In our previous blog post, we spoke about the Pre-Funding compliance requirements and due diligence that needs to be adhered to for Startups registered in India. Today we will be discussing the Post-Funding compliance checklist for Startups that includes the guidelines set by the Reserve Bank of India for startups raising funds from investors outside India.
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.
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.
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
Every service provider in India is aware of service tax and many have at some point dealt with a penalty for late filing of service tax return. For those who are not aware, service tax is an indirect tax that is levied on the services provided by any service provider. Consumers are responsible for paying this service tax which is included in the invoice, and service providers are responsible for collecting it and paying it through the service tax return.
Our second part in the GST FAQs series deals with the Composition Scheme which was introduced under the Goods and Services Act keeping the best interests of small businesses in mind. SMEs often face the challenges of maintaining various compliances with the statutory bodies of the country in a timely manner.
Composition Scheme permits the taxpayer to choose for making GST payments as a fixed percent of the business turnover rather than paying those taxes under regular norms of the GST law.
Previously we discussed the parameters of determining a company to be considered as engaged in “active business outside India” and the POEM guidance associated with it. Today we talk about the guidelines for those companies that are not engaged in active business outside India.
POEM Guidance for companies not engaged in active business outside India
For companies not engaged in active business outside India, a two-stage process for the determination of Place of Effective Management is provided as follows:
In our previous post, we discussed the idea of Place of Effective Management and how it came into existence. Today we will be focusing on the POEM guidance for companies that are engaged in active business outside India.
Determination of “active business outside India”
A company shall be considered as engaged in “active business outside India” if the passive income is not more than 50% of its total income; and if the following conditions are met –
The idea of Place of Effective Management or POEM was first introduced in the Finance Act 2015 for the purpose of determining the residential status of foreign businesses. As per the act, any business having its place of effective management in India will be considered as an Indian resident and accordingly, it’s global income will be taxable in India.17
But the Finance Act was missing the entire criteria and process for determining the place of effective management. For this purpose, the Central Board of Direct Taxes (CBDT) introduced the Guiding Principles for determination of Place of Effective Management (POEM) of a Company.