to levy the GST simultaneously,which shall subsume all the indirect taxes which are currently levied inclusive of service tax and excise duties. Rather than on production, it will now be levied on the basis of consumption.

The GST Bill amendments adopted by the Rajya Sabha last week were unanimously passed by the Lok Sabha on Monday 10 Aug 2016.

Two important components:

The GST will include 2 components in reference to the federal structure of our country: the State GST(SGST) and the Central GST(CGST).

The shift from various indirect taxes to the GST Regime will now lead to a seamless and a uniform market across India. GST will boost (increase) growth rates,check evasion and will bring into force a uniform rate said the Finance Minister Mr. Arun Jaitley while he initiated the debate.

Mr. Chidambaram, the lead speaker of the Congress party made it very clear that main opposition party shall support long pending GST Bill on the condition that the government would give an assurance on 2 important things: Keeping the GST rate fixed at 18% in the ongoing subsequent legislation for roll-out of GST and bringing GST as a financial bill and not money bills, to which the Rajya Sabha will vote on and not just discuss.

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Impact of GST on Real Estate Industries of INDIA

What is the impact of GST on real estate industries of INDIA?

gstThe introduction of GST would enhance attractions of other countries towards India as the investment destination through encouraging easier operations and higher transparency especially in property deals. In short term basis, the warehousing segment and industrial property shall be the most beneficial sectors of GST Adoption. However nothing can be firmly said if adoption of GST system will definitely bring the prices down in residential and commercial segments as sales of immovable property on which stamp duty continues to apply is outside the ambit of GST.

POSITIVE- IMPACT OF GST ON WAREHOUSING AND INDUSTRIAL PROPERTY

As said earlier, in short run, the warehousing and industrial property sector shall be the prime beneficiary of Adoption of GST. The decision of establishing a warehouse shall no longer be on the base of tax arbitrage. It will be based on achievement of solving the optimal logistics. This will reduce the number of octroi checkpoints leading to considerable reduction in transportation time. Further, the Logistics companies shall look forward to establish large warehouses located on transit corridors.

We can therefore see the development of spoke and hub system in the warehousing, the spokes being on feeder lines and hubs on the transit corridors. We thus are expecting the nation to become a massive large market by cost of products being brought down. Further, the recent Modi government initiatives like 100% FDI in e-commerce sector and “Make in India” shall also boost the warehousing and manufacturing sector. Various international players like E-bay and Amazon have entered Indian markets already and have started to occupy large spaces in warehouses to gain their share in the E-commerce industry.

Neutral- Impact of GST on commercial property

Commercial leasing makes up for the larger portion of commercial property business in our country. Currently, commercial property leasing is considered as a service under finance act,1994 and is thus is taxed as per service tax. The service tax being applicable at 15%. After the introduction of GST, it is assumed that this treatment shall remain unchanged and commercial property leasing will be subject to GST. The negative or the positive impact is primarily dependable on the GST rate which is applicable. Moreover, adding to this is the ambiguity about availability of GST tax credit which is paid on the procurement of services and goods during the phase of construction.

Neutral- Impact of GST on residential property

The impact of GST on the residential property sectors cannot be decided precisely as it is too early to comment. We have briefly analysed the effects of GST on 3 types of transactions of residential property, being, residential property leasing, sale of property which is under construction and sale of immovable property which is completed:

  1. Residential property leasing is currently not subject to service tax. This treatment is more likely to remain unchanged under GST Regime too.
  2. Sale of property which is under construction shall be covered under GST Regime. However, in present times it looks like there wouldn’t be much difference besides the fact being all forms of indirect taxes shall be clubbed under one single heading. Some benefit can be expected only if GST tax credit will be made available for developers for GST paid on services and goods.
  3. The sale of immovable property which is completed will in no way be impacted by GST as these transactions are outside the ambit of GST. On these transactions, stamp duty shall be made payable.

To conclude it, we can expect the GST to increase(boost) the overall demand on real estate, especially on warehousing and industrial sector, due to impact on economy being positive overall. From the perspective of cost, more precision is required on various transactions on the applicability of GST tax credits. The developers must be able to get overall credit for various taxes paid on inputs if proper application of mechanism of credit utilisation is made. This will eventually lead to reduce the overall cost.

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CORPORATE AND PROFESSIONAL UPDATE AUG 9, 2016

Direct Tax:

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Kolkata ITAT allows assessee’s (cooperative bank) appeal against levy of penalty u/s 271FA for delay in furnishing annual information return (‘AIR’) u/s 285BA, accepts assessee’s “bonafide ignorance” of relevant provisions as sufficient cause for non-compliance.[TS-425-ITAT- 2016(Kol)]

Delhi High Court in the below citied case held that The payment made by the Petitioner to Steria France for the managerial services provided by the latter cannot be taxed as fee for technical services and are not liable to withholding of tax u/s 195.( Steria (India) Ltd. Vs. CIT & Anr.)

Fee charged by Finance Co. for collecting EMI from bank customers would be considered for sec. 36(viii) deduction. [Gruh Finance Ltd. v. Assistant Commissioner Income-tax, Circle-4, Ahmedabad]

No disallowance of ITC for mere technical defect in VAT invoice.[M/s Avdesh Tracks Private Limited vs. The State of Punjab and another (Punjab & Haryana High Court)]

NCLT has issued order to prescribed Rs. 200/- per inspection as the fee for inspection for the records as provided under Rule 114 of the NCLT Rules,2016

Only when a corresponding liability arises on the ONGC to pay up the accrued amount, the income will become taxable. [Deep Industries Limited vs Assistant Commissioner of  Income Tax, Circle-1-2016(8)TMI 225 – Gujarat High Court]

The assessee is eligible for the claim of depreciation u/s 32(1)(ii) on the amount of intangible assets acquired by it as per Business Transfer Agreement. [Grindwell Norton Ltd. vs Addl. CIT 1 (1) , Mumbai and Vice-Versa – 2016 (8) TMI 222 – ITAT MUMBAI]

 IT: MAT computation – deferred revenue expenditure is nothing but a window dressing and the authority should not be mislead or guided by the balance sheet which is prepared to satisfy the shareholders. It is the P&L a/c prepared on the basis of the books of accounts as contemplated in Part-II of Schedule-VI which should form and assist to find out what is the profit earned and on that profit tax is levied – CIT & Anr Vs. Karnataka Soaps & Detergents Ltd. (Supreme Court of India)

ITAT Chennai in the below citied case held that the mere sale of few pieces of lands here and there, now and then, irrespective of their value, as long as the said assets/lands did not lose the basic character of agricultural lands, does not constitute business activity for the assessee. (The DCIT, Corporate Circle 6 (1), Chennai Vs. Shri S. Amar Narayana Reddy)

Gujarat High court in the below cited case held that the Tribunal has rightly decide that the assessee is entitled for deduction under Section 801A of the Income Tax Act, 1961 without deducting the amount of subsidy given by the Government to the farmers and accordingly allowed the claim of the assessee .(CIT, Ahmedabad Vs. Kishan Discretionary Family Trust)

Indirect Tax:

Punjab and Haryana High Court held that no disallowance of ITC for mere technical defect in VAT invoice.( M/s Avdesh Tracks Private Limited vs. The State of Punjab and another

ST: Erection Commissioning or Installation Services – receipt of labour charges for installation and commissioning of GRP Pipes for various customers – The pipes that the respondent / assessee had to lay were not plant machinery or equipment – demand was rightly set aside – Addn.C.C.E. Vs. M/s Strategic Engineering Pvt. Ltd. (Madras High Court).

DVAT prescribes Delhi Sugam-2 (DS2) to be produced at check-post or barrier for bringing the goods in Delhi – Notification No.F.7(433)/Policy-II/VAT/2012/PF/1259-70, dt.08 JAN 2016.

DVAT specifies Conditions for downloading Central Statutory forms online – Notification No.F.3(556)/Policy/VAT/2015/1271-82, dt.08 JAN 2016.

Transportation services up to customer’s premises eligible for credit if transfer of title takes place therein-(Commissioner of Central Excise, Service Tax, Bengaluru-IV v. Ultra Tech Cement Ltd.)

Delhi HC sets aside order passed by Jt. Secretary to Govt. of India rejecting assessee’s revision application u/s 129DD of Customs Act, absent valid signature. It Rejected Revenue’s submission that it is consistent practice of Dept. of Revenue that only draft orders are signed by Adjudicating Authority and on that basis, certified copies of final orders are issued to parties and that the word ‘draft’ is mere appendage. [TS-299-HC-2016(DEL)-CUST]

Melting and converting old batteries into lead plates amounts to manufacture under UP VAT.( Shyam Behari Lal Keserwani v. Commissioner, U.P. Trade Tax, Lucknow)-[2016] 72  42 (Allahabad)

Normal mining exp. couldn’t be disallowed just because assessee was engaged in illegal mining.(Obulapuram Mining Company (P.) Ltd.hj v Deputy Commissioner of Income-tax, Central Circle-1 (3), Bangalore)

GST

ICAI releases BGM on Model GST Law- Order online https://goo.gl/NxX2n5 and download soft copy from www.idtc.icai.org

ICAI Updates:-

ICAI invites comments on any aspect of exposure draft of IND AS 102, share based payments, issued by the Accounting Board of the Institute of Chartered Accountants of India dated on 4/8/2016.

RBI Updates:-

RBI launched new website named “sachet” on Thursday, where information regarding entities that are allowed to accept deposits, lodge complaints, and share information regarding illegal acceptance of deposits by unscrupulous entities can be obtained.

SEBI clarified that in case an eligible seller does not receive the tender/offer form, he can participate in the delisting by providing the application in writing on plain paper, signed by the eligible seller, by introducing the issue in the FAQs on SEBI (Delisiting Of Equity Shares) Regulations, 2009

Key Dates:

  • Income tax department extends ITR-V verification deadline till 31 JAN 2016.
  • 10.08.16 is last date to file ER-1,2 & 6 for Excise returns by Non SSI assesses, EOUs,& by units paying duty of more than 1Cr respectively, for July 2016.
  • Excise return in form ER-1 for NON SSI assessee for the month of July: 10/08/2016
  • Return by EOU in the ER-2 form for the month of July-10/08/2016
  • Public Servants Annual Assets Liabilities Return Filing due date extended to 31.12.2016
  • 15-08-16 is the last date for Issue of TDS certificates in form 16A for quarter ended 30-6-16 by all deductors.

The road to success and the road to failure are almost exactly the same.

Why we have so many temples when god is everywhere? An intelligent man said air is everywhere, but we still need a fan to feel it.

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CORPORATE AND PROFESSIONAL UPDATE AUG 5, 2016

CORPORATE AND PROFESSIONAL UPDATE AUG 5, 2016

date-extended

Professional Update For the Day:

DIRECT TAX:

  • Assessee having eligible industry and availing deduction under section 80-IB, will not be entitled for same in respect of income from DEPB and DEPB Premium.
  • Personal property of directors can’t be used to recover import duty payable by company: HC
  • Income Tax:  MAT – computation of the book profit under explanation to section 115JA – the question of increasing the net profit by the amount of lease equalization charge would not arise, the same being not in the nature of a reserve – Gujarat High Court in case of [PCIT Vadodara Vs. Sun Pharmaceutical Industries Ltd]
  • ITAT: Applies Sec. 50C to builder’s land-transfer; Cites long-term holding intention to earn appreciation [TS-415-ITAT-2016(Mum)]
  • SC: Reverses Bombay HC, restores reassessment notice absent proof of bad-debts write-off [TS-410-SC-2016]

INDIRECT TAX:

  • Constitution (122nd) Amendment Bill, 2014 enabling levy of GST by Central Govt. as well as State Govts. is finally passed by Rajya Sabha with 100% in favour of the same. Now it shall go back to Lok Sabha to approve the amendments made by Rajya Sabha. Thereafter it shall be ratified by at least 16 States before being presented to the Hon’ble President for his assent.
  • Order passed by DG allowing confidentiality of documents couldn’t be subject matter of appeal: CCI.
  • No service tax could be levied if there was a transfer of right to use goods irrespective of the fact that the transfer was non-exclusive.
  • CESTAT Bangalore in the below citied case set aside the penalty imposed, due to delay in payment of service tax, by the revisionary authority since the service tax along with interest has been paid voluntarily by the appellant.( S-Mac Security Services Pvt. Ltd. Vs. Commissioner of Service Tax)

Company Law:

  • Extension of last date of filing Form AOC-4, AOC-4 XBRL, AOC-4 CFS & MGT-7 under the Companies Act, 2013.
  • MCA issues The Companies (Accounts) Amendment Rules, 2016. MCA Notification dated 27.07.2016.
  • MCA releases Companies (Incorporation) Third Amendment Rules, 2016. MCA Notification dated 27.07.2016.

OTHER UPDATE :

  • New RBI norms rule out banking licences for big corporates.
  • Result of IPCC announced is Ist group – 9.18%, IInd group – 7.06%, both group – 4.78%.Congratulations to all passed out students
Key Dates:
 ·  Filing of ITR returns by Individuals, HUF (Without Audit): 05/08/2016
·  Filing of ITR returns by Firms, AOP, BOI (Without audit): 05/08/2016
·   E-Payment of Service Tax for July by Companies: 06/08/2016
· Extension of last date of filing of Income tax  returns for the FY 2015-2016 (AY 2016-17) from31.07.2016 to 05.08.2016. For J&K assessees last date is 31.08.2016.
·  Extension to 29.10.2016, of Last Date of filing of e-forms AOC-4 , AOC-4 XBRL, AOC-4 (CFS), & MGT-7. Circular No.08/2016 Dated 29.07.2016.
·  Public Servants Annual Assets Liabilities Return Filing due date extended to 31.12.2016
·  15-08-16 is the last date for Issue of TDS certificates in form 16A for quarter ended 30-6-16 by all deductors.

“Watch your thoughts, they become words. Watch your words, they become actions. Watch your actions, they become habits. Watch your habits, they become character. Watch your character, it becomes your destiny.”

” Zindagi to apne dum par hi ji jati hai, dusron ke kandhon par to sirf janaaze utha karte hain!”

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