April 21, 2024

“Easily file your TCS return with Form 27EQ. Simplify tax compliance and reporting for hassle-free transactions.” Tax Collected at Source (TCS) is a tax collected from the buyer and paid to the government by the seller. According to Section 206C of the Income Tax Act 1961, if the seller has collected the tax then they are required to file a TCS return in Form 27EQ. The form has to be submitted by both corporate and government collectors and deductors. What is Form 27EQ? Form 27EQ is a TCS Return/ Statement holding information on Tax Collected at Source by the seller while receiving payments from the buyer on specified goods. Basically, details of Tax Collected and paid to the central government are covered in Form 27EQ. It is required to be submitted quarterly on or before the due date. Who is Required to submit Form 27EQ? The following entities are required to submit Form 27EQ Corporate deductors and collectors Government deductors and collectors Contents of Form 27EQ Section 1: This section requires the deductor to fill in the following information: TAN Details PAN Details The financial year The year of assessment Whether a statement has already been filed previously for the quarter in question If such a statement has been filed then the provisional receipt number of the original statement will have to be provided Section 2: Under this section the following details and information of the collector will have to be filled in: The name of the collector The collector’s branch or division, if applicable The collector’s personal and residential details such as: Full address Telephone number E-Mail address Section 3: This section will contain the following details and information of the person in charge of tax collection The individual’s name The individual’s full address Section 4: This section is to be filled with the following information regarding the tax collected at source and subsequently paid to the credit of the Central Government: The collection code The amount of Tax Collected at Source (TCS) The surcharge amount The amount of Education Cess The amount of interest charged Any other amount The total tax deposit, which is the sum of the above mentioned amounts The cheque number or Demand Draft number if applicable The BSR code The date on which the tax amount was deposited The transfer voucher number or the challan serial number If the Tax Collected at Source was deposited via book entry Section 5: Under this section details of the tax that has been collected as well as details of the amounts that have been paid are to be mentioned along with the relevant signatures. All relevant details are to be entered in the annexure provided with the form. FAQs When is Form 27EQ due for filing? Form 27EQ is typically due for filing quarterly. The due dates for filing vary depending on the quarter for which the return is being filed. The due dates are usually July 15, October 15, January 15, and May 15 for the quarters ending June, September, December, and March respectively. What transactions are covered under Form 27EQ? Form 27EQ covers transactions where tax is collected at source, such as sale of goods, provision of services, sale of scrap, sale of minerals, and other specified transactions as per the Income Tax Act. 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Mutual funds are a challenging concept for most people to grasp, but they are unquestionably a successful business strategy. Establishing a mutual fund company in India is not straightforward, but if you understand the entire procedure, you may simply do it and earn handsomely. A Mutual fund company involves a collection of money from its investors put together to make the highest profit returns from the invested money. It is a pool of money that is invested at different places to lower the risk of loss in case a single channel fails to give expected results and thus increasing the likelihood of booking profits. All the funds are managed by professional managers. What are Mutual Fund Companies? Mutual fund company is a type of  financial firm. It collects the money from the different investors in the market. That is how such companies get their funds and they further pool these funds to buy various types of stocks, bonds, or other assets. These companies manage the investments on behalf of the investors. Each investor in a company of mutual funds must be owning a portion of the holdings proportionate to the amount they’ve invested. The companies have professional managers who make decisions on where to invest the pooled money in different financial instruments. The aim is to grow the investors’ money over time and offer them returns based on the fund’s performance in the market. Registration of mutual fund company in India Because of the huge profit margins, it draws a lot of con artists and those that engage in unethical behavior. As a result, the SEBI (Securities Exchange Board of India) 1996 makes it essential to register a mutual fund company. Mutual fund companies are governed by the SEBI. To get a certificate of registration of Mutual Fund, the applicant must meet the following necessary requirements: In his previous experiences and commercial dealings, the sponsor should have a track record of fairness and honesty. It must have at least 5 years of experience running a business and providing financial services. And throughout the course of those five years, the net worth will be positive. The sponsor must provide at least 40% of the Asset Management Company’s net value. The sponsor should be free of fraud and have never been convicted of a crime involving moral turpitude. A mutual fund company trustee must be appointed by the sponsor. Appointment of an Asset Management Company to administer the Mutual Fund’s money and activities.  A net worth of INR 5 crore is required for such an asset management business. Appointment of a custodian for the safekeeping of securities Under the Indian Trust Act of 1882, the mutual fund company must be registered as a trust. The memorandum must include the objects that permit the sponsoring business to conduct the mutual fund company’s operations. Steps to start a mutual fund company in India 1. SEBI approval is required.- If you want to form your own private mutual fund company, the first step is to apply for SEBI permission and obtain a certificate of registration. After that, the Securities and Exchange Commission must approve the application. Following approval, the person must have sufficient operational cash to keep the business afloat. 2. Look at Investment Firms- Investment businesses that are registered with the Securities and Exchange Commission are known as mutual funds. For mutual funds, the SEC has tight requirements and provisions, such as maintaining adequate capital to compensate investors for cashing in shares and making relevant information publicly available. To start a mutual fund company, an individual must incorporate a company in the form of a Limited Liability Partnership (LLP). 3. A financial advisor-Obtain clearance from the Securities and Exchange Commission (SEC) for institutional investment management in order to manage the mutual fund company. Form ADV, which is also used for various state registration requirements, can be utilized to get registration. The size of portfolios an applicant wishes to manage must be disclosed on Form ADV. Institutional investment managers with portfolios worth more than $1 million must submit a Form 13F, which provides information on the fund’s transactions and value. 4. Arrangements for Funding- Fees and operational expenditures are included in the mutual fund’s operating expenses. The most expensive expenditure of every mutual fund company is attracting the investor’s money to construct a portfolio. A tiny startup cost might be extremely low, but to be a lucrative corporation, a person requires a large portfolio. 5. Find a partner with whom you can have a mutually beneficial relationship.- Any shared trust can partner with a mutual fund to offer a board of directors, insurance, and regulatory compliance. These firms assist small and new mutual fund companies to become more competitive, and mutual fund managers are free to make their own decisions. Registration process of Mutual Funds with SEBI An applicant must submit Form A and a non-refundable fee of INR 5 lakh in accordance with Schedule I of the SEBI (Mutual Fund) Regulations 1996. A person who owns 40% or more of an asset management company’s net worth is considered a sponsor and must submit an application. When a sponsor firm files for mutual fund company registration, it must ensure that its memorandum of agreement (MOA) has an object clause allowing the mutual fund company to carry out its operations. An application must include a full list of all group firms or linked entities that are registered with SEBI in whatever manner. Details of the sponsor firm or its affiliate business, if it is publicly traded, must also be included. A declaration that no director or executive of the sponsor firm has been found guilty of fraud or has been convicted of a crime involving moral turpitude. The information of the sponsor company’s registration with RBI as a Banking Company or Non-Banking Company must also be appended. The trust deed must be signed, coupled with the formation of a board of trustees that includes two-thirds of independent directors. The Asset Management Company and the Trustee Company should both be incorporated.

India continues to be a regulated economy, in order to boost investment in the venture capital space (which is fairly capital intensive in nature) and incentivize investments in start-ups, the Government has introduced and, from time to time, liberalized the regulatory regime applicable to foreign venture capital investors (“FVCI”). In 2000, the Securities and Exchange Board of India (“SEBI”) announced the SEBI (Foreign Venture Capital Investors) Regulations, 2000 (“FVCI Regulations”) for enabling registered FVCIs to avail of certain benefits. Additionally, benefits have also been granted by the Reserved Bank of India (“RBI”) pursuant to the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 (“NDI Rules”)  to investments by FVCIs. The cumulative investment by FVCIs for the year 2017 was INR 46,031 crores Foreign Venture Capital Investment in India The term refers to investments made by a Non-Resident / Foreign investor in Venture Capital Undertakings (“IVCU”) and Venture Capital Funds (“VCF”). In India, such investments are governed by the Securities Exchange Board of India (“SEBI”) Regulations and the Foreign Exchange Management Regulations. The foreign country which chooses to invest in India’s Venture Capital is known as the Foreign Venture Capital Investor (“FVCI”). The term has been defined under Regulation 2(g) of SEBI (Foreign Venture Capital Investors) Regulations, 2000 as an investor which is incorporated and established outside India, is registered under this Regulation and has proposed to invest in VCF or Venture Capital Undertakings (“VCU”s) in India. The Foreign Direct Investment Policy, 2020 (“FDI Policy”), gives a similar definition of the term FVCI by stating FVCI is an investor incorporated and established outside India, registered under the SEBI (FVCI) Regulations, 2000 (“FVCI Regulation”) which proposes to invest according to these Regulations. Thus, from the above two definitions we can conclude that there are 3 essentials which a foreign investor must satisfy before it can start making investments in India’s venture capital enterprises: It must have been established and incorporated in a country other than India; and It must be registered with SEBI as an FVCI; and While making investments in VCFs and VCUs in India, it must act in accordance with FVCI Regulation Eligibility and Registration In order to be recognized by SEBI as an FVCI, the applicant/ foreign investor must fulfil certain conditions which have been listed in Regulation 4 of the FVCI Regulations. These include: The Applicant’s track record Professional competence Financial soundness Experience in the field Reputation with respect to fairness and integrity If the applicant is an investment company, investment trust, investment partnership, pension fund, mutual fund, endowment fund, university fund, charitable institution or any other entity incorporated outside India If the applicant is an asset management company, investment manager or investment management company or any other investment vehicle incorporated outside India If the applicant is authorised to invest in venture capital fund or carry on the activity as a foreign venture capital investors If the applicant is regulated by an appropriate foreign regulatory authority or is an income tax payer; or submits a certificate from the banker of its or its promoter’s track record where the applicant is neither a regulated entity nor an income taxpayer If the applicant has not been refused a certificate by the Board Reserve Bank of India (“RBI”) must have given approval to the Applicant for making investments in India The Applicant must be a ‘fit and proper person’, according to the criteria laid down in Schedule II of the SEBI (Intermediaries) Regulations, 2008 If the application is incomplete or the necessary criteria have not been fulfilled, the Board may reject the application after giving the applicant time to remove the objections / an opportunity of being heard. Contrarily, if the Board is satisfied that the applicant satisfies the eligibility conditions, it shall grant a certificate of registration as FVCI to the applicant. Types of Investments made by an FVCI 1. Indian Venture Capital Undertaking VCUs are generally newly inaugurated, private companies that are yet to establish themselves in the market and require finances and expert advice from investors. It may be defined as a company: Which is incorporated in India Whose shares have not been listed on a recognized Indian stock exchange Which is not engaged in any activity or sector included in the ‘negative list’ by SEBI 2. Venture Capital Fund As the name suggests, it is a ‘fund’ that has been established as a trust or a company. It must: Be registered under the SEBI (Venture Capital Fund) Regulations of 1996 Have a dedicated pool of capital, which was raised in the manner given in the aforementioned Regulations Invest in VCUs according to the said Regulations Key Benefits of FVCI Route v. FDI Route 1. FVCIs are exempted from pricing norms at the time of entry as well as exit. As a result, FVCIs can acquire or sell instruments at a price mutually acceptable to the buyer and the seller/issuer. This is a significant exemption as it enables FVCIs to structure a cash-out at any price and without being subject to the fair market value related hassles. 2. The open offer related provisions under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 are not applicable in case of sale of shares by FVCIs to promoters, if such transfer is effected pursuant to a pre-existing arrangement. 3. FVCIs are exempted from the one year lock-in requirement under the SEBI (Issue of Capital and Disclosure) Regulations, 2018 (“ICDR Regulations”), provided that the shares have been held by such FVCIs for at least one year. As a result, FVCIs have an opportunity to exit immediately once the investee company goes public. 4. FVCIs are classified as ‘Qualified Institutional Buyers’ under the ICDR Regulations and are therefore eligible to subscribe to securities offered at an initial public offering through the book building process. Restrictions on Investments A minimum of 66.67% of the investible funds must mandatorily be invested in the equity-linked instruments or the unlisted equity shares of a VCU It may invest 33.33% of the investible funds (and not more