June 18, 2024

Article 265 of the Constitution of India states that no tax can be levied or collected except by the authority of law. This means that all taxes must be imposed by a valid law and that no tax can be levied or collected without the authority of law. The law here means only a statute law or an act of the legislature. The law when applied should not violate any other constitutional provision. This article acts as an armour against arbitrary tax extraction. In the case of Tangkhul v. Simerei Shailei, the Supreme Court held that the practice of villagers paying Rs. 50 a day to the headman in place of a custom to render free a day’s labour was a collection of tax and that no law had authorised it. Therefore, it violated Article 265. The system of taxation is the backbone of a nation’s economy which keeps revenue consistent, manages growth in the economy, and fuels its industrial activity. India’s three-tier federal structure consists of Union Government, the State Governments, and the Local Bodies which are empowered with the responsibility of the different taxes and duties, which are applicable in the country. The local bodies would include local councils and the municipalities. The government of India is authorized to levy taxes on individuals and organisations according to the Constitution. However, Article 265 of the Indian constitution states that the right to levy/charge taxes hasn’t been given to any except the authority of law. The 7th schedule of the constitution has defined the subjects on which Union/State or both can levy taxes. As per the 73rd and 74th amendments of the constitution, limited financial powers have been given to the local governments which are enshrined in Part IX and IX-A of the constitution. Definition of Tax A tax may be defined as a monetary burden rested upon individuals or people with property to help add to the government’s revenue. Tax is, therefore, a mandatory contribution and not a voluntary payment or donation which one decides on one’s own.  It is a payment exacted by the legislative authority. It may be direct tax or indirect tax. Revenue growth which may be a little faster than GDP (Gross Domestic Product) can result from revenue mobilization with an effective tax system and measures.  The government uses this tax to carry out functions such as: Social welfare projects like schools, hospitals, housing projects for the poor, etc. Infrastructure such as roads, bridges, flyovers, railways, ports, etc. Security infrastructure of the country such as military equipment Enforcement of law and order Pensions for the elderly and benefits schemes to the unemployed or the ones below the poverty line. Characteristics of a good tax structure A good tax system as a whole should be equitable and be fairly leading to equal distribution of wealth in the community. It should be effective and yield the required revenue for the government. The collection of taxes is a major task and it should be economical. The development of trade and industry should not be hampered by the burden of taxes. The taxes levied should give a clear picture to the government of its revenue. The tax system should be based on comprehensive and up-to-date statistical information enabling accurate forecasting. The tax system should also be simple and elastic so that it can respond to the new needs of the State. While distributing the burden of taxes, the ability of the tax-payers should be considered. Taxation system in India Union List (List 1 of the 7th schedule to the Constitution of India) contains those matters on which the Central Government has the power to make laws [Article 246(1)]. The State List has only those matters on which the State Government has the power to make laws [Article 246(3)]. The Concurrent List has those matters on which both the Central and State Governments have the power to make laws [Article 246(2)].  Distribution of powers of taxation List 1 in the 7th schedule to the constitution has the powers of the Central Government listed in Entries 82-92B. List 2 in the schedule has the powers of the State Government listed in Entries 45-63. As regards list 3, it doesn’t deal with taxation and hence both centre and state do not have any concurrent powers of taxation. Entry 97 of List 1 in the 7th Schedule contains residuary powers of taxation belonging only to the centre. Types of Taxes in India Direct tax- It is a tax imposed on corporate units and individual people. It is a type of tax that can’t be moved or accepted by anyone else. Direct tax examples are wealth tax, income tax, gift tax, etc. In the Ministry of Finance, the Central Board of Direct Tax (CBDT) is a part of the revenue department. This board has a two-fold role that gives important ideas, significant inputs of planning, and policies to be implemented regarding direct tax in India. The management of direct taxes which is done by the Income Tax department is helped by the Central Board of Direct Taxes in doing so. Indirect tax- Taxes that are indirectly imposed on the public through goods and services are called indirect taxes. The government bodies collect taxes from people who sell goods and services. When a good or product is sold in a state, then a sales tax is levied on it and its rate is decided by the government, this is called Value Added Tax (VAT). Formulation of the policy regarding duty, collection of custom excise duty and service tax is dealt with by the Central Board of Excise and Custom (CEBC) The Central Board of Excise and Custom was given a new name which was the Central Board of Indirect tax and Custom (CBIC) after GST came into force. Its key role is to help the government in formulating policies related to GST. Custom Duty- The customs duty is collected on all goods entering the country to ensure that they are taxed and paid for. It is levied on both export and import of goods and is important in regulating trade as well as

The payment service known as the Aadhaar Enabled Payment System (AEPS) enables bank customers to access their Aadhaar-enabled bank account and carry out standard banking operations such as checking their balance, making cash withdrawals, and sending money overseas through a Business Correspondent by using Aadhaar as their identity. Payments can be made using the unique identification number (UID) in this payment system. All Aadhaar card holders can use AEPS to make payments, transfer money, withdraw money, make a deposit, and perform other bank-related tasks. What is AEPS? AePS, or Aadhaar-enabled payment system, is a service developed by the National Payments Corporation of India. It allows users to conduct transactions on a micro-ATM by providing their Aadhaar number and biometric information. Here are the key features of AePS: Aadhaar-linked transactions: AePS enables Aadhaar card holders to make transactions through their Aadhaar-linked bank accounts, similar to debit/credit card transactions. Biometric authentication: Transactions are completed by submitting the Aadhaar number and biometric details (iris or fingerprint scan) at Points of Sale (PoS) or micro ATMs, using Aadhaar authentication. Bank account privacy: Users are not required to share their bank account details during the transaction, enhancing privacy and security. Fund transfers: AePS allows users to transfer funds between bank accounts, providing a convenient way to send and receive money. Secure transactions: AePS transactions are considered safe and secure as they require biometric authentication, ensuring the identity of the user. Services Offered by AEPS Cash Deposit Balance Enquiry Cash Withdrawal Aadhaar to Aadhaar funds transfer Mini statement Authentication BHIM Aadhaar Pay e-KYC Best finger detection Tokenisation Demo Auth Aadhaar Seeding Status  Benefits of AePS or Aadhaar Enabled Payment System User-friendly: AePS is designed to be user-friendly, making it easy for individuals to understand and use the system for various financial transactions. Biometric authentication: The system requires the submission of biometric data (such as fingerprints or iris scans) and the Aadhaar card number for authentication, ensuring secure and reliable transactions. Empowering the underprivileged: AePS plays a significant role in empowering the underprivileged sections of society by providing them with access to banking services and enabling digital financial transactions. Bank account privacy: Users can complete transactions without having to disclose their bank account details, enhancing privacy and security. Convenient Access to Bank Accounts: AePS allows users to conveniently access their bank accounts using Aadhaar authentication, eliminating the need for physical bank visits. Enhanced security: The submission of biometric data and Aadhaar number adds an extra layer of security to AePS transactions, making them highly secure and reliable. Reach to remote areas: AePS enables the deployment of micro Point of Sale (PoS) machines to remote villages and areas, facilitating easy and accessible transactions for users in underserved regions. Features of AePS Account deduction: The transaction amount is deducted directly from the Aadhaar-linked bank account of the user, ensuring a seamless and straightforward transaction process. Basic banking transactions: AePS allows Aadhaar card holders to perform various basic banking transactions, including cash deposits, interbank and intrabank fund transfers, cash withdrawals, balance inquiries, and obtaining mini bank statements. These transactions can be conducted through a banking correspondent. How to use AePS? Step 1: You have to go to a micro-ATM or banking correspondent in your area. Step 2: Then, enter your 12-digit Aadhaar number in the PoS Machine. Step 3: Provide KYC (Know Your Customer) information to open a new account. Note: Aadhaar Number should be linked with the bank account. Step 4: You have to choose the transaction type from the below categories: cash deposit withdrawal mini statement fund transfer balance enquiry eKYC. Step 5: After that, you need to select the Provide verification through fingerprint/ iris scan Step 6: Finally, the transaction gets completed, and the banking correspondent will give you a receipt. FAQs What is the full form of AePS in banking? AePS stands for Aadhaar Enabled Payment System. It is an Indian payment system that uses Aadhaar verification to enable online interoperable financial transactions at Micro ATM or Point of Sale (PoS) terminals via any bank’s Business Correspondent (BC). What is AePS settlement? AePS settlement refers to the process of interbank transaction routing during routine banking operations. Members of the AePS network maintain a current account or RTGS settlement account with the RBI (Reserve Bank of India) to facilitate the settlement of transactions. Prior to joining the AePS network, members must submit a letter of authorization to the RBI and provide NPCI (National Payments Corporation of India) with an RBI-acknowledged copy. 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 Demand Notice | Psara License | FCRA Online 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 | GST Search Taxpayer | caro 2020 | Challan 280 | itr intimation password |  internal audit applicability |  preliminiary expenses |  mAadhar |  e shram card | ec tamilnadu |  aaple sarkar portal |  epf activation |  scrap business |  brsr | depreciation on computer | west bengal land registration | traces portal | Directorate general of GST Intelligence | form 16 | rtps | patta chitta

Aspiring to become an entrepreneur or businessman and setting up businesses have been rising tremendously among the people. In India, everyone, especially the youth, is looking to develop unique business ideas and create opportunities to grow. This, in turn, is reaping benefits for both the business and the economy at large. India is a land of opportunities, and to start and manage the business more straightforwardly, the country is equipped with proper methods and planned strategies that can make your dream come true. Though starting a business can be a challenging task, now, due to smooth work procedures and operations, things have turned easy. the Indian business scenario, the business structure witnessed a paradigm shift over the years, providing immense opportunities for the upcoming and growing sectors of the economy. There is no doubt that the Indian government played a vital role in transforming Indian businesses by opening doors to possibilities and encouraging them to take these to their best advantage. With the changes in Macroeconomic reforms, finance reforms, tax reforms, and relaxing the market, India revamped the entire map of doing businesses in India. As a result, the scope of doing business in India has grown in magnitude. With the Make in India campaign, more and more companies are entering the market, focusing on achieving their operational and business effectiveness and creating a brand in itself. Now, doing business in India is not a tedious task. Instead, it is made simpler for everyone to access sources via the schemes and initiatives and expand the business globally. With these facts, it is sure that Indian businesses have a very long way to go to leverage up to the best possible way. What are the types of businesses to start in India? Sole Proprietorship Firm Partnership firm Limited Liability Partnership One Person Company (OPC) Private Limited Company Public Limited Company 1. Sole Proprietorship Firm A sole proprietorship business is owned and managed by one single person. The small traders and merchants come under this category. Under this form of business, the registration is recognized through service or GST registration. 2. Partnership firm A partnership firm is a form of business where two or more individuals agree to come together and manage the business’s operations, as mentioned in the partnership deed. The setting up of a partnership form is less complicated and is a viable option, especially for home businesses. 3. Limited Liability Partnership A Limited Liability Partnership differs from an ordinary partnership in terms of the liabilities of the partners. Under this, partners associated with the firm are protected from negligence, misdeeds, and incompetence by other partners that do not demolish the Partnership. 4. One Person Company (OPC) Under One Person Company, the business owner enjoys twin benefits. First being a solopreneur, and second, being a promoter of the company. The person can enjoy the advantages of forming a company except Equity funding or offering employee stock option plans. 5. Private Limited Company Companies are the most popular form of business structure that is practiced in India. By forming a company, you can take advantage of funding, limited liability, and attracting suitable acquisitions. The company is bound to conduct meetings and file annual returns stated by government jurisdiction under the Ministry of Corporate Affairs. 6. Public Limited Company A Public Limited Company certainly has more advantages than a Private Limited Company. These companies have the right to issue IPOs to the public, attract investors and enjoy flexibility. These companies are suitable for organizations that have a different perspective and higher growth possibilities. A few examples include SAIL, GAIL, BHEL, IOCL, and a few more. Why is it good to start a business in India? India is now at a very progressive stage. As a result, it is opening up to represent in the different markets across the globe. The Indian government provides a favorable business environment for all the organizations to come up and make most of their plans. As a result, it is now more viable for businesses to set up their businesses in India to maintain their stability and growth in the market. Adding to it, the businesses can also get the opportunity to work and explore in the international market. Let’s take a look at the primary five reasons highlighting the advantage of starting a business in India: Ease of Doing Business Increase in the Market Demand Cost-Effectiveness Provide Sustainable Business Environment Scope of employment 1. Ease of Doing Business As mentioned before, the government policies and market have made the procedure of starting a business easy. With the introduction of business-friendly laws, liberalizing the market, and reducing the procedures for registration, the government is providing a great deal to help people in business ease out the mode of starting the business. I went back to those days of long queues because now the whole process has turned online. 2. Increase in the Market Demand The demand of the Indian market has been consistently high. From essential items to luxury items, people in India need a variety of everything. Keeping in mind the pace of population, the demand for the items has been rising high, encouraging the businesses to take the advantage to grow in the respective sectors and fulfill the demand accordingly. 3. Cost-Effectiveness The process to start a business in India is much more affordable than compared to other countries. You can get the advantage of the accessibility of land, labor, electricity & infrastructure helping you scale the production level. At this point, you will be able to achieve economies of scale, resulting in a drop in the overall cost of production. 4. Provide Sustainable Business Environment India is a developing nation, and being a host of business activities, the Indian market provides a sustainable environment for any type of business to maintain stability and flourish on a large scale. India has turned a favorable table towards businesses by supporting the livelihood for the upcoming years. 5. Scope of employment This reason is an effect of

In order to ride or drive a vehicle legally on the public roads, an Indian driving licence is mandatory. However, a permanent driving licence cannot be received right away. There is a separate process for it. An individual who wants to drive any type of motor vehicle in India has to get his/her learner’s license first. A learner’s license is issued for learning. A month after the issuance of the learner’s license, the person has to appear for the test in front of an RTO authority, who upon proper examination, will declare if he/she has passed the exam or not. Rajasthan, the desert state of India, is known for its royal forts and colourful culture. The grandeur of the state attracts tourist attention all year long. Hence, the roads of Rajasthan experience a mix of locals and tourists moving around, resulting in a flood of vehicles.  To maintain a smooth transport system, the RTOs in the state are instrumental in implementing the rules as per The Motor Vehicles Act, 1988. One of the primary rules in this act is that only valid Driving Licence (DL) holders are allowed to drive vehicles on the roads. That’s why you must apply for a DL before riding/driving a vehicle on public roads. Driving Test at a Glance An individual who wants to drive the motor vehicle in India roads has to get his/her learner’s license first. Learner’s license will act as a provisional license; it is issued for learning. After practising the driving, the person has to apply for driving license and appear for a test in front of a Regional Transport Office (RTO) authority, which upon proper examination, will declare whether he/she has passed the exam or not. Upon passing the test, the Driving license will be issued. Key Features of a Driving Licence The photograph of the licence-holder, which also makes the driving licence an eligible photo ID proof. The licence should have a unique registration number which is assigned by the issuing authority. The name of the office wherein the licence was generated and issued from. The rubber stamp and signature of the issuing officer of the issuing RTO. Types of Driving Licences in Rajasthan Type of Driving Licence Vehicle type Learner’s Licence For two-wheelers and four-wheelers with 6 months of validity Permanent DL for two-wheelers (gearless) Mopeds, gearless scooters, etc. Permanent DL for two-wheelers (geared) Geared motorbikes, scooters, etc. Permanent DL for four-wheelers  Private cars like SUVs, MUVs, sedans, hatchbacks, etc. Permanent DL for transport vehicles Trucks, autorickshaws, buses, etc. Permanent DL in other categories Transport vehicles that carry dangerous goods Eligibility for Driving licence in India To get the driving license, the applicant must be fluent with traffic rules and regulations. The applicant should have valid address proof and age proof documents. The candidate must 18 years old to get a driving license for motorcycles with gear The driving license for heavy commercial vehicles and transport vehicles, the applicant must have finished 8th standard of schooling and applicant must be at least 18 years old To obtain a driving license for motorcycles without gear up to 50 cc capacity, the candidate must be aged at least 16 years. Documents Required Proof of Address: Aadhaar Card, Passport, Ration Card or House agreement Proof of Age: Pan card, Birth Certificate, Transfer certificate or 10th Class mark sheet Application Fees for Learner’s License Passport size photographs Medical Certificate – Form 1 which is to be signed by a certified Government doctor Application form Driving Licence application process in Rajasthan Step 1: Visit the official portal of RTO Parivahan Sewa. Step 2: On the home screen, you will find “Online Services” among different tabs. Inside that, you must click on “Driving Licence Related Services”. Step 3: On the Sarathi platform, choose “Rajasthan” and move inside the option “Apply for LL/Learner’s Licence”. Step 4: Add details, upload documents and pay the fee to apply for LL. Step 5: Upon passing the LL test, you will get your initial licence. Step 6: Once your LL gets 30 days old, you can apply for a permanent licence via the Sarathi website. Step 7: Apply for DL with the requested documents and charges. Step 8: Appear for your licence test at the RTO office in your city. How to apply for a Driving Licence offline in Rajasthan Step 1: Download the application Form 2 via Parivahan and fill it out for Learner’s Licence. Step 2: Visit an RTO in your area with the application and documents. Step 3: Submit the application and documents, and pay the fee to take your LL test. Step 4: Complete the application for a permanent licence to get your driving test slot. Step 5: Appear for the practical exam in a month’s time with the acknowledgement receipt obtained at the time of submitting the application. FAQs What are the consequences of driving without a valid licence? Driving without a valid licence and getting caught by authorities can result in fines, imprisonment, and potential vehicle seizure. Additionally, driving without a valid licence can void your motor insurance coverage. How long does a permanent driver’s licence remain valid after issuance? A permanent driver’s licence is valid for 20 years from the date of issuance. 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 Demand Notice | Psara License | FCRA

Under section 17 of the Indian Registration Act 1908, AP stamps and registration deed details of every immovable property sold should be registered in the Registrar’s office within six months of deed execution.  IGRS AP deed details help in preserving the ownership title and also act as proof if the property documents are lost. When a property is being registered and you get IGRS AP deed details, in addition to stamp duty and registration charges, transfer duty is also levied, according to the Andhra Pradesh Gram Panchayats Act, 1964 and the Andhra Pradesh Municipalities Act, 1965. The buyer and the seller must go to the SRO office where the property is located and proceed with the AP stamps and registration process. Also, present should be two witnesses for the AP stamps and registration of deed details. The stamps and registration AP department takes up AP registration of 5,000 to 6,000 properties on a daily basis. Annually, nearly 17 lakh to 18 lakh AP registration properties and AP land registration is done. e-Stamping services launches in Andhra Pradesh The Stamps and Registration department of Andhra Pradesh launched the e-stamping services that will simplify stamp duty and registration process in the state. The service is offered by Stock Holding Corporation of India  The service is available in 1,400 centres now and the state government plans to extend the project to a 1,000 more centres. Purpose of Property Registration It serves for proper recording of documents which provide more authenticity To ensure prevention of fraud, conservation of evidence, transfer of title to the owner By registering property, the document will maintain an up to date public record Documents Passport-size photo of both seller and buyer Photo identification (Voter Identity Card, passport, Aadhaar card) Certified copy of the original old sale deed Copy of the latest property register card (From the City Survey Department) Copy of Municipal Tax bill Online Registration Procedure Step 1: Please visit the official website http://registration.ap.gov.in/ of Andhra Pradesh Government. Step 2: Click on “Prepare Your Own Document” which is on the home page of the portal. Step 3: Enter the Aadhaar number of the seller to fetch the details of the seller based on the number provided. Step 4: Click on the button “Save and Continue” to proceed further. Step 5: Now enter the Aadhaar Number of the buyer to fetch the details of the buyer based on the number provided. Step 6: Select “Continue” to proceed further with the steps. Step 7: User has to select the presenter and the person who is preparing the document. Step 8: Enter total consideration value and details of Local body type, Registration District and Sub Register Office location. Step 9: Provide details by clicking on “Add Schedule of the Property to be Registered“. Step 11: Select the mode of payment and click on ” Save Payment Details” option. Step 12: Enter the details of Sub Register Office for property registration. Calculation of Market Value and Registration Charges Step 13: Market value and registration charged will be calculated based on the above details provided. Step 14: The applicant needs to select the ” Mode of Payment” to make payment online. Step 15: Add enclosure details and then click on “Save and Continue” option. Witness Details Step 16: Enter the Aadhaar number of two witnesses, and the details will be fetched based on the Aadhaar number provided. Step 17: Finally click on the ” Submit” button to submit the application. Generate Slot Booking Slip Step 18: Slot booking slip will be created after entering the details. Step 19: The document of sale deed with an application number and barcode displayed can be printed.  Step 20: Submit the printed document to the Sub Registrar Office on the date and time of the booked slot for biometrics and e-KYC. FAQs Where can property registration be done in Andhra Pradesh? Property registration can be done at the Sub-Registrar’s Office in the jurisdiction where the property is located. The list of Sub-Registrar Offices can be found on the official website of the Andhra Pradesh Registration and Stamps Department. How is the registration fee calculated? The registration fee in Andhra Pradesh is typically a percentage of the property’s market value or sale value, whichever is higher. It includes: Stamp duty (usually around 5-7% of the property value). Registration fee (typically around 1% of the property value). Additional charges such as user charges or handling fees. 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 Demand Notice | Psara License | FCRA Online 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 | GST Search Taxpayer | caro 2020 | Challan 280 | itr intimation password |  internal audit applicability |  preliminiary expenses |  mAadhar |  e shram card | ec tamilnadu |  aaple sarkar portal |  epf activation |  scrap business |  brsr | depreciation on computer | west bengal land registration | traces portal | Directorate general of GST Intelligence | form 16 | rtps | patta chitta

After the introduction of the Insolvency and Bankruptcy Code, 2015 in the Lok Sabha on 21st December 2015, it was referred to the Joint Committee. On such a referral the Committee had presented its recommendations and a modified Bill based on its suggestions. In May 2016 both the Houses of Parliament passed the Insolvency and Bankruptcy Code, 2016. The major objective of this economic reforms is to focus on creditor drove insolvency resolution. Insolvency vs Bankruptcy Insolvency and bankruptcy are two very different terms and with distinct meanings. Insolvency refers to a situation where a person is going to financial misery due to lack of funds. Bankruptcy is a court directive that outlines exactly how an insolvent borrower would manage his/her responsibilities and/or have resources settled to pay off the creditors. Hence, the Insolvency and Bankruptcy Code, aims to provide comprehensive relief for all stakeholders who are involved in the financial matters of an insolvent person or entity. Key Highlights Insolvency Resolution Process: During this process, the financial creditors assess if the debtor’s business is viable enough to continue its business and other options for its revival and rescue. Liquidation: This is inititated when the insolvency resolution process does no help and eventually fails or when the financial creditors decide that winding down and distributing the assets of the debtor is the best choice forward. Insolvency Resolution Process (IRP) The Insolvency Resolution Process offers a collective mechanism to various lenders to deal an overall distressed position of a certain corporate debtor. This is a major change from the exisiting legal framework under which the primary onum to initiate a reorganisation process lies with the debtor, and where lenders may choose to pursue distinct actions for the recovery, security enforcement and debt restructuring. The Insolvency and Bankruptcy Code states the following steps to execute IRP. Commencement of the Insolvency Resolution Process An operational creditor (for an unpaid operational debt) or a financial creditor (for a defaulted financial debt) may inititae an Insolvency Resolution Process against a corporate debtor at the NCLT or the National Company Law Tribunal. The corporate debtor who defaulted, its employees and shareholders may also initate a voluntary insolvency proceedings. Moratorium The National Company Law Tribunal has ordered a moratorium on a debtor’s operations for the period of the Insolvency Resolution Process. This generally means a calm period during which there would be no judicial proceedings for recovery, sale or transfer of assets, enforcement of security interest, or the termination of essential contracts that can be inititated against the debtor. Appointment of a Resolution Professional The National Company Law Tribunal would appoint an insolvency professional or a resolution professional to administer the Insolvency Resolution Process. The professional’s primary function is to take over the power to manage the corporate borrower and to opearte its business as a going concern under the directions of a committee of creditors. This is very similar to the process of the UK insolvency laws, but varies from the “debtor in possession” where the debtor’s management retains control over the business while the bankruptcy professional has the power to oversee the business to prevent any asset stripping on the part of its promoters. Therefore, the Code sllows a shift of control from a defaulting debtor’s management to the control of its creditors. Here, the creditors drive the business of the defaulter debtor where the Resolution Professional acts as their agent. Creditors Committee and Revival Plans A Resolution Professional would identify the financial creditors and forms a creditors committee. Any operation creditor who are above a certain threshhold would be allowed to attend the meetings of the committee although, they would not be given the power to vote. Every decision taken by the creditors committee would require a 75 percentage of majority vote. The corporate debtor and all its creditors would be bound by the decisions taken by the creditors committee. The proposals for the rescue and revival of the defaulting debtor would be considered by the creditors. The committee would eventually choose an option to proceed with the revival plan or the liquidation of the entity within a period of 180 days. A one-time extension of 90 days of the time period could be granted. Any individual may submit a proposal to revive, although it must provide for the payment of the operational debts to the extent of the liquidation waterfall necessarily. The Code does not go in detail about the types of revival plans that may be adopted. Revival plans may include fresh finance, the sale of assets or change of management and so on. Liquidation Under the Insolvency and Bankruptcy Code, a corporate debtor may be put to liquidation for the following circumstances. When 75 per cent of the committee of the creditor finalises to liquidate the corporate debtor at any given time during the during the insolvency resolution process. When the committee of the creditor does not approve a resolution plan within the given time period of 180 days or within the extended time period of 90 days. When the NCLT does not agree with the resolution plan that was submitted and rejects it on technical grounds. When the debtor contravens the resolution plan that was initially agreed upon and an affected individual makes an application before the NCLT to liquidate the corporate debtor. Once the National Company Law Tribunal sanctions and passes an order of liquidation of the corporate debtor, a moratorium is imposed on the legal proceedings that are pending against the corporate debtor, The assets of the corporate debtor including the proceeds of the liquidation vests in the liquidation estate. Priority of Claims The Code brings significant changes to the priority waterfall for the distribution of liquidation proceeds. Secured debt along with the workmen dues for the preceding 24 months would be ranked the highest in priority after the costs of the insolvency resolution which includes any interim finance. The Central and State Government dues are considered a priority after the claims of the secured creditors, employee dues, workmen dues and