April, 2024 | CA B K Goyal & Co LLP

Conversion of Dormant Company To Active Company

Companies Act 2013 / CA Bhuvnesh Goyal / April 30, 2024

A company acquires the Dormant Company status when the Registrar approves an application in Form MSC-1 of Companies. There are several reasons why a company seeks dormant status. Please refer to our detailed discussion on the procedure to convert an active company as a dormant company; click here. A company can remain dormant only for up to five years, and if a company remains in dormant status beyond the five years, then the ROC shall strike off the company itself. Hence the company should apply to the ROC for obtaining the Active Company Status within five years from the date the company was declared to be a Dormant Company. In case of any event in breach of conditions for a dormant company, the company’s directors must apply for the restoration of the company as an active company within seven days of such event. The primary objective of the revisions made to the Companies Act 1956 was to have a simplified law that will be able to address the changes taking place in the national and international scenario, enable the adoption of internationally accepted best practices and also provide flexibility in response to the ever-changing business models. One such aspect which was introduced in the Companies Act 2013 was the concept of Dormant Companies in section 455 of this act. In common parlance, the word “Dormant” means inactive or inoperative. A dormant company is an excellent opportunity to start a company for a future project or hold an asset/intellectual property without having significant accounting transactions. On the other hand if a company has not filed its annual returns for two consecutive years then such a company will also be called as a dormant company. What is a Dormant company? A Dormant company is one that does not have: Been undertaking or carrying on any activity, Carrying out any accounting operations, Saved financial statement Previous two years financial returns report. The benefit of Dormant Company The inoperative company that does not do any business now can, by converting as a dormant company, continue as a going concern and remain valid as a legal entity for a future project or use. One of the objectives of converting an active company into a dormant company is to reduce the company’s compliance requirements under the Companies Act, 2013. Here is the list of advantages as a dormant company. To Protect the Company Name during inactivity Board Meeting to be held once in every six month To Reduce Regular Compliance Burden Option to Revive when the company has business Few provisions of the company act apply Simplified Annual Return Filing obtain the status of Dormant Company Suo-Moto (Voluntary): A company can apply Suo-Moto to the Registrar of Companies for ‘Dormant company’ status in Form MSC-1 along with the fee as specified in the Companies (Registration Authorities and Fees) Rules, 2014. ROC can declare a company a Dormant company; The Registrar can issue a notice to the company if the company has not filed financial statements or annual returns for two consecutive financial years. The ROC shall enter the name of such a company in the register maintained for companies that have acquired the status of dormant Company. The exemptions enjoyed by the Dormant companies Dormant companies do not contain cash flow statement in its financial statements. The provision on the rotation of auditors does not apply. Dormant Company status remains for five consecutive years. Fewer legal requirements apply, resulting in lower compliance costs. The company can revive and operate as it intends to in the future. To protect the interests and reputation of the independent trader. Stepwise Process To Convert an Active Company as Dormant STEP 1 – Convene Board Meeting The Board of Directors shall pass a resolution approving the filing of an application for conversion of the company’s status as Dormant Company in the Board Meeting. The Board shall also authorise one director to act on this behalf and send Notices to all shareholders for the Extra Ordinary General Meeting. STEP 2 – EGM Notice Issue appropriate Notice calling the EGM along with an explanatory statement, clearly stating the reasons as to why the Board of directors proposes a change in status of the company and as “Dormant Company STEP 3 – CA Certification of Statement of Affairs While the EGM is scheduled, the authorised director needs to work with the Statutory Auditor or a Chartered Accountant in practice for certification of the Company’s Statement of affairs (Financials). STEP 4 – Conduct of EGM On the designated EGM Date, the meeting of shareholders to be conducted per secretarial standards and with the requisite quorum, a Special Resolution approving the filing of an application for conversion of the status from Active to Dormant Company need to be passed. STEP 5 – Filing of MGT-14 Every special resolution passed in EGM needs to be filed with the Registrar of Companies in the prescribed form MGT-14 with the certified true copy of the resolution along with EGM Notice within 30 days of EGM. STEP 6 – Application for Change in Status After the MGT-14 is filed with the ROC, an application in the Form MSC-1 along with the scan copy of all resolutions, declarations, consent of creditors and CA Certificate is filed with the ROC for its approval. STEP 7 -Change of Status From Active to Dormant Company The registrar of companies examines the application made in MSC-1 and, if finds it in order, then issues a Certificate in form MSC-2. With the issue of the MSC-2 form the status of the company is changed as Dormant Company Reactivation of Dormant Dormant companies must file an application for the conversion of Dormant company status to active company status by filling MSC-4 form. The fees recommended under the Companies (Registration Authorities and Fees) Rules, 2014, should also be paid along with the application for conversion of a dormant company into an active company. The MSC-4 should be accompanied by the Dormant Company Return Form MSC-3. After reviewing the application as for

Conversion of Dormant Company To Active Company Read More »

Professional Tax Registration

learn / CA Bhuvnesh Goyal / April 30, 2024

The term “Income tax” collected by the Income Tax Department of India. Professional tax is similar to income tax, but unlike income tax, it is collected by the state government. Professional tax deducts from the employee’s salary income or applies to the income of professionals and businesses for their trade and profession. Many employees may not be aware of the professional tax registration process, tax rate slab, and who is responsible for deducting the professional tax. Income tax imposed by the Central Government, professional tax is levied by the government of a state or union territory in India. In the case of salaried and wage earners, the professional tax is liable to be deducted by the Employer from the salary/wages, and the same is to be deposited to the state government. In the case of other classes of individuals, this tax is liable to be paid by the employee himself. The tax calculation and amount collected may vary from one State to another, but it has a maximum limit of Rs. 2500/- per year. Professional tax is deductible from taxable income under section 16(iii) of the Income Tax Act 1961, and tax rates vary in different states of India and follow a slab system. The Commercial Tax Department collects professional tax and reaches the fund of the municipal corporation. However, professional tax is not applied in some states. What are the types of professional tax certificates? Professional Tax Enrollment Certificate (PTEC):It applies to owners of business entities, i.e., public and private companies, sole proprietors, partnership firms, and professionals. Professional Tax Registration Certificate (PTRC):It applies to government/ non-government employers, and they deduct the tax from the employee’s salary and pay it to the government. Who is liable to pay professional taxes? Individuals carrying freelance business without employees must register if the income exceeds the threshold provided by the state’s legislation. Owners of sole proprietorships, corporates, and partnership firms are required to pay tax on their trade and profession if income exceeds the threshold. Employers must register for professional tax registration and obtain the certificate of professional tax registration certificate. An employer is liable to deduct the tax from their employee’s salary and deposit it to the state government, and it is also subject to the monetary threshold. Professional Tax Applicable States across India Applicable States Non-Applicable States Andhra Pradesh Central Assam Andaman and Nicobar Islands Bihar Arunachal Pradesh Gujarat Chandigarh Jharkhand Chhattisgarh Karnataka Dadra and Nagar Haveli Kerala Daman and Diu Madhya Pradesh Delhi Maharashtra Goa Manipur Haryana Meghalaya Himachal Pradesh Mizoram Jammu and Kashmir Nagaland Ladakh Odisha Lakshadweep Pondicherry Rajasthan Punjab Uttar Pradesh Sikkim Uttarakhand Tamil Nadu Telangana Tripura West Bengal Professional Tax Rate- The maximum amount payable per annum towards professional tax is INR 2,500. The professional tax is usually a slab amount based on the gross income of the professional. It is deducted from his income every month. The Commercial Taxes Department of a state/union territory is the nodal agency that collects professional tax on the basis of predetermined tax slabs which vary for each state and union territory. The tax is calculated on the annual taxable income of the individual; however, it can be paid either annually or monthly. What are the Exemptions in professional tax? Any person having a mental or physical disability Parents of a child with a disability Temporary factory workers State-employed foreign individual Any individual aged 65 years or older Individuals running educational institutions Employees of force (Governed by Army, Air Force, Navy Act) Professional Tax Rates in Different States of India Professional tax slab for few states The professional tax rate on salary in Gujarat Monthly Gross Salary Professional Tax Up to 12000 Nil ₹12000 and above ₹200 Per month The professional tax rate on salary in Andhra Pradesh Monthly Gross Salary Professional Tax Up to ₹ 15000 Nil ₹ 15,001 to ₹ 20,000 ₹ 150 per month ₹ 20,000 and above ₹ 200 per month The professional tax rate on salary in Bihar Annual Salary Professional Tax Up to ₹ 3,00,000 Nil ₹ 3,00,001 to ₹ 5,00,000 ₹ 1000 per month ₹ 5,00,001 to ₹ 10,00,000 ₹ 2000 per month ₹ 10,00,001 and above ₹ 2500 per month The professional tax rate in Karnataka Monthly Gross Salary Professional Tax ₹ 1 to ₹ 9,999 Nil ₹ 10,000 – ₹ 14,999 Nil ₹ 15,000 and above ₹ 200 per month The professional tax rate in Kerala Half year Salary Professional Tax half yearly Up to ₹ 11,999 Nil ₹ 12,000 to ₹ 17,999 ₹ 120 ₹ 18,000 to ₹ 29,999 ₹ 180 ₹ 30,000 to ₹ 44,999 ₹ 300 ₹ 45,000 to ₹ 59,999 ₹ 450 ₹ 60,000 to ₹ 74,999 ₹ 600 ₹ 75,000 to ₹ 99,999 ₹ 750 ₹ 1,00,000 to ₹ 1,24,999 ₹ 1000 ₹ 1,25,000 and above ₹ 1250 Documents required for Professional Tax Registration Certificate of Incorporation / LLP Agreement MOA and AOA PAN Card of Company/LLP/Proprietor/Owner/Director NOC from the landlord, where the business is situated Passport size photos of Proprietor/Owner/Director Address and identity proof of Proprietor/Owner/Director Details of employees and salaries paid Additional registrations and licenses Procedure for Obtaining Professional Tax Registration Certificate The applicant must file the application form and the requisite documents. The applicant needs to submit the Application with the necessary documents to the concerned state government. A copy of the same should also be submitted to the tax department. On receipt of an application, the tax authority shall scrutinize the application to ensure that all the information is correct. Issue of Professional Tax Certificate: The authority will issue the registration certificate after successfully scrutinizing all the documents. Penalties Related To Professional Tax Registration Nature of default Penalty Leviable Not obtaining PT registration Rs.5/- per day Late filing of PT return Rs.1,000/- Late payment of PT dues Interest @1.25% p.m.Penalty @10% FAQs Is professional tax mandatory for sole proprietorship? Employer (Pvt./Public company, sole proprietorship, partnership firm) or any individual carrying on profession/trade or being a freelancer required to pay

Professional Tax Registration Read More »

Real time gross settlement (RTGS)

learn / CA Bhuvnesh Goyal / April 30, 2024

The term “real-time gross settlement (RTGS)” refers to a funds transfer system that allows for the instantaneous transfer of money and/or securities. RTGS is the continuous process of settling payments on an individual order basis without netting debits with credits across the books of a central bank. Once completed, real-time gross settlement payments are final and irrevocable. In most countries, the systems are managed and run by their central banks. The RTGS system was first adopted by three central banks in 1985. Today, there are more than 110,000 RTGS-enabled bank branches, making it one of the most popular money transfer methods, owing to its capability of transferring funds on the same day. In today’s world financial landscape, RTGS is critical in facilitating efficient and secure transactions, enabling the smooth and timely flow of capital and supporting the growth of businesses and the economy. What is RTGS? RTGS stands for Real-Time Gross Settlement. It is one of the types of electronic payment systems that facilitate instant and secure transfer of funds between banks in India. RTGS is generally used for large transfers, such as interbank settlements, government payments, and high-value business transactions. Think of it as an express service for moving money between banks, ensuring swift and reliable transfers. Here’s how RTGS is described: Real-time: Funds are transferred immediately, typically within seconds or minutes. Gross settlement: Each transaction is settled individually and in full, without grouping it with other payments. Central banks or financial authorities are in charge of the management and operation of RTGS systems for seamless and secure transactions. RTGS payments have an extremely high level of security, which makes them resistant to counterparty risks. The SWIFT system is an essential part of modern finance, and it speeds up and secures global funds transfer. Benefits of RTGS (Real Time Gross Settlement) The role of RTGS in reducing the risks in high-value payment settlements between financial institutions is particularly critical. Central banks worldwide increasingly adopt RTGS systems due to their effectiveness in bolstering financial security. Due to the nature of real-time settlement, RTGS minimises the window of opportunity for hackers to obtain critical financial data. RTGS dramatically decreases the level of cybersecurity risks, such as social engineering, phishing and data theft, by minimising the exposure of critical information. By enabling immediate and final settlement of transactions, RTGS systems contribute to overall financial security by reducing the likelihood of successful cyber attacks on sensitive financial information. Features of RTGS Real-Time Online Fund Transfer: Money can be transferred in real-time from one bank to another via RTGS; thus, the system is referred to as RTGS because it allows for real-time gross settlement from one bank to another. Suited for High-Value Transactions: The RTGS is usually used for a high amount above a certain amount, such as ₹ 2 lakh. It is better to use for a large business sum, property transaction, or a considerable amount transfer. Safe and Secure, with RBI’s Backing: RTGS is safe and secure because the Reserve Bank of India protects it, and there is no possibility of fraud and error. Quick Settlement: RTGS provides the facility of quick money settlement because the payment is settled within 2 hours, and the payments are reflected quickly on the beneficiaries’ end. Available 24×7: Round-the-clock availability of RTGS is another important feature. You can begin RTGS transfers at any point in time, day or night, as the system is available for use 24/7. How Does RTGS Works? Step 1: Initiation ProcessThe first step is the initiation process, where the payer (sender) here first initiates an RTGS transaction by providing the necessary details, including the recipient’s (payee’s) bank account number, name, and the amount to be transferred. Then the payer’s bank verifies the availability of funds in their account. Step 2: Verification of Settlement MessageAfter the initiation process, the RTGS system receives the settlement message and verifies the authenticity and accuracy of the information. It performs essential checks such as validating the sender’s account, ensuring compliance with regulatory requirements, and confirming the availability of funds. Step 3: Funds TransferWhen the settlement message is verified, the RTGS system authorises to debit from the sender’s account for the transaction amount and simultaneously credits the recipient’s account with the same amount. This transfer of funds happens instantly. Step 4: ConfirmationAfter the funds are transferred, the RTGS system generates confirmations for both the sender and the recipient. These confirmations usually include transaction details, such as the transaction reference number, timestamp, and the updated account balances of the sender and recipient. What are the uses of RTGS? – Real Estate Transactions: RTGS is often utilised where significant amounts of money are involved, such as in real estate transactions. It ensures swift and secure funds transfer for property purchases, sales, and other related transactions. – High-priority Payments: One of the reasons why RTGS payment is the most reliable in need of the time is because it’s super convenient as it is also meant to use during high-priority situations. This works well when an immediate settlement is required, such as emergency healthcare, salary payments, or disaster relief funds and even when a critical supplier payment is required. – International Transfers: In some cases, RTGS systems can facilitate transfers between banks in different countries. Bilateral or multilateral arrangements between countries enable real-time funds settlement, improving international payments’ efficiency. – Government Transactions: RTGS is often used for various government-related transactions, including payment of taxes, customs duties, subsidies, pensions, and other government-to-individual or government-to-government payments. Different Methods to Initiate RTGS Transactions in India Internet banking: Most banks offer online banking services, and you can log in to your account to initiate an RTGS transfer online. In this case, you select the option, enter the name of the beneficiary, amount, and other required details, and then complete the process. Mobile banking apps: In today’s digital world, you can now use your mobile banking app to initiate RTGS transactions as quickly as ever. These apps have been developed to simplify the process and enable you to make RTGS transfers from your mobile internet or tablet. Bank branch: If you are more of a traditional

Real time gross settlement (RTGS) Read More »

Moratorium period

learn / CA Bhuvnesh Goyal / April 30, 2024

A moratorium period is a period during which the borrower is not obligated to make payments. In other words, during a moratorium period, the borrower is permitted to halt their payments. It is commonly incorporated in home loans – called an equated monthly installments holiday – and educational loans. Understanding a Moratorium Period A moratorium period typically commences once a loan is granted. It is primarily extended to give the borrower adequate time to sort out finances and prepare for loan repayment. A moratorium period can also occur during the mid-life of a loan. It would be the case if the lender allows the borrower to stop making payments over a specified period for a specific reason – for example, due to financial hardship. It should be noted that interest on the loan generally accrues over the moratorium period. Is a Moratorium Period Beneficial? The ability to defer payments into the future offers greater financial flexibility. However, it is important to recall that interest generally accrues over the moratorium period, resulting in a higher total loan amount payable. Unless the borrower is under financial distress – i.e., unable to make payments – the financial flexibility of a moratorium period is largely offset by the additional interest charge. Moratorium Period vs. Grace Period A moratorium period is commonly confused with a grace period. It is important to note that a grace period is a set length of time after payment is due, where a payment can be made without penalty. In other words, a borrower is expected to make a payment over the grace period or face penalization – such as a late fee, credit rating downgrade, etc. On the other hand, over a moratorium period, a borrower is not required to make a payment over the period. In addition to the distinct difference as outlined above, a moratorium period length can range from weeks to months, whereas a grace period length is usually 15 days. FAQs How Long Is a Loan Moratorium Period? The length of a loan moratorium period will vary depending on the individual and is agreed upon between the lender and borrower. A moratorium can be up to a few months to a year. They are generally longer in term. What Is an Example of a Moratorium? An example of a moratorium would be an individual who takes out a loan and has a monthly payment of $300. If the individual can no longer pay this $300 due to financial hardship, they would contact their bank and ask for a moratorium on the loan payments. The bank would agree to a moratorium for six months, in which the individual does not have to make any payments. What Is the Grace Period of a Loan? The grace period of a loan will differ for every loan or credit card. Typically, a grace period will be 15 days, but it can be more or less depending on the lender. 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 Cases | Search & Seizure | CIT Appeal | ITAT Appeal | Auditors | Internal Audit | Financial Audit | Process Audit | IEC Code | CA Certification | Income Tax Penalty Notice u/s 271(1)(c) | Income Tax Notice u/s 142(1) | Income Tax Notice u/s 144 |Income Tax Notice u/s 148 | Income Tax Demand Notice | Psara License | FCRA Online Company Registration Services in major cities of India Company Registration in Jaipur | Company Registration in Delhi | Company Registration in Pune | Company Registration in Hyderabad | Company Registration in Bangalore | Company Registration in Chennai | Company Registration in Kolkata | Company Registration in Mumbai | Company Registration in India | Company Registration in Gurgaon | Company Registration in Noida | Company Registration in lucknow Complete CA Services CA in Delhi | CA in Gurgaon | CA in Noida | CA in Jaipur | CA Firm in India RERA Services RERA Rajasthan | RERA Haryana | RERA Delhi | UP RERA Most read resources tnreginet |rajssp | jharsewa | picme | pmkisan | webland | bonafide certificate | rent agreement format | tax audit applicability | 7/12 online maharasthra | kerala psc registration | antyodaya saral portal | appointment letter format | 115bac | section 41 of income tax act | GST Search Taxpayer | 194h | section 185 of companies act 2013 | caro 2020 | Challan 280 | itr intimation password | internal audit applicability | preliminiary expenses | mAadhar | e shram card | 194r | ec tamilnadu | 194a of income tax act | 80ddb | aaple sarkar portal | epf activation | scrap business | brsr | section 135 of companies act 2013 | depreciation on computer | section 186 of companies act 2013 | 80ttb | section 115bab | section 115ba | section 148 of income tax act | 80dd | 44ae of Income tax act | west bengal land registration | 194o of income tax act | 270a of income tax act | 80ccc | traces portal | 92e of income tax act | 142(1) of Income Tax Act | 80c of Income Tax Act | Directorate general of GST Intelligence | form 16 | section 164 of companies act | section 194a | section 138 of companies act 2013 | section 133 of companies act 2013 | rtps | patta chitta

Moratorium period Read More »

Registration as taxpayer (under composition scheme)

Goods & Service Tax / CA Bhuvnesh Goyal / April 30, 2024

Composition Scheme is a simple and easy scheme under GST for taxpayers. Small taxpayers can get rid of tedious GST formalities and pay GST at a fixed rate of turnover. This scheme can be opted by any taxpayer whose turnover is less than Rs. 1.5 crore*. a tax-paying mechanism offered to the country’s small businesses to impart benefits like reduced tax compliance and paperwork alongside lower taxation liabilities. Businesses with a turnover of less than Rs. 1.5 crore can opt for the Composition Scheme under GST and pay their taxes at a fixed rate of their annual turnover. For instance, those registering under this scheme can pay their taxes at the rates of 1% to 6% of their total turnover and file one quarterly and one annual return each year. Alternatively, those not registered under this scheme need to submit 4 GST returns each year – 3 monthly and one annual. Who is Eligible to Opt for this Composition Scheme? As mentioned before, taxpayers with annual turnover below Rs. 1.5 crore can opt for this scheme. Further, for Himachal Pradesh and the North-Eastern states, this limit has been further reduced to Rs. 75 lakh per year. This cap is, however, set solely for manufacturers, traders and restaurants that do not serve alcohol. For service providers, the cap is set at Rs. 50 lakh. One must remember here that the collective turnover of businesses registered under the same PAN will be taken into account while gauging their eligibility to avail the benefits extended under GST Composition Scheme. Who Cannot Opt for this Scheme? Taxpayers belonging to the following categories are not eligible to avail the benefits of this scheme – Those engaged in making inter-state supplies. Businesses engaged in supplying goods via e-commerce platforms. Pan masala, tobacco and ice-cream manufacturers. Any non-resident and casual taxable person. Conditions to Opt for this Scheme Before taxpayers register themselves under the composition scheme, they must take note of the following conditions pertaining to its applicability – Dealers registering under the scheme cannot be engaged in supplying goods that do not attract GST (e.g. alcohol). Dealers who opt for the benefits under this scheme cannot claim input tax credits. Any transaction made under the mechanism of reverse charges will be taxed normally. Taxpayers opting for this scheme will need to mention that they are a “composite taxable person” on every signboard or notice displayed at the location of their business. They will also need to put down these words on the bills of supply issued. If a taxpayer has businesses belonging to multiple sectors like electronic accessories, textile, groceries, etc., registered under the same PAN, all such businesses will need to be registered collectively. Otherwise, the taxpayer will have to opt-out of this scheme. According to the CGST (Amendment) Act of 2018, traders and manufacturers who extend services up to Rs. 5 lakh or up to 10% of their total turnover (whichever is higher) are eligible to avail the benefits of GST Composition Scheme. This provision was brought into effect from 1st February 2019. With such GST Composition Scheme rules under consideration, taxpayers can proceed to register themselves under this scheme. How to Opt for this Scheme? Step 1 – Enter the registered ID and password to the GST portal and log in. Step 2 – Navigate to “Services” and choose the option “Registration” from the drop-down menu. Next, click on the option marked – “Application to opt for composition levy”. Step 3 – Read the scheme’s terms carefully and check the box provided for confirmation. Next, fill the boxes marked “Place” and “Name of authorising signatory” by choosing the right options from the drop-down menu and save them. Step 4 – To submit the details, LLPs and companies need to choose the option marked “Submit with DSC”. All other taxpayers can choose between “Submit with EVC” or “Submit with e-signature”. Step 5 – A warning sign will pop up next, under which one will find the “Proceed” option. Click on it. By doing so, the application will be submitted successfully. Registered taxpayers will receive a confirmation on their designated email IDs or mobile numbers. Once the registration is successfully completed, taxpayers will be able to enjoy the benefits extended under the GST Composition Scheme. Benefits of this Scheme Reduced interest rates- The GST Composition Scheme rates are significantly lower than what is levied normally. Increase in liquidity- Owing to the fixed rate of taxation extended under this scheme, businesses can enjoy higher liquidity and maintain a better cash flow. Thus, the scheme can effectively ensure smoother operations for businesses. Minimal compliance- With this system in effect, taxpayers can do away with the need to file multiple returns and thus enjoy relaxation in compliance. Disadvantages of this Scheme Restriction on tax collection- Taxpayers registered under this scheme cannot raise invoices or collect composition taxes for their buyers. Input tax cannot be credited- Businesses are not allowed to collect input tax from any output liability. Further, buyers of these goods cannot collect credit from input tax. This can lead businesses registered under the composition scheme to lose out on customers. FAQs What is the composition scheme for taxpayers? The composition scheme is a simplified taxation scheme designed for small businesses. Under this scheme, taxpayers are taxed at a flat rate on their turnover, rather than the regular GST rates applicable to various goods and services. Who is eligible to register under the composition scheme? Eligibility criteria vary by jurisdiction, but generally, small businesses with a turnover below a certain threshold are eligible to register under the composition scheme. However, certain businesses, such as manufacturers of goods, service providers, and interstate sellers, may not be eligible. 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

Registration as taxpayer (under composition scheme) Read More »

Registration as taxpayer (non resident taxable person)

Goods & Service Tax / CA Bhuvnesh Goyal / April 30, 2024

A “non-resident taxable person” refers to an individual who occasionally conducts transactions involving the sale of goods or provision of services, either as an agent or as a principal or in any other capacity, but lacks a permanent business or residence location in India.” Any person who is a resident of India will obtain regular GST Registration in Form GST REG-01. In contrast, a non-resident taxpayer has to use Form GST Reg-09 to get GST Registration as Non-resident taxable person. Like the casual taxable person, the non-resident taxable person must also pay tax in advance. A business importing goods or services from outside India or managing a business on behalf of a person resident outside India, Who is a ‘Non- Resident Taxable Person’? The Goods and Services Tax Law has defined a ‘non-resident taxable person’ as any person who occasionally undertakes transactions involving the supply of goods or services, or both, whether as principal or agent or in any other capacity, but who has no fixed place of business or residence in India. Section 24 of the GST law further specifies the requirement for registration for a non-resident taxable person. It mentions certain businesses and entities which are mandatorily required to register under Goods and Services Tax and are not governed by the minimum threshold limit of Rs. 20 lakh/ 10 lakh. Thus, irrespective of whether the business is involved in a one-time transaction or frequent taxable transactions, every non-resident individual or company will have to obtain a registration under the Goods and Services Tax GST Registration Requirements for Non- resident Taxable Persons Mandatory Registration: Regardless of transaction volume, registration under GST is compulsory for non-resident taxable persons. There’s no minimum threshold for registration. Ineligibility for Composition Levy: Non-resident taxable persons are not eligible to opt for the composition levy scheme under GST, which allows for a simplified tax payment process and compliance for small taxpayers. Advance Registration Requirement: Registration for GST must be completed at least five days before beginning business operations in India. Passport Required for Registration: A valid passport is required for GST registration and serves as the primary documentary evidence. Documentation for Business Entities: Business entities based outside India must include their tax identification number (TIN) or a unique identification number recognized by their home country’s government in their GST registration application. Alternatively, if available, they can provide their Indian Permanent Account Number (PAN). Registration Procedure for a Non-Resident Taxable Person Person or business who falls under the definition covered above needs to apply for registration at least five days prior to the commencement of business. Further clarification has been provided in case of a high-sea sale; the law says that every person who makes a supply from the territorial waters of India shall obtain registration in the coastal state or Union territory where the nearest point of the appropriate baseline is located. High Sea Sale (HSS) is a sale carried out by the carrier document consignee to another buyer while the goods are still being transported, or after their dispatch from the port/airport of origin and before their arrival at the port/airport of destination. Thus if any high-sea sale is carried out near the shore of Mumbai, the GST registration has to be obtained in the state of Maharashtra. A non-resident taxable person needs to electronically submit a duly signed application, along with a self-attested copy of his valid passport, for registration, using the form GST REG-09, at least five days prior to the commencement of business on the Common Portal. Application must be duly signed or verified through EVC, a new mode of electronic verification based on aadhar. The non-resident (if it is a company) must submit its tax identification number of its original country (whatever is the equivalent of our PAN in that country). A person applying for registration as a non-resident taxable person will be given a temporary reference number electronically by the Common Portal for making an advance deposit of tax in his electronic cash ledger and an acknowledgment will be issued thereafter. High Sea Sale (HSS) is a sale carried out by the carrier document consignee to another buyer while the goods are still being transported, or after their dispatch from the port/airport of origin and before their arrival at the port/airport of destination. Thus if any high-sea sale is carried out near the shore of Mumbai, the GST registration has to be obtained in the state of Maharashtra. A non-resident taxable person needs to electronically submit a duly signed application, along with a self-attested copy of his valid passport, for registration, using the form GST REG-09, at least five days prior to the commencement of business on the Common Portal. Application must be duly signed or verified through EVC, a new mode of electronic verification based on aadhar. The non-resident (if it is a company) must submit its tax identification number of its original country (whatever is the equivalent of our PAN in that country). A person applying for registration as a non-resident taxable person will be given a temporary reference number electronically by the Common Portal for making an advance deposit of tax in his electronic cash ledger and an acknowledgment will be issued thereafter. Documents Required for GST Registration Proof of Principal Place of Business For own premises – Any document in support of the ownership of the premises like Latest Property Tax Receipt or Municipal Khata copy or copy of Electricity Bill. Rented or Leased premises – A copy of the valid Rent / Lease Agreement with any document in support of the ownership of the premises of the Lessor like latest Property Tax Receipt or Municipal Khata copy or copy of Electricity Bill. For premises not covered above – A copy of the Consent Letter with any document in support of the ownership of the premises of the Consenter like Municipal Khata copy or Electricity Bill copy. For shared properties also, the same documents may be uploaded. Identity Proof Scanned copy of the passport of the Non -resident taxable person with VISA details. In case of a business entity incorporated or established outside India, the application for registration shall

Registration as taxpayer (non resident taxable person) Read More »