FREQUENTLY ASKED QUESTIONS

DIRECT TAX
DOMESTIC TAXATION

As per the FEMA Act,

An Indian Citizen who stays abroad for - (a) employment/ carrying on business or (b) vacation outside India or (c) stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad is a non-resident. Persons posted in U.N. organizations and officials deputed abroad by Central/ State Government and Public Sector Undertakings on temporary assignments are also treated as non-resident.

As per the Income Tax Act,

An individual is Non-Resident Individual, if any of the following conditions are not satisfied:

  • He stayed in India for 182 days or more during the previous year, or
  • He stayed in India for 365 days or more during the four preceding years and stays in India for at least 60 days (182 days in case of an Indian citizen or a person of Indian Origin coming on a visit to India or in case of an Indian citizen going abroad for employment) during the previous year.

Section 14 of the Income-tax Act has classified the income of a taxpayer under five different heads of income, viz.:

  • Salaries.
  • Income from house property.
  • Profits and gains of business or profession.
  • Capital gains.
  • Income from other sources.

The following chart highlights the tax incidence in the case of different persons:

  Nature of income

  Residential status
   ROR(*)  RNOR(**)

 NR(***)

  Income which accrues or arises in India

  Taxable  Taxable

 Taxable

  Income which is deemed to accrue or arise in India

  Taxable  Taxable

 Taxable

  Income which is received in India

  Taxable  Taxable

 Taxable

Income which is deemed to be received in India;

  Taxable  Taxable

 Taxable

  Income accruing outside India from a business controlled from India or from a profession set up in India

  Taxable  Taxable

 Not Taxable

  Income other than above (i.e., income which has no relation with India)

  Taxable  Not Taxable

 Not Taxable


*      Resident and ordinarily resident.

**    Resident and not ordinarily resident.

***  Non-resident.


If you are not satisfied with the order passed by your Assessing Officer, then you can file an appeal to the appellate authority. The first appellate authority is the Commissioner (Appeals). Subsequently, the matter can be taken to the Income-tax Appellate Tribunal, then to the High Court and finally to the Supreme Court.

Alternatively, instead of going for the appeal mechanism, you can make an application for revision to the jurisdictional Commissioner of Income-tax.


In the Finance Act, 2020, the Dividend Distribution Tax (DDT) on dividend was abolished, making dividend payment taxable in the hands of the recipient effective from AY 2021-22.


  • A payee can approach to the payer for non-deduction of tax at source but for that they have to furnish a declaration in Form No. 15G/15H, as the case may be, to the payer to the effect that the tax on his estimated total income of the previous year after including the income on which tax is to be deducted will be nil.

           Form No. 15G is for the individual or a person (other than company or firm) and Form No. 15H is for the senior citizens.

  • Section 197 of the Income Tax Act, 1961, allows the taxpayer to receive benefit of Nil or Lower tax rate deduction on the receipts, if he have Nil or Lower TDS certificate. In order to apply for the certificate, one need to submit Form 13 to the assessing officer along with supporting information/documents.

Income Tax Return is the form in which assessee files information about his/her Income and tax thereon to Income Tax Department.

Benefit of filing ITR -

Filing of return is your duty and earns for you the dignity of consciously contributing to the development of the nation. Apart from this, your income-tax returns validate your credit worthiness before financial institutions and make it possible for you to access many financial benefits such as bank credits, etc.??
 

Due dates for filing of Income Tax Returns -

 Sl.No.

   Category

  Due Date

   1.

   Individuals, HUF, BOI, AOP and Firm (If no audit required under the Income Tax Act or any other Act)

  31st July of the relevant assessment year.

   2.

   Company, Taxpayers whose accounts are needed to be audited under Income Tax Act or any other Act and Working partner of the firm, whose books are needed to be Audited.

  31th October of the relevant assessment year.

   3.

   Assessee, who have to file report containing international transactions or specified domestic transactions under section 92E

  30th November of the relevant assessment year.


NOTE:

  • You must file your return before the due date, if you have incurred a loss in the financial year and if you want to carry forward it to the subsequent year for adjustment against subsequent years’ positive income.
     
  •  Filing of income tax returns is mandatory for all the firms and companies irrespective of profit or loss; while persons other than companies and firms are required to file their income tax returns only when their income exceeds the basic exemption limit. Even when the advance taxes have been paid, the same need to be reported to the Department through Income-tax return filing procedure.

Section 285BB of the Income-tax Act, 1961, requires the assessee to upload in the registered account an annual information statement in Form 26AS containing the following information:

  • Information relating to tax deducted or collected at source.
  • Information relating to payment of taxes.
  • Information relating to specified financial transaction.
  • Information relating to pending proceedings.
  • Information relating to demand and refund.
  • Information relating to completed proceedings.

Section 44AB of the Income Tax Act, 1961 deals with the Audit of the Accounts of certain category of persons carrying on a business or engaged in a profession. The class of taxpayers listed under this section compulsorily have to get their accounts audited by a Chartered Accountant. Simply put, this audit required as per Section 44AB of the Income Tax Act, 1961 is called as tax audit.

The audit under section 44AB aims to ascertain the compliance of various provisions of the Income-tax Law and the fulfilment of other requirements of the Income-tax Law.

The outcome of the audit is an audit report. This report is drawn by the Chartered Accountant where he or she gives his findings and observations about the compliance of the person under audit.

The report of tax audit is to be given by the Chartered Accountant in Form Nos. 3CA/3CB and certify the details mentioned in Form 3CD.

To whom is it applicable?

  Sl No

   Category

  Criteria

  1.

 PROFESSION
  • Gross receipts are more than INR 50 lakhs in a financial year.
  • If Carrying a profession eligible for presumptive taxation (Section 44ADA) and you have claimed that your profits were lower than the stipulated limit.

 

 

  2.

   BUSINESS
  • Turnover or Gross receipts are more than INR 1 crore, where the cash receipts or payments during the year are more than 5% of total receipts or payments respectively.
  • Turnover or Gross receipts are more than INR 10 Crore, where the cash receipts & payments during the year are not more than 5% of total receipts & payments respectively.
  • If you are running a business which is eligible for presumptive taxation (Section 44AE, 44BB or 44BBB) and you claim that profits or gains are lower than the stipulated limit.


Due dates for filing of Tax Audit Report:

  Sl No

   Category

  Due Date

  1.

   Taxpayers who need to get their accounts audited undersection 44AB but not required to file report containing international transaction or specified domestic transaction u/s 92E

  30th September of the relevant assessment year.

  2.

   Taxpayers who need to get their accounts audited undersection 44AB and also required to file report containing international transaction or specified domestic transaction u/s 92E

  30th October of the relevant assessment year.

 


An assessee, being an individual resident in India, whose total income does not exceed INR 5,00,000 [five lakh rupees], shall be entitled to a deduction, from the amount of income-tax on his total income, of an amount equal to hundred per cent of such income-tax or an amount of INR 12,500 [twelve thousand and five hundred], whichever is less.


 Section

   Basic conditions to claim exemption

 Eligible Person

  54

  The assesse is required to invest the capital gains from the transfer of residential house property in another residential house property

  Individual/HUF

  54B

  Exemption is Allowed provided the Assessee has  Capital Gains on transfer of Agricultural Land and has invested such a capital gain in the purchase of another Agricultural land

  Individual/HUF

  54D

  The Assessee  is required to invest the  Capital Gains on Compulsory Acquisition of Industrial Undertaking on the acquisition of  land/building for re-establishment of  industrial undertaking

  All Persons

  54EC

  The Assessee having long term Capital Gains on transfer of any long term Capital Asset (being land or building or both w.e.f A.Y. 2019-20) invests such a capital gain in a specified bond within a period of 6 months from the date of sale then a maximum of Rs. 50 lakhs is exempt.

  All Persons

  54F

  Exemption is Allowed provided the Assessee has Long Term Capital Gains on transfer of any Capital Asset except Residential House and invests such capital gain or part of it in the purchase or construction of another residential house property

  Individual/HUF

 


  Particulars

   Section 44AD

  Section 44ADA

  Eligible Assessee

   Resident Individual, HUF or partnership firm engaged in eligible business

  Resident individual, HUF or partnership firm engaged in specified profession

  Eligible Business or Profession

  Any business whose total turnover or gross receipts is =< INR 200 lakhs in the relevant previous year except the following businesses:

  1. Business of plying, hiring or leasing of goods carriages
  2. Agency Business
  A person who is earning income in the nature of commission or brokerage

  Any profession specified under section 44AA, whose gross receipts is =

  Presumptive Income

  8% of total turnover /sales /gross receipts or a sum higher than the aforesaid sum claimed to have been earned by the assessee.

  6% of total turnover /sales /gross receipts in respect of the amount of turnover/sales/ gross receipts received by account payee cheque/ bank draft/ECS through bank account or through such other prescribed electronic modes during the P.Y. in respect of that P.Y. or a sum higher than the aforesaid sum claimed to have been earned by the assessee.

  50% of the gross receipts of such profession or a sum higher than the aforesaid sum claimed to have been earned by the assessee.

 


Advance tax means advance payment of Income Tax instead of paying a lump sum tax after completion of the previous year. It is known as “pay as you earn tax”.

It is applicable only if total tax liability of the person exceeds INR 10,000 in a previous year. It is not applicable to senior citizen of age 60 years or more & not having income from business or profession.

The taxpayer has to make these payments in instalments as per the due dates provided in the Income Tax Act.

Due dates for Advance tax:

  • Following are the advance tax due dates for corporate taxpayers and tax payers who have not opted for presumptive taxation:
     

      Advance Tax Due Date

      Advance Income Tax Instalment Amount

      On or before 15th June

      15% of advance tax liability

      On or before 15th September

      45% of advance tax liability less advance tax already paid

      On or before 15th   December

      75% of advance tax liability less advance tax already paid

      On or before 15th March

      100% of advance tax liability less advance tax already paid

Note: In case if the assessee is in the receipt of any of the following cash flows, then such an assessee can make the payment of tax in the subsequent advance tax instalments without any charge of interest under section 234C of the Income Tax Act:

  • The amount of capital gain; or
  • Income of the nature referred to in sub-section (1) of section 115BBDA; or
  • Income under the head “Profits and gains of business or profession” in cases where the income accrues or arises under the said head for the first time; or
  • Income of the nature referred to in sub-clause (ix) of clause (24) of section 2;
     
  • For taxpayers who opted for presumptive taxation scheme u/s 44AD, 44ADA etc., of the Income Tax Act, the following is the advance tax payment due date:
     

      Advance Tax Due Date

      Advance Income Tax Instalment Amount

      On or before 15th March

      100% of advance tax liability less advance tax already paid

Note: Anytax paidafter 15th of March and on or before 31st day of March shall also be treated as advance tax paid during the year.


An exempt income is not charged to tax, i.e., Income-tax Law specifically grants exemption from tax to such income. Incomes which are chargeable to tax are called as taxable incomes.


The exact taxes payable on income can be finalized only on completion of the previous year. However, to enable a regular flow of funds and for easing the process of collection of taxes, Income-Tax Act has provisions for payment of taxes in advance during the year of earning itself or before completion of previous year. It is also known as “pay as you earn concept”. The balance taxes after taxes paid during the previous year, can be paid on or before filing of return of income.

Taxes are collected by the Government through the following means:

  • Voluntary payment by taxpayers such as Advance tax, Self-Assessment tax, etc.
  • Taxes deducted at source.
  • Taxes collected at source.
  • Equalization Levy.
INTERNATIONAL TAXATION

FORM 15CA -

Any payments made by a resident to a non-resident has to be reported under the Income Tax Act. The idea behind deduction of the taxes at source and their subsequent reporting is to ensure that taxes are collected on time. Form 15CA is a declaration made by the person remitting the money wherein he states that he has deducted the tax from any payments so made to the non-resident.

FORM 15CB -

Form 15CB is certificate issued by a Chartered Accountant ensuring that the provisions of the Double Taxation Avoidance Agreement and the Income Tax Act have been complied with in respect of tax deductions while making the payments. 

NOTE -

  • If the amount of remittance is not chargeable to tax, then no forms are required.
  • If the remittance is covered under a specified exemption list, then only Part D of the Form 15CA is to be submitted.
  • Where remittance is less than Rs. 5 lakhs in a particular financial year – Only Form 15CA – Part A to be submitted.
  • Where remittance exceeds Rs. 5 lakhs – Form 15CA – Part C and Form 15CB to be submitted.
  • Where remittance exceeds Rs. 5 lakhs and a certificate under Section 195(2)/195 (3)/197 of the Income Tax has been obtained – Form 15CA – Part B to be submitted.

Advance Pricing Agreement -

An APA is an agreement between a tax payer and tax authority determining the transfer pricing methodology for pricing the tax payer’s international transactions for future years. The methodology is to be applied for a certain period of time based on the fulfilment of certain terms and conditions (called critical assumptions).

Different types of APA -

An APA can be unilateral, bilateral, or multilateral.

 • Unilateral APA - an APA that involves only the tax payer and the tax authority of the country where the tax payer is located.

• Bilateral APA (BAPA) - an APA that involves the tax payer, associated enterprise (AE) of the tax payer in the foreign country, tax authority of the country where the tax payer is located, and the foreign tax authority.

 • Multilateral APA (MAPA) -  an APA that involves the tax payer, two or more AEs of the tax payer in different foreign countries, tax authority of the country where the tax payer is located, and the tax authorities of AEs.

Safe Harbour Rules -

It is a provision of the Income Tax Act that specifies that from the perspective of Transfer Pricing (TP) provisions, if the assessee fulfils certain defined circumstances, the Income Tax authorities shall accept the TP declared by the taxpayer.

In other words, it refers to the circumstances under which the Income Tax authorities shall accept the transfer price declared by the assessee and the same shall be without any question or scrutiny.


Penalty for failure to furnish report under section 92E. —If any person fails to furnish a report from an accountant as required by section 92E, the Assessing Officer may direct that such person shall pay, by way of penalty, a sum of INR 1,00,000.


In case of failure to maintain and keep any information and documents as required under section 92D (1) or section 92D (2), the Assessing Officer of the Commissioner (Appeals) being the directing authority may impose a penalty of an amount equal to 2% of the value of each international or specified domestic transaction.


Secondary adjustment means an adjustment in the books of account of the assessee and its associated enterprise to reflect that the actual allocation of profits between the assessee and its associated enterprise are consistent with the transfer price determined as a result of primary adjustment, thereby removing the imbalance between cash account and actual profit of the assessee.


Equalization Levy was introduced with the intention of taxing the digital transactions i.e. the income accruing to foreign e-commerce companies from India. It is aimed at taxing business to business transactions.

Applicability of Equalization Levy -

Equalization Levy is a direct tax, which is withheld at the time of payment by the service recipient. The two conditions to be met to be liable to equalisation levy:

  • The payment should be made to a non-resident service provider;
  • The annual payment made to one service provider exceeds Rs. 1,00,000 in one financial year.

Services Covered Under Equalisation Levy -

Currently, not all services are covered under the ambit of equalisation Levy.

The following services covered:

  • Online advertisement
  • Any provision for digital advertising space or facilities/ service for the purpose of online advertisement

As and when any other services are notified will be included with the aforesaid services.


Tax Residency Certificate is a document that proves residency in a particular country and substantiates it under a treaty between countries. The TRC should be obtained from the country of residence. A certificate issued by the foreign country would be sufficient as proof of tax residency.

Mandatory details to be mentioned in the TRC:

  • Name of the assessee.
  • Status (individual, company, firm etc.) of the assessee.
  • Nationality of the assessee.
  • Assesses tax identification number in the country or specified territory of residence or in case no such number, then a unique number on the basis of which the person is identified by the Government of that country or the specified territory.
  • Period for which the residential status as mentioned in TRC is applicable.
  • Address of the applicant (outside India) for the period for which TRC is applicable.

A TRC containing the above details should be duly verified by the Government of the Country or the Specified Territory of which the NRI claims to be a resident for tax purposes.

The procedure for obtaining TRC is explained below:

How to obtain a TRC:

A NRI may approach the appropriate Income Tax or Government Authorities of the country where he/she resides to obtain a TRC. NRI may check with a Chartered Accountant for the detailed procedure to obtain TRC.

An Indian resident may make an application for TRC in Form 10FA to the Income Tax Department. Subsequently on verification of details furnished, the Income Tax Department will issue a TRC to the Indian resident in Form 10FB.

Validity of TRC:

A TRC is typically valid for one financial year and no other document in lieu of TRC is considered for availing DTAA benefits. Therefore, it is mandatory to submit TRC every year in order to avail DTAA benefit without any hassles.


The foreign tax credit is a non-refundable tax credit for income taxes paid to a foreign government as a result of foreign income tax withholdings. The foreign tax credit is available to anyone who either works in a foreign country or has investment income from a foreign source.

Generally, only income, war profits, and  excess profits taxes qualify for the credit. The credit can be used by individuals, estates, or trusts to reduce their income tax liability. ? In addition, taxpayers can carry unused amounts to future tax years, up to ten years.

Types of foreign tax credits:

  1. Unilateral relief
  2. Bilateral relief

Unilateral relief -

Section 91 of the Income Tax Act, 1961 provides for unilateral relief against double taxation. According to the provisions of this section, an individual can be relieved of being taxed twice by the government, irrespective of whether there is a DTAA between India and the foreign country or not. However, there are certain conditions that have to be satisfied in order to be eligible for unilateral relief.

These conditions are:

  • The individual or corporation should have been a resident of India in the previous year.
  • The income should have been accrued to the taxpayer and received by them outside India in the previous year.
  • The income should have been taxed both in India and in the country with which there is no DTAA.
  • The individual or corporation should have paid tax in that foreign country.

Bilateral relief -

Bilateral relief is covered under section 90 of the Income Tax Act, 1961. It offers protection from double taxation through a DTAA. This type of relief is offered in two different ways.

  1. Exemption method: The exemption method offers full and complete protection from being taxed twice. That is, if an income earned outside India has been taxed in the relevant foreign country, it is not subject to tax in India.
  2. Tax Credit method: According to this method, the individual or the corporation can claim a tax credit (deduction) for the taxes paid outside India. This tax credit can be utilized to set-off the tax payable in India, thereby reducing the assesses overall tax liability.

Note:

  • In case there is DTAA with the Country, then Tax Relief can be claimed under section 90.
  • In case there is DTAA with the Specified Associations, then Tax Relief can be claimed under section 90A.

The Double Tax Avoidance Agreement (DTAA) is a tax treaty signed between two or more countries to help taxpayers avoid paying double taxes on the same income. A DTAA becomes applicable in cases where an individual is a resident of one nation, but earns income in another.

DTAAs can be either be comprehensive, encapsulating all income sources, or limited to certain areas, which means taxing of income from shipping, inheritance, air transport, etc. India presently has DTAA with 80+ countries, with plans to sign such treaties with more countries in the years to come.

Advantage - The intent behind a DTAA is to make a country appear as an attractive investment destination by providing relief on dual taxation. This form of relief is provided by exempting income earned in a foreign country from tax in the resident nation or offering credit to the extent taxes have been paid abroad.

A NRI can avail benefits under DTAA by timely submission of documents listed below to the payer of income:

  • Tax Residency Certificate (TRC) obtained from Government of home country.
  • Self-attested copy of Passport and Visa.
  • Indemnity-cum-declaration (in case of Banks).
  • OCI card (if applicable).
  • Self-attested copy of PAN Card (if available).

International taxation is the study or determination of tax on a person or business subject to the tax laws of different countries, or the international aspects of an individual country's tax laws as the case may be.

International taxation in a simple language means the study of Taxation beyond the National Level. Though we all are very much aware about our Indian Taxation Laws but as time is demanding something more, so there is a need to study the taxation at international level.

GENERAL
FCRA

  • Annual return is to be submitted online at fcraonline.nic.in in prescribed Form FC-4, duly accompanied by balance sheet and statement of receipt and payment, which is certified by a Chartered Accountant.
  • Submission of a ‘NIL’ return, even if there is no receipt/utilization of foreign contribution during the year, is also mandatory.

No; However, in terms of Rules of FCRA, 2011, any person receiving foreign contribution in excess of one lakh rupees or equivalent thereto in a financial year from any of his relatives shall inform the Central Government in Form FC-1 within thirty days from the date of receipt of such contribution.


No. Foreign Contribution received by registered entities shall not be utilized for speculative purposes. Speculative activities defined in Rule 4 of FCRA, 2011 includes any activity or investment that has an element of risk of appreciation or depreciation of the original investment, linked to market forces, including investment in mutual funds or in shares.

In view of above definition NGO’s Cannot invest in securities out of foreign contributions.


No, Only FCRA is applicable to foreign contributions received by NGO.


Yes, Association should not incur more than 20 percent of the foreign contribution received in a financial year to meet administrative expenses. However more than 20 percent of such foreign contribution may be incurred with prior approval of the Central Government.


Foreign Company means any company or association or body of individuals incorporated outside India and includes:

  • A foreign company within the meaning of section 591 of the Companies Act, 1956.
  • Company which is a subsidiary of a foreign company.
  • The registered office or principal place of business of a foreign company.
  • Multi-national corporation.

  • Every per seeking registration under the Act shall mandatorily open its FC designated bank account with SBI, Main Branch, New Delhi.
  • The person seeking registration has option to open one “Another FCRA Account” and one “Utilisation Account” in any PFMS compliant scheduled bank.

In terms of FCRA, 2010 "person" includes ?

  • an individual;
  • a Hindu undivided family;
  • an association;
  • a company registered under section 25 of the Companies Act,1956 (now Section 8 of Companies Act, 2013).

As defined in Section 3(1) of FCRA, 2010, the following are prohibited to receive foreign contribution:

  • candidate for election;
  • correspondent, columnist, cartoonist, editor, owner, printer or publisher of a registered newspaper;
  • Public Servant, Judge, Government servant or employee of any corporation or any other body controlled or owned by the Government;
  • member of any legislature;
  • political party or office bearer thereof;
  • organization of a political nature as may be specified under sub-section (1) of Section 5 by the Central Government.
  • association or company engaged in the production or broadcast of audio news or audio visual news or current affairs programmes through any electronic mode, or any other electronic form as defined in clause (r) of sub-section (1) of Section 2 of the Information Technology Act, 2000 or any other mode of mass communication.
  • correspondent or columnist, cartoonist, editor, owner of the association or company referred above.
  • Individuals or associations who have been prohibited from receiving foreign contribution.

  • The new FCRA 2010 has limited the validity of the registration certificate for a period of 5 years.
  • As per the provisions application for renewal of certificate of registration shall be made to Central Government in electronic form in form FC-3C six months before the expiry for their existing registration

The online application form FC-3 (A) for registration / FC-3 (B) for prior permission are to be submitted at the website - fcraonline.nic.in.


  • Any person, if it is not registered with the Central Government, can accept foreign contribution only after obtaining the prior permission of the Central Government.
  • Prior permission is granted for receipt of a specific amount from specific donor/donors for carrying out specific activities/projects.

  • An association should be registered under an existing statute like the Societies Registration Act, 1860 or the Indian Trusts Act, 1882 or under Section 8 (erstwhile Section 25) of the Companies Act, 2013 etc;
  • An association normally be in existence for at least 3 years and has undertaken reasonable activity in its chosen field for the benefit of the society for which the foreign contribution is proposed to be utilized.
  • An association should have spent at least Rs.15,00,000/- over the last 3 years on its aims and objects, excluding administrative expenditure.
  • Statements of Income & Expenditure, duly audited by CA, for last 3 years are to be submitted to substantiate that it meets the financial parameter.

Any amount received, by any person from any foreign source towards cost in lieu of goods or services rendered by such person in the ordinary course of his business, trade or commerce whether within India or outside India cannot treated as foreign contribution.


Foreign contribution means the donation, delivery or transfer made by any foreign source -

  • of any article, not being an article given to a person as a gift for his personal use, if the market value, in India, of such article, on the date of such gift is not more than such sum as may be specified from time to time by the Central Government by the rules made by it in this behalf.
  • of any currency, whether Indian or foreign.
  • of any security as defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 and includes any foreign security as defined in clause (o) of Section 2 of the Foreign Exchange Management Act,1999.
STPI

Once registered with STPI, the Non-STP units shall submit quarterly report and annual reports to respective STPI centres as per the prescribed format.


A common monthly Softex in the form of Excel summary sheet as prescribed by RBI can befiled for all invoices raised in a month. The Softex is required to be filed within 30 daysfrom the date of last invoice raised in that month.


Yes, operations as NON-STP unit can be carried out from any location in the country.

However, registration has to be made with the respective jurisdictional STPI Centre.


Software Export Declaration (Softex) Form is a form used for declaration of Software Exports through data-communication links and receipt of Royalty on the Software Packages/Products exported.


  • Any company who does IT/ITES exports through Data communication links needs to submit the Softex Form for certification.
  • For getting the Softex certification by STPI (which is the Designated Authority), the companies have to become STP members by either registering under STP scheme or as NON-STP unit with STP.
EPF

PF Form 12A monthly report that provides the details of the PF Payments made to the respective PF Accounts of the Employees during the given month.


  • UAN stands for Universal Account Number to be allotted by EPFO.
  • The idea is to link multiple Member Identification Numbers (Member Id) allotted to a single member under single Universal Account Number.
  • This will help the member to view details of all the Member Identification Numbers (Member Id) linked to it.
  •  If a member is already allotted Universal Account Number (UAN) then he / she is required to provide the same on joining new establishment to enable the employer to in-turn mark the new allotted Member Identification Number (Member Id) to the already allotted Universal Identification Number (UAN).

A registered establishment continues to be under the purview of the Act, even if the employee strength falls below the required minimum.


PF Registration is mandatory for all the establishments that has engaged 20 or more than 20 people.

ESI

Every employer who is covered under this act is required to comply with various compliances like the deposit of monthly contribution, to file the half-yearly return and report to the ESIC authorities if there are any changes in the business activity, the address, ownership and the management, the maintenance of registers and records etc.


It is a 17-digit unique identification number allotted to each of the factory/establishment registered under the provisions of the Act. Such a number is generated through ESIC portal on submission of the pertinent information by the employer. It can also be generated on receipt of Survey Report from the Social Security Officer.


The ESI scheme is applicable to all factories and other establishments as defined in the Act with 10 or more persons employed in such establishment and the beneficiaries’ monthly wage does not exceed Rs 21,000 are covered under the scheme.

TRADE LICENSE & TRADE MARK

A trademark can be any word, phrase, symbol, design, or a combination of these things that identifies your goods or services. It’s how customers recognize you in the marketplace and distinguish you from your competitors.

A trademark:

  • Identifies the source of your goods or services.
  • Provides legal protection for your brand.
  • Helps you guard against counterfeiting and fraud.

GHMC has recently simplified the list of documents required for obtaining a trade license in Hyderabad. Now, the following documents are sufficient to obtain Hyderabad Trade License -

  • Aadhaar Card – Individual.
  • PAN or Incorporation Certificate – Business.
  • Lease Deed or Legal Occupancy.

The trade license check is done by the municipal corporation in the respective state government, where the business will have its registered office and also where the operations will be carried out.


Eligibility for a Trade license is -

  • The applicant must have crossed the age of 18 years.
  • The applicant must not have any criminal records.
  • Business must be legally permissible.

  • Industries license - small, medium and large scale manufacturing factories.
  • Shop license - This license is required for anyone who wants to open a shop. The shop can be of any retail type.
  • Food establishment license -  Restaurants, hotels, food stall, canteen, the sale of meat & vegetables, bakeries etc.

A trade license is a document/certificate that gives the permission to the applicant (person seeking to open a business) to commence a particular trade or business in a particular area/location. However, the license does not allow the holder to any other trade or business than for it is issued. Furthermore, this license does not pass on any kind of property ownership to the holder of the license.

SOCIETY

Society registration can be done online on Stamp Department of Telangana official website.


  • As per the Societies Registration Act, 2001 a minimum of 7 persons who have attained the age of 18 years can form a society in Telangana.
  • Society should contain a minimum of 3 executive committee members.

  • Society or association is an organized group of people with an aim and objective of non-profitable service.
  • As per the provision of Telangana Societies Registration Act, 2001, society can be registered in the office of the Registrar in which district the society is intended to be established.
FEMA

The BO /PO of a foreign entity, excluding a Liaison Office, are permitted to acquire property for their own use and to carry out permitted/incidental activities but not for leasing or renting out the property. However, entities from specified countries require prior approval of the RBI to acquire immovable property in India for a BO/PO. BO's/LO's/PO's have general permission to carry out permitted/ incidental activities from leased property subject to the lease period not exceeding five years.


Filing of Form 15CB is mandatory only when the remittance or the aggregate of such remittances exceeds 5 lakh rupees during the Financial Year (i.e., When Part C of 15CA is required to be filed).


The major accounts that can be opened are -

  • Non-Resident External (NRE) Accounts.
  • Non- Resident Ordinary (NRO) Accounts.
  • Foreign Currency Non-Resident (FCNR) Account.

An NRO Account refers to the accounts opened by a Non-Resident Indian (NRI) or a Person of Indian Origin (PIO) with a bank or financial institution which is authorised by the Reserve Bank of India (RBI), to provide various services.


This form must be filed by the shareholder resident outside India or resident Indian when they transfer the shares of the Indian company from a resident to non-resident Indian or vice versa. The form FC- TRS (Foreign Currency Transfer) is submitted along with the Form FC- GPR to the authorized dealer bank, who in turn submits to the RBI.


The Indian company that receives foreign investment and allots shares against such investment should file such allotment with the RBI. The company must provide details of allotment in the Form FC- GPR (Foreign Currency – Gross Provisional Return) within 30 days of allotment to the RB.


An Indian company that receives investment outside India for the issue of shares or other eligible securities under the FDI scheme must report all the details of the amount of consideration to the concerned Regional Office of the Reserve Bank of India through its AD category I bank within 30 days from the date of issue of shares.


The annual return on Foreign Liabilities and Assets (FLA) is required to be submitted directly by all the Indian companies which have received FDI (foreign direct investment) and/or made FDI abroad (i.e. overseas investment) in the previous year(s) including the current year i.e. who holds foreign Assets or Liabilities in their Balance Sheets.


An Indian Party (IP) / Resident Individual (RI) which has made an Overseas Direct Investment (ODI) has to submit an Annual Performance Report (APR) in Form ODI Part II to the Reserve Bank by 31th December every year in respect of each Joint Venture (JV) / Wholly Owned Subsidiary (WOS) outside India.


  • The amount representing the full export value of goods /software/ services exported shall be realised and repatriated to India within nine months from the date of export
  • However, where the goods are exported to a warehouse established outside India with the permission of the Reserve Bank, the amount representing the full export value of goods exported shall be paid to the authorised dealer as soon as it is realised and in any case within fifteen months from the date of shipment of goods
  • Further the Reserve Bank, or subject to the directions issued by that Bank in this behalf, the authorised dealer may, for a sufficient and reasonable cause, extend the period of nine months or fifteen months, as the case may be.

  • An export declaration is a type of form submitted at the port, providing details about the goods that are bound for export. The export declaration is required each time goods are exported to a country outside the EU, and the document is used by the customs authority to control exports.
  • After verification and authentication of the declaration form, the Commissioner of Customs shall forward the original declaration form/data to the nearest office of the Reserve Bank.

  • Authorized person means an authorized dealer, money changer, off-shore banking unit, or any other person authorized under section 10 (1) to deal in foreign exchange and foreign securities
  • For being registered as an " Authorized Person” necessary application along with relevant documents has to be furnished to Reserve Bank.
  • An " Authorized Person" is also, not given a free hand to deal in foreign Exchange. He has to furnish details and information, to Reserve Bank from time to time as may be required by it.

No, Citizenship is not relevant for determining residential status under FEMA.


"Person resident in India" means -

(i)  A person residing in India for more than one hundred and eighty eighty-two days during the course of the preceding financial year but does not include -

  • A person who has gone out of India or who stays outside India, in either case -
  1. for or on taking up employment outside India, or
  2. for carrying on outside India a business or vocation outside India, or
  3. for any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period.
  • A person who has come to or stays in India, in either case, otherwise than -
  1. for or on taking up employment in India, or
  2. for carrying on in India a business or vocation in India, or
  3. for any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period.

 (ii)  Any person or body corporate registered or incorporated in India,

(iii)  An office, branch or agency in India owned or controlled by a person resident     outside India.

 (iv)  An office, branch or agency outside India owned or controlled by a person resident in India.

INDIRECT TAXES
GOODS & SERVICES TAX

  • All registered persons having the same Permanent Account Number (PAN) have to opt for composition scheme. If a registered person opts for the normal scheme, others become ineligible for the composition scheme.

  • Refund of the unutilized input tax credit is not allowed in cases where the goods exported out of India are subjected to export duty - as per the second proviso to Section 54(3) of CGST/SGST Act.

  • GST Composition Scheme is an option available to a registered taxpayer who needs to inform the tax authorities of his intention to be registered under the scheme.
  • In case the registered taxpayer fails to comply with the same he would be treated a normal tax payer and administered accordingly.
  • The threshold for composition scheme is Rs.150 Lakhs of aggregate turnover in the preceding financial year. The benefit of the composition scheme can be availed up to the turnover of Rs.150 Lakhs in the current financial year.

  • Composite supply is a supply consisting of two or more taxable supplies of goods or services or both or any combination thereof, which are bundled in a natural course and are supplied in conjunction with each other in the ordinary course of business and where one of which is a principal supply.
  • Mixed supply is a combination of more than one individual supplies of goods or services or any combination thereof made in conjunction with each other for a single price, which can ordinarily be supplied separately.
  • For example, Construction of a new building is a classic example of Composite Supply as it includes a combination of Materials like bricks, cement, sand along with services of Labourers, engineers etc., in construction of a building.
  • For example, The Advertisement contains a bucket free for purchase of 5 kg Detergent and it is a classic example of Mixed Supply as the bucket can be sold even as a single one and not in a combination.

  • When having a glance on Imports, Imports of Goods and Services will be treated as Inter-State supplies and IGST will be levied on Imports of Goods and Services into the Country.
  • Generally, Exports are Zero rated supplies under GST which means that there shall not be taxed.
  • We can pay tax on Exports according to the Domestic Rates under GST and we can claim the Refund of the tax that we have paid.
  • The Exporter will have an option to either pay tax on the output and claim refund of IGST or export under bond without payment of IGST and claim a refund of Input Tax Credit (ITC).

The Payment of Tax is in an Electric mode with a common ‘Challan’ for all the Taxes under three different modes of Payment:

  • Internet Banking including Credit card/Debit cards
  • Payment through RTGS/NEFT
  • Over the Counter Payments (for Payments up to INR 10000/- per Tax period) in Cash cheque or Demand Draft(DD).

A Registered Supplier supplying Taxable Goods or Services shall issue at the time of Supply, a tax invoice showing complete details of Transaction viz., Name, Address and GSTIN of the Supplier, Name, Address and GSTIN of Buyer/Service Recipient, Date of Invoice, Value of Goods or Service, Description of Goods and Services, HSN Classification, Rate of CGST, Value of Goods or Service, Description of Goods or service, HSN Classification, rate of CGST, SGST or IGST, Tax amount, Signature of Taxpayer, etc.


  • Cross Utilization of Credit of CGST between Goods and Services would be allowed.
  • Similarly, Cross utilization of Credit of SGST also available.
  • However, the Cross Utilization of CGST and SGST would not be allowed except in case of Inter State Supply of Goods and Services.

  • Under the erstwhile regime, Taxpayers were separately registered with the state and/or with the Central Tax Administrations (or) with both based on their business Activity.
  • In GST regime, a taxpayer is required to obtain State-wise single Registration.
  • Even within a state, the Taxpayer has an option to obtain multiple registrations for different business, if required.

  • Each Taxpayer is allotted a state-wise (PAN) based 15 digit Goods and Services Taxpayer Identification Number (GSTN).
  • A new applicant can apply for registration on the common portal without Prior enrolment.

  • Every person registered under GST will have to file returns in some form or other.
  • A registered person will have to file returns either monthly (normal supplier) or quarterly basis (Supplier opting for composition scheme).
  • An ISD will have to file monthly returns showing details of credit distributed during the particular month.
  • A person required to deduct tax (TDS) and persons required to collect tax (TCS) will also have to file monthly returns showing the amount deducted/collected and other specified details.
  • A non-resident taxable person will also have to file returns for the period of activity undertaken.

Input Tax Credit means the credit of input tax on the supplies of goods or services or both received by a registered person.Following four conditions are to be satisfied by the registered taxable person for obtaining ITC:

  • he is in possession of tax invoice or debit note or such other tax paying documents (such as bill of entry or any other document prescribed under the Customs Act, ISD invoice as prescribed in Rule 36(1) of the CGST Rules).
  • he has received the goods or services or both;
  • the supplier has actually paid the tax charged in respect of the supply to the government; and
  • he has furnished the return under section 39.

For Example, a person named as Sowmya, received goods and services both from her supplier and also received the Tax Invoice relating to the Payment for Goods and Services received but Supplier here hasn’t paid the tax charged in respect of supply and also not furnished the return. And hence 2 conditions aren’t satisfied in the above 4 conditions and hence ITC can’t be claimed.


  • As per Section 22 of the CGST/SGST Act 2017, every supplier (including his agent) who makes a taxable supply i.e. supply of goods and / or services which are leviable to tax under GST law, and his aggregate turnover in a financial year exceeds the threshold limit of twenty lakh rupees shall be liable to register himself in the State or the Union territory of Delhi or Puducherry from where he makes the taxable supply.
  • In case of eleven special category states (as mentioned in Art. 279 A (4) (g) of the Constitution of India), this threshold limit for registration liability is ten lakh rupees.

  • Goods/sectors that are out of the GST ambit include alcohol and specified petroleum products i.e. petroleum crude, high speed diesel, motor spirit, aviation turbine fuel and natural gas.
  • Petroleum products are likely to be inducted into GST at a later date.
  • Taxes such as stamp duty, toll tax, road tax, electricity duty etc. are not part of GST.
CUSTOMS

Customs uses the following:

  • The Assessed Value which is issued on the Customs Classification and Valuation Report (CCVR),
  • The National Tariff which specifies the taxes applicable to each item in the Tariff,
  • The Rates of Duty per each tax Type
  • Other charges as are spelt out in the Tariff.

  • The Special Valuation Branch (SVB) is a special unit within the Indian Customs department which specializes in investigating the valuation of the transactions between ‘related persons’, as defined under Rule 2 (2) of CVR.
  • Specific customs officials are posted to this department of customs who carry out the investigation and evaluate whether the intercompany prices of goods are influenced due to the relationship between the parties, with the intention to reduce the Customs Duty liability or not.

  • Custom Duties are calculated on the ‘assessable value’ of the goods as per Section 14 of the Customs Act, which is the ‘transaction value’ agreed between the supplier and the importer subject to certain inclusions (such as freight, insurance etc.,) in the transaction value if not already included and subject to the condition that the buyer and seller are not related. 
  • In case the buyer and seller of the goods are related, the value is to be determined as per Customs Valuation (Determination of value of Imported Goods) Rules, 2007 (‘CVR’) framed in this regard.

 


  • Seizure means the item has been placed under and pending investigation, the provision of additional information etc.
  • Forfeiture means the item has been taken over completely by the State without the option of it being returned to the owner.

  • Custom House Agents are not Employees of GRA (Customs).
  • They are in commercial business and also facilitate the clearance for importers and exporters of goods.
  • That is why you have to pay them for the services they give in clearing your goods for you.

The Persons of Indian Origin (British Passport Holder) coming to India are eligible to a free allowance of Rs.12000/-


  • The Customs Duty will always be arrived through CIF value.
  • In case of Actual Insurance and Freight are not available then the Customs Act provides for levy of a notional freight and Insurance.

To import goods through Indian custom we require Importers Original Passport, Original bill of lading (Signed on Reverse), Inventory of articles (Please mention Value, Make, Model, Serial number & Year of purchase for electronic & high value goods) Other forms like Transfer of Residence Forms, Unaccompanied baggage forms, Declaration, Authorisation letter etc. will be provided by us - for your signatures.


Customs duty and cess as applicable + IGST+ GST compensation cess. IGST and GST compensation cess shall be paid after adding all customs duty and customs cess to the value of imports.

CORPORATE LAW

As per Section 2(41) of the CA, 2013, “financial year” in relation to any company or body corporate, means the period ending on the 31st day of March every year, and where it has been incorporated on or after the 1st day of January of a year, the period ending on the 31st day of March of the following year, in respect whereof financial statement of the Company or body corporate is made up.

For Example:

If a company is incorporated before 1st January of a year,then the financial year shall start from the date of incorporation and end on 31st day of March every year;

If a company is incorporated after 1st January of a year then the financial year, shall start from the date of incorporation and end on 31st day March of the following year.


Yes, as per Section 101(1) of the CA, 2013, AGM can be convened after giving a shorter notice, subject to consent in writing or in electronic mode is received from 95% of the members entitled to vote thereat.


As per Section 96 of the Co. Act, 2013, the first AGM of a company should be held within a period 9 months from the end of close of financial year. Example – If a company’s financial year commences on 1st April and ends on 31st March, the first AGM of the company shall be held latest by 31 December of that year.


Sec 185 of the Co. Act, 2013 restricts loans to Directors including private limited companies. However, as per the notification dated 6th June 2015, a private company may grant loan to its directors’ subject to fulfilment of all of the following conditions:

• No body-corporate has invested in the share capital of the company;

• Borrowings from banks/financial institutions/any other body corporate is less than twice the paid-up share capital of the company or fifty crores rupees whichever is lower; and

• There is no subsisting default in repayment of existing borrowings at the time of the transaction.


Yes, the shareholders of the Company may by passing an ordinary resolution in general meeting remove a director, but after giving a reasonable opportunity of being heard pursuant to Section 169 of the Co. Act, 2013. A special notice would be required for passing such resolution. Once the shareholders remove a director from the Board, the Board of Directors cannot reappoint him.


As per the provisions of Section 152 of the Companies Act, 2013, an individual holding a valid DIN and not disqualified from being appointed as Director under Section 164 of the CA, 2013, is eligible to be appointed as Director. He shall give his consent to act as a director in writing along with the disclosure of his interest and a declaration that he is not disqualified to become a director under Co. Act, 2013.


DIN is a unique identification number issued to an intending director by the DIN cell of Ministry of Corporate Affairs (“MCA”). An individual should hold a DIN before being appointed as a director in any Company.


As per Section 40 of the Companies Act, 2013, it is mandatory for companies to make an application to one or more recognised stock exchange or exchanges and obtain permission for the securities to be dealt with in such stock exchange or exchanges before making a public offer.


Any foreign company can establish its place of business in India by filing e-Form FC-1 (Information to be filed by foreign company).

Note: The e-Form needs to be digitally signed by authorized representative of the foreign company. There is no need to apply and obtain DIN for Directors of a foreign company. However, it is mandatory to register the DSC of the authorized representative of the foreign company via associate DSC service available at MCA portal.


Yes, a company is required to pass a special resolution for altering its MOA except for the alteration of capital clause of memorandum which could be altered by passing an ordinary resolution.


As per Companies (Incorporation) Fifth Amendment Rules, 2016, all companies except Part I companies and a company having more than 7 subscribers/promoters are required to follow the SPICe process for incorporation with effect from 1st January 2017.


SPICe refers to “Simplified Proforma for Incorporating Company Electronically”. It is a simplified integrated process for incorporating a company in Form No. INC-32 along with e-Memorandum of Association in Form No. INC-33 and e-Articles of Association in Form No. INC-34. It has been introduced by the MCA.


Incorporating a company through Simplified Proforma for Incorporating Company electronically (SPICe)(INC-32), with e-MOA (INC-33) and e-AOA (INC-34), is the default option and most companies are required to be incorporated through SPICe only.

AUDIT & ASSURANCE

As per Secretarial Standard 2, the notice in writing of every general meeting shall be given to every member of the company. Such notice shall also be given to the Directors and Auditors of the company, to the Secretarial Auditor, to Debenture Trustees, if any.


Only a member of the Institute of Company Secretaries of India holding a certificate of practice (Company Secretary in practice) can conduct a Secretarial Audit and furnish the Secretarial Audit Report to the company. [Section 204(1) of CA, 2013]. The Secretarial Audit Report should be signed by the Secretarial Auditor who has been engaged by the company to conduct the Secretarial Audit and in case of a firm of Company Secretaries, by the partner under whose supervision the Secretarial Audit was conducted.


As per Section 140 (1) of the Co Act, 2013 and Rule 7 of Companies (Audit and Auditors) Rules, 2014, a company may remove its auditor before the expiry of the term by obtaining prior approval of the Central Government and passing a special resolution in general meeting.


Yes,if appointment of auditor is not ratified in the Annual General Meeting, then it will be considered as casual vacancy.


As per Rule-7 Explanation: If the appointment is not ratified by the members of the company, The Board of Directors shall appoint another Individual or Firm as its auditor. It will be considered as casual vacancy.


As per Section 139(8): If Casual Vacancy Arise due to Resignation of Auditor, then:

By Board of Directors in the Board Meeting within 30 days of Resignation and required approval of Members (Through General Meeting) within 3 months from the date of intimation to shareholders by the Board of Directors. Auditor appointed due to casual vacancy will hold the office till the conclusion of the next Annual General Meeting.


No, there is no need to file any form for appointment of First auditor.


As per Section 139(6), First Auditor will be Appoint by Board of Directors of Company within 30 days of Incorporation of Company.


No, as per Section 179 read with applicable rules, Internal Auditor shall be appointed at the duly convened board meeting of the Company.


“Chartered Accountant” or “Cost Accountant”, or such other professional as may be decided by the Board of Directors of the company can be appointed as internal auditor of the Company. The internal auditor may or may not be an employee of the company.


As per Section 139(2) of the Co Act, 2013 read with Rule 5 of Companies (Audit and Auditors) Rules, 2014, the following companies shall not appoint an individual as statutory auditor for more than one term of 5 years and a firm as statutory auditor for more than two terms of 5 years each:

  • Listed company;
  • All unlisted public companies having paid up share capital of INR 10 Crores or more;
  • All private limited companies having paid up share capital of INR 50 Crores or more;
  • All companies having paid up share capital below the threshold limit mentioned in the aforesaid two points, but having public borrowings from financial institutions, banks or public deposits of INR 50 Crores or more.

As per the proviso to the Section 148(3), the person appointed under Section 139 of the Co Act, 2013 as an auditor of the company shall not be appointed for conducting the audit of cost records.


As per the Section 139 of the Co Act, 2013, the first auditors should be appointed by the Board within 30 days of the registration of the company and in case of failure of the Board to appoint such auditors, the auditors shall be appointed by the members in general meeting. Further, such auditor shall hold office till the date of the conclusion of the first annual general meeting.

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