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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.

Year End Payroll Compliance’s

by Sanjeev Archak Sanjeev Archak No Comments

As we welcome the New Year 2020, we must get ready to say good bye to the Financial Year 19-20. Every organization must prepare itself to handle a basket of employee related statutory compliance’s. Let’s explore the year end payroll compliance’s.

The Government has entrusted the employers with handling duties which are critical to employee’s finances. Accordingly, every employer has to:

  • Deduct taxes from employers
  • Contribute towards statutory components viz, ESI,PF,Bonus,Gratuity
  • Remit taxes & other dues to the Government
  • File returns with various Government departments

Deduction of Taxes

The Income Tax Act, 1961 mandates that it is the employer’s responsibility to deduct the correct amount of taxes from the salary of an employee. In order to arrive at the tax amount the employer must collect proofs of investments from the employees. It is these proofs which ultimately result in a Form 16, which is used by employees to file their tax returns. Here is what an employer must do:

  • Communicate to the employees about the need for investment proof
  • Clearly list out the documents which is called as “Proof”
  • If possible, hold multiple rounds of proof collection
  • Re-calculate the TDS based on proof submitted
  • Deduct the TDS from employees salary
  • Remit the TDS to the Government within due dates

In addition to the above, every employer must file E-TDS returns for the January-March quarter within the due dates. The credit of tax deducted from the salary is transmitted to an employee only when the E-TDS returns are filed. The TDS deducted by the employer appears in the Form 26AS of every employee from whom tax has been deducted.

Further, it is important to note that a Form 16/Form 12BA can be generated only when the employer files his E-TDS returns. The Government requires that the Form 16’s be provided to employees within certain due dates. The Form 16, so issued by the employer, contains all the information required by an employee to file his income tax returns.

What happens when there is salary from more than one employer?

Section 192(2) of the Income Tax Act deals with situations where an individual changes employers during the year. The Law requires that the employee provide to the present employer details of salary income received from the former employer and TDS done thereon. The present employer will be required to deduct taxes on aggregate amount of salary (including salary from the previous employer)

If the employee fails to provide these details, it will be likely that he will have to pay interest on the taxes owed at the time of filing the return.

Contribution to Provident Fund & Employee State Insurance

The Provident Fund rules require the employer to deduct 12% from the salary of every employee as “Employee’s Contribution to Provident Fund”. The employer contributes 12% from his side as “Employer’s Contribution to Provident Fund”.

The employee’s contribution to provident fund is allowed as deduction from income tax under Section 80C. It is imperative that the employer includes the PF contributions in the Form 16 of the employee.

In order to ensure PF gets computed correctly and remitted on time, the entire payroll process has to be automated. We recommend Zoho Payroll for effortless payroll processing.

Employee State Insurance scheme stipulates that employer & employee contribute 4.75% and 1.75% of salary to the Insurance scheme. This scheme is applicable to employees who have a salary of less than Rs 21,000. Further, employees are not eligible for an income tax deduction for contribution to this scheme.

Remit taxes & Filing returns with the Government

Every employer has the onerous responsibility of depositing the amounts deducted from the employees with the Government. These returns have to be filed within specified timelines:

Sl.No

Particulars

Due Date

1

TDS

Deposit of TDS by  7th of every month

2

Provident Fund

Deposit of PF by 15th of  every month

3

Employee State Insurance

Deposit of ESI by 15th of  every month

4

ETDS

Filing of ETDS by 31st of every quarter

Non deposit of statutory deduction will lead to penalties and even criminal prosecutions. It can have a worse impact on the business’s reputation, because compliance violations tend to cause customers to lose faith in the business.

Needless to say that being compliant with regulations is a best bet for any business. As more employees get added to the business, more automated compliance management must get. Here is where Integra Books can help. We have a unique solution where expert human resources use the best technology to manage your business. Get in touch today.

PS: As a related piece we recommend that you read our previous blog on payroll here