Company Incorporation in India made simpler and more versatile

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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

FPI inflows top Rs. 20,000 cr in Sept, at 11-month high

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Foreign investors pumped in more than Rs. 20,000 crore into the capital market in September, making it the highest net inflow in 11 months.

This also marks the third consecutive month of positive inflows (equity and debt).

The trend is likely to continue in the coming weeks as regulator SEBI has decided to offer well-regulated foreign investors direct entry to invest in corporate bonds, say experts.

They attributed the latest flurry of capital to factors such as sound progress in roll-out of GST, better corporate earnings and the US Fed’s decision not to lift interest rates.

Sentiment turned better after the current account deficit (CAD) narrowed sharply to just $300 million, or 0.1 per cent of GDP, in the June quarter and domestic passenger vehicle sales grew for the 14th straight month in August, they added.

According to depositors’ data, net investment by FPIs stood at Rs. 10,443 crore in equities last month while the same for debt was Rs. 9,789 crore, taking the total inflow to Rs. 20,233 crore ($3 billion).

This was the highest net inflow in the capital markets since October 2015 when FPIs had infused Rs. 22,350 crore.

The latest inflow has taken the FPI investment tally in equities to Rs. 51,293 crore in 2016 while the same for the debt market stands at Rs. 2,441 crore, resulting in a net inflow of Rs. 53,734 crore.

Source: http://www.thehindubusinessline.com/economy/fpi-inflows-surpass-rs-20000-cr-in-sept-at-11month-high/article9176139.ece

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.

Income Declaration Scheme: Rs 65,000 cr and counting

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The Capital’s tallest building, the 28-storey Civic Centre near the New Delhi Railway Station, is hardly a hub of action on a weekend night. But September 30 was not like any other Friday evening. It was the last day of the government’s Income Declaration Scheme (IDS). And hours before the midnight deadline, top officials in Mumbai and New Delhi confirmed that the response was overwhelming. Till 11 pm, the pan-India declarations had exceeded Rs 65,000 crore, implying a tax amount or earning of Rs 30,000 crore for the government.

While the final tally will be announced by Finance Minister Arun Jaitley at a press conference on Saturday afternoon, till evening of Friday, Hyderabad emerged as a top destination with declaration of Rs 13,000 crore, followed by Mumbai (Rs 8,500 crore), New Delhi (Rs 6,000 crore) and Kolkata (Rs 4,000 crore).

Business Standard visited Delhi’s Civic Centre, which houses one of the largest income tax offices in the country, to do a reality check of the Narendra Modi government’s ambitious black money declaration scheme just before the window closed. At the main gate, the register kept for visitors’ entry got filled and the second register had more than 100 entries at 9 pm. The basement parking was overflowing through the day, a clear indication that the scheme had picked up momentum on the last day.

Across several floors of the building, aides of those declaring undisclosed income were lined up till late in the evening. All top officers were at work, handholding people who wanted to come out clean, by paying 45 per cent tax on the declared amount. Among the people who had rushed with the income papers along with fat cheques was a 20 something man with a backpack. He represented a businessman, but remained tight-lipped, in the spirit of the scheme that promises not to give away any detail of the people who had responded to the government’s call.

There were more like him, sitting on sofas outside the commissioners’ rooms or at the elevators, trying to reach the right floor before midnight.

“I am just delivering the form for someone else. This is not my declaration,” said one of those, when asked why he waited for the last minute to make the disclosure.

A helpful principal commissioner pointed out that there was a rush of people over the last two days, with most seeking clarifications about the scheme. Many of the last day declarants were the ones whose forms were rejected earlier because of incomplete information, a source said.

With a sigh of relief, another principal commissioner at 10 pm said over Rs 200 crore worth declarations were received in his office, helping him meet the expectations.

There was no time to break for dinner but cooks, sourced from a prominent restaurant chain, were at work, making cuisines for close to 100 people who stayed up till midnight to accept declarations.

A tax officer gave out the secret of the scheme’s success. “Besides the 900,000 letters that were sent out, we intimated individuals whose information we had. Most of them chose to declare it under the scheme to avoid the risk of prosecution after the window closed,” he said.

In fact, it was during the surveys that many individuals decided to declare their unaccounted income or assets. “During surveys, they asked if they could still declare it. We agreed, and that worked,” he said. In the 1997 tax amnesty scheme — Voluntary Disclosure of Income Scheme (VDIS) — the government had received Rs 33,000 crore in declarations. In contrast, only about 644 declarations worth Rs 4,164 crore were made under the black money window for foreign assets last year, resulting in tax collection of Rs 2,428 crore.

The stiff warning from the Prime Minister against the black money holders earlier this month may have also acted as a trigger for people to avail the one-time Scheme. Modi, in an interview to a private channel, had said, “No one should blame me if I take tough decisions after the 30th (of September).”

The IDS, which charges a one-time effective tax rate of 45 per cent on undisclosed income or property, gave a chance to domestic taxpayers to declare undisclosed income or assets by September 30 and avail immunity from prosecution under the Income-tax Act, Wealth Tax Act and Benami Transactions (Prohibition) Act.

Source: http://www.business-standard.com/article/economy-policy/income-declaration-scheme-rs-65-000-cr-and-counting-116093001207_1.html

GST Council: Tax exemption threshold fixed at Rs 20 lakh

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The first session of the GST Council that concluded here on Friday made good progress in ironing out some of the contentious issues between the Centre and states: The exemption threshold for the goods and services tax (GST) has been fixed at Rs 20 lakh for all states except the northeastern ones and the three hill states of Jammu and Kashmir, Uttarakhand and Himachal Pradesh, in whose case this limit would be Rs 10 lakh; states will have the assessment powers for units with annual turnover up to Rs 1.5 crore while in the case of bigger businesses too, the one-taxpayer-one-authority principle will be retained and either the Centre or the state concerned will be accorded the assessing power based on risk profiling.

Importantly, the Centre agreed to the states’ demand for including the proceeds from sundry cesses levied by them in the definition of “revenue”, a step that could increase its compensation payouts. This would also mean that the states would cease to levy the cesses, the proceeds from which stood at close to Rs 40,000 crore in FY16.

The council decided to take 2015-16 as the base year to compute compensation to states for any future revenue loss, but left open the question of projecting the business-as-usual rate of increase in revenue, crucial for quantifying compensation. Finance minister Arun Jaitley said three options were under consideration for projecting the revenue growth rate: A mutually agreed-upon fixed rate; the average of the three best (high-growth) years in the past five years; and the average of median three of the last five years. States had earlier turned down the Centre’s proposal for taking the average of the last three years for projecting future revenue growth, saying these years haven’t been particularly good due to the economic slowdown.

Jaitley said the Centre will continue to assess the 11 lakh service tax assessees (even those below Rs 1.5 crore) but added that states will be given training to assess them and once they acquire competence, the future addition to this taxpayer base will be shared with them for the purpose of assessment.

Regardless of whether the Centre or the state has control on an assessee, the tax proceeds will be shared between the two — the central GST component will go to the Centre and the states will appropriate the state GST, which could be slightly higher than central GST. As far as integrated GST — to be levied on interstate transactions and imports — is concerned, the place of supply rules will decide who the appropriating authority will be; of course, the basic principle is that tax needs to be paid where the consumption takes place.

The council, Jaitley said, would meet again on September 30 to finalise the draft rules on the council’s functioning and the exemption thresholds and decide how the grandfathering of tax sops (like the area-based excise exemptions) will be carried out. The crucial question of the GST slab structure, the revenue-neutral rate (RNR) and actual GST rates would be discussed by the council between October 17 and 19. The Arvind Subramanian panel that had estimated a RNR of 15-15.5% had said if the standard rate is 17%, it could comprise central GST of 8% and state GST of 9%.

Tax experts welcomed the outcome of the first meeting of the council. Harishanker Subramaniam, national leader, indirect tax, EY India, said: “It is interesting is that for GST on services, the Centre will have administrative control irrespective of threshold at least in the initial years till states are trained to handle services. This may be a good news for industry as many were worried as to how states will handle complexity of services.”

According to Pratik P Jain, leader, indirect tax, PwC India, enhancing the annual turnover for exemption to Rs 20 lakh from Rs 10 lakh contemplated earlier would be administratively easier for the government as several small businesses would be out of the GST ambit. “Industry would also welcome the move to have a single assessing authority, instead of having a dual system of assessment and scrutiny, which was a major concern for businesses,” he said.

Source: http://www.financialexpress.com/economy/threshold-for-gst-fixed-at-rs-20-lakh/389350/

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/