Wednesday, 31 January 2018

GST Council to trim list of items in 28% tax slab

The Goods and Services Tax (GST) Council is set to further amend tax rules to fix glitches in the new indirect tax system and make it easier for businesses and traders to settle into it.
The move comes as a tacit admission by the authorities of the flaws in the system that have made it hard for businesses and traders to make a smooth transition, and that the system started off with high compliance requirements.
The original GST structure, designed as a sophisticated IT-driven tax regime meant to increase transparency and compliance, is now being re-calibrated to make it easier for taxpayers to adapt to it.
The GST Council is set to trim the list of items in the highest tax slab of 28% by shifting some items of common use as well as products made predominantly by small and medium enterprises (SMEs) to a lower tax slab.The tax rate fitment committee, a panel of central and state officials assisting the GST Council, is rigorously combing through the list of items in the highest slab to identify such items, two people with knowledge of the development said on condition of anonymity.The GST Council wants to address the public perception of high tax rates on certain items of common use as well as give further relief to SMEs, which are labour-intensive.
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Thursday, 18 February 2016

Taxman gets more teeth to track non filers of Income Tax

Aimed at further arming the taxman to go after those who do not file their income tax returns (ITRs), a new database of multiple addresses of such erring assessees has been set up by the department.

For more info visit company formation in Gurgaon

A new technology enhancement by the systems wing of the department has been added to the ‘Non Filers Management System’ electronic database, the address used by a person or his associate in the ITR or Annual Information Return filed by him.

Source: Hindustan Times, New Delhi, 15th Feb. 2016

Tuesday, 15 December 2015

Why your Startup should be an LLP (Limited Liability Partnership) - Incorporation of company in India

A Limited Liability Partnership (LLP) is a Partnership in which some or all partners have limited liability. It therefore exhibits elements of partnerships and corporations. In an LLP, one partner is not responsible or liable for another partner's misconduct or negligence. This is an important difference from that of an unlimited partnership. In an LLP, some partners have a form of limited liability similar to that of the shareholders of a corporation. In some countries, an LLP must also have a form of limited liability similar to that of the shareholders of a corporation. In some countries, an LLP must also have at least one "General Partner" with unlimited liability. 

Salient features of an LLP 

An LLP is a body corporate and legal entity separate from its partners. It has perpetual succession. 

Being the separate legislation (i.e. LLP Act, 2008), the provisions of Indian Partnership Act, 1932 are not applicable to an LLP and it is regulated by the contractual agreement between the partners. 

Every Limited Liability Partnership shall use the words "Limited Liability Partnership" or its acronym "LLP" as the last words of its name. 

Every LLP shall have at least two designated partners being individuals, at least one of them being resident in India and all the partners shall be the agent of the Limited Liability Partnership but not of other partners. 

Need for LLP 

For a long time, a need has been felt to provide for a business format that would combine the flexibility of a partnership and the advantages of limited liability of a company at a low compliance cost. The Limited Liability Partnership format is an alternative corporate business vehicle that provides the benefits of limited liability of a company but allows its members the flexibility of organizing their internal management on the basis of a mutually arrived agreement, as is the case in a partnership firm. 

This format would be quite useful for small and medium enterprises in general and for the enterprises in services sector in particular. Internationally, LLPs are the preferred vehicle of business particularly for service industry or for activities involving professionals. An LLP is similar in some ways to a standard Partnership, except that the individual members have lower liabilities to any debts which may arise from running the business. There are more administrative duties involved compared to the Partnership business structure. 

In fact, an LLP is more similar to operating a Limited Company. In terms of liability, the Limited Liability Partnership is itself liable for debts run up in running the business, rather that the individual members of the LLP. As a result, LLP's are only recommended for profit running businesses. The rights and responsibilities of all members would usually be laid out in a "Deed of Partnership". The LLP would typically select a "Designated Member" who would be responsible for maintaining communications with Companies House, preparing accounts and acting for the LLP if for some reason it is dissolved further down the line. 

For company Laws and company incorporation visit link  Company Incorporation in India

Sunday, 29 November 2015

Tax implications of setting up overseas subsidiaries - subsidiary company in India

There is a rising trend that many start-ups incorporate their ultimate holding companies abroad, especially in Singapore for various reasons with tax being one of the top 3 factors for such decisions. 

Some of them have restructured the holding structures after few months of direct Indian holding to accommodate requests from investors and VCs. Apart from ease of regulatory environment in the case of overseas companies, the tax implications in such scenarios could be a grey area and potentially a serious cause of concern if not managed amicably. 

A typical overseas structure could be:

Let's now try and understand the tax implications of the above mentioned typical structure: 

- Capital gains on sale of shares of Singapore Holding Company (SHC): This seems to be one of the biggest reasons for such a structure especially where the funds investing are registered overseas. In the case of Singapore, Mauritius, Dubai or similar jurisdictions, there is no domestic tax on capital gains hence the shareholders may not be subject to tax on sale of shares in SHC. 
However consequent to recent amendments in Income tax law, if SHC derives more than 50% of its value from assets in India and that the sale value exceeds Rs. 10 crores, then proportionate capital gains shall still be subject to tax in India irrespective of domestic tax laws in the country of incorporation of SHC. 

The case for concern in this scenario is the conflict of interpretation between Double Taxation Avoidance Agreements (DTAA) and Income tax law - since as per DTAA this transaction would continue to be taxed only in Singapore (where capital gains is taxed @ 0%) and as far as Indian laws are concerned, DTAA always prevails over domestic taxation laws. 

- Royalty income of SHC: Royalty earned and received by SHC from Indian Selling Company (ISC) would be subject to withholding taxes in India @ 10% provided: 

o Tax residency certificates (TRC) of SHC is made available to ISC and o SHC has an Indian PAN 

Where one or both the above conditions are not fulfilled the withholding tax rates could be anywhere between 20-40%. 

Applicability of Transfer Pricing Rules: Any transaction with an Indian entity with its related person overseas shall fall within the ambit of transfer pricing rules. Accordingly all the transactions which are subject to transfer pricing shall be made at fair market values (technically known as arm's length price [ALP]). 

Hence royalties paid by ISC and software development charges received by ISD shall be subject to transfer pricing. Detailed commercial contracts and invoices need to be prepared for these transactions. There are elaborate rules and regulations provided for determining alp which need to be adhered. Non-compliance could lead to serious penalties and tax levies. It is noteworthy to mention that India is one of the popular jurisdictions globally for high value transfer pricing litigations.

- Taxability of Dividends distributed by ISC and ISD: Indian companies are subject to corporate tax @ 30% plus surcharge (7/12%) and cess @ 3% depending on their income levels. Post tax profits, when distributed are subject to 15% distribution plus surcharge and cess. However dividends distributed by ISC and ISD to SHC are not subject to any further tax in India since dividends from Indian companies are fully exempt in India. 

For more information on tax implications You can consult any tax consultancy in Mumbai. They provide support from Company registration to filing e-returns. For company Laws and company incorporation visit link Company Incorporation in India steps

Wednesday, 18 November 2015

Income Tax Department on Twitter - Company registration India

Income Tax Department launched its official handle on Twitter in order to make assure that all taxpayers remain updated regarding all activities of Income Tax Department. The handle is “incometaxindia_”.
"Follow us to stay updated on the latest taxpayer services," the first tweet by the department said.
Tax payers can access online all tax services at
The income tax department functions under the Central Board of Direct Taxes(CBDT) under the order of Union Finance Ministry.
For more information regarding payment of taxes you can consult these Chartered Accountant Firms.

For more info on income tax and company in corporation visit Company Formation of India

Sunday, 26 July 2015

Procedure of Opening / Setup Subsidiary Company in India

In recent past Government of India has opened its doors for international companies to open their subsidiary company in India or branch in India. This move was highly welcomed by international business community and hence many international brand have started their subsidiary companies or branches in India.

Companies / Business having operations in countries other than India can set up wholly-owned subsidiary in India under those sectors where in 100% foreign direct investment is permitted under the Foreign Direct Investment Policy issued by Government of India. A foreign company or business can start their wholly-owned subsidiary in India may be either of the following business / company types like : Private Limited Company, Public Limited Company, Unlimited Company and under Sole Proprietorship. International business groups / companies can also set up their operations in India through the business entities: Liaison Office/Representative Office, Project Office, Branch Office. These companies have to register their subsidiary companies with Registrar of Companies which can undertake any permitted business activities.

It is vital to choose the right kind of business consultant who have expertise in starting a subsidiary company in india which best suits its purposes and takes care of liability issues and tax planning issues. We Signs and Marks having years of professional experience in providing assistace to Foreign Direct Investors can help you to starting or setting up your subsidiary company in India.

Foreign direct investors who are planning in setting up a subsidiary company or office in India are required to seek approvals from Government of India before investing in India. Our expert team can help in getting those approvals and perform those much need liasions and paper work in limited period of time.

With regard to Foreign Direct Investment in India we can provide professional assistance in How to form Subsidiary in India, Opening Branch in India, How to Incorporate in India, Forming Company in India, Incorporating in India, Forming Subsidiary in India, Starting Business in India, Types of Companies in India, Business Entities in India, Procedure for Formation of Company India, Forming Corporation in India, Forming Private Limited Company in India.

Monday, 20 July 2015

Procedure for Limited Company Name Change

The name of a private limited company may have to be changed for a number of reasons including change of objective of the business, change of management, rebranding, etc., The name of a private limited company can be changed at anytime with the approval of the shareholders and Ministry of Corporate Affairs (MCA). In this article, we look at the procedure for private limited company name change.

Private Limited Company Name Change

The name adopted by a private limited company during incorporation can be changed later. To change the name of a private limited company, the consent of the shareholders through a special resolution and MCA approval are required. The change of name of a private limited company has no impact on its legal entity or its existence as a corporate entity. The change of name of a company will not create a new company or new entity. Therefore, the change of company name shall NOT:
1.  Affect any rights or obligations of the company
 2.. Render defective any legal proceedings by or against the company
3. Not affect any legal proceedings by or against the company and pending in the old name; they may continue in the old name.

Step 1: Board Resolution

A Board meeting must be convened to pass a resolution for change of name of the company and to authorize a Director or Company Secretary to make an application to the MCA for ascertaining availability of proposed name. At the same Board meeting, a resolution to convene an extraordinary general meeting for changing the name of the company, and altering the Memorandum of Association and Articles of Association can also be passed.


Step 2: Check Company Name Availability

Once a resolution is passed ascertaining availability of proposed company name, the authorized person can make a name application to the MCA. The procedure for name application is similar to that of the name application procedure followed during Company Incorporation in India. Therefore, the name must be as per the Companies Act 2013 Naming Guidelines.


Step 3: Pass Special Resolution for Company Name Change

Once a name is approved by the MCA, the Company must conduct an extraordinary general meeting and pass a special resolution for change of company name, and consequential changes to the Memorandum of Association and Articles of Association.

Step 4: Application for approval of Company Name Change

Once the special resolution for change of company name is passed, the special resolution and application for approval of company name change must be filed with the Registrar of Companies. An application for company name change must be made in Form 1B along with the requisite fee.

Step 5: Issuance of New Certificate of Incorporation

If the Registrar of Companies is satisfied with the company name change application, the Registrar would issue a new certificate of incorporation. It is important to note that the company name change is said to be complete and effective on issuance of new incorporation certificate by the Registrar of Companies.

Step 6: Make Changes to MOA and AOA

Subsequent to the issuance of the new incorporation certificate, steps must be taken to incorporate the new company name in all the copies of Memorandum of Association, Articles of Association and Certificate of Incorporation issued by the Registrar.