November 2023

Businesses use many capital goods on which input tax credit is available.The registered person who is involved in the export of goods or services or taxable supply or both can utilize qualified ITC on goods or services or both used in the development of the business. ITC can be utilized on inputs, input services, and capital goods.Input Tax Credit (ITC) reversal calculations, input tax credit availability and non-availability calculations, and input tax credit calculations for capital under GST each have their own unique special rules. Additionally, capital items that are utilized for both taxable and exempt deliveries are given special treatment. In this article, we examine the application of the GST’s input tax credit for capital goods in further depth, as well as the GST’s Input Tax Credit calculations Meaning of Capital Goods as per CGST Act, 2017 The Section 2(19) provides for definition of capital goods. It provides, capital goods are those goods, values where of have been capitalized and  are used or intended to be used in the course or in furtherance of business. Hence, capital goods which are not capitalized, that is to say, not debited to respective asset account, ITC in respect thereof, is not available  to be taken credit.However, Section 2(59) provides that “input” means  any goods other than capital goods used or intended to be used in the course or in furtherance of business. It has implication that wherever word input is used, and not input tax, the same shall mean input other than capital goods.Capital goods are regarded as items that assist in creating finished goods and preparing them for shipment. Many capital goods items use longer than one year. As a result, the cost may not apply as a business expense for the current year, and the deduction happens at set product usage lifetimes. Capital assets help the business or sector by generating goods. Capital goods are assets such as buildings, machinery, equipment, vehicles and tools that an organization uses to produce goods or services. For example, a blast furnace used in the iron and steel industry is a capital asset for the steel manufacturer.    Difference between Capital Goods & Other Inputs Goods utilized to create a finished product are known as input goods. In other words, input goods are many items combined to create a finished good. It may also be regarded as a component of the product’s manufacturing process. The price of making these raw items qualifies as a business expense. Let us take an example. You are making a cake in your oven. You add ingredients such as eggs, water, flour, butter. These are your inputs. The cake is your final product. The oven is the capital good which helps you to make the cake. Inputs are consumed while making the final product and are treated as business expenses as cost of production.  Capital goods are not consumed when the final product is made. They are not consumed in a single year of production. Therefore, they cannot be entirely deducted as business expenses in the year of their purchase. Instead, they are depreciated over the course of their useful lives. The business recognises part of the cost each year through accounting techniques as depreciation, amortization and depletion.    What is Credit on Capital Goods? So, you’ve invested in that shiny new machinery. The good news? You’re eligible for a sweet deal—the Input Tax Credit on Capital Goods. This credit allows businesses to offset taxes paid on capital goods against their output tax liability. When you purchase anything, you are required to pay GST on it. Later, you can claim input tax credit on the GST paid on your purchases. Similarly, when you are purchasing any machinery for your factory, you will pay the applicable GST rate. This GST paid can be claimed as credit in the same way as inputs. However, if you claim depreciation on the GST paid while purchasing the capital asset, you cannot claim input tax credit. Concept of Common Credit Businesses often use the same assets and inputs for both business & personal use. For example, Ms. shruti is a freelance designer and Youtube blogger . She has a personal Desktop which she also uses for her freelance work. She can claim the input credit of GST paid on purchase of Desktop only to the extent it pertains to her freelance business. Ms. shruti has also purchased a special designing software. Since this pertains only to her business, she can claim full ITC on this.  Common Credit: The Concept 1.The Unity Principle:Common Credit pools the credits of both inputs and capital goods. A unified approach for streamlined taxation. 2.Crossing Borders:Applicable when a business has multiple units across states.Ensures seamless credit utilization. Why is common credit important? Financial Fluidity: Smooth cash flow as taxes paid on capital goods find purpose. Empowers businesses to invest in growth. Reduction in Tax Burden: Common Credit mitigates the tax burden on the end consumer. A win-win for businesses and customers alike. ITC is only offered for commercial use. The same inputs are used by many traders for both professional and personal purposes. Taxpayers are not permitted to deduct personal costs from their taxes. Once more, products that are exempt from GST already pay 0% GST. ITC claims for inputs used in certain exempt items are not permitted since doing so would result in negative taxes. ITC on inputs for exempted items would thus be eliminated as well. Input Tax Credit on Capital Goods All individuals who have registered for the GST are permitted to get input tax credits, according to Section 16 of the CGST Act (ITC). The registered person is eligible to use the ITC for company expansion or other related reasons. When purchases of capital items are made solely for business use, and when GST’s input tax credit is applicable. The taxpayer must document the business transaction when completing the GST return in order to receive the input tax credit for capital goods. Use of Capital Goods for both Personal Use and Exempt Sales Personal

Universal Account Number (UAN) is important for EPF account holders as the entire process related to the Employee Provident Fund (EPF) services are now operated online. Accessing your PF account services like withdrawal, checking EPF balance without the help of an employer, and PF loan application is easy due to the EPFO portal The Employee Provident Fund (EPF) in India and wondering how to activate UAN? The EPF ensures a steady retirement savings plan for employees and employers alike. To make the management of your EPF account seamless and hassle-free, the Universal Account Number (UAN) was introduced. Activating your UAN is the key to unlocking a host of benefits and services.  In this article, we will discuss how to activate UAN number on EPFO portal. What is UAN? The Universal Account Number or UAN is a 12-digit unique number assigned to every employee contributing to the EPF. It is generated and allotted by the Employees’ Provident Fund Organisation (EPFO) and authenticated by the Ministry of Labour and Employment, Government of India. The UAN of an employee remains the same throughout his life irrespective of the number of jobs they change.  Every time an employee switches his/her job, EPFO allots a new member identification number or EPF Account (ID) linked to the UAN. As an employee, one can request a new member ID by submitting the UAN to the new employer. Once the member ID is created, it gets linked to the UAN of the employee. Hence, the UAN will act as an umbrella for the multiple member IDs allotted to the employee by different employers. The UAN remains the same and portable throughout the life of an employee. The employee shall have a different member ID when switching between jobs. All such member IDs are linked to the employee’s UAN to ease the process of EPF transfers and withdrawals. Significance of UAN Every new PF account with a new job will come under the umbrella of a single unified account. It is easier to withdraw (fully or partially) PF online with this number. The employees can transfer the PF balance from old to new using this unique account number. Any time you want a PF statement (visa purpose, loan security, etc.), you can download one instantly – either by logging in using the member ID or UAN or by sending an SMS. There is no need for new employers to validate your profile if the UAN is already Aadhaar and KYC-verified. UAN ensures that employers cannot access or withhold the PF money of their employees. It is easier for employees to ensure that their employer regularly deposits their contribution in the PF account. Documents required for UAN activation Aadhar card PAN card Bank account details Your EPF member ID Some other proof of identity or residence may be necessary. How to Activate UAN for Your EPF Registration? Visit the UAN portal: To activate your UAN, visit the official UAN member portal. Ensure you have access to a stable internet connection and have the necessary documents like your PAN, Aadhar, and bank account details readily available.. Select ‘Activate UAN’: Look for the ‘Activate UAN’ option on the portal’s homepage. Fill in the details: Input your UAN, Aadhar, PAN, and other required details. Generate OTP: An OTP (One-Time Password) will be sent to your registered mobile number. Enter it to verify your identity. Create a password: Set a secure password for your UAN account. Remember, the key to your financial fortress deserves a strong guard! Login with credentials: Once your UAN is activated, log in using your UAN and password. Complete KYC details: To make the most of your UAN account, ensure you link your KYC (Know Your Customer) details such as Aadhar, PAN, and bank account details. This step helps streamline various EPF services and ensures smooth transactions. Access EPF Services: Congratulations! Your UAN is now activated, and you can access a range of EPF services conveniently through the UAN member portal. These services include checking your EPF balance, updating personal details, and managing EPF transfers or withdrawals. UAN Activation Time The UAN activation process through the Umang app or any other approved method provided by the Employees’ Provident Fund Organization (EPFO), the activation should happen almost immediately or within a few hours. If you encounter any issues or if your UAN activation is delayed for an extended period, it’s best to contact the EPFO helpline or visit the nearest EPF office for assistance and to check the status of your UAN activation. FAQs Q1: What if I forget my UAN password? A: No worries! You can use the ‘Forgot Password’ option on the UAN portal. Follow the steps to reset your password and regain access to your account. Q2: Can I activate my UAN without Aadhar and PAN? A: No, both Aadhar and PAN are essential documents for UAN activation. They are required to verify your identity and ensure the security of your financial information. Q3: Is UAN activation a one-time process? A: Yes, activating your UAN is a one-time process. Once activated, your UAN remains the same throughout your career, making it a constant link to your EPF account. Q4: Is UAN activation mandatory for EPF withdrawals? A: Yes, UAN activation is a prerequisite for managing your EPF account, including withdrawals. It ensures a streamlined and secure process for accessing your funds. Practice area’s of B K Goyal & Co LLP Income Tax Return Filing | Income Tax Appeal | Income Tax Notice | GST Registration | GST Return Filing | FSSAI Registration | Company Registration | Company Audit | Company Annual Compliance | Income Tax Audit | Nidhi Company Registration| LLP Registration | Accounting in India | NGO Registration | NGO Audit | ESG | BRSR | Private Security Agency | Udyam Registration | Trademark Registration | Copyright Registration | Patent Registration | Import Export Code | Forensic Accounting and Fraud Detection | Section 8 Company | Foreign Company | 80G and 12A Certificate | FCRA Registration |DGGI Cases | Scrutiny Cases | Income Escapement

The organisation’s objectives, activities, and associations with investors and the rest of the world are completely spread out in this central report. However, the initial MOA may need to be modified to accommodate new strategies, expansions, or regulatory changes due to the constantly shifting business environment. Memorandum of Article is a vital document for the Company, which provides the Scope, objectives, and limitations of it. It lays down the framework within which the company operates, and any changes to the MOA can have far-reaching consequences for the company and its stakeholders. An alteration of the MOA may become necessary due to various reasons, such as changes in the company’s business model, expansion plans, or legal requirements. The Companies Act, 2013 provides for the alteration of the MOA, subject to the approval of the shareholders and the Registrar of Companies (ROC). In this article, we will discuss the step-by-step procedure for Alteration of Memorandum of Association (MOA), documents required, clauses mentioned under MOA and many other. the company may have to alter the specifications of its Memorandum of Association. Defining the word ‘alter’ or ‘alteration’, Section 2(3)  of the Act states that it includes the making of additions, omissions, and substitutions. For instance, when the company shifts its principal office to some other location, the Registered Office Clause of the company’s Memorandum of Association will have to be altered. Nevertheless, such alteration cannot be done without satisfying the steps mandated under the provisions of the Companies Act, 2013 .  In this article, we shall understand the process of altering the contents of a Memorandum of Association.  Brief about Memorandum of Association Memorandum of Association is like the identity card of any company.  It is a document drafted before incorporating any company. It is a public document prepared by the promoters of the company. A Memorandum of Association is also called the ‘charter of the company’ and specifies the affiliation between the company and its shareholders or creditors. The entire structure of any company depends upon the Memorandum of Association. It marks the scope of a company’s operation. It means that the company must function only as per the provisions of its Memorandum of Association. MOA is a legal document that defines the constitution and scope of a company’s activities. It contains the fundamental rules and regulations that govern the company’s affairs and sets out the company’s objectives, powers, and limitations. The MOA is a critical document that forms the basis for the company’s relationship with its shareholders, creditors, and other stakeholders. It is also required for the incorporation of a company and must be registered with the Registrar of Companies (ROC) at the time of incorporation. The MOA must be drafted and executed in accordance with the provisions of the Companies Act, 2013, and any amendments thereto. Any alteration to the MOA must also comply with the provisions of the Act and require the approval of the shareholders and the ROC. Clauses mentioned under MOA The MOA is like a treasure chest of clauses, each holding a key piece of information. From the company’s name and registered office to the objects it pursues and the liability of its members, it’s all there. These clauses aren’t just legal jargon; they’re the heartbeat of your company. 1.Name Clause: The name clause outlines the name of the company and specifies whether it is a public or private company. 2.Registered Office Clause: This clause states the registered office of the company. That is the official address of the company and where all official communications and notices will be sent. 3.Liability Clause: The liability clause outlines the liability of the members of the company. In the case of a company limited by shares; the liability of the members is limited to the amount unpaid on their shares. In the case of a company limited by guarantee, the liability of the members is limited to the amount they have agreed to contribute to the company’s assets. 4.Association Clause: This clause confirms the intention of the subscribers to form the company and become its members. 5.Capital Clause: The capital clause outlines the company’s authorised share capital. This is the maximum amount of share capital the company is authorised to issue. 6.Objective Clause: This clause defines the main objectives and scope of the company’s activities. It also outlines the objects that the company is authorized to pursue and the activities that it is not authorized to undertake. When is alteration of a Memorandum of Association allowed? Alteration of a MOA is allowed in the following circumstances: Change in Objectives: If a company wants to change its objectives or expand its business activities, it may need to alter its MOA to reflect the new objectives or activities. Change in Name: If a company wants to change its name, it must alter its MOA to reflect the new name. Change in Registered Office: If a company wants to change its registered office from one state to another, it must alter its MOA to reflect the new address. Change in Authorized Share Capital: If a company wants to increase its authorized share capital, it must alter its MOA to reflect the increase. Any other change required by law: The Companies Act, 2013, or any other law may require a company to alter its MOA to comply with the legal requirements. Documents needed for Alteration of MOA Notice of the General Meeting: A notice of the general meeting of the company, along with an explanatory statement, must be sent to all the shareholders of the company. Draft Resolution: A draft resolution proposing the alteration of the MOA must be prepared and included in the notice of the general meeting. Altered MOA: The altered MOA, with the proposed changes clearly highlighted or underlined, must be prepared and circulated to the shareholders. Board Resolution: A board resolution must be passed by the board of directors of the company approving the proposed alteration of the MOA. Shareholders’ Resolution: A special resolution must be passed by the shareholders of the company approving the proposed alteration of the MOA. Minutes of the General Meeting: Minutes of the