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Proprietorship Firm

Proprietorship Firm Registration

Proprietorship firm is one of the Simpe way to start a business because it is owned and managed by propretor self or authorized person. Proprietorship firm are very simple and easy to start and have very less regulatory compliance requirement for starting and operating. So, its ideal for small businesses and first-time Entrepreneurs who would like to know how to run a business. Current account of Proprietorship firm can be open by taking registration in shop and establishment Act, GST No.or Udhyam as per applicability according to bank rules.

ADVANTAGES AND DISADVANTAGE OF SOLE PROPRIETORSHIP

*Less Formalities during formation.
*Less Government Intervention
*Less wastage of time for taking various approvals.
*Limited Capital required according to business need.
*Current account can be opened easily.
*Have a registration name in proprietorship.
*No Sharing of profits.
*Personal Property Of Proprietor Is Also Affected In Case Of Any Loss Arise In Sole Proprietorship.
*Because Of Proprietor Pan Is Used In The Business For All The Compliance Or Registration It Is Not Easy To Transfer The Business To Some One Else If Required Or Needed In Future.
*There Is No Chance Of Perpetual Existence In Case Of Sole Proprietorship Because Proprietor And Proprietorship Both Are In Case Of Death Of Proprietor – Proprietorship Is Also Come To Its End.

*Not Easy to get funds from outside.
*Limited Scope of Recognition.

HOW TO REGISTER A SOLE PROPRIETORSHIP?

There is no Specific Registration Process Or Procedure Prescribed By The Government For The Registration Or Operation Of Sole Proprietorship.

One or more Business license or tax license are applicable:
1. Udhyam MSME Registration

2. GST Registration (Optional till limit of Tournover specified)

3. Trademark – In case you want no one can use your business name

4. Shops and Establishment License.

Limited Liability Partnership(LLP)

A Limited Liability Partnership (LLP) is business form which provides benefits of limited liability and flexibility of a partnership business.It was introduced in INDIA by Limited liability Partnership Act,2008.It have features of both business entity as Corporation and a Sole Proprietorship.An LLP is better than Proprietorship firm,and it is simplest business firms to doing business in India.

Since LLPs are not capable of issuing equity shares, LLP should NOT be select for any business that has plans for raising equity funds from Angel Investors, Venture Capitalist or Private Equity Funds.LLP’s are administered by the Registrar of Companies.

The main reason for registering as an LLP is the limited liability. The partners of the firm are only liable for a small amount of debt incurred by it. This is entirely different from proprietorship and partnership where the personal assets of directors and partners are not protected if the business becomes bankrupt.

Minimum Requirement to Start an LLP

Minimum Two People: Minimum two partners are required to start an LLP. However, there is no limit on maximum partners.

No Minimum Capital: Capital in case of LLP is depending on the need of the business and contribution to partnership by partners. The Stamp Duty on the deed is based on the amount of capital.

Resident Person requirement: One Designated partner of LLP must be from India.

Unique Name: Name of the LLP should be unique, and it must not be same or similar to the name of any existing company, LLP or trademark which is registered or applied for.

Advantage of LLP
Limited Liability: Partners’ liability of the LLP is limited and it is limited only to their capital contribution by them to the LLP.

Minimal regulatory compliance: Regulatory compliance are very less in case of LLP as compared to company form of entity.

Separate Legal Entity: An LLP is a separate legal entity and a juristic person distinct from its partners and both can sue each other and be sued.

Continuity of existence of the LLP: Even after the death of the partner LLP continue its exist.

Property Ownership: LLP enjoys the right to own, enjoy and transfer property. The rights can be exercised by the LLP in its own name.

No Audit Requirement: There is no audit requirement up to turnover of less than 40 Lacs and capital contribution of less than 25 Lacs.

Transferability of ownership: The ownership of an LLP can be easily transferred to another person. However, transferee should be inducted as a Designated Partner of the LLP.

Taxation: Both Partners & LLP can give loan to each other. There is no dividend tax in case of LLP.

Shop and Establishment Registration (LDMS)

As per the Labour Law If you are starting a commercial establishment or a shop you need to file for registration under the Act, within 30 days of commencement of your establishment. This registration is mandatory for many reasons, including the opening of current account in a bank. This license, forms as a basic license and a proof of your business to apply for other registrations required to run a business in India. While each state have their own rules and regulation regarding registration.

We mainly serve

#Shop and establishment registration consultant in Jaipur

#Shop and establishment registration consultant in Rajasthan

Hindu Undivided Family Registration(HUF)

All About HUF

*By forming a Hindu Undivided Family, you can optimize your tax liabilities and also include your family members to benefit in the future

*For the sake of income tax, the HUF is considered as a separate entity and is therefore taxed separately

*Although HUF is governed by the Hindu law board, it can be formed by Jain, Sikhs and Buddhists as well

*Shutting down the HUF is a difficult process and hence it is impossible to proceed with unless all the HUF members agree to the partition

The Income Tax Act provides several opportunities for taxpayers to reduce their tax liabilities in an organized and legitimate manner. One such aspect is the creation of the HUF or the Hindu Undivided Family. HUF is governed under Hindu law board and could be formed by a married couple or by members of a joint family. HUF could be formed by two members and at least one among them should be a male member of the family. Senior most male member of the family would become ‘Karta’. Although it is governed by the Hindu law board, it can be formed by Jain, Sikhs and Buddhists as well.

For the sake of income tax, the HUF is considered as a separate entity and is therefore taxed separately. This helps to separate tax obligations of an individual from that of his family. The income tax slab for HUF is same as that of an individual, with an exemption limit of Rs 2.5 lacs and qualifies for all the tax benefits under Section 80C, 80D, 80G and so on. It also enjoys exemptions under Section 54 and 54F with respect to capital gains.

Creating an HUF

HUF has to be created keeping in mind the legal and financial requirements. A HUF is created through executing a deed, getting HUF PAN and opening a bank A/c in the name of HUF. The cost of creating a HUF is a few thousands of rupees. You next need to infuse capital to form the HUF corpus with money received as gifts from relatives or with assets received under a will or inheritance, as it enjoys tax exemption. Care should be taken that personal assets and funds are not transferred to the HUF account, as income generated from it shall later be clubbed under personal income under Section 64 (2).

The Karta of a HUF is the senior most male member of the family and in financial terms he can also be called manager of the family. In this account a corpus is created where every family member can pool their income. The corpus will be handled by or authorized to handle by Karta (head of the family). Signature of Karta will be required for every transaction from the bank. These accounts are similar to individual saving bank accounts; there will be various tax benefits that are available for an individual’s account while the income of members is being pooled in the HUF account.

Since the account is equivalent to an individual’s account there are various tax benefits and a few of them are mentioned below.

*According to IT act, tax rebates and deductions can be availed under sections 80C for HUF account.
*Gifts collected up to a worth of Rs 50,000 will be tax free. A father who owns a HUF account can gift a property or money of higher worth to a son who owns a smaller HUF account; but he should specify that the gift is for the son’s HUF and not to him as an individual. Under section 64(2) and 56(2) tax benefits can be enjoyed in such instance.
*Corpus can be used for investment in tax free money instruments.

Ways to reduce tax outgo with an HUF

*Rental Income from property: Rental income from a property could be received on behalf of a HUF instead of an individual account.

*Business Income: Profits generated out of the family business, in the name of a HUF, shall be taxed accordingly and exemptions will give more leverage on tax saving.

*Remuneration to Karta and members: Remuneration to Karta and other family members is an allowable deduction from income of an HUF.

*Loan to HUF members: If the business, capital or investment of the HUF is expanding, then such expansion can be done in the individual names of the members of HUF by giving loans to the members from the HUF. The HUF may or may not charge interest on the loans' given.

*Family Settlement or Arrangement: The sole purpose of the family settlement should be to settle existing or future disputes regarding property, amongst the members of the family. Since this arrangement does not involve transfer, it would not attract gift tax, capital gains tax or clubbing. In a family arrangement, tax incidence is considerably reduced or it may even become nil.

HUF Checklist

*HUF will need to file return of income every year, considering every income which is received on its name. However, there is a clubbing provision which would hold the Karta liable for all the income which is diverted to HUF with intention to evade tax.
*Any asset which is contributed to the HUF will be treated as common asset and the asset owner must renounce the ownership in the name of HUF. Hence, if the previous owner wishes to sell such asset, then it cannot be done so without the consensus of all HUF members.
*Any addition to the family by birth or marriage will add a member to HUF. Hence, it may be very difficult to manage such a large HUF, while keeping appropriate records of asset and funds contributed to HUF and by HUF.
*Shutting down the HUF is a difficult process and hence it is impossible to proceed with unless all the HUF members agree to the partition.
*Where there is no male member, female member can become Karta, but its tax aspects are not very clear.
*If any member of Karta transfers any property to HUF without any sufficient consideration, then it will be clubbed in the hands of such transferor.
*Where any woman has any wealth which she brought in from her maiden home, the income from the same would not be taxable as income of HUF, rather in hands of such wealth owner.

One Person Company (OPC)

As the Name suggest One person company(OPC) means where only one member is Shareholder.The concept of One Person Company in India was introduced through the Companies Act, 2013 for the purpose of Incoportation an entity as like company.

This is good refinement of proprietorship firm.This is covered by the rule of Ministry Of Corporate Affairs {section 2(62)} of the companies Act 2013 ".Only natural person resident of India can be member in OPC.So it is a company which is owned by one single person.

SECTION APPLICABLE: Section 3 of Companies Act, 2013

RULES APPLICABLE: Rule 3 and 4 of Companies (Incorporation) Rules, 2014

Further, in case of OPC company has an average hattrick turnover of Rs. 2 crore and over or acquires a paid-up fund of Rs. 50 lacs and over, it has to be converted to a private limited company or public limited company within six months.Though a OPC have full control of one person but an OPC does have a few limitation for instance, every One Person Company (OPC) must nominate a nominee director in the MOA and AOA of the Company - who will become the owner of the OPC in case the sole Director is disabled.

MINIMUM REQUIREMENTS

*Minimum 1 Shareholder-Natural person,Cannot be minor,Indin citizen,resident in India
*Minimum 1 Director-and Maximum 15. director receive remuneration for their take care of management of company and member receive profit.The director and shareholder can be the same person
*Minimum 1 Nominee
*Letters ‘OPC’ to be suffixed with the name of OPCs to distinguish it from other companies.

PRELIMINARY CONDITIONS

(As per Rule 3 of Companies (Incorporation) Rules, 2014)

*Only a natural person who is an Indian citizen and resident in India can be member and nominee of an OPC.

*We can only incorporate only one OPC. The law does not permit the incorporation of more than one OPC by the same owner. This is the same case with regards to the nominee of an OPC also. A *nominee of an OPC cannot be a nominee of another OPC.
*No minor shall become member or nominee of the OPC or can hold share with beneficial interest in such OPC.

*Such Company cannot be incorporated or converted into a company under section 8 (Company with Charitable Objects) of the Act.

*Such Company cannot carry out Non-Banking Financial Investment activities including investment in securities of any other body corporate.

*No such company can convert voluntarily into any kind of company unless two years is expired from the date of incorporation of One Person Company except
*In the case if its falls under the mandatory conversion criteria.

*A natural person shall not be a member and nominee of more than a One Person Company at any point of time.

*Company shall state word ‘OPC’ in the bracket after the name of the Company, like XYZ (OPC) Private Limited.

OTHER IMPORTANT POINT ABOUT MANAGEMENT OF OPCs:

*In case the paid up share capital of an OPC exceeds fifty lacs rupees or its average annual turnover of immediately preceding three consecutive financial years exceeds two crore rupees, then the OPC has to mandatorily convert itself into private or public company.

*One Person Company shall file a copy of the financial statements duly adopted by its member, along with all the documents which are required to be attached to such financial statements, within one hundred eighty days from the closure of the financial year.

*The provision of holding of Annual General Meeting is not applicable to OPC

*The OPC is required to hold minimum two Board meeting during a calendar year and one meeting in each half of the calendar year and gap between two meetings is not more than 90 days.

*For the purposes of quorum, in case of a single Director, it shall be sufficient if the passed resolutions is entered in the minutes book and signed and dated by such director.

Private Limited Company

Private Limited Company is the simplest and popular form of Business Registration in India. It can be registered with a minimum of two people.A Private Limited Company is a company which is privately held for small businesses. The liability of the members of a Private Limited Company is limited to the number of shares respectively held by them. Shares of Private Limited Company cannot be publicly traded.

Minimum Requirement for Private Limited Company:

*A minimum number of 2 Directors and 2 Share holders who are adults(Major).
*One of the Directors of a private limited company has to be an Indian Citizen and Indian Resident.
*The other director(s) can be a Foreign National.
*The shareholders can be natural persons or an artificial legal entity.

Basic advantages of Private Limited Company:

*Limited risk to personal assets in Private Limited Company.
*Separate Legal Entity.
*Limited Liability for members.
*Shares of a company limited by shares are transferable by a shareholder to any other person easily.

*A company being an independent legal entity can sue and be sued in its own name.

*A company has ‘perpetual succession’, that is continued or uninterrupted existence until it is legally dissolved.

*For a private company, the earlier minimum number of the share capital was Rs. 1 Lakh but now there is no such minimum capital compulsion. Therefore there is no pressure of fund requirements.

*It is easy to fetch funding in a private limited company by transferring of shares.

*Fund Raising:A Private Limited Company in India is the only form of business except Public Limited Companies that can raise funds from the Venture Capitalists or Angel investors.

*FDI Allowed: In Private Limited Company, 100% Foreign Direct Investment is allowed that means any foreign entity or foreign person can directly invest in a Private Limited Company.

*Credibility: The particulars of the company are available on a public database. Which improves the credibility of the company as it makes it easy to
authenticate the details

Basic disadvantages of a Private Limited Company:

*It restricts the transfer ability of shares by its articles.
*Number of members in any case cannot exceed 200.
*it cannot issue prospectus to public.
*In stock exchange shares cannot be quoted.

Nidhi Company

Nidhi Companies in India are formed and regulated by Section 406 of the new Indian Companies Act of 2013, the Companies (Nidhi Companies) Rules of 2014, and the Chapter XXVI of the Companies Rules, 2014.Nidhi Company is a type of Non-Banking Financial Company (NBFC)

The main feature of Nidhi company is that Nidhi deals with deposits from and loans to its members/shareholders only,and works for the mutual benefits of its
members for develop the habits of saving. Accordingly, certain exemptions have been provided to these companies in respect of annual compliances and taxation.

Nidhi Company isn’t required to receive the license from Reserve Bank of India (RBI), hence it is easy to form Still RBI has powers to issue directives for them related to their deposit acceptance activities.

Nidhi companies are allowed to take a deposit from and lend to the members only. In other words, the funds contributed to a Nidhi company come only from its members (shareholders) and are to be used only by the members of the Nidhi Company.
The name “Nidhi” in Nidhi Company means “treasure”or fund which is for the mutual benefit of its members.It is registered as a public company and should have “Nidhi Limited” as the last words of its name. Moreover, because these Nidhis deal with their shareholder-members only, they have been exempted from the core provisions of the RBI Act and other directions applicable to NBFCs. Therefore, Nidhi Company is an ideal legal entity to take a deposit from and lend to a specific group of people.Nidhi Company is easy and economic to register as compare to NBFC.

Requirements for Nidhi Company Incorporation
Given below are the essential conditions that must be met with for registering or operating a Nidhi Company.

Requirement before Registration

*Minimum 7 shareholders.
*Minimum 3 directors.
*Minimum paid up equity share capital of Rs.5,00,000/-
*No Preference Shares shall be issued.

Requirement after Registration within 1 year of incorporation
*Not have less than two hundred members (shareholders);
*Net owned fund should be more than Rs. 10 lacss.
*The ratio for Net owned fund to Deposit should be more than 1:20.
*Unencumbered term deposits Must not less than ten per cent of the outstanding deposits.

"Net Owned Funds" means

The aggregate of paid up equity share capital
Add: free reserves
Less:reduced by accumulated losses and intangible assets appearing in the last
audited balance sheet.

Restrictions of Nidhi Company

*It can not do the business of chit fund, hire purchase finance, leasing finance, insurance or acquisition of securities issued by any body corporate;
*It can not issue preference shares, debentures or any other debt instrument by any name or in any form whatsoever;
*It can not carry on any business other than the business of borrowing or lending in its own name: Provided that Nidhis which have adhered to all the
provisions of these rules may provide locker facilities on rent to its members subject to the rental income from such facilities not exceeding twenty per cent of the gross income of the Nidhi
at any point of time during a financial year.
*It cannot accept deposits from or give loans to some external individual or corporation.
*It can not take deposits from or lend money to any body corporate;
*It can not enter into any partnership arrangement in its borrowing or lending activities;
*It can not advertise themselves to invite deposits,: Provided that private circulation of the details of fixed deposit Schemes
among the members of the Nidhi carrying the words “for private circulation to members only” shall not be considered to be an advertisement for soliciting deposits.
*It can not Pay commission, fee or incentive for giving or taking deposits,
*Acquire another company by purchase of securities or control the composition of the Board of Directors of any other company in any manner whatsoever or enter into any arrangement for the change of its management, unless it has passed a special resolution in its general meeting and also obtained the previous approval of the Regional Director having jurisdiction over such Nidhi;
*It can not open any current account with its members;
*It can not Pledge any of the assets lodged by its members as security;
*It can not do Leasing Finance & Hire-Purchase finances,Lotteries,Insurance business.
*It is not entitled to perform vehicle finance business or micro finance business in India.
*A Nidhi Company is not empowered to issue preference shares, debentures, or some other debt instruments in any form.

Compliances for Nidhi Company

*NDH-1 Form: submit the list of members within 90 days from the end of every financial year.
*NDH-2 Form: Request MCA for an extension, in case it has not been able to add 200 members in its first financial year.
*NDH-3 Form: A half-yearly return is required to be filed in NDH-3 Form.
*Annual Returns with ROC: The Nidhi Company has to file its Annual Returns with MCA through Form MGT-7.
*Profit & Loss Statement and Balance sheet: The financial statements and other related documents are to be submitted, annually, in Form AOC-4.
*Income Tax Returns: Nidhi Company, like all other businesses, must file its Annual Income Tax Returns by 30th September of the following financial year.
*Audit: A Nidhi co. is require for audit by CA as per companies act 2013.

Key Features

as mentioned in Rule-6 of the Nidhi Rules of 2014 some key feature are noted

*Within 12 months of registration, the number of members must be Minimum 200.
*A maximum interest rate of 20% p.a. (calculated by the reducing balance method) can be charged.
*Operations limited to district level for the first 3 Years. After completion of 3 years, 3 offices can be set up within the same district. For expansion beyond district level , prior approval from the Regulator Director is required.
*It can only give loans against security. These securities may be Gold, Property, Fixed Deposits, Government Securities or Life Insurance Certificates.
*Unencumbered deposits (Deposits not offered as securities for any purpose) should not be less than 10 % of outstanding deposits.
*Filing of Annual Accounts, Audit, and Tax Returns, in the proper format, is compulsory.
*The maximum rate of interest that can be offered on saving deposit account shall not exceed 2% above the rate offered by Nationalised Banks.
*Nidhi Company can accept FD, RD & savings and can earn an interest of 12.5% currently.
*Rate of Interest that can be offered on Fixed and Recurring Deposit shall not exceed the maximum rate of interest prescribed by RBI for the NBFCs to offer on their deposits. The maximum limit of the rate of interest for NBFCs is also applicable to the Nidhi companies.

Advantage of Nidhi Company

*Easy Processing: Taking borrowing or lending the amount form Nidhi company is much easy then other like banks or Nbfc because the transaction take place between the known person or group or persons.
*Less Capital Requirement: As per Companies act 2013 minimum capital required for Nidhi co. is Rs. 5 lacs And, within 1-year, the capital has to be raised to at least Rs. 10 lacs.
*Micro Banking: Nidhi co.'s also provide banking services to the remote and rural areas.
*Interest Rate:The loans given to the members are at a lower rate of interest than the market rate. This brings greater savings to the members.
*Liability is Limited: Liability of Directors and shareholders of is limited.In case of any loss the members and directors have no impact form market.

Section 8 Company

n India, there are mainly the following types of non-profit organizations(NGO's):

1. "Section 8 Company" as per Companies Act, 2013 (Section 25 as per old Companies Act, 1956)

2. "Societies" registered under Section 20 of the Societies Registration Act 1860

3. "Trusts" formed under Indian Trusts Act 1880

Main restrictions
The purpose of section 8 company is same as like other NGO's.The main object may for promoting research, social welfare, religion, charity,commerce, art, science, sports, education, and the protection of the environment or any such other object, provided that the profits, if any, or the other income is applied for promoting only the objects of the company and also, No dividend is paid to its members. Intends to apply its profits, and any other income in promoting its objects only.

otherSame as mentioned in

https://www.vardhmantaxcon.com/startbusiness/section-8-company--ngo-

Our Blogs

Incentive for warehouse Business in Rajasthan

Are your planning to set-up warehouse business in Rajasthan then you can avail the following incentives:

Eligibility: 2Cr Minimum Investment

Benefits:

Capital Subsidy: @25% of equipment value max.1Cr.

Or

Interest subsidy @7%

+

Green incentive: 25% of cost of capital max. 50 Lakh(EV,Rain-water harvesting etc.)

+

100% exemption of electricity duty, mandi fee & land taxes for 7 years

100% Stamp Duty benefit will be given in stages as notified by the State

100% conversion charges benefits given in stages as notified by the State

#RIPS2019 #RIPS 2022 #Incentive by rajasthan goverement

posted by @admin Read more

Faq's on cancellation of GST Registration



Q-1	What are the cercumstances in which GST registration can be cancelled?
Ans.	Any registration granted under this Act may be cancelled by the Proper Officer. The various
Subsection 1	circumstances and the provisions of the law on this subject have been outlined under Sec. 29
	A registration granted can be cancelled by the proper officer, either on his own or on
	application by the registered person when –
	— the business is discontinued, transferred fully for any reason including death of
	proprietor, amalgamated with other legal entity, demerged or otherwise disposed of; or
	— there is any change in the constitution of the business; (For example- Private limited company has changed to a public limited company) or
	— the taxable person is no longer liable to be registered under sections 22 or section 24 or
	intends to opt out of the registration voluntarily made under subsection (3) of section 25.
	Provided that during pendency of the proceedings relating to cancellation of
	registration filed by the registered person, the registration may be suspended for such
	period and in such manner as may be prescribed
	Inserted vide The Central Goods & Services Tax Amendment Act, 2018 w.e.f 01.02.2019

Q-2	When the proper office may cancell the registration?
Ans.	The proper officer may cancel the registration of a person from such date, including any
Subsection 2	retrospective date, as he may deem fit, where, ––
	(a) a registered person has contravened such provisions of the Act or the rules made
	thereunder as may be prescribed; or
	(b) a person paying tax under section 10 has not furnished returns for three
	consecutive tax periods; or
	(c) any registered person, other than a person specified in clause (b), has not
	furnished returns for a continuous period of six months; or
	(d) any person who has taken voluntary registration under sub-section (3) of section
	25 has not commenced business within six months from the date of registration;
	or
	(e) registration has been obtained by means of fraud, wilful misstatement or
	suppression of facts:

	Provided that the proper officer shall not cancel the registration without giving the
	person an opportunity of being heard:
	[Provided further that during pendency of the proceedings relating to cancellation of
	registration, the proper officer may suspend the registration for such period and in such
	manner as may be prescribed].
	Inserted vide The Central Goods & Services Tax Amendment Act, 2018 w.e.f 01.02.2019

Q-3	Is the cancellation of Reg. affect the liability?
	No, The cancellation of registration under this section shall not affect the liability of the
Subsection 3	person to pay tax and other dues under this Act or to discharge any obligation under
	this Act or the rules made thereunder- for any period prior to the date of cancellation
	whether or not such tax and other dues are determined before or after the date of
	cancellation.

Q-4	Is the cancellation deemed to be affect in all act of GST?
Ans.	Yes, The cancellation of registration under the State Goods and Services Tax Act or the
Subsection 4	Union Territory Goods and Services Tax Act, as the case may be, shall be deemed to
	be a cancellation of registration under this Act.


Q-5	What will be liability of GST reversal in case of cancellation?
Ans.	Every registered person whose registration is cancelled shall pay an amount, by way of
Subsection 5	debit in the electronic credit ledger or electronic cash ledger, equivalent to the credit of
	input tax in respect of inputs held in stock and inputs contained in semi-finished or
	finished goods held in stock or capital goods or plant and machinery on the day
	immediately preceding the date of such cancellation or the output tax payable on such
	goods, whichever is higher, calculated in such manner as may be prescribed:

	Provided that in case of capital goods or plant and machinery, the taxable person shall
	pay an amount equal to the input tax credit taken on the said capital goods or plant and
	machinery, reduced by such percentage points as may be prescribed or the tax on the
	transaction value of such capital goods or plant and machinery under section 15,
	whichever is higher.

Q-6	What will be the manner of calculation of amount payable u/s/s 5 ?
Ans.	The amount payable under sub-section (5) shall be calculated in such manner as may
Subsection 6	be prescribed.

Q-7	What is the Process for Application for cancellatin of Registration ?
Ans.	A registered person, other than a person to whom a registration has been granted under
Rule 20	rule 12 or a person to whom a Unique Identity Number has been granted under rule 17,
	seeking cancellation of his registration under sub-section (1) of section 29 shall
	electronically submit an application in FORM GST REG-16, including therein the details
	of inputs held in stock or inputs contained in semi-finished or finished goods held in
	stock and of capital goods held in stock on the date from which the cancellation of
	registration is sought, liability thereon, the details of the payment, if any, made against
	such liability and may furnish, along with the application, relevant documents in support
	thereof, at the common portal within a period of thirty days of the occurrence of the
	event warranting the cancellation, either directly or through a Facilitation Centre notified
	by the Commissioner.

	[Provided that no application for the cancellation of registration shall be considered in
	case of a taxable person, who has registered voluntarily, before the expiry of a period of
	one year from the effective date of registration.] Omitted vide Notf no. 03/2018-CT dt. 23.01.2018

Q-8	In what cases Registration to be cancelled by Proper officer?
Ans.	Registration to be cancelled in certain cases
Rule 21	The registration granted to a person is liable to be cancelled, if the said person,-
	(a) does not conduct any business from the declared place of business; or
	(b) issues invoice or bill without supply of goods or services in violation of the
	provisions of this Act, or the rules made thereunder; or
	[(c) violates the provisions of section 171 of the Act or the rules made thereunder. i.e Violates the anti-profiteering provisions (for example, not passing on benefit of ITC to customers)]- Inserted vide Notf no. 07/2017-CT dt. 27.06.2017 ;or
	[(d) violates the provision of rule 10A. i.e requirement of furnishing of the bank account details under GST]-Inserted vide Notf no. 31/2019 – CT dt. 28.06.2019

	With effect from 1st January 2021-
	(e) Utilisation of ITC from electronic credit ledger to discharge more than 99% of the tax liability for specified taxpayers violating Rule 86B – with the total taxable value of supplies exceeding Rs.50 lakh in the month, with some exceptions. OR
	(f) A taxpayer who cannot file GSTR-1 due to GSTR-3B not being filed for more than two consecutive months (one quarter for those who opt into the QRMP scheme) OR
	(g) Avails input tax credit in violation of the provisions of section 16 of the Act or the rules.


Q-9	What is Suspension of Registration and when this Rule inserted ?
Ans.	Inserted vide Notf no. 03/2019-CT dt. 29.01.2019 wef 01.02.2019
Rule 21A
	(1) Where a registered person has applied for cancellation of registration under rule 20, the
	registration shall be deemed to be suspended from the date of submission of the
	application or the date from which the cancellation is sought, whichever is later, pending
	the completion of proceedings for cancellation of registration under rule 22.

	(2) Where the proper officer has reasons to believe that the registration of a person is liable
	to be cancelled under section 29 or under rule 21, he may, after affording the said
	person a reasonable opportunity of being heard, suspend the registration of such
	person with effect from a date to be determined by him, pending the completion of the
	proceedings for cancellation of registration under rule 22.
	(3) A registered person, whose registration has been suspended under sub-rule (1) or subrule
	(2), shall not make any taxable supply during the period of suspension and shall
	not be required to furnish any return under section 39.
	[Explanation.-For the purposes of this sub-rule, the expression “shall not make
	any taxable supply” shall mean that the registered person shall not issue a tax invoice
	and, accordingly, not charge tax on supplies made by him during the period of
	suspension].-Inserted vide Notf no. 49/2019-CT dt. 09.10.2019

	(4) The suspension of registration under sub-rule (1) or sub-rule (2) shall be deemed to be
	revoked upon completion of the proceedings by the proper officer under rule 22 and
	such revocation shall be effective from the date on which the suspension had come into
	effect.]
	[(5) Where any order having the effect of revocation of suspension of registration has been
	passed, the provisions of clause (a) of sub-section (3) of section 31 and section 40 in
	respect of the supplies made during the period of suspension and the procedure
	specified therein shall apply].-Inserted vide Notf no. 49/2019-CT dt. 09.10.2019


Q-10	What is the Process of cancellatin of Registration by Proper officer ?
Ans.	(1) Where the proper officer has reasons to believe that the registration of a person is
Rule 22	liable to be cancelled under section 29, he shall issue a notice to such person in FORM	SCN
	GST REG-17, requiring him to show cause, within a period of seven working days from
	the date of the service of such notice, as to why his registration shall not be cancelled.

	(2) The reply to the show cause notice issued under sub-rule (1) shall be furnished in
	FORM GST REG–18 within the period specified in the said sub-rule.

	(3) Where a person who has submitted an application for cancellation of his registration is
	no longer liable to be registered or his registration is liable to be cancelled, the proper
	officer shall issue an order in FORM GST REG-19, within a period of thirty days from
	the date of application submitted under rule 20 ([sub-rule (1) of] rule 20 Omitted vide Notf no. 7/2017-CT dt. 27.06.2017) or, as the case may
	be, the date of the reply to the show cause issued under sub-rule (1), cancel the
	registration, with effect from a date to be determined by him and notify the taxable
	person, directing him to pay arrears of any tax, interest or penalty including the amount
	liable to be paid under sub-section (5) of section 29.

	(4) Where the reply furnished under sub-rule (2) is found to be satisfactory, the proper
	officer shall drop the proceedings and pass an order in FORM GST REG–20:

	[Provided that where the person instead of replying to the notice served under subrule
	(1) for contravention of the provisions contained in clause (b) or clause (c) of subsection
	(2) of section 29, furnishes all the pending returns and makes full payment of
	the tax dues along with applicable interest and late fee, the proper officer shall drop the
	proceedings and pass an order in FORM GST-REG-20.]-Inserted vide Notf no. 39/2018-CT dt. 04.09.2018

	(5) The provisions of sub-rule (3) shall, mutatis mutandis, apply to the legal heirs of a
	deceased proprietor, as if the application had been submitted by the proprietor himself


Q-11	What is final return and when it to be filed after cancellation?
Ans.	As per section 45 i.e Final return, “every registered person who is required to furnish a
	return under sub-section (1) of section 39 and whose registration has been cancelled shall
	furnish online on the GST Portal, a final return “within three months” of the date of
	cancellation or date of order of cancellation, whichever is later, in GST FORM GSTR-10 as
	specified in Rule 81”


Q-12	What are the releven for deal in cancellation?
Ans.	Form No	Filed By	Discription
	REG-16	For Taxpayer	Application for Cancellation of Registration
	REG -17	For Tax Official	Show Cause Notice for Cancellation of Registration
	REG -18	For Taxpayer	Reply to the Show Cause Notice issued for cancellation for registration
	REG-19	For Tax Official	Order for Cancellation of Registration
	REG-20	For Tax Official	Order for dropping the proceedings for cancellation of registration
Q-13	In case a person whose tournover not exceed threshold limit but taken GST Registration can apply for cancellation?
Ans	Yes, can apply after Notf no. 03/2018-CT dt. 23.01.2018, Earlier, such person could not apply for cancellation before expiry of one year from the effective date of registration.

posted by @admin

206CQ: Collection at source on remittance under LRS for purpose other than for purchase of overseas tour package or for educational loan taken from financial institution
206CQ: Entry in 26AS: Collection at source on remittance under LRS for purpose other than for purchase of overseas tour package or for educational loan taken from financial institution

The Finance Act 2020 has inserted new sub-section (1G) in Section 206C of the Income-tax Act, 1961 (“Act”) which is effective from 1^st October, 2020

Act:

206(1G) Every person,—

Being an authorized dealer, who receives an amount, for remittance out of India from a buyer, being a person remitting such amount out of India under the Liberalized Remittance Scheme(LRS) of the Reserve Bank of India( RBI);

being a seller of an overseas tour program package, who receives any amount from a buyer, being the person who purchases such package,

shall, at the time of debiting the amount payable by the buyer or at the time of receipt of such amount from the said buyer, by any mode, whichever is earlier, collect TCS from the buyer, a sum equal to 5% of such amount as income-tax:

Provided that the authorised dealer shall not collect the sum, if the amount or aggregate of the amounts being remitted by a buyer is less than 7 Lakh Rs. in a financial year and is for a purpose other than purchase of overseas tour program package:

Provided further that the sum to be collected by an authorised dealer from the buyer shall be equal to 5% of the amount or aggregate of the amounts in excess of 7 lakh rupees remitted by the buyer in a financial year, where the amount being remitted is for a purpose other than purchase of overseas tour program package:

Provided also that the authorised dealer shall collect a sum equal to .5 % of the amount or aggregate of the amounts in excess of 7 lakh rupees remitted by the buyer in a financial year, if the amount being remitted out is a loan obtained from any financial institution as defined in section 80E, for the purpose of pursuing any education:

Provided also that the authorised dealer shall not collect the sum on an amount in respect of which the sum has been collected by the seller:

Provided also that the provisions of this sub-section shall not apply, if the buyer is,—

(i) liable to deduct tax at source i.e TDS under any other provision of this Act and has deducted such amount;

(ii) the Central Government, a State Government, an embassy, a High Commission, a legation, a commission, a consulate, the trade representation of a foreign State, a local authority as defined in the Explanation to clause (20) of section 10 or any other person as the Central Government may, by notification in the Official Gazette, specify for this purpose, subject to such conditions as may be specified therein.

Explanation.—For the purposes of this sub-section,—

(i) "authorised dealer" means a person authorised by the Reserve Bank of India under sub-section (1) of section 10 of the Foreign Exchange Management Act, 1999 (42 of 1999) to deal in foreign exchange or foreign security;

(ii) "overseas tour programme package" means any tour package which offers visit to a country or countries or territory or territories outside India and includes expenses for travel or hotel stay or boarding or lodging or any other expenditure of similar nature or in relation thereto.

FAQs

Q What is the provision under the new sub-section (1G) of Section 206C of the Act?

Ans.The above sub-section has introduced liability of collecting TCS on below two categories of remittances with effect from 01.10.2020 –

TCS on remittances made under LRS of RBI

TCS on remittances made towards overseas tour program package

Q. When does the liability of collecting TCS arises for remittances made under LRS?

Ans. With effect from 01.10.2020, any amount or aggregate of the amounts being remitted outside India by a person resident in India under the LRS Scheme of RBI in excess of Rs. 7 Lakh in a financial year will attract TCS @5%. The authorized dealer who is authorized by RBI under Foreign Exchange Management Act, 1999 (“FEMA”) to deal in foreign currency or foreign security, would be liable to collect such TCS from the buyer who is remitting such amount of foreign exchange outside India under the LRS scheme.

Q. What is Meaning of Buyer for the purpose of TCS under LRS?

Ans. Buyer shall be the person who is remitting any amount out of India under LRS for any approved purposes which are covered under the said scheme.

Q. At what time, TCS is required to be collected from the buyer?

Ans. TCS is to be collected earlier of the following either

at the time of receipt of remittance amount by any mode from the buyer; or

at the time of debiting the amount payable by the buyer.

Q.What is LRS Scheme of RBI?

Ans. Under LRS Scheme, an Individual person who is resident in India as per FEMA is permitted to remit outside India fund up to US$ 2,50,000 per financial year (April to March) without any approval of RBI for any permitted current account or capital account transactions or both such as opening foreign currency account abroad, purchase of property or making investments abroad, private visit, gift/donation, business trip, medical treatment, studies abroad, going abroad on employment, etc.

This scheme is available only to Individuals (including minors) and not to corporates, Partnership firms, LLP, HUF, etc.

Q. How to compute the threshold of Rs. 7 Lakh for TCS on LRS?

Ans.The threshold of Rs. 7 Lakh is for the whole financial year for each buyer. However, for the FY 2020-21, this provision is effective from 01.10.2020. Therefore, any remittance made till 30.09.2020 will not attract any TCS. However, for computing the limit of Rs. 7 Lakh, remittances made from 01.04.2020 will be considered. Hence, if any person has already remitted Rs. 7 Lakh by 30.09.2020, then TCS will be applicable on every remittance made on or after 01.10.2020. In case remittances made up to 30.09.2020 is less than Rs. 7 Lakh, then TCS on remittance(s) on or after 01.10.2020 will be applicable on amount exceeding Rs. 7 Lakh.

Where remittance is being made under LRS for the purpose of education and source of funds for such remittance is out of any loan taken from any financial institution as defined u/s 80E of the Act, then TCS shall be collected at reduced rate of 0.5% on the amount in excess of Rs. 7 Lakh in any financial year.

Q.Is there any relaxation on remittances made for pursuing any education abroad?

Ans.The above relaxation is applicable only in case of loan taken from financial institution as defined u/s 80E and not from the loan taken from non-approved financier or remittances from own source of funds.

Q.What are the provisions applicable on Overseas Tour Program Package under the newly introduced sub-section (1G) of Section 206C?

Ans. Every seller of an overseas tour program package is required to collect TCS from the buyer at the time of debiting the amount payable or receipt of such amount by any mode, whichever is earlier at the rate of 5%. It is to be noted, that there is no minimum threshold prescribed for overseas tour package and thus, TCS is to be collected for any amount being remitted by the buyer. Such TCS would be collected on the amount including GST

TCS would not be collected by the authorized dealer on foreign remittances for Overseas Tour Program Package where seller of the package has already collected TCS from the buyer.

Q. Whether TCS is applicable on all foreign remittances?

Ans. No, TCS will be applicable only on the remittances made under LRS Scheme of RBI. Remittances other than LRS such as remittances by non-individuals, remittances for payment of import of goods or services, etc. are not subject to TCS provisions.

Q. Whether GST will be applicable on TCS collected under the above section?

Ans. No. CBIC has clarified through the Corrigendum to Circular No. 76/50/2018-GST dated 31st December2018.

Q.What would be rate of TCS in case of non-submission of PAN/Aadhar?

Ans. In case of non-submission of PAN/Aadhar, TCS rate would be 10% instead of 5% under LRS and overseas tour program package. However, in case of remittances made under LRS for the purpose of education abroad, TCS would be collected at 5% in case of non-submission of PAN/Aadhar.

However, it is to be noted that it is mandatory for an Individual under FEMA regulations to provide PAN for making any remittances under LRS scheme.

Q.Is there any relaxation in TCS rates till 31.03.2021 due to situation of COVID-19?

Ans. No relaxation has been provided on TCS rates under Section 206C(1G). Hence, it needs to be collected at the specified rate of 5% or 0.5%, as the case may be where PAN/Aadhar is provided by the buyer and in case of non-submission of PAN/Aadhar, TCS would be collected at the rate of 10% or 5% as the case may be.

Q.What are the exclusions for the applicability of Section 206C(1G)?

Ans. The liability to collect TCS under LRS or overseas tour program package will not be applicable in case of below categories of buyer:

(i) liable to deduct tax at source i.e TDS under any other provision of this Act and has deducted such amount;

(ii) the Central Government, a State Government, an embassy, a High Commission, a legation, a commission, a consulate, the trade representation of a foreign State, a local authority as defined in the Explanation to clause (20) of section 10 or any other person as the Central Government may, by notification in the Official Gazette, specify for this purpose, subject to such conditions as may be specified therein.

It is to be noted that public sector undertakings, government companies are not excluded from the scope of section and provisions of this sub-section would be applicable on them.
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CSR Funding Rules and Regulation

Filing of CSR-1 with MCA for CSR funding

*The Government of India has come out with a new registration for NGOs who are undertaking or desirous of undertaking CSR activities on behalf of the companies.

*Such registration is to be taken by filing Form CSR-1 electronically on the MCA portal.

*This registration can be taken by NGOs with effect from April 1, 2021.

*Form CSR-1 shall be signed and submitted electronically and verified by a practising CA or CS or Cost Accountant.

*On application, the MCA portal will automatically generate a unique CSR registration number

*CSR funding will be available only to those NGOs that are registered with MCA.



Documents for filing Form CSR-1

1. Copy of PAN Card of the NGO

2. Mail ID and Mobile Number

3. Details of Governing Body Members

4. Copy of Registration Certificate

5. Digital Signature of the Authorised Person with his PAN Number

Following type of NGO’s are eligible to file Form CSR-1 on MCA Portal for getting CSR Funding



(a) a company established under section 8 of the Act, or a registered public trust or a registered society, registered under section 12A and 80 G of the Income Tax Act, 1961 (43 of 1961), established by the company, either singly or along with any other company, or

(b) a company established under section 8 of the Act or a registered trust or a registered society, established by the Central Government or State Government; or

(c) any entity established under an Act of Parliament or a State legislature; or

(d) a company established under section 8 of the Act, or a registered public trust or a registered society, registered under section 12A and 80G of the Income Tax Act, 1961, and having an established track record of at least three years in undertaking similar activities

“Corporate Social Responsibility (CSR)” means the activities undertaken by a Company in pursuance of its statutory obligation laid down in section 135 of the Act in accordance with the provisions contained in these rules, but shall not include the following, namely:-

CSR does not Includes foowings



(i) activities undertaken in pursuance of normal course of business of the company: Provided that any company engaged in research and development activity of new vaccine, drugs and medical devices in their normal course of business may undertake research and  development activity of new vaccine, drugs and medical devices related to COVID-19 for financial years 2020-21, 2021-22, 2022-23 subject to the conditions that-

(a) such research and development activities shall be carried out in collaboration with any of the institutes or organisations mentioned in item (ix) of Schedule VII to the Act;

(b) details of such activity shall be disclosed separately in the Annual report on CSR included in the Board’s Report;

(ii) any activity undertaken by the company outside India except for training of Indian sports personnel representing any State or Union territory at national level or India at international level;

(iii) contribution of any amount directly or indirectly to any political party under section 182 of the Act;

(iv) activities benefitting employees of the company as defined in clause (k) of section 2 ofvthe Code on Wages, 2019 (29 of 2019);

(v) activities supported by the companies on sponsorship basis for deriving marketing benefits for its products or services;

(vi) activities carried out for fulfilment of any other statutory obligations under any law in force in India; As per this notification from 01 April 2021 onwards, every entity, covered under sub-rule

(1), who intends to undertake any CSR activity, shall register itself with the Central Government by filing the Form CSR-1 electronically with the Registrar. On successfulsubmission of Form CSR-1, a unique CSR Registration Number shall be generated by system automatically.

Important points regarding filing of Form CSR-1

*Form CSR-1 can be filed on MCA portal with effect from April 1, 2021

*Where the entity (Trust/ Society/ Section 8 Company) is established by any company or group of companies: Maximum 5 CIN of such companies can be provided in the Form

*Email ID of the entity shall be provided in Form CSR-1. The email-id shall be verified by One Time Password (OTP)

*The facility of sending OTP shall be enabled only after successful pre-scrutiny of the Form CSR-1.

*OTP can be sent to email ID against one form for maximum 10 times in a day. OTP shall be valid for 30 minutes. In case of failure, you need to download a fresh form on the same day or try OTP next day.

*Details of Directors/ Board of Trustees/ Chairman/ CEO/ Secretary/ Authorised representative (AR) of the entity need to be provided in the form. It should be ensured that DIN or PAN of the above is valid and associated with the entity.

*Maximum 10 rows shall be available for entering the particulars of Directors/ Board of Trustees/ Chairman/ CEO/ Secretary/ AR of the entity.

Mandatory attachments:

1.Copy of Registration Certificate of the entity and

2.Copy of PAN of the entity

But, the following further information/ documents should be kept ready in hand before filing Form CSR-1: -

1.Email ID of the NGO

2.Trust deed of Trust/ Registration Certificate of Society/ Registration Certificate of Section 8 Company

3.Copy of letter granting exemption under section 12A of the Income Tax Act

4.Copy of letter granting registration under section 80G of the Income Tax Act

5.Audited Financial Statements of immediately preceding three financial years

6.Project Report showing activities undertaken by the NGO in the earlier years

7.DIN/PAN of the Director of section 8 company/ Board of Trustees of the trust/ Chairman or secretary of the society

8.Email ID of above office bearers

9.Copy of resolution authorizing the person by the entity to sign on behalf of the entity.

10.Digital Signature of person authorized on behalf of the entity to sign the Form CSR-1

11.Engagement Letter or Authorisation Letter in favour of CA or CS or Cost Accountant who shall verify the form.

12.Digital Signature of CA/CS/Cost Accountant who shall verify the Form CSR-1.

Who shall sign the Form CSR-1

The Form CSR-1 shall be digitally signed by: -

1.In case of Section 8 Company: - any director who is not disqualified under provisions of Companies Act, 2013

2.In case of Registered Public Trust: - One of the Trustee/ CEO

3.In case of a Registered Society: - Chairman/ CEO/ Secretary

4.In case of an entity established under an Act of Parliament or State Legislature: - Authorised representative on their behalf

It shall also be ensured that the Form is digitally verified by a Chartered Accountant/ Company Secretary/ Cost Accountant in full time practice.

How to download Form CSR-1

Form CSR-1 may be downloaded from the MCA portal by following the steps as below: -

Visit the MCA portal by clicking the above link: - http://www.mca.gov.in/MinistryV2/companyformsdownload.html

Scroll down page till you find “incorporation services”.

Download the Form with or without instruction in zip format.

Open the zip file.

Form CSR-1 will be available in fillable PDF form.



Is Filing of Form CSR-1 compulsory

*Every entity (NGO) as stated above, who intends to undertake any CSR activities, shall register with the Central Government by filing Form CSR-1 electronically with the Registrar, with effect from 1st day of April, 2021.

*Thus, filing of Form CSR-1 is compulsory. However, the above provision shall not affect the CSR projects approved before 1st April, 2021.

*Form CSR-1 shall be signed and submitted electronically by the entity and shall be verified digitally by a CA or CS or Cost Accountant in practice.

*On submission of Form CSR-1 on the MCA portal, a unique CSR registration number shall be generated by the system automatically.

https://csr.gov.in

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