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Author: Sanjeev Archak

Tax Calculation Made Simpler with Income tax Calculator 2020-21

by Sanjeev Archak Sanjeev Archak No Comments

The budget for the year 2020-2021 has created a lot of ripples of curiosity among the people due to its unusual features. In this budget, the Finance Minister has proposed the removal of about 70 different tax exemptions. This has made the tax calculation a much simpler and easier activity for many individuals. If you think your income is within the taxable regime, you need to keep in mind a few of the important things before you opt for a genuine income tax calculator 2020

income tax calculator 2020 - 21

Choosing the Regime

The biggest thing that a person needs to do is to choose the right tax calculation regime. As per the recent budget regime, there is a relaxation in the tax rates but with the condition of a lesser number of deductions. In this case, the best option is to make use of the income tax calculator ay 2020 21 to check through the right regime. You can calculate the payable taxes individually as per both the regimes and can check which one is more profitable for you. 

The Deductions

As per the new regime for 2020-21, there are 70 deductions that have been removed. Hence it becomes quite important for you to understand the deductions that will be made. The maximum amount of deduction that an employee can make is 10% of his or her salary. If you are choosing the new regime, the deductions will be made as per the 80CCD (2) of the Income Tax Act 1961. People who have chosen the old regime may have several deductions but have to pay a higher tax rate comparatively. 

How is This Calculated?

In order to come up with the right payable tax, you need to calculate the net taxable income for the financial year. 

Step – 1: The very first step in this calculation is to first accumulate the income of the financial year. This accumulation has to be the total taxable income for that financial year. 

Step – 2: Now, you need to know the deductions that you can claim for that particular financial year. Here, you need to check through the list of deductions removed if you are calculating the payable tax amount as per the regime of 2020-2021. 

Step – 3: When the deductions are made from the total income, you get the total taxable amount. 

Step – 4: On this, you need to apply the tax rate based on the slab you belong to so that you can calculate the amount that you need to pay as tax. 

Even though the method has been simplified after removing different exemptions, there are a number of people who might find it difficult to find out the exact amount that has to be paid as tax. They might either opt for a professional and pay a hefty commission or use the tax calculator AY 2020 21

Choosing the Right Tax Calculator

If you are unable to make the calculation manually and wish to seek the help of the income tax calculator 2020, you should make sure to choose the right one. Go through the reviews of different calculators well and check the details that the calculator is asking for. Make sure that the calculator includes these eminent steps:

  • Option to the financial year, gender, and age 
  • Providing the taxable salary and the deductions
  • Providing other details such as interest income and others
  • Providing other investment options such as under section 80D, 80C, and others if you wish to calculate as per the old slab
  • Ability to compare results calculated as per the old slab as well as the new slab 

These eminent steps in the calculator will help you in getting the right one.

Conclusion

Integra Books can offer you an easier way of calculating. Contact us to know the methods even further. You can conveniently calculate your tax for the financial year 2020 – 2021 by clicking here.

GST Return Late Payment Fee Calculator – All You Need to Know

by Sanjeev Archak Sanjeev Archak No Comments

Goods and Services Tax, commonly known as GST, has been applicable to all businesses operating in India since July 2017. This ambitious and targeted tax regime has been a major asset in subsuming a plethora of indirect taxes that were applicable to goods and services before its implementation.

late fee and interest in GST

However, a major problem statement GST has presented businesses with is the calculation of late payments, and the interest rates applicable to it. GST has two strata of operation, namely Central Goods and Service Tax (CGST) and States Goods and Service Tax (SGST). Under GST, the government has implemented certain procedures that determine the late fee and interests applicable to businesses failing to meet the payment timelines. Let’s take a closer look into the functioning of GST to understand how to calculate late fee and interest in GST.

Provisions of the GST Regulations

Under Section 50 of the CGST Act, the government of India has the right to collect defined interest rates on the tax dues of businesses. These tax dues consist of the taxes payable excluding interests and penalties, on certain goods and services. The government only imposes the interest for GST after the due taxes are paid by individuals/businesses, as the official GST portal doesn’t allow them to file for returns before paying their taxes.

This rate of interest is defined at 18%, which carries from the period from the date when the taxes are due until the date that taxes are paid. The GST department issues a notice, after which this interest has to be paid to file for returns every financial year. The late payments are cleared in the form of “challan”, which are issued on the official GST portal. A copy of this challan has to be sent to the jurisdictional tax officer. This challan is named Form DRC03.

How to Calculate Late Fee and Interest for GST Returns?

There are two ways to calculate the late fee and interest in GST to file for returns. The differences between them are subtle, but they are important to understand to get a grasp of interest and late fee calculator.

  1. Calculator Specifically for Late Fee 

 Late fees are charged under the GST laws in case of delays in filing for returns in GST by businesses or individuals. The late fees applicable right now on SGST and CGST is Rs 25 per day. You can calculate the late fees seamlessly on Integra Books’ interest and late fee calculator GST automatically. 

      2. Calculation Specifically for Interest on Late Payments or Filing                   for  GSTR 3B

If you have any GST dues, whether late payment or late filing, then an interest rate on them is applicable under the GST laws. These interest rates are applicable to every taxpayer who has made a delayed GST payment at 18% per annum. Interest rates are also applicable if an excess input tax credit is claimed at 24% per annum. These interest rates can be calculated on the interest and late fee calculator GST offered by Integra Books.

Now that you know about calculating the late fee and interest in GST, let’s take a look at some important dates, so you don’t miss out on filing for GST Returns:

  • The returns scheme for filing for GST Returns has been postponed to start from 30th September 2020.
  • E-invoicing for filing for GST returns has been postponed to start from 1st October 2020. This is only applicable for taxpayers who have an annual turnover of over Rs 100 crores for B2B transactions, or over Rs 500 crores for B2C transactions.

A recent update regarding  GST late fee payment 

Below are important highlights as per a recent update from the government by the Economic Times  on June 12th, 2020:

  • No late fee will be charged for taxpayers who do not have any tax liability but were yet to file returns for the period from July 2017 to January 2020  (prior to the COVID-19 period). 
  • Taxpayers who have liability but have not yet filed their returns can do so with late fee payment of maximum Rs 500 if returns are submitted by July 1, 2020.
  • During COVID-19 period of February, March and April 2020, the interest rate on late return filings by small taxpayers with turnover up to Rs 5 crore, will be reduced to 9% from 18%, if returns of inward supplies are filed till September 30.

Conclusion

Integra Books can help you keep track of all the GST due dates and payments, and maintain accuracy in the calculations of GST payments. Contact us today for any GST related concerns and other financial solutions by clicking here.

COVID-19 Financial Relief Packages for MSMEs – All You Need to Know

by Sanjeev Archak Sanjeev Archak No Comments

In the wake of the COVID-19 pandemic, the Indian Government initiated a multitude of incentives to be dispersed to the qualified Micro, Small, and Medium Enterprises (MSMEs) across the country. Announced by the Finance Minister Smt Nirmala Sitharaman on May 13th, these incentivized relief packages are targeted towards providing much-needed assistance to the businesses in surviving the repercussions that this pandemic has brought along with it.

MSMEs employ a major portion of the country’s working population, especially the economically weaker areas. These relief packages are meant to provide them with a solid ground to avoid bankruptcy, and the competency to still pay the salaries and wages to their employees. This was further assisted by the Ministry of Labour and Employment and Ministry of Home Affairs, who issued an advisory and order respectively to still pay the salaries of the employees during the lockdown.

Financial Relief Packages for MSMEs

Let’s take a closer look at what these relief packages are and how they are supposed to help MSMEs.

Loans

Automatic Loans for MSMEs were a major highlight of the relief packages. Under Automatic Loans, the MSMEs will have the following advantages:

  • Added relief for businesses in the form of additional working capital of 20% of the finance of outstanding credit. Term Loans will implement a concessional rate of interest for the same. Available to MSMEs with an outstanding credit of up to Rs 25 crores and a turnover capital of up to Rs 100 crores, without having to provide any collateral or guarantees of their own.
  • Of the loan balance that any MSME carries, a 20% loan extension would be provided under the same conditions as the last pointer.
  • These relief packages will be available to over 45 lakh MSMEs across India, with over 3 lakh crore rupees available for dispersion.

Taxes and Provident Funds

There were some major rollbacks provided by the Finance Ministry for employers and employees alike for 

  • The Finance Ministry has reduced the rate of provident funds issued between the employer and the employee from 12% to 10%. 
  • The Tax Deduction at Source (TDS) and Tax Collected at Source (TCS) deduction rates have been cut down by 25% on non-salary payments. Only residents will be able to claim this benefit, which has been implemented since 14th May.
  • For all businesses, the due date of filing for income tax returns has been officially extended till 30th November 2020. 
  • Finance Ministry has also aimed to increase liquidity across all domains in the market. Exact monetary relief announcements may or may not be announced by the Ministry. 

Glass Half Full or Empty?

Digging deeper into the relief packages offered by the Finance Ministry, it becomes clear that the idea is solid, but lost amidst the big numbers. There are over 5 crore MSMEs (registered or unregistered) in India, and the relief packages offer eligibility to only 45 lakh of them, which is a mere 6%. 

According to The Print, the government failed to provide payroll support to MSMEs. Moreover, the government also sanctioned loans instead of directly transferring money to MSMEs, which was the result of the government focusing on liquidity rather than direct transfer. There is a possibility that this might result in MSMEs being unwilling to return the loans taken under this scheme.

 

Conclusion

 

Regardless of the fact that the government’s actions for providing relief to MSMEs weren’t swift, it did deliver in coming up with schemes that can majorly assist in preventing an economic downfall due to the pandemic. It is reasonable for MSMEs to be less content with the structure/benefits of the relief packages, but these packages can prove to be a source of vital assistance to help keep their business running amidst the complications caused by the COVID-19 pandemic.

 

Instant PAN Through Aadhaar Based e-KYC

by Sanjeev Archak Sanjeev Archak No Comments

The Income Tax Department has launched a new facility of availing instant Permanent Account Number (PAN) for applicants with a valid Aadhaar. This is a massive improvement over the current process where an individual has to wait for 14 days for the PAN to arrive post filling the application.  Plus, one had to pay Rs 93 for delivery to his/her chosen postal address. This new Instant PAN facility is free of cost.

 Procedure for availing PAN:

  1. To apply for PAN, please visit the e-Filing website of Income-tax department.(Url: www.incometaxindiaefiling.gov.in)
  2. Click the link- ‘Instant PAN through Aadhaar’.
  3. Click the link- ‘Get New PAN’.
  4. Fill in your Aadhaar in the space provided, enter captcha and confirm.
  5. The applicant will receive an OTP on the registered Aadhaar mobile number; submit this OTP in the text box on the webpage.
  6. After submission, an acknowledgement number will be generated. Please keep this acknowledgment number for future reference.
  7. On successful completion, a message will be sent to the applicant’s registered mobile number and e-mail id (if registered in UIDAI & authenticated by OTP). This message specifies the acknowledgement number.

How to Download PAN:

  1. To download PAN, please go to the e-Filing website of Income-tax department. (Url: www.incometaxindiaefiling.gov.in)
  2. Click the link- ‘Instant PAN through Aadhaar’.
  3. Click the link- ‘Check Status of PAN’.
  4. Submit the Aadhaar number in the space provided, then submit the OTP sent to the Aadhaar registered mobile number.
  5. Check the status of application- whether PAN is allotted or not.
  6. If PAN is allotted, click on the download link to get a copy of the e-PAN pdf

Format of e-PAN:

The e-PAN also contains enhanced QR code having demographic (Name, DOB) as well as biometric
(scanned photo and signatures) information of the PAN holders which can be accessed and used for
PAN verification purposes in off-line mode. Sample of e-PAN

 

 

Setting up Your Accounts-Part 1

by Sanjeev Archak Sanjeev Archak 1 Comment

When you are starting your business handling accounting and compliance can be daunting. There are a few  common mistakes that early stage businesses commit; of course with the right advice you can avoid these pitfalls. Part 1 of this blog looks at setting up your accounting system.

Open a Bank Account

It is best to open a current account for your business. This current account must be used to deposit all your sales income & paying all the business expenses. Of course there is a wide choice of banks to choose from, here are some factors to be kept in mind while choosing a bank account:

Bank charges: look at how much the bank charges for NEFT/RTGS, ATM Withdrawals, foreign currency receipts and payments, forex rates etc.

Minimum balance requirements: check the minimum balance requirements in the account. Also ease of operating the net banking must  be checked.

Mobile banking: choose a bank which offers mobile banking. This will save you a lot of time.

Separate Your Finances

There needs to be separation between yourself and the business. The individual and the business are not necessarily the same. How this works will depend on your legal structure:

For Sole Traders/Owners: if you’re a self-employed sole trader then your business and personal money are one and the same, legally speaking. But to manage your accounts, it’s still essential to have two separate bank accounts and to keep detailed financial records.

For Companies: a company is a legal person separate from its shareholders & directors. Companies are required to have bank accounts in company’s name.

Accounting for business and personal money separately allows you to have the best possible overview of how the business is faring – and is vital for tax purposes.

Keeping Tax Records

One can never escape taxes, as a business you will have to pay tax. It is a legal requirement, under GST & Income Tax Law, to have books of accounts. How much tax you have to pay depends on your legal structure. So as a business you must:

Know your tax liabilities: which depends on the legal structure of your business. Tax rates are different for companies & individuals.

Digitise your records: Income Tax Law requires you to maintain records for a minimum of seven years. Similar requirements are there in the Companies Act as well. So it is prudent to digitize your records.

Pay Taxes on Time: by paying taxes on time you will avoid payment of penalty. Let our experts at Integra Books help you with taxes.

Choose Cloud Accounting Software

Put your accounting on the cloud. A good cloud accounting software has the following features:

Ease of Use

Automation

Integration with other Apps

Zoho Books is a cloud accounting software which ticks these requirements. Zoho Books integrates with a whole range of Zoho Apps and will put your entire business on the cloud.

You can read a related blog here. Stay tuned for Part 2.

Bank Reconciliation: Why?

by Sanjeev Archak Sanjeev Archak No Comments

Bank Reconciliations. Sounds very tedious. But doing some boring and tedious work can save you from pitfalls. So sit back and read more about the need to do bank reconciliations.

What is bank reconciliation?

As the word reconciliation suggests, you will be comparing bank statements with your books of accounts for the same period. The idea of any comparison is to find discrepancies and rectify them.

Who is responsible for bank reconciliation?

If you do your own accounting, then it is you. If you have an accountant then it is the accountant. You will need to do bank reconciliation only if you are following the accrual method of accounting. If, on the other hand, if you are following the cash method of accounting, then you record every transaction at the same time as bank does; there should be no discrepancy between your books and your bank statement.

Still wondering which method of accounting to use? Read our Cash vs Accrual accounting for more.

Why should we do bank reconciliation?

1.So you don’t spend the money that you don’t have

If your bank account and your books don’t match up, you will end up spending money you don’t really have or holding on to the money you could be investing in your business.

2. To track cash flow

Cash is king. Reconciling your bank statements lets you see the relationship between when money enters your business and when it enters your bank account, and plan how you collect and spend money accordingly.

3. To detect frauds

Bank reconciliation will not stop frauds but will help you detect when it has happened. For instance, you could pay a vendor by check, but they could tamper with it, making the amount withdrawn larger, and then cash it. The discrepancy would show up while you reconcile your bank statement.

4. To detect errors

Banks are not infallible, they do make mistakes. Such errors maybe rare. If there’s a discrepancy in your accounts that you can’t explain any other way, it may be time to speak to someone at the bank.

5. Stay on top of accounts receivable

If you use the accrual system of accounting, you might “debit” your cash account when you finish a project and the client says “the cheque is going in the courier today, I promise!” Then when you do your bank reconciliation a month later, you realize that cheque never came, and the money isn’t in your books (even though your bookkeeping shows you got paid).

Bank reconciliations are like a fail-safe for making sure your accounts receivable never get out of control. And if you’re consistently seeing a discrepancy in accounts receivable between your books and your bank, you know you have a deeper issue to fix.

Conclusion

Doing bank reconciliation sounds easy but in reality it is not so. Here is where Zoho Books can help. You can sync your bank accounts with Zoho Books and even make vendor payments directly from Zoho books using the ICICI+Zoho Books integration. Reach out to us today to learn more.

What happens if you don’t do your accounting?

by Sanjeev Archak Sanjeev Archak No Comments

You are a business owner and you are juggling sales, marketing, hiring, managing payroll and employees. The chances are that you will be letting boring things like accounting stack up into a mess. Maybe you are waiting for the tax season to arrive. What happens if you don’t do your accounting?

There is a good change that you are likely to end up in a big mess and there might be a hefty price tag.

You will never have clear view of your business finances

If you put a full stop to accounting, your books will no longer show a clear picture of your company’s financial viability. Without accurate records, it can be difficult (or nearly impossible) to track cash flow projections and statements.

Without accurately measuring cash flow, you can obscure issues like overdue invoices, held inventory, or recurring variable expenses like shipping costs or salaries. A clear break up fixed and variable costs allows you to find out your break-even point.

Your cash flow shows when money is coming in and what bills need to be paid. If your business is failing to track cash flow and you’re struggling financially, having a paper trail can reveal the problem. But, without accounting there is no trail—just a stack of papers on a desk somewhere.

Financing options become limited

Let’s face it; no bank will lend you without proper financial statements. Without evidence of your financial history, securing loans, bringing on investors or partners, or selling your business will be an uphill grind.

Your invoicing cycle goes haywire

You could keep a mental note of who owes you what, but we’re all human—we all make mistakes. Are you sure you didn’t forget about the invoice for the client who always pays late? If you did, they’re not going to voluntarily remind you that they owe you money. The slower you are at organizing outstanding invoices, the longer your business will go without those funds.

Payroll problems start to rise

If a system of checks and balances isn’t in place, issues with payroll can happen. Without proper bookkeeping, you might be under-compensating (or overpaying) employees without knowing. Generating Form 16 for tax filing will be a huge problem. Moreover, this can cause tax problems for the employees as well.

Managing expenses becomes tricky

Having a shoebox of receipts might sound easy enough, but this is not going to save you money. Without proper bookkeeping, your business could suffer from slow leaks.

Accounting backlog drains your time and money

Tracking down a year’s worth of records on your own takes you away from running the day-to-day operations of your business—and catch up accounting can make a stressful time of the year even worse.

If there isn’t a system in place for monitoring your books, your accountant is going to need ample time to sort through the mess, and it will cost you money

You will get in tax trouble

Filing tax returns without books of accounts is near impossible. All tax filers declare that they are providing correct information in their returns. Therefore, providing incorrect or false details will lead to penalties.

So we have answered  the question of “What happens if you don’t do your accounting?”. Get in touch today and save yourself a load of trouble.

Latest GST updates

by Sanjeev Archak Sanjeev Archak No Comments

The GST council held its 39th Meeting on 14.03.2020. The Council has taken some important decisions relating to interest on delayed payments, GST returns, and rates of GST among other things. In this blog we present to you the latest GST updates, read more below:

1.Interest on delayed payment of GST

The GST department had starting sending out notices for delayed payment of GST last month. You can read more about it in our detailed blog post .The GST department had clarified that the interest will be levied on net liability of GST. The GST council has now endorsed this decision and has provided the legal backing.

2.Changes in Due Dates for Annual Returns

The due date for filing Annual GST returns (in Form GST 9 & 9C) for F.Y. 18-19 has been extended upto 30.06.2020. This earlier due date was 31.03.2020. Further, MSME’s having turnover below Rs 5 crores have been granted relaxation from filing Form GST 9C (Auditor certificate). In some good news to the tax payers, late fees for delayed filing of Forms GST & 9C has been waived for FY 207-18 and 18-19 for tax payers having turnover of less than Rs 2 crores. It is important to note that Form GST 9C need not be filed by tax payers having less than Rs 2 crores in turnover.

3.Postponement of E-Invoicing

The Govt had announced a mandatory e-invoicing procedure for tax payers having turnover of more than:

  1. Rs 100 crores for B2B transactions
  2. Rs 500 crores for B2C transactions

This feature involved uploading invoices on the GST portal with a QR code. E-invoicing was supposed to start from 01.04.2020 but now has been pushed to 01.10.2020.

4.Postponement of New Returns

Further, the new returns scheme that was to come into effect from 01.04.2020 has been pushed to start from 30.09.2020. You can read more about the new returns here. The GST 3B and GST1 will continue until 30.09.2020.

5.Know your Supplier

It is proposed to introduce a new “Know your supplier” facility within the GST portal. Further, details are awaited on how this will be made available

Final Thoughts

So these were some of the latest GST updates.The GST back end, managed by the GST Network, has been beset with problems from inception. Very often, the servers of the GST crash when the return filing load is higher. The capacity of the GSTN to handle a large number of returns is doubtful. Frequent changes in the law have also caused problems for the tax payers and GSTN as well. The GST council has set a target of July 2020 to resolve all IT problems. Let us hope all is well by the said date.

What is EBITDA? Why is it important?

by Sanjeev Archak Sanjeev Archak No Comments

This is  blog is a first in a series of wherein we explain “Accounting Terminology”. The most used term is EBITDA. What is EBITDA? And why is it important?

What is EBITDA?

EBITDA is an acronym that stands for “Earnings before Interest, Taxes, Depreciation and Amortization” and it’s used to measure the overall financial health of the business. Let’s understand more of these terms.

  1. Earnings=net profits
  2. Interest=expenses paid out for borrowings
  3. Taxes=income tax or local taxes paid
  4. Depreciation= decline in the value of tangible assets employed by the business
  5. Amortization=decline in the value of intangible assets employed by the business

How is EBITDA used as financial metric?

EBITDA is an indicator of the financial performance of a business. As a business you can use EBITDA number to get a clear idea of your company’s value. Also, it presents the worth of your business to outsiders.

How to calculate EBITDA?

EBITDA=Net Income+ Interest+ Taxes+Depreciation+Amortization

Why is EBITDA important?

A profit and loss statement contains both operating and non-operating expenses. EBITDA removes the impact of the non-operating expenses while measuring the performance of a business.Interest,taxes,depreciation and amortization are non operating expenses. Further, EBITDA provides a meaningful comparison between different companies in various sectors. This enables you map your performance with competitors. EBITDA as a unit of measurement is not accepted by all, the prominent one being Warren Buffet. That being said EBITDA will remain an important financial metric always.

Do check out some of our other blogs here.

 

MCA:SPICE+

by Sanjeev Archak Sanjeev Archak No Comments

The Ministry of Corporate Affairs has rolled out a new Form for incorporating companies. This new Form called SPICE+ was launched on 25.2.2020. SPICE+ offers 10 services of the Central Government and one State Government, thereby making it easy for starting a business.

This new form is part of Government of India’s Ease of Doing Business Initiative (EODB Index). India has been steadily moving up on the EODB Index over the last few years. The Ministry of Corporate Affairs centralized the incorporation process a few years ago to bring down the time it takes to incorporate a company. Further, an automated approval system was introduced for a number of Forms to replace the manual approval process. This was not the case previously when one had to wait for approval for adding/deleting directors,changing registered office etc. Delays in approval were common and were a hindrance to business. Now let’s look at the features of the new SPICE + Form:

What is the difference between SPICE & SPICE+?

SPICE+ offers 10 services of the Central Government and one State Government, thereby making it easy for starting a business. SPICE was a form used only to incorporate a company, apply for PAN and TAN. Moreover, SPICE + is a web form to be filled in and submitted on the MCA portal by registered users. 

What are the contents of the SPICE + Form?

The Form contains a PART A which has to be used to apply for a name. The PART B offer the following services:

  1. Incorporation
  2. DIN allotment
  3. Mandatory issue of PAN
  4. Mandatory issue of TAN
  5. Mandatory issue of PF registration
  6. Mandatory issue of ESI registration
  7. Mandatory issue of Profession Tax registration(Maharashtra)
  8. Mandatory Opening of Bank Account for the Company 
  9. Allotment of GSTIN (if so applied for)

How to use SPICE+?

SPICe+ Web form is a post-login service and existing registered users would need to login into their account using their credentials. New users are required to create a login account first before using the service. An application number will be given to an application for Name reservation/Incorporation which is yet to be submitted/uploaded by the user.

What are the new fields in PART A of the Form?

New fields introduced are:

  1. Type of company
  2. Class of company
  3. Category of company
  4. Sub-Category of company
  5. Main division of industrial activity of the company
  6. Description of the main division

Is it permitted to apply for two names in the SPICE+ Form?

Yes. However, a fee of INR 1000 becomes payable if applied separately.

How many changes can be made to SPICE + Form after generating PDF and affixing Digital Sign’s?

Changes/modifications to SPICe+ (even after generating pdf and affixing Digital Sign), can be made up to five times by editing the same web form.

What is the procedure after filling the SPICE +?

Once the SPICe+ is filled completely with all relevant details, the same would then have to be converted into pdf format. The digital signatures will have to affixed and uploaded.

Is Registration for Professional Tax Mandatory?

No. It is mandatory only for companies incorporated in the state of Maharashtra w.e.f 23.02.2020

Is Registration for PF & ESI Mandatory?

Yes. Registration for PF & ESI is mandatory now companies incorporated w.e.f 23.02.2020. This rule is new addition and effectively takes away the exemptions for registration under PF and ESI Acts.

Is opening of a Bank Account mandatory for all companies incorporated w.e.f 23.02.2020?

Yes. All companies started using the SPICE+ will have to open bank accounts using the AGILE PRO linked forms. Thus far only two banks viz, Punjab National Bank and Kotak Mahindra Bank have been added by the MCA and more are awaited. There is no fee prescribed by the MCA for account opening.

What is AGILE PRO?

AGILE-PRO contains application for GSTIN/EPFO/ESIC/Profession Tax Registration (in Maharashtra) and Opening of Bank A/c.

Is it mandatory for all Directors and Subscribers to obtain Digital Signatures & DIN (Director Identification Number?

Yes. It is mandatory for all the proposed directors to have a DIN. Further, all the subscribers to MoA & AoA to have Digital Signatures.

How is the approval of the SPICE+ Form communicated to the user?

On approval of SPICe+ forms, the Certificate of Incorporation (CoI) is issued with PAN as allotted by the Income Tax Department. An electronic mail with Certificate of Incorporation (CoI) as an attachment along with PAN and TAN is also sent to the user. Further PAN card shall be issued by the Income Tax Department.

How much is the registration fees?

 A consolidated challan gets generated at the time of filing SPICe+  which shall contain applicable fee towards:

  1. Form Fee
  2. MoA
  3. AoA
  4. TAN
  5. PAN

Final Thought’s

This initiative by the Government is good one but there are problems as well. Registration under PF and ESI has been made mandatory. This means that every company even without crossing the required employee strength under PF & ESI law has to get registered.  The PF &ESI Acts grants exemption from registration based on the employee strength. This mandatory registration nullifies the exemption. Companies will have to file at least “NIL” returns every month to avoid penalties under these Laws.The Government needs to re-examine the  mandatory PF & ESI registrations, as they will increase the compliance burden on businesses. 

Moreover, the MCA has needlessly mandated opening of Bank Accounts with only two banks as of now. Further, the account opening has to be done through AGILE PRO forms. This  amendment  will force companies to deal with only two banks till other banks are listed.

 Want to incorporate a company? Get in touch now.