Company Incorporation in India made simpler and more versatile

by | posted in: Company Incorporations, e-filing of MCA Returns, Corporate & Business Advisory Services, Corporate Updates, Economy, Business Updates, Corporate Affairs | 0
MCA has taken another bold initiative in Government Process Re-engineering (GPR) and launched Simplified proforma for Incorporating Company Electronically (SPICe) e-Form.

Ministry of Corporate Affairs (MCA) has introduced a bold initiative in Company Incorporation so that registering a company and starting business, in India, is made simpler and speedier that your business can be started within the stipulated time frame, in line with international best practices.

 

MCA has launched SPICE (Simplified Proforma for Incorporating Company Electronically) w.e.f. 02.10.2016 for registering companies  in completely online form, vide Form INC-32.

 

This would be processed speedier as the e-MOA and e-AOA would have a faster review, by the approving authorities through the back office set up in this regard.

 

This would make setting up of business, in India, fairly simpler and more versatile, making way for “ease of doing business”.

The highlights of SPICE are:

  1. Simplified and completely Digital Form for Company Incorporation – Form INC-32
  1. Standard format of e-Memorandum of Association as per Companies Act, 2013 – Form INC 33
  1. Standard format of e-Articles of Association as per Companies Act, 2013 – Form INC 34
  1. Memorandum and Articles will now be filed as linked e-forms, except for Section 8  (not-for-profit companies)
  1. Provision to apply for Company Incorporation with a pre-approved Company Name vide INC -1, as well
  1. Mandatory DSCs of Subscribers and Witnesses in SPICe MOA and SPICe AOA 

7. Back Office productivity gains due to faster review of e-MOA and e-AOA by approving authorities.

As part of the initiative of ease of doing business in India, the Ministry of Corporate Affairs had earlier introduced e-filing of single Form INC-29 as alternative to INC 7, so that incorporating a company in India does not take too long a time. As further simplification of the process of registering companies, SPICE Form INC-32 is intended to make the whole process versatile for a new company to be registered on-line in India, under the Companies Act, 2013.

e-Filing of single Form INC-32

  • This form can be filed even after approval of name vide INC-1. This facility was not provided in INC-29.
  • Memorandum of Association (MOA) has been provided in Electronic Mode INC-33.
  • Article of Association (AOA) has been provided in Electronic Mode INC-34.
  • By new e-MOA & e-AOA, no need for physical signatures of Subscribers; Instead, Digital Signature Certificate (DSC) of Subscribers can be affixed on MOA & AOA.
  • By the new e-MOA & e-AOA, no need for physical signatures of Witness; Instead, Digital Signature Certificate (DSC) of Witness can be affixed on MOA & AOA.
  • Existing INC-29 and INC-7 will be phased out and SPICe will be the single, simplified versatile form to be filed on-line for incorporation of a company in India.

Read earlier posts:

Integrated e-Form INC-29 for Company Incorporation and Ease of doing business

Incorporation of Companies under Companies Act, 2013 – Procedure

Source: http://www.mca.gov.in/Ministry/pdf/SPICEPress%20Release_03102016.pdf

CAG may audit IDS, not individual declarations

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The Comptroller and Auditor General of India (CAG) may audit the just ended black money disclosure scheme for the process followed and how well it performed, but will not get into the disclosures made.

As much as Rs 65,250 crore of undeclared assets were declared through 64,275 declarations through the one-time four-month compliance window provided under the Income Disclosure Scheme (IDS) that ended on September 30.

“The information filed under the IDS is confidential and will neither be shared with any law enforcement agency nor any enquiry be launched by the I-T department,” an official said.

But the official auditor CAG may choose to do a performance audit of the scheme as a whole, the official said.

“It can audit the process followed in going about the scheme as well as how well it did. But no specific information on declaration made will either be gone into by the auditor or shall it be given,” he said.

The CAG had previously audited the Service Tax Voluntary Compliance Encouragement Scheme for the very same purpose.

The last tax amnesty scheme of 1997 – The Voluntary Disclosure of Income Scheme (VDIS), too, was audited by the CAG.

In its August 2000 report, CAG had found gaping holes and glaring defects in the VDIS saying it was drafted “with a number of lacunae which in turn, were compounded by CBDT circulars, clarifications and press briefings that benefited the declarants”.

The implementation of VDIS, it said, left a number of gaps in the procedural matters with distinct impact on revenue realisation.

The official said no adverse action shall be taken by the Financial Intelligence Unit or the Income-Tax department solely on the basis of the declarations made under IDS.

Also, no enquiry or investigation shall be launched on undisclosed income and assets declared under the scheme even if evidence is found subsequently during search or survey proceedings.

Specific information on declarations will not be shared with anyone including investigating agencies like CBI, he added.
Source: http://economictimes.indiatimes.com/articleshow/54639314.cms

File income tax return (ITR) even if your income is not taxable

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Many people think it an avoidable headache to file income tax returns, when their income falls below the taxable limit, or when tax is deducted at source or when no taxes are due. They also unnecessarily fear some notice will come from Income Tax Department every year, once they have started filing income tax return.

Here are the benefits of filing the income tax return that show you that it’s always better to file the return every year, even if your income  is not taxable.

  1. Helps as Standard Income Proof

In simple words, a tax return is a summary document or declaration about the results of all your financial transactions undertaken during the tax year. It consolidates the income under all sources and calculates the taxes due after allowing all eligible deductions.

ITR is considered and accepted by various agencies as a proof of your income, not only in India but also globally. If you are looking for higher education or employment abroad, ITR is the largely accepted income proof.

PAN – Permanent Account Number, issued by the Income Tax authority is not only a prerequisite for filing ITR but is also now mandatory for all financial transactions – from opening a bank account, or purchasing mutual funds to real estate for investment. So it makes sense to get yourself one and file the tax return.

  1. Helps Loan application:

At the time of applying for a home loan or vehicle loan or education loan, most banks ask the applicant to furnish copies of tax returns for the past 2-3 years. This helps banks understand your financial position and ability to repay the loan. Providing a copy of returns receipts helps in faster approval of your loan application

Apart from a good credit history (or past repayment track), the fact that you are filing your ITR regularly gives you speedier access to credit and at better terms, although not necessarily a larger line of credit, but surely a better rate.

It also provides the impression to the lender that you are a law abiding citizen and will repay the loan within time.

3. Helps claiming your tax refund:

Filing of ITR also helps your claiming of Tax Refund! In the case of salaried employees or those who have sold property, where Tax is deducted at source at standard rate, you can claim refund if the tax outgo has been more than the actual tax payable. You must file your tax returns if you wish to claim tax refunds. Not doing so would lead to forgoing the refund.

Generally, your employer deducts taxes on your estimated income based on the declaration that you have submitted. Apart from this, taxes are also deducted at source on various other incomes such as interest, commission, rent, and others, at a standard rate. When you club all these incomes with your salary, and also consider tax deductions as applicable to you, the final tax rate applicable may turn out to be different from the TDS rate. Owing to this you may either have to pay more tax or expect a refund.

Thus, filing ITR is not always about paying tax. It can be used as a means to reduce your tax liability!

  1. Helps Carry forward of losses:

Income tax laws allow you to carry forward and set off certain losses (losses from business income, depreciation, capital gains) against future gain or income. These losses can be carried forward for eight consecutive years immediately succeeding the year in which the loss is incurred. Even if you have taxable income this year, you might have losses to carry forward that can be adjusted against gains in later years when you actually have higher incomes.

  1. Visa processing:

If you are planning to immigrate to another country or explore an overseas job opportunity, then prepare yourself in advance. Most embassies and consulates require you to furnish copies of your tax returns for the past couple of years at the time of the visa application. This is especially applicable when applying for visa for the US, the UK, Canada or Europe.

  1. Helps in Statutory Compliance:

This also helps in statutory compliance, when you need to file tax returns.

The income tax department requires you to file a tax return in case your gross total income exceeds Rs.2.5 lakh (Rs.3 lakh for tax payers older than 60 years and Rs.5 lakh for those older than 80 years) in the financial year. Further, even if you do not have taxable income but if you qualify as a ‘resident’ individual and have any asset or financial interest in an entity located outside of India, then also it is mandatory for you to file.

What if you don’t file your taxes? If you are required to file your returns but miss it, then the tax officer may impose a penalty of up to Rs.5,000 (under section 271F). And if you owe some taxes and still don’t file it, then you may be liable to pay additional interest (section 234A), along with other penalties for avoiding taxes.

Ease of doing business: 12 states implement 75% of reforms

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As many as a dozen states, including Uttarakhand, Rajasthan and Jharkhand, have implemented 75% of the reform initiatives under the ease of doing business programme, reflecting positive sentiments, commerce minister Nirmala Sitharaman said on Thursday.

These three states are followed by Telangana, Madhya Pradesh, Haryana, Chhattisgarh, Maharashtra, Andhra Pradesh, Gujarat, Punjab and Karnataka in implementing reforms.

The government, however, has maintained that the review process of the reform initiatives is still on and the current rankings may change.

The ranking of states is an assessment of the regulatory performance of states and a measure of how they improve over a period of time. Importantly, the rankings don’t accurately reflect the level of business-conducive nature of the states; rather, it shows how the states fared in implementing an action plan adopted by them with the help of the Centre within a particular time frame.

Addressing the inaugural session of the Invest North Summit organised by CII, Sitharaman also said tax and regulatory authorities are being directed not to go on an overdrive and asserted the government will not in any way create hindrances for businesses.

The ranking is based on indicators including the ease of starting a business, registering a property, getting credit, paying taxes and resolving insolvency.

The World Bank, which has been entrusted with the job of ranking states on their performance on ease of doing business by the centre, will likely wrap up this exercise by the end of this month.

Talking on the occasion, Department of Industrial Policy and Promotion Ramesh Abhishek said India is also hopeful of improving its rank among other nations in the World Bank’s Ease of Doing Business Index.

Last year, India was ranked 130th in the World Bank’s index covering 189 countries, an improvement of four notches from a year before.

While India improved its rank on three counts — starting a business, getting construction permits and accessing electricity — it witnessed its performance worsen in two areas — accessing credit and paying taxes.

Source: http://www.financialexpress.com/economy/ease-of-doing-business-12-states-implement-75-of-reforms/387441/

India’s banking outlook stable, worst asset quality cycle almost over: Moody’s

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India’s banking system outlook is likely to be stable over the next 12-18 months as the pace of formation of bad loans is expected to decrease compared to last five years, global rating agency Moody’s said today. Under the asset quality recognition (AQR) of the Reserve Bank, lenders have recognised a major portion of their non-performing assets (NPAs) or bad loans, it said. “The pace of deterioration in asset quality over the next 12-18 months should be lower than what was seen over the last five years, especially compared to the fiscal 2015-16, even as we take into account some remaining problem loan under -recognition in a handful of large accounts,” said Moody’s Vice- President and Senior Credit Officer Srikanth Vadlamani.

Aside from these legacy issues, the underlying asset trend for Indian banks will be stable because of a generally supportive operating environment, he added. Moody’s said the stable outlook for the banks over the next 12-18 months reflects its assessment that the system is moving past the worst of its asset quality down cycle. The credit rating firm today released a report — ‘Banking System Outlook — India: Bottoming Asset Cycle, Strong Liquidity Support Stable Outlook’. The agency rates 15 banks in the country that together account for around 70 per cent of system assets. The ratings outlook on 11 of the banks is positive. Vadlamani expects net interest margins (NIMs) of banks to stabilise, given the expectation of limited policy rate cuts over the next 12 months, with an upside risk coming from current changes in portfolio mixes in favour of higher yielding retail loans.

“Credit costs will also remain high for the sector, including for some private sector banks, but will be no higher than in recent years for the industry overall.” Indian banks’ capital strength will continue to show divergence between the weak public banks and the far stronger private lenders, he said. State-owned banks will require significant external infusions of equity capital over the next three years. “For state-run banks to have a credit growth of 12-15 per cent over the next three years, equity capital requirement will be of USD 1.2 trillion,” he said.

The PSU banks have not been able to demonstrate access to the equity capital markets, while the announced capital infusion plans of the Government fall short of the amount required for full recapitalisation, Vadlamani said. “A potential way to bridge this capital shortfall would be to slow loan growth to the low single digits over the next three years,” he said.

Source: http://indianexpress.com/article/business/banking-and-finance/indias-banking-system-outlook-stable-worst-asset-quality-cycle-almost-over-moodys-3039297/

Forex reserves hit fresh all-time high, cross $371 billion

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The country’s forex reserves continued to scale new highs, with the week to September 9 adding $3.513 billion to the kitty, which hit a new life-time peak of $371.279 billion, RBI data showed today.

The reserves had increased by $989.5 million to $367.76 billion in the previous reporting week.

The reserves are more than sufficient to cover nearly 13 months of exports.

The surge indicates that new RBI Governor Urjit Patel is continuing with his predecessor Raghuram Rajan’s policy of building up the forex reserves. The three-year tenure of Rajan saw the RBI adding a net of $92 billion to the kitty.

Foreign currency assets (FCAs), a major component of the overall reserves, swelled by $3.509 billion to $345.747 billion for the week ended September 9, the Reserve Bank said.

FCAs, expressed in dollar terms, include the effect of appreciation/depreciation of non-US currencies such as the euro, pound and the yen held in the reserves.

Gold reserves, however, were unchanged at $21.64 billion at the end of the reporting week, the apex bank said.

The country’s special drawing rights with the International Monetary Fund increased by $5.3 million to $1.493 billion, while the reserve position with the fund was down by $1.3 million to $2.395 billion, it added.

Source: http://www.financialexpress.com/economy/forex-reserves-hit-fresh-all-time-high-cross-371-billion/379908/

India’s microfinance industry clocked 60% growth in fiscal 2016: Report

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After years of subdued growth, the Indian microfinance (MFI) industry expanded more than 60% to Rs54,329 crore in 2015-16 compared to the previous year, according to a report prepared by Sa-Dhan, the self regulatory organisation of MFIs.

The MFI client base expanded by 2.8 million in the year, taking the total number of clients to 39.9 million, said the report. This growth was despite the fact that Bandhan, which was the largest MFI, moved out of the space to become a full fledged bank.

The top 10 MFIs classified as non-banking financial companies (NBFCs) accounted for about 80% of the total gross loan value, the report said. They include Janalakshmi Financial Services Ltd, Ujjivan Financial Services Ltd and SKS Microfinance Ltd.

“Attaining over 28 lakh clients is no mean feat. This goes on to show that the microfinance industry, having reached its inflection point, is growing steadfastly,” P. Sathish, executive director of Sa-Dhan, said.

The MFI sector experienced a crisis after Andhra Pradesh, the biggest market for small loans made to the unbanked poor and self-employed, in 2010 clamped down on micro lenders.

The state government tightened regulations governing MFIs after reports surfaced that coercive loan recovery practices by the lenders had driven some overextended borrowers to commit suicide. That led to a shrinking of the asset base of the microfinance industry and a surge in bad loans.

Of the total client base of 39.9 million, the southern region alone contributed to 39% of the total client base. Kerala and Karnataka now have the maximum number of MFI branches.

The growth in this sector is also due to Reserve Bank of India allowing many NBFC-MFIs to act as banking correspondents (BCS) connecting commercial banks with customers in small towns and rural areas.

“The MFIs are finding the BC model rather attractive on the credit side,” Sathish added.

The report also claims that 94% of the total loans taken from MFIs are for income generating activities, dominated by agriculture and animal husbandry.

Source: http://www.livemint.com/Industry/4Zb0zp5yOh0toqEdBFz4jL/Indias-microfinance-industry-clocked-60-growth-in-fiscal-2.html