Legal


Deprecated: preg_replace(): Passing null to parameter #3 ($subject) of type array|string is deprecated in /home4/cabkgoya/public_html/wp-includes/kses.php on line 1805

What is an Affidavit?

An affidavit, recognized as an attestation in Indian law, is a sworn statement or declaration made by a defendant or plaintiff in a legal proceeding. Its purpose is to establish the truth of specific facts within the legal context. In India, an affidavit serves as a document certifying the authenticity of a statement, often featuring a declaration from the individual signing it.  The affidavit is a written statement sworn before a person having authority to administer an oath. In India, an affidavit can be sworn or affirmed before: Any Judge or any Judicial or Executive Magistrate; Any Commissioner of Oaths appointed by a High Court or Court of Sessions; Any Notary appointed under the Notaries Act, 1952; How Does an Affidavit Work in India? Affidavits play a crucial role in Indian legal proceedings, serving as sworn statements made under oath in a court of law. These statements, whether written or oral, are commonly employed to validate the veracity of certain facts. In the written form, the affidavit must bear the signature of the individual making the statement, accompanied by their full name, address, and date of birth. If oral, the statement requires confirmation through an oath or affirmation administered by a notary public or another authorised official. How to draft an affidavit Affidavits should be drawn in the first person, and the matter of the affidavit should be divided into paragraphs which are numbered consecutively. Each of the paragraphs in an affidavit should ideally be confined to a portion of the subject. Affidavits should mention the full name, fathers name, religious persuasion, age, profession, occupation and residence of the person on whose behalf an affidavit is filed. In case of changes or alterations to an affidavit, changes should be authenticated by the initials of the officer before whom the affidavit was taken. Different Types of Affidavits in India In India, affidavits play a crucial role in legal and administrative processes, serving as sworn statements that validate the accuracy of their contents. The three main types of affidavits in India are oral, written, and certified.  Oral affidavits are suitable for disputes, written affidavits are used as evidence in court or governmental proceedings, and certified affidavits are essential when document accuracy is paramount, such as in citizenship applications. Purpose of an Affidavits An affidavits serves the vital purpose of providing a sworn statement of facts or information under oath. This legal document is utilised in various scenarios, including legal proceedings, court cases, immigration matters, and official or administrative processes. Importance of Affidavits ffidavits are extensively used in Courts and except in the cases of final judgments, orders are passed based on affidavits. Further, for invoking the powers of Courts under various provisions of relevant enactments including procedural acts, applications are to be filed supported by affidavits. FAQs Who makes an affidavit? An affidavit is typically made by the person with direct knowledge or involvement in the matters addressed in the statement. Is affidavit compulsory? While affidavits are not always compulsory, they are commonly required in various legal, official or administrative processes. Many legal proceedings, court cases, and government applications may request or require individuals to submit affidavits to support their claims or provide essential information under oath. What is the purpose of the affidavit? The primary purpose of an affidavit is to provide a written, sworn statement of facts or information. It is used to confirm the truthfulness of statements made by an individual in legal or official matters. 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

What is an Affidavit? Read More »

FSSAI Licensing Requirement for Tea Business in India

Tea holds a special place in India’s tradition and culture, with the country boasting a substantial consumption rate, making its tea industry highly profitable. The burgeoning population has paved the way for numerous new tea brands to emerge. To ensure the quality and safety of tea amidst this growth, the Food Safety and Standards Authority of India (FSSAI) is implementing measures to regulate the production and sale of tea. Additionally, the FSSAI has issued guidelines outlining the regulatory framework governing the tea industry in India. Requirement of FSSAI License for Tea Business The FSSAI oversees the regulation of all food-related businesses in India. Tea, being one of the most celebrated beverages, has the compulsion to be regulated by an authoritative body like the FSSAI. The FSSAI, therefore, takes the responsibility of laying adequate checks and balances in place to ensure that the tea sold is safe for consumption. Thus, the FSSAI plays an irreplaceable role in ensuring the public that the tea consumed by them has been scrutinised for the required quality and food safety protocol.  It also helps in proving that the product is free from contamination or adulteration. Hence, approval from the FSSAI is indispensable if one wishes to kick start a new tea business. This is regardless of whether the owner wishes to market the brand locally or internationally by exporting the tea. Varieties of Tea as per FSSAI The varieties of tea can be categorised as shown below as stipulated by the FSSAI regulations:     Tea –This constitutes the type of tea, other than Kangra tea. It includes tea leaves, stems, and buds of the plant Camellia sinensis. This variety brings all types of Black and Oolong tea     Kangra Tea –This is a special variety of tea got from the buds, stems, or leaves of Camellia sinensis. This variety is predominantly seen in Kangra Mandi valleys. The tea grows widely in the foothill region of Himachal Pradesh and flaunts an exceptional flavor     Green Tea –This variety is processed by rolling, drying, and inactivating the buds or leaves of certain varieties of Camellia sinensis. Regulations Set by FSSAI for Tea Leaves/Powder The FSSAI sets a few basic standards for tea products in order to be considered safe for human consumption. The tea products are expected to exhibit their characteristic flavor and aroma that is devoid of any unpleasant odor, mustiness, or taint. It should also be clean and free from any kind of insects dead or living, molds, insect fragments, and other contaminants like bodily waste of rodents, etc, that are visible to the naked eye. Furthermore, the product must exist in its natural form and therefore should be free from added colors and artificial flavors, other harmful substances, and foreign materials. The product may however contain natural flavor and flavoring compounds that are acceptable for human consumption. The flavor has to be obtained through physical processes and should be of plant origin. The manufacturer must duly mention the addition of such flavors distinctly through labels and declarations as per the rules. Also, before marketing such flavored tea brands, the manufacturer should register the brand with the Indian Tea Board. The pectinase enzyme, an enzyme used for the extractions of juice from leaves, plants, and fruits can be used in the tea leaves up to a level of 0.2% for the purposes of processing the product. The two main regulations set by the FSSAI for tea products are: Regulation 7.3.11- The marketing, offering, and sale of Kangra tea have several restrictions in India. All such processes should occur only after marking and grading the tea following the rules laid down in the Agricultural Produce Act, 1937 Regulation 7.3.12- Only tea manufacturers registered and certified by the Tea Board may sell flavoured tea in India. Also, the label of such products must mention the items that have been added as flavouring agents. The label must also mention the manufacturer’s registration number and must follow the labelling conditions mentioned in the regulation Furthermore, all tea manufacturers should pack and label their tea following the FSSAI (Packaging and Labelling) Regulations, 2011. As per these regulations, the package must carry the stipulated information. Labelling Requirement by FSSAI Businesses that deal with the selling of tea locally and internationally must mandatorily follow the rules of labelling as stipulated by the FSSAI. The label has to exhibit all the relevant and important information before pushing the products to the market for sale.       Product’s common name       Manufacturer’s name and address       Date of manufacturing       Expiration Date       Net Weight       Ingredients details       Additives       Packaging Codes or Batch Number       Country of origin if imported. Furthermore, the label must be legible, readable, and understandable for the customers. The label should not describe any information that is untrue or deceptive or is likely to create any kind of confusion or create a false impression about the product in the mind of the consumer. Compliance With FSSAI Licence for Tea Business in India Before applying for an FSSAI license for your tea business, it is imperative to comply with the product labelling criteria set by the FSSAI department. The labelling process is critical as it ensures that all essential components and information are present before the product can be introduced to the market. As per the FSSAI license the following compliances requirements has to be met:  Prohibition of colourants in tea by FSSAI Authorisation for using 0.2 percent pectinase enzyme to enhance flavour in tea Approval for the use of organic ingredients and natural food colouring Mandatory FSSAI Registration for tea businesses involved in production, marketing, and retail. License for Tea Business-Conditions for Testing and Approval- The product has to undergo several levels of testing pertaining to food safety constraints before being introduced into the market. The tea products are sent for testing to the National Accreditation Board for Testing and Calibration Laboratories (NABL) to check if the products are quality compliant. The product has to obtain approval from NABL before it could be sent to the market

FSSAI Licensing Requirement for Tea Business in India Read More »

Indian Divorce Act

The Indian Divorce Act governs divorce among the Christian couples in India. Divorce is the legal dissolution of the marital union between a man and a woman. According to this act, the separation is granted by the court of law after receiving a petition from either wife or husband. Divorce is followed by granting alimony, child custody, and child visitation, distribution of property and distribution of debts. Before opting for a divorce, the Christian couple should be aware of the fact that a divorce procedure in our country. The Indian Divorce Act – An Outline The Indian Divorce Act was drafted into the Indian legal system in the year 1869. In India divorce rules and procedure varies according to the community of the couple. As stated above divorce among Christians is governed by the Indian Divorce Act, 1869, Hindus, Buddhists, Sikhs and Jains by the Hindu Marriage Act, 1955, Muslims by the Dissolution of Muslim Marriages Act, 1939, Parsis by the Parsi Marriage and Divorce Act, 1936 and the civil and inter-community marriages by the Special Marriage Act, 1956. The State of Jammu and Kashmir is excluded under the ambit of this divorce Act, though residents domiciled in other states but residing in Jammu and Kashmir would qualify for these rules and provisions. Types of Divorce Petitions A Christian couple can get a divorce with mutual consent (no-fault divorce or mutual divorce), or either spouse may file for divorce without the consent of the other (fault divorce) as per Indian divorce act. Divorce with Mutual Consent- When the couples agree to a divorce, the courts will consider a divorce with mutual consent as per. Section 10A of Indian Divorce Act, 1869, requires the couple to be separated for at least two years, the couple only needs to provide that they have not been living as husband and wife during this period. The couples should be separated for over a year The couple should able to prove that they have not been able to live together Matters of children’s custody, maintenance and property rights need to be agreed to mutually Alimony or Maintenance Issues- There are three aspects regarding which the couples have to reach a consensus. One is alimony or maintenance issues. As per divorce law, there is no minimum or maximum limit of support Custody of the child- The second consideration will be the custody of the child. Child custody in the mutual consent divorce can also be shared or joint or exclusive depending upon the understanding of the spouses. Property Rights- The third is property. The couples must decide who gets which part of the property (both movable and immovable property). Regarding the bank accounts, everything must be divided. Duration of Divorce- The duration of divorce by mutual consent varies from six to 18 months, depending on the decision of the court. Dissolution of Marriage (Divorce without Mutual Consent)- According to Indian Diverse act, either the husband or wife can file the petition for dissolution of Marriage. The conditions when they can file the petition are explained in detail below: Petition by Husband- Any husband can present a petition to the District Court or the High Court, praying that his marriage needs to be dissolved on the ground that his wife has been guilty of adultery since the solemnization of marriage. According to this act, such marriage might be solemnised according to the Christian Marriage Act. Petition by Wife- Any wife can present a petition to the District Court or the High Court for dissolution of marriage. The wife can file such petition under any of the following circumstance: If her husband has exchanged his profession of Christianity for the profession of some other religion If the husband went through a form of marriage with another woman If her husband has been guilty of incestuous adultery since the solemnization of marriage In case of bigamy with adultery In case of marriage with another woman with adultery In case of rape, sodomy or bestiality In case of adultery coupled with such cruelty as without adultery would have entitled her to a divorce a mensa et toro In the case of adultery coupled with desertion, without reasonable excuse, for two years or more Contents of Petition- Every such petition should contain as distinctly as the nature of the case permits, the facts on which the claim to have such marriage dissolved is founded. Dismissal of petition- The court will dismiss the petition for any of the following cases: In case of evidence for any petition is not satisfied by the court or the petitioner’s case has not been proved If the court is not satisfied that the alleged adultery has been committed,   find that the petitioner has, during the marriage, been accessory to,  or conniving at, the going through of the said form of marriage, or the adultery of the other party to the marriage, or has condoned the adultery complained of, If the petition is prosecuted in collusion with either of the respondents and any of the said cases, the court will dismiss the petition. When the District Court dismisses a petition under this act, the petitioner can present a similar petition to the High Court. Decree for Dissolving the Marriage- In case the court is satisfied, and the evidence of a case of the petitioner has been proved, the court will pronounce a decree declaring such marriage to be dissolved. According to this act, the Court will not be bound to pronounce such decree for the following cases: If it finds that the petitioner has been guilty of adultery If the petitioner has been guilty of unreasonable delay in presenting or prosecuting such petition, In case of cruelty towards the other party to the marriage In case of having deserted or willfully separated himself or herself from the other party before the adultery complained and without reasonable excuse, In case of such willful neglect or misconduct towards the other party as has conducted to the adultery Confirmation of decree for dissolution-

Indian Divorce Act Read More »

The Criminal Procedure Code: Arrests

It is common to see a person, who works against or has done something against the laws, get arrested. In a general term, the word ‘arrest’ in its normal sense would mean the apprehension, restraint or deprivation of one’s liberty. Ironically, the Criminal Procedure Code of 1973, that deals with the aspects of arrests, have not defined the very same term. From the context in the Code, it is a term to describe the deprivation of liberty by a legal authority. Hence, not every physical restraint can be termed as an arrest. An arrest of an individual comprises of taking the person into the custody of an authority empowered by the law for detaining the person to answer the criminal charges and to prevent the commission of a criminal offence Types of Arrest An arrest made in pursuance of a warrant issued by a Magistrate. An arrest made without a warrant but with a legal provision permitting the detention. Authorities to Arrest Arrests may be initiated by an officer of the Police Department, the Magistrate or a private person or an ordinary citizen under some legal provision permitting such an arrest. The Criminal Procedure Code forbids the detention of the members of the Armed Forces for any action executed by them in the discharge of their official duties except after obtaining the consent of the Indian Government. According to Section 43, a private individual may conduct an arrest of another person specifically when the arrested individual is determined to be an offender by proclaiming or commits a non-bailable offence and cognizable offences in the presence of the arresting individual. Section 44 states that a Magistrate, regardless of being Executive or Judicial, may conduct an arrest on a person without a warrant. Arrest by a Police Officer can be performed without a warrant only when the said person conducts a cognizable offence. Cognizable offences include criminal activities that are of more serious nature as compared to non-cognizable offences. Cognizable offences include criminal activities such as murder, kidnapping, theft and so on. Arrest without Warrant Section 41 enumerates the different categories of cases in which an officer of the Police Department may arrest an individual without an order from a Magistrate and a warrant. These include the following. A person who has been concerned with and in any cognizable offence or against whom a reasonable complaint has been filed, or credible information has been received, or a reasonable suspicion surrounds the person, of his having been so concerned. A person who has an item in his possession without any lawful excuse, the burden of proving which excuse shall lie on such a person, any implement of housebreaking. A person who has been proclaimed as an offender either under the Code or by order of the State Government. A person who is in possession of anything that may reasonably be suspected to be stolen property and a person who may be reasonably be suspected of having committed an offence with a reference of such a thing. A person who obstructs the functioning of a police officer while in the execution of his duty, or who have escaped, or attempts to escape, from lawful custody. An individual who is reasonably suspected of being a deserter from any of the Armed Forces of the Union. A person who has been involved in, or against whom a reasonable complaint has been made, or credible information has been obtained, or a reasonable suspicion exists, of his having been involved in, any act committed at any country or a place out of India which, if done in India, would have been considered and punishable as an offence, and for which he is, under any law concerned to extradition, or otherwise, liable to be apprehended or detained in custody in India. A person who was a released convict and commits a breach of any rule, relating to the notification of the residence or change of or absence from the place of residence. A person for whose arrest any requisition, regardless of being written or oral, has been received from another officer, provided that the order specifies the individual to be arrested and the crime or other causes for which the detainment is to be done, and it appears therefrom that the individual might lawfully be arrested without a warrant by the officer who issued the requisition. Section 42: Arrest for refusal to give name and residence If any individual who is accused of committing a non-cognizable offence does not provide his name, residence or instead provides a name and residence which the police officer feels to be false, he may be taken into custody. However, such a person cannot be held or detained beyond 24 hours if his actual name and address cannot be ascertained or fails to execute a bond or furnish sufficient sureties. In such an event, he shall be forwarded to the nearest Magistrate having jurisdiction. Section 43: Arrest by a private person A private individual may conduct an arrest or cause to be arrested by any individual who in his presence commits a cognizable or a non-bailable offence or who is a proclaimed offender. This right of arrest arises under the Common Law which applies to India Ramaswamy Aiyar (1921) 44 Mad. 913. Section 44: Arrest by Magistrate As stated in Section 44 clause (1) of the Criminal Procedure Code, the Magistrate has been given the power to arrest an individual who has committed an offence in his presence and also commit him to custody. Under Clause 2 of the Code, the Magistrate has the power to arrest a person for which he is competent and has also been authorised to issue a warrant. However, Section 45 of the Code protects the members of the Armed Forces from an arrest where they execute an action in the discharge of their official duties. They could be arrested only after obtaining the consent of the Central Government. Section 46: Making an Arrest Section 46 of the Criminal Procedure Code enlightens the

The Criminal Procedure Code: Arrests Read More »

Dispute Settlement Agreement

Dispute settlement or Dispute resolution is the process of resolving the disputes between the parties to a contract. The term dispute resolution is different from conflict resolution as the dispute resolution has ways to resolve guided by the dispute resolution techniques which helps in solving the disputes arose of the citizens, corporations as well as governments. Dispute Settlement Agreements is a legal contract executed by and amongst the parties whether natural individuals, corporations or governments to solve a dispute in future if any arises. The Dispute Settlement Agreements can also become the part of the original agreement if any executed by the parties carrying business with each other or they may be executed separately depending upon the mutual understanding of the parties. Ways of Dispute Resolution Mediation- The first method of solving disputes is mediation which involves usually a voluntary arrangement whereby the parties appoint by a method agreed by the parties to listen to the arguments of each side a third party as a mediator to discuss the case with either separately or together and tries to help the parties to reach a settlement. The mediator does not have any authority except assisting the parties in recognizing the strengths and the weaknesses of their arguments and to look forward for a solution on which they can agree, which is usually done through an agreement on common ground. Unlike the arbitration or conciliation there is no specific law that deals with mediation in India. Hence, unlike the other statutorily-recognized forms of non-binding alternative mechanism dispute resolution (being conciliation), confidentiality in the mediation process is not specifically provided for in any law in India. Litigation- Litigation is a process of proceeding the case further through the courts for an enforceable settlement. It is a lengthy procedure sometimes which involves a potential problem of how enforceable the order from a court of one country will be in a different country and also how much time it will take .The enforceability depends on a various number of factors. The decree or award of a judge is legally binding on the parties. Arbitration- Arbitration is a process where a neutral third party is appointed as an Arbitrator for resolving the disputes; they are more like private judges also there can be one or more than one arbitrators involved. It is the most reliable way of solving a dispute between the parties. An agreement is formed already called an Arbitration Agreement which is a way of solving disputes if any arises in future. The Arbitration in India is governed by Arbitration and Conciliation Act, 1996. Drafting of Agreement Drafting of Dispute Settlement Agreements varies from cases to case also in India Arbitration is majorly used as a mode of solving disputes. Following are the points which are generally covered while drafting an Arbitration Agreement:- Place of Arbitration Procedure of appointing Arbitrator Language of Arbitrator Type of Arbitration Governing Laws Statement of Claim Hearing of parties Award Name & Address of the Arbitration Institution Execution of Award Signature of parties Number of Arbitrators and Qualification of Arbitrators FAQs What do you mean by dispute resolution? The term dispute resolution means solving a problem or hurdle arose between the parties to the agreement through ways to resolve guided by the dispute resolution techniques between the citizens, corporations as well as governments. What is the time period involved in solving any disputes? As such there is no time, It will be guided by the clause mentioned in the Dispute Settlement Agreements for settling the dispute. Dispute Settlement Agreements are executed to reach parties to an amicable settlement. Whether the decision of the Arbitrator is binding on the parties ? Yes, the Arbitration proceedings are guided by the Arbitration and Conciliation Act, 1996 and hence, the decision is binding on the parties. 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

Dispute Settlement Agreement Read More »

Risk Free Rate (rf)

The Risk Free Rate (rf) is the theoretical rate of return received on zero-risk assets, which serves as the minimum return required on riskier investments. The rate should reflect the yield to maturity (YTM) on default-free government bonds of equivalent maturity as the duration of the projected cash flows. What Is the Risk-Free Rate of Return? The risk-free rate of return is the theoretical rate of return of an investment with zero risk. The risk-free rate represents the interest an investor would expect from an absolutely risk-free investment over a specified period of time.The so-called “real” risk-free rate can be calculated by subtracting the current inflation rate from the yield of the Treasury bond matching your investment duration. In theory, the risk-free rate is the minimum return an investor expects for any investment. Investors will not accept additional risk unless the potential rate of return is greater than the risk-free rate. If you are finding a proxy for the risk-free rate of return, you must consider the investor’s home market. Negative interest rates can complicate the issue. How to Calculate Risk Free Rate (rf)? For corporate valuations, the majority of risk/return models begin with the presumption that there is a so-called “risk free rate”. Despite the fact that the return expected by investors is considered to be risk-free, it is important to remember that the risk-free rate is a mere simplification, as all investments carry some degree of risk. However, government-issued bonds are logically about as close to being risk-free as an asset could get, as governments could simply print more money if necessary.As a result of being secured by a central government, the probability of default on such bond issuances is practically zero – and therefore, government bonds are viewed as the safest asset class that investors could place their capital in. Risk Free Rate Formula (rf) To expand further on the risk-free rate, there are two different types to consider: Real Risk-Free Rate Nominal Risk-Free Rate The reasoning behind these two concepts is related to the inclusion (or exclusion) of the rate of inflation. The real risk-free rate is the required return on zero-risk financial instruments with the rate of inflation taken into account. The relationship between the real and the nominal risk-free rate is depicted by the following equation: Real Risk Free Rate (rf) = (1 + Nominal rf Rate) ÷ (1 + Inflation Rate) The nominal risk-free rate refers to the yield on a risk-free asset without the effect of inflation. If the projected cash flows are discounted in nominal terms (i.e. reflects expected inflation), the discount rate used should also be nominal. Nominal Risk Free Rate (rf) = (1 + Real rf Rate) x (1 + Inflation Rate)  What is the Role of the Risk Free Rate in CAPM? The risk-free rate has a significant role in the capital asset pricing model (CAPM), which is the most widely used model for estimating the cost of equity.Under the CAPM, the expected return on a risky asset is estimated as the risk-free rate plus an approximated equity risk premium. The minimum threshold for return factors in the beta of the specific asset (i.e. systematic, non-diversifiable risk) and the average return of the stock market. The risk-free rate serves as the minimum rate of return, to which the excess return (i.e. the beta multiplied by the equity risk premium) is added. The equity risk premium (ERP) is calculated as the average market return (S&P 500) minus the risk-free rate. Equity Risk Premium (ERP) = Expected Market Return – rf Rate The equity risk premium helps investors evaluate potential investments based on the “extra” return that they are receiving for the incremental risk above the rf rate. How Does the Risk-Free Rate Affect Discount Rate? The risk-free rate assumption is also a key input in the estimation of the weighted average cost of capital (WACC) of a company. The CAPM estimates the cost of equity based on the risk-free rate of return and the additional risk (and required return) associated with the investment. But the cost of debt can also be estimated by adding a certain spread based on the risk profile (i.e. default risk premium) of the company to the risk-free rate. If the risk-free rate increases, there will be increased pressure on the equity risk premium to compensate investors more for the amount of risk undertaken (and vice versa).Since investors can receive higher returns from risk-free assets, riskier assets are expected to result in higher returns to meet the new standards set by the market for the returns of riskier assets. FAQs Why is the risk-free rate important? The risk-free rate is important because it provides a baseline for comparing the returns of other investments. Investors use the risk-free rate as a reference point to assess the risk and potential reward of various investment opportunities. What investment is considered risk-free? Typically, short-term government securities issued by stable and creditworthy governments are considered risk-free investments.  How is the risk-free rate determined? The risk-free rate is influenced by various factors, including monetary policy, inflation expectations, and market demand for safe assets. Central banks, such as the Federal Reserve in the United States, play a significant role in setting short-term interest rates, which in turn affect the risk-free rate. 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

Risk Free Rate (rf) Read More »

Custody of Children in India

Parenting is not merely the bragging rights of a desperate parent but is an endeavor that determines the future well-being and morale of the child. The need for determining the legal guardianship of children aged below 18 occurs in the event of a divorce or annulment of marriage. In India, the rights of adjudication of this most delicate of provisions are vested with the family law courts. This article covers the legal framework pertaining to the custody of children in India. What Is Child Custody in India? In India, both parents have legal rights to the child. This means that the mother has the right to raise and care for the child and is entitled to visitations with the child. The father has equal rights to raise and care for his children but does not have the right to visitation. The courts do not decide on custody based on which parent is more suitable or better suited to care for the child. In this case, it would be a tie between both parents. This system of custody comes from how society views women as the weaker gender. They would rather give mothers legal rights over children because they believe mothers should be caring for children while fathers should be out working and providing financially for their children. Types of Custody he law concerning custodianship facilitates custodianship of any of the following manner, as directed by the courts: Physical custody Legal custody Joint physical custody Third party custody Physical Custody- Physical custody awards the custody of a child to a single parent if the other parent is abusive and is considered unfit for parenting. The parent with the custodial rights will be designated as the primary caretaker and will be in charge of the child’s emotional, medical and educational needs. For this purpose, the legal guardianship is bestowed on the person who may potentially serve the child better in terms of these needs. The earning capacity of the parent isn’t prioritized here, as the parents are assessed based on their potential to provide a safe and secure environment to the child. If a non-earning parent is bestowed with the custody of a child, the earning member is accountable to cater to the financial needs of the children. Note: According to a ruling of the Supreme Court, the custody of a child is bestowed to the mother if the age of the child is five or below, subject to conditions. Joint Physical Custody- The affection of a child is oftentimes impossible to comprehend. Most children, except in certain extreme scenarios, prefer to side with both their parents. Such a scenario would entitle both the parents to cherish the legal custody of the child, though physical guardianship would be entrusted to a single parent. Here again, the aspect of income isn’t prioritized over the potential of the parent to provide a safe and secure environment to the child. Legal Custody- The option of legal custody bestows the parents with the entitlement of making vital decisions with respect to the upbringing of a child. The rights so bestowed on them includes the right to cater to the child’s educational, moral, financial, and medical requirements. These aspects are given prominence as it has a direct bearing on the welfare of the child. Third Party Custody- The discretion to bestow the guardianship rights on the hands of a third party are taken when the concerned adjudicators are of the opinion that neither of the biological parents is considered fit to be assigned with the custodianship. In this case, the rights are granted to a third person. How Child Custody Works in India The Indian courts are reluctant to make decisions about child custody and the welfare of children. Child custody is a state-based issue in India, so each state has its own set of rules and regulations. In India, many people prefer joint custody to sole custody. A parent does not have to share custody of their children, and it can either be shared or not. In the event that the parents cannot agree on joint or non-joint guardianship, the court will decide who will have full custody of their child. In most cases, the court will ask both parents what they want if they cannot agree. The Central Regulation The laws concerning the custody of a child are provided in the Guardians and Wards Act of 1890. The law is enforced on all the religions of the country and is considered in conjunction with the relevant religious laws. On a precise note, the following aspects are considered while determining the guardianship of a child: The personal law wherein the minor is the subject. The age, gender, and religion of the minor. The character and capacity of the proposed guardian. The relationship of the kin with the minor. The wishes of a deceased parent. Any existing or prior relations of the proposed guardian with the minor. The minor’s capacity to make an intelligent preference. The desire of the child. The number of siblings in a family – The courts would generally like to keep the children together if the concerned family has multiple children, and hence would ordain the custodial rights accordingly. The comfort, health, material, intellectual, moral and spiritual welfare of the child. The Hindu Law he Hindu laws pertaining to guardianship are covered in the Hindu Minority and Guardianship Act, 1956, which is almost synonymous with the Guardians and Wards Act, 1890. The similarities found in both these laws are as follows: The mother will be bestowed with the custodianship of the child if the particular child is aged five or below, except in circumstances where the mother is proven to neglect or ill-treat the child. The general regulatory standards of both the laws favor the father to gain custody of older boys and the mothers with that of older girls, though it is by no means a compulsory dictum. A child’s desire is considered if he/she has surpassed the age of nine. Apart

Custody of Children in India Read More »