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Reduction in Corporate Taxes

by Sanjeev Archak Sanjeev Archak No Comments

In a major relief to all corporates in the country the Finance Minister announced a significant tax reduction. The Government of India has brought in Taxation Laws (Amendment) Ordinance 2019 to make amendments to the Income Tax Act to lower tax rates for Corporate tax payers.

Salient features of these amendments are as under:

  1. A domestic company in India has now an option to pay income-tax at the rate of 22% subject to condition that they will not avail any exemption/incentive. The effective tax rate for these companies shall be 25.17% inclusive of surcharge & cess. In a further relief, it has been announced that such companies shall not be required to pay Minimum Alternate Tax.
  2. A domestic company incorporated on or after 1stOctober 2019 making fresh investment in manufacturing, has now an option to pay income-tax at the rate of 15%. This benefit is available to companies which do not avail any exemption/incentive and commences their production on or before 31st March, 2023. The effective tax rate for these companies shall be 17.01% inclusive of surcharge & cess.  Also, such companies shall not be required to pay Minimum Alternate Tax.
  3. A domestic company which does not opt for the concessional tax regime and avails the tax exemption/incentive shall continue to pay tax at the pre-amended rate. After the exercise of the option they shall be liable to pay tax at the rate of 22% and option once exercised cannot be subsequently withdrawn.
  4. Further, in order to provide relief to companies which continue to avail exemptions/incentives, the rate of Minimum Alternate Tax has been reduced from existing 18.5% to 15%

These are very significant announcements which are designed to restart the private investments in the country. The reduction in corporate taxes was due for a while as countries like Singapore & the USA had reduced their corporate taxes.

In order to boost the Make in India initiative the Government has set a tax rate of 15% for manufacturing industries set up on or after 1.10.19. This is a historic move to give a boost to the struggling manufacturing sector. The slowdown in consumption had resulted in massive job losses in this sector.

The Minimum Alternate Tax (MAT) has been removed for domestic companies in the new tax regime. Further, in case of companies opting old rate of taxes, the MAT has reduced to 15%. We only hope that in the future MAT is completely removed and India moves towards taxing only actual profits.

The conditions for availing reduced taxes will have to be looked in detail once they are notified by the Central Board of Direct Taxes.

Final Thoughts

India can boast of an optimal tax rate of 22% and incentive tax rate of 15%. These rates are on par with global corporate tax rates and will provide an incentive for manufacturing firms to shift their supply chains to India.

Annual Returns for Companies

by Sanjeev Archak Sanjeev Archak No Comments

Come September and it is time to file Annual Returns with the Registrar of Companies. As per the provisions of the Companies Act, 2013, the due date for holding the Annual General Meeting (AGM) for the financial year ended 31st March 2019 is 30th September 2019.

The annual returns consists of two forms viz:

  1. Form AOC 4
  2. Form MGT 7

 As per Section 137 and 92 of the Companies Act, it is required to file the Balance sheet (Form AOC-4) and the Annual Return (form MGT-7) within 30 days and 60 days respectively from the date of AGM. 

Annual returns consists of the following information and documents:

  1. Audited Financial Statements
  2. Audit Report
  3. Directors Report
  4. Notice to AGM
  5. Other secretarial documents prescribed under the Companies Act.

The Companies Act, 2013 was amended in November to introduce late fees for delayed filing of ROC Returns. The late is fees now at Rs 100 per day for each form.

It is important to note that a Unique Document Identification Number (UDIN) being made mandatory from 1st July 2019 for all Audit/Assurance/Attest function. Hence, in order to conduct the AGM on or before 30.09.2019, Statutory Auditor should generate and mention UDIN in the statutory audit report on or before 29th September 2019.

Running a Startup business in India is not an easy task. It involves a constant investment of both time and effort as well as technical capabilities of knowing the various statutory compliance and regulations. We hope this blog post is helpful for both founders and budding entrepreneurs in imparting the right knowledge and guiding them.

But many early businesses struggle with the multitude of compliances that are part of doing business in India. Our advisors at Integra Books can help you ensure you file the right things at the right time.

New GST Returns Starting October 2019

by Sanjeev Archak Sanjeev Archak No Comments

New GST Returns

The GST council in has recommended to introduce a new set of GST returns to replace the current returns with effect from 1.10.19. The new set of returns are supposed to ease the compliance burden on tax payers while making it simple to fill and file the returns.

The new return scheme will have separate returns for large tax payers (having turnover of more than 5 crores) and small tax payers (having turnover upto 5 crores).

Form GST RET 1 will replace the Form GST 1. The Form GST RET 1 will have two Annexures:

  1. Form GST ANX-1: Annexure of Outward Supplies including imports and reverse charge
  2. Form GST ANX-2: Annexure of Inward Supplies

The timelines for filing the Form GST RET 1 will be as under:

 

Category

Filing of GST ANX-1

Large Tax Payers

Monthly basis from October 2019

Small Tax Payers

Quarterly only in January 2020

 

Small tax payers shall use GST PMT-8 to pay GST either by cash or by input credit. There are no changes in the due date for payment of taxes i.e, 20th of the following month.

There are other option for small tax payers who do not want to file GST RET 1, they can choose to file other quarterly returns viz, GST Sahaj-Form GST RET 2 or Sugam-Form GST RET3.

Invoices uploaded via GST ANX-1 can be viewed by the recipient on a real time basis. The matching tool is designed to help the taxpayers match their input credit. It is important to note that changes in GST ANX-1 can be made only by the supplier. Further, editing is allowed only if the recipient has not accepted the supply. Once accepted, the edit can be done only if the recipient unlocks the invoice. All the changes to GST ANX-1 can be done before furnishing the annual return.

Recipient filing monthly returns can accept details uploaded by the supplier till 10th of the following month. If the recipient is filing quarterly returns, then he can accept details uploaded by the supplier till the 10th of the month succeeding the quarter for which the return is filed.

The Form GST ANX-2 will be auto populated with details uploaded by the supplier. The recipient can accept it or reject it. Any rejection by the recipient will be conveyed to the supplier only after filing of the return by the recipient. The rejection from the recipient can be edited by the supplier before filing the subsequent return. If the supplier does not file ANX-2 for more than two months the input credit will not be available to recipient.

It needs to be seen how the new set of returns will be accepted by the business community. Even in the new set of returns the onus of getting the input credit is upon the tax payer. The tax payer is required to follow up with the supplier to ensure the input credit is transmitted.

Our advisors at Integra Books can help you file your GST returns and navigate through multiple compliance’s.

GST Registration for businesses in Co-Working Spaces

by Sanjeev Archak Sanjeev Archak No Comments

Co-working spaces growing in India at a fast pace. Startups, small and medium-sized enterprises (SMEs) and even multinationals are based in co-working spaces. A co-working space provides work on a plug and play model which is convenient as well as cost effective for businesses.

This co-working concept has posed a challenge for GST authorities when it comes to providing GST registration. GST authorities so far have been hesitant in providing registration to businesses working from a co-working space. Most often the reasons for rejection was that the co-working space could not be considered as “principal place of business” as per the GST law. To further this reasoning the GST department contended that there were other companies in the same space and hence it could not act as principal place of business.

Recently, a co-working space in Kerala petitioned the GST Authorities to permit the registration for businesses based out of co-working spaces. The co-working space argued that hiring full-fledged offices in big cities is unaffordable due to high rental charges. Due to this reason many startups prefer co-working spaces. The following questions were raised by the co-working space in its petition to the GST Authorities:

  1. Can GST registrations be allowed for multiple companies from the same address?
  2. Can registration be denied even if they follow all GST rules regarding “place of business?

The GST authorities ruled that there is no prohibition under GST law for obtaining GST registration to a shared office space or virtual office, if the land lord permits such leasing as per the agreement. Further, the GST authority ruled that every business seeking registration shall upload the following:

  1. the rental agreement with the landlord
  2. if there is a sub-lease, then rental agreement between lessee and sub lessee
  3. monthly utility bill in connection with the payment of electricity charges or water charges

This ruling is a relief for businesses working out of a co- working space and will enable to obtain GST registration henceforth.

Running a business in India is not an easy task. It involves a constant investment of both time and effort as well as technical capabilities of knowing the various statutory compliance and regulations.

But many early businesses struggle with the multitude of compliances that are part of doing business in India. Our advisors at Integra Books can help you ensure you do the right things at the right time

7 Different Funding Options for Startups in India

by Sanjeev Archak Sanjeev Archak No Comments

For an entrepreneur to pivot their business models and explore untapped opportunities, funding becomes the inevitable step. Apart from choosing the right entity for registering your startup business and going through the cumbersome process of following the various regulatory compliance’s, getting your startup funded is an important aspect that needs significant time and effort.

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The Ultimate Annual Compliance Checklist for Startups in India

by Sanjeev Archak Sanjeev Archak No Comments

For a Startup registered as a private limited company in India, there are certain compliance requirements laid down by the Companies Act, 2013 and other regulatory bodies that need to followed and adhered to from time to time. Failure to adhere to such regulations would lead the startup to penalties that could severely damage your business and harm the reputation that you have worked so hard for. Keeping this in mind, we have curated an annual compliance checklist for startups in India.

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Pre-Funding Compliance Checklist for Startups in India

by Sanjeev Archak Sanjeev Archak No Comments

Typically, most modern startups today seek some sort of funding after they’ve been set up. While we have huge respect for companies that bootstrap, raising funds from investors has become quite common these days and often a necessity as well. But in most cases, startup founders are so involved in the process of raising funds that they forget to look at the mandatory compliances and due-diligence processes that are involved before and after fundraising. Today we’ll take a look at the pre-funding compliance checklist for startups in India.

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Rules Applying to IGST for Advertisement Services

by Sanjeev Archak Sanjeev Archak No Comments

Rules applying to IGST for advertisement services were amended recently via notification dated 15 November 2017. The guidelines state the criteria for allocating the IGST to various States/Union Territories in case of the advertisement services are supplied either to the Central/ State Government, a local authority or even a statutory body as per Section 12(14) of the IGST Act, 2017.

These criteria are applicable in case of no contract between the recipient and the supplier regarding the amount to be to be mentioned on the invoice. Here is a brief below of the major pointers issued as amendments to help you grasp the gist quite quickly.

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How to Manually File GST Refund Claims

by Sanjeev Archak Sanjeev Archak No Comments

The Government of India is introducing new policies for the benefit of the nation. Last year in November government introduced Demonetization to prevent hoarding of black money and in July 2017 it introduced Goods and Services Tax, a group of indirect taxes which replaced a lot of indirect taxes levied by State and Central Government. In November 2017 in order to simplify the process of GST refunds, Government introduced a Circular No. 17/17/2017 stating the process of –“How to Manually File GST Refund Claims”. Here I will help you to understand the procedure in a better and easy way.  Read more