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Compliances for Private Limited Company in India


“If you’re operating a business registered in India, staying informed about mandatory compliance requirements is crucial, as outlined by corporate laws such as the Companies Act, 2013, Income Tax Act 1961, GST Act, and other applicable acts.

Ensuring compliance with these regulations is paramount for private limited companies. Given that many startups opt for this structure, understanding the annual compliance obligations for a Private Limited Company becomes a key concern for most growing enterprises.

A Private Limited Company offers a unique form of limited liability ownership. Its distinct features, including limited liability for shareholders, separate legal identity, ability to raise equity funds, and perpetual succession, contribute to its popularity. This structure is highly recommended for small and medium-sized businesses, whether family-owned or professionally managed.”

What are the Compliances for Private Limited Company?

“The landscape of compliance for private limited companies has evolved significantly over time.

Navigating the statutory requirements for a private company under the Companies Act of 2013 involves:

  • 1. Commencement of business – Filing of INC-20A

  • “For companies incorporated in India after November 2019 with a share capital, securing the Commencement of Business Certificate within 180 days of incorporation is compulsory.

Failure to do so attracts penalties: a fine of Rs. 50,000 for the company itself, along with Rs. 1,000 per day for directors, for each day of default.”

  • 2. Auditor Appointment – Filing of Form ADT-1

“ADT-1: Within 30 days of incorporation, every Indian registered company must appoint a statutory auditor.”

  • 3. Filing of GST Returns – GSTR 1 & GSTR 3B – Monthly/Quarterly

In India, businesses registered under the Goods and Services Tax (GST) system are required to file various returns to comply with tax regulations. Two key returns are the GSTR-1 and GSTR-3B, which serve different purposes and have different filing frequencies.

  1. 1. GSTR-1:
    • ⦁ Frequency: Monthly
    • ⦁ Purpose: GSTR-1 is a monthly return that contains details of outward supplies or sales made by the taxpayer. It includes information such as invoices issued, credit or debit notes issued, and details of exports and supplies to SEZs (Special Economic Zones).
    • ⦁ Due Date: Typically, the due date for filing GSTR-1 is the 11th of the following month. However, the government may announce extensions or changes to the due dates from time to time.
  2. 2. GSTR-3B:
    • ⦁ Frequency: Monthly
    • ⦁ Purpose: GSTR-3B is a summary return that taxpayers use to report their summarized sales and input tax credit (ITC) claims for the month. It is a self-declaration form, meaning taxpayers enter the summary figures directly without invoice-level details.
    • ⦁ Due Date: The due date for filing GSTR-3B is usually the 20th of the following month.

For certain eligible taxpayers, quarterly filing options are available for both GSTR-1 and GSTR-3B. However, it’s essential to note that while the filing frequency may differ, the information reported in these returns should reconcile.

Businesses must ensure timely and accurate filing of these returns to avoid penalties and maintain compliance with GST regulations. It’s also advisable to stay updated with any changes or notifications issued by the GST authorities regarding filing requirements or due dates.

  • 4. Accounting and Book Keeping Services

  • ⦁ Accounting and bookkeeping services for private limited companies are essential for maintaining financial records accurately and ensuring compliance with regulatory requirements. Here’s some key information about these services:
  1. 1. Scope of Services: Accounting and bookkeeping services encompass various financial tasks, including:
    • ⦁ Recording financial transactions: This involves accurately documenting all financial transactions, such as sales, purchases, expenses, and payments, in the company’s books of accounts.
    • ⦁ Preparation of financial statements: Service providers compile financial statements like the balance sheet, profit and loss statement, and cash flow statement based on the recorded transactions.
    • ⦁ Reconciliation: Reconciling bank statements, accounts receivable, and accounts payable to ensure accuracy and identify discrepancies.
    • ⦁ Payroll processing: Calculating employee salaries, deductions, and taxes, as well as generating pay stubs and filing payroll taxes.
    • ⦁ Inventory management: Tracking inventory levels, valuation, and cost of goods sold (COGS) calculations.
    • ⦁ Compliance: Ensuring adherence to applicable accounting standards, tax regulations, and statutory requirements.
  2. 2. Benefits of Outsourcing: Many private limited companies opt to outsource accounting and bookkeeping services due to various benefits, including:
    • ⦁ Cost-effectiveness: Outsourcing can be more affordable than hiring in-house staff, as it eliminates the need for salaries, benefits, and training costs.
    • ⦁ Expertise: Outsourcing firms often have experienced professionals with expertise in accounting and finance, providing high-quality services.
    • ⦁ Focus on core activities: By delegating accounting tasks to experts, company management can focus on core business activities and strategic decision-making.
    • ⦁ Compliance assurance: Outsourcing firms stay updated with changing regulations, ensuring that the company remains compliant with tax and accounting standards.
  3. 3. Choosing a Service Provider: When selecting an accounting and bookkeeping service provider for a private limited company, consider factors such as:
    • ⦁ Experience and reputation in the industry.
    • ⦁ Range of services offered and customization options.
    • ⦁ Technology and software used for accounting processes.
    • ⦁ Data security measures and compliance with data protection regulations.
    • ⦁ Service level agreements (SLAs) and responsiveness to queries and concerns.

Outsourcing accounting and bookkeeping services can streamline financial management processes, enhance accuracy, and ensure compliance, thereby contributing to the overall efficiency and success of a private limited company.

  • 5. Filing of TDS Returns on Quarterly Basis

Filing Tax Deducted at Source (TDS) returns on a quarterly basis is a critical compliance requirement for entities in India that deduct TDS from certain payments. Here’s some key information about filing TDS returns quarterly:

  1. 1. Frequency: TDS returns are filed quarterly, meaning they are submitted every three months.
  2. 2. Types of TDS Returns: There are different types of TDS returns based on the nature of payments and deductees. The most common ones include:
    • ⦁ Form 24Q: For TDS deducted on salaries.
    • ⦁ Form 26Q: For TDS deducted on payments other than salaries.
    • ⦁ Form 27Q: For TDS deducted on payments made to non-residents.
    • ⦁ Form 27EQ: For TDS deducted on payments made under the provisions of the Income Tax Act other than salaries.
  3. 3. Due Dates: The due dates for filing quarterly TDS returns are as follows:
    • ⦁ For the quarter ending June 30th: July 31st
    • ⦁ For the quarter ending September 30th: October 31st
    • ⦁ For the quarter ending December 31st: January 31st
    • ⦁ For the quarter ending March 31st: May 31st
  4. 4. Information Required: To file TDS returns, entities need to provide details such as:
    • ⦁ TAN (Tax Deduction and Collection Account Number)
    • ⦁ PAN (Permanent Account Number) of deductors and deductees
    • ⦁ Amount of TDS deducted
    • ⦁ Details of payments and deductions made
    • ⦁ Challan details for TDS deposited
  5. 5. Mode of Filing: TDS returns can be filed online through the Income Tax Department’s website using Digital Signature Certificate (DSC) or Electronic Verification Code (EVC). Alternatively, authorized intermediaries or professionals can assist with filing returns on behalf of entities.
  6. 6. Penalties for Non-Compliance: Failure to file TDS returns within the prescribed due dates can result in penalties. The penalty amount varies based on the delay in filing and the nature of the default.
  7. 7. Reconciliation: It’s essential to reconcile TDS returns with TDS certificates (Form 16 and Form 16A) issued to deductees to ensure accuracy and consistency in tax reporting.

Compliance with TDS provisions and timely filing of TDS returns is crucial to avoid penalties and maintain good standing with the tax authorities in India. Businesses should stay updated with any changes in TDS regulations and ensure accurate filing of returns to fulfill their tax obligations effectively.

  • 6. Filing of Income Tax Return of the Private Limited Company

Filing income tax returns for a private limited company in India is a crucial annual compliance requirement. Here’s some key information about the process:

  1. 1. Filing Deadline: The deadline for filing income tax returns for private limited companies in India is typically October 31st of the assessment year following the financial year for which the return is being filed. However, due dates may vary depending on any extensions granted by the tax authorities.
  2. 2. Preparation of Financial Statements: Before filing the income tax return, the company must prepare its financial statements, including the balance sheet, profit and loss account, and other relevant documents in compliance with the Companies Act, 2013.
  3. 3. Tax Computation: The company must compute its taxable income for the financial year based on the provisions of the Income Tax Act, 1961. This involves adjusting the financial results as per the tax laws, including deductions, exemptions, and allowances available to the company.
  4. 4. Filing Forms: The income tax return for a private limited company is typically filed using Form ITR-6, which is specifically designed for companies other than those claiming exemption under section 11 (Income from property held for charitable or religious purposes) of the Income Tax Act.
  5. 5. Tax Payment: Before filing the income tax return, the company must ensure that any tax liability for the financial year has been paid in full. This includes advance tax payments made during the year and any self-assessment tax paid before filing the return.
  6. 6. Filing Procedure: The income tax return can be filed electronically on the Income Tax Department’s e-filing portal. The company must register on the portal and then upload the necessary documents and information as required by Form ITR-6.
  7. 7. Auditor’s Report: In certain cases, the company may be required to obtain an auditor’s report certifying various details included in the income tax return. This report is annexed to the return while filing.
  8. 8. Penalties for Non-Compliance: Failure to file the income tax return within the specified deadline may attract penalties, including interest on tax due and late filing fees. It’s essential for companies to adhere to the filing deadlines to avoid such penalties.
  9. 9. Annual Compliance: Filing the income tax return is part of the annual compliance requirements for private limited companies in India. Companies must also comply with other regulatory requirements, including annual general meetings, maintenance of statutory registers, and filing of annual financial statements with the Registrar of Companies.

Ensuring timely and accurate filing of income tax returns is essential for private limited companies to meet their tax obligations and maintain compliance with Indian tax laws. Companies may seek the assistance of tax professionals or chartered accountants to ensure proper tax planning and compliance.

  • 7. Statutory Audit under Companies Act, 2013
  1. 1. Mandatory Requirement: Every company registered under the Companies Act, 2013, is required to conduct a statutory audit of its financial statements annually. This includes all types of companies, such as private limited companies, public limited companies, and one-person companies (OPCs).
  2. 2. Appointment of Auditor: The auditor conducting the statutory audit must be a practicing Chartered Accountant (CA) or a firm of Chartered Accountants appointed by the company’s shareholders at the Annual General Meeting (AGM). The appointment is typically made for a term of one year and must be ratified at each subsequent AGM.
  3. 3. Scope of Audit: The statutory audit encompasses a comprehensive examination of the company’s financial records, including the balance sheet, profit and loss account, cash flow statement, and notes to accounts. The auditor verifies the accuracy of financial transactions, ensures compliance with accounting standards and legal requirements, and assesses the company’s internal controls and financial reporting practices.
  4. 4. Audit Report: Upon completion of the audit, the auditor issues an audit report expressing their opinion on the fairness and accuracy of the company’s financial statements. The audit report includes various disclosures, such as the auditor’s opinion, observations, qualifications (if any), and compliance with auditing standards.
  5. 5. Filing of Audit Report: The audited financial statements and the audit report must be filed with the Registrar of Companies (RoC) within 30 days from the date of the AGM. The filing is done electronically on the Ministry of Corporate Affairs (MCA) portal using Form AOC-4.
  6. 6. Penalties for Non-Compliance: Failure to conduct a statutory audit or file the audit report within the specified timeline may result in penalties imposed by the RoC. Additionally, non-compliance with auditing standards or misrepresentation of financial statements can lead to legal consequences for the company and its directors.
  7. 7. Role of the Auditor: The statutory auditor plays a crucial role in providing assurance on the company’s financial statements, enhancing transparency and investor confidence, and facilitating informed decision-making by stakeholders.
  • 8. Filing of Applicable ROC Returns
  • a) Form AOC-4

Form AOC-4 is a document required for the filing of financial statements by companies registered in India, as mandated by the Ministry of Corporate Affairs (MCA). Here’s some key information about Form AOC-4:

  1. 1. Purpose: Form AOC-4 is used for filing financial statements with the Registrar of Companies (RoC) in India. These financial statements typically include the balance sheet, profit and loss account, cash flow statement, and notes to accounts.
  2. 2. Applicability: Form AOC-4 is applicable to all types of companies registered under the Companies Act, 2013, including private limited companies, public limited companies, and one-person companies (OPCs).
  3. 3. Filing Timeline: Companies are required to file Form AOC-4 within 30 days from the date of the annual general meeting (AGM) at which the financial statements are adopted. In case the AGM is not held, the financial statements must be filed within 30 days from the date on which the AGM should have been held.
  4. 4. Contents of Form AOC-4: The form includes various details about the company’s financial performance and position, including:
    • Balance Sheet: Details of assets, liabilities, and equity as of the reporting date.
    • Profit and Loss Account: Summary of the company’s revenues, expenses, and net profit or loss for the financial year.
    • Cash Flow Statement: Information about the company’s cash inflows and outflows during the financial year.
    • Notes to Accounts: Additional explanations and disclosures related to items in the financial statements.
  5. 5. Auditor’s Report: Form AOC-4 may also include the auditor’s report, which provides an independent opinion on the fairness and accuracy of the financial statements.
  6. 6. Mode of Filing: Form AOC-4 is filed electronically on the MCA’s portal. Companies are required to register on the portal and upload the necessary documents and information in the prescribed format.
  7. 7. Penalties for Non-Compliance: Failure to file Form AOC-4 within the specified timeline may result in penalties imposed by the RoC. Additionally, non-compliance with filing requirements can lead to legal consequences for the company and its directors.
  • b) MGT-7A (small companies and OPC), MGT-7 (others)
  1. 1. MGT-7A (For Small Companies and One Person Companies – OPC):Purpose: MGT-7A is specifically designed for small companies and One Person Companies (OPCs) to file their annual returns with the Registrar of Companies (RoC).Applicability: Small companies and OPCs, as defined under the Companies Act, 2013, are required to file MGT-7A.
  2. 2. Filing Timeline: Companies must file MGT-7A within 60 days from the conclusion of the annual general meeting (AGM) of the company.
  3. 3. MGT-7 (For Other Companies): Purpose: MGT-7 is used by companies other than small companies and OPCs to file their annual returns with the RoC.
  4. 4. Applicability: All types of companies registered under the Companies Act, 2013, except small companies and OPCs, are required to file MGT-7.
  5. 5. Filing Timeline: Companies must file MGT-7 within 60 days from the conclusion of the AGM of the company.
  • 8. Filing of Other Forms like ADT-1, DIR-3 KYC, DPT-3, MBP-1, MSME-1 and other applicable forms.
  1. 1. ADT-1 (Appointment of Auditor):
    • Purpose: ADT-1 is filed for the appointment of auditors by companies.
    • Filing Timeline: Within 15 days from the date of appointment of the auditor at the company’s general meeting.
  2. 2. DIR-3 KYC (Director’s KYC):
    • Purpose: DIR-3 KYC is filed to update and verify the KYC details of directors of companies.
    • Filing Timeline: Annually, by April 30th of the financial year for which the KYC is to be updated.
  3. 3. DPT-3 (Return of Deposits):
    • Purpose: DPT-3 is filed to furnish details of deposits accepted by the company.
    • Filing Timeline: Annually, by June 30th of the financial year for which the return is being filed.
  4. 4. MBP-1 (Disclosure of Interest by Directors):
    • Purpose: MBP-1 is filed by directors to disclose their interest in any contract or arrangement entered into by the company.
    • Filing Timeline: Whenever there is any change in the director’s interest or at the first board meeting of the financial year.
  5. 5. MSME-1 (Initial Return for Outstanding Dues to MSMEs):
    • Purpose: MSME-1 is filed to report outstanding dues to Micro, Small, and Medium Enterprises (MSMEs).
    • Filing Timeline: Within 30 days from the end of each half-year (April to September and October to March).

Besides Annual Filings, there are various other compliances which need to be done as and when any event takes place in the Company. Instances of such events are:

  • ⦁ Change in Authorised or Paid up Capital of the Company.
  • ⦁ Allotment of new shares or transfer of shares
  • ⦁ Giving Loans to other Companies.
  • ⦁ Giving Loans to Directors
  • ⦁ Appointment of Managing or whole time Director and payment of remuneration.
  • ⦁ Loans to Directors
  • ⦁ Opening or closing of bank accounts or change in signatories of Bank account.
  • ⦁ Appointment or change of the Statutory Auditors of the Company.

Different forms are required to be filed with the Registrar for all such events within specified time periods. In case, the same is not done, additional fees or penalty might be levied. Hence, it is necessary that such compliances are met on time.

In summary, keeping up with all the rules and regulations for private limited companies is super important. It’s like following a roadmap to make sure everything runs smoothly and stays legal. From paying taxes to doing audits and filing paperwork, it’s all about staying on top of things.

With laws changing now and then, it’s crucial for these companies to keep an eye out for any updates. This isn’t just about following the rules – it’s also about being honest and responsible with the company’s actions.

By making sure everything is done right, these companies not only avoid trouble but also gain trust from customers, investors, and others. So, while it might seem like a lot of work, staying compliant is key to running a successful and trustworthy business in today’s world.

Section 194-IA: TDS On Purchase of Immovable Property – Simplified

TDS On Purchase of Immovable Property – Section 194-IA

The buyer of immovable property is under a statutory obligation to deduct the TDS and pay it to the government within the due date. TDS has to be deducted under section 194-IA of the Income Tax Act, 1961. We have tried to explain the provisions in simplified language.

Who is liable to deduct TDS u/s 194-IA?

A Buyer of the property who is responsible for paying (other than the person referred to in section 194LA) to a resident seller any sum by way of consideration for transfer of any immovable property other than agricultural land.

Criteria to be met, so that TDS has to be paid under section 194-IA –

  1. ✓ The buyer of immovable property other than agricultural land is required to deduct tax at source u/s 194-IA. It means if you buy an agricultural land, there is no liability for the payment of the TDS.
  2. ✓ The seller should be a resident person. Thus, this section is not applicable where the seller is a non-resident. In case the seller is a non-resident section, 195 is applicable and TDS has to be paid according to that section.
  3. ✓ Even if the buyer has no income, still TDS has to be deducted and paid.
  4. ✓ The purpose of purchase is not relevant, i.e. it is immaterial whether the property is acquired as stock-in-trade or as a capital asset.

Important definitions for section 194-IA

Q. What is Immovable property?

Ans: Any land or any building or part of a building. But Immovable property shall not include agricultural land, which is not a capital asset.

Q. What is Agricultural Land?

Ans: Agricultural Land means agricultural land in India, not being a land situated in any area referred to in items (a) & (b) of section 2(14)(iii).

Q. What is “Consideration for the purposes of section 194-IA?

Ans: “Consideration for transfer of any immovable property” shall include all charges of the nature of club membership fee, car parking fee, electricity or water facility fee, maintenance fee, advance fee, or any other charges of similar nature, which are incidental to the transfer of the immovable property.

Meaning of “Agricultural Land” simplified –

Items (a) & (b) of section 2(14)(iii) are as under agricultural land situated –

(a) In any area comprised within jurisdiction of a municipality or a cantonment board having a population not less than 10,000;

or

(b) In any area within the distance, measured aerially,

  • (i) Not being more than 2 km. From local limits of any municipality or cantonment board, which has a population of more than 10,000, but not more than 1,00,000
  • (ii) Not being more than 6 km. From local limits of any municipality or cantonment board, which has a population of more than 1,00,000 but not more than 10,00,000
  • (iii) Not being more than 8 km. From the local limits of any municipality or cantonment board, which has a population of over 10 Lakhs.

When to deduct TDS u/s 194-1A –

• At the time of credit or at the time of payment, whichever is earlier.

TDS rate /s 194-IA –

  1. • TDS Rate: 1%.
  2. • If Pan Not Available: 20%.

Threshold Limit u/s 194-IA –

• No TDS where consideration is less than Rs. 50 Lakhs.

More than 1 buyer or seller –

More than 1 Buyer

• More than one buyer: In the case of more than one buyer and the purchase price of each buyer is less than Rs. 50 lakhs but the aggregate sales consideration of the property is more than Rs. 50 Lakhs, section 194-IA will be applicable and all the buyers will be required to deduct TDS on their respective share of the purchase price.

Note – For contradictory views, refer: Vinod Soni vs. ITO (2019)

• More than one seller: If there is more than one seller in a single sale deed in respect of the property and the aggregate consideration for the property exceeds Rs. 50 Lakhs however the share of each co-owner is less than Rs. 50 Lakhs, section 194-IA will be applicable. Therefore, the buyer would be required to deduct TDS u/s 194-IA.

Important Points on TDS On Purchase of Immovable Property – Section 194-IA –

  • • If the immovable property is purchased from a non-resident person for any value, no TDS is required to be deducted u/s 194-IA as section 195 shall apply in such a case.
  • • It is not necessary that the land or building should be situated in India. Thus, if any person purchases property outside India from a person resident in India, he is liable to deduct tax at source @ 1%.
  • • This is a unique section as TAN is not required in this section for making deduction of tax at source.
  • • Section 194-1A shall not be applicable where the immovable property has been transferred by way of gift, will or inheritance as there is no consideration in this case.
  • • In the case where the property value is Rs. 50 Lakhs or more and payment is made in installments, TDS shall be required to be deducted on every part of payment (installment) of the consideration.

Amendment on Section 194-IA by Finance Bill, 2022:

The cases where the actual consideration is different from stamp duty value Amendment by Finance Bill, 2022:

  • • The Income Tax Act, 1961 provides for deduction of tax at source @ 1% where the sales consideration
    Of the property is not less than Rs. 50 Lakhs. However, section 194-IA was not consistent with the
    provisions of section 43CA and section 50C of the Act.
  • • In order to bring consistency, the Finance Bill, 2022, has proposed amendment in section 194-1A, and
    now TDS @ 1% shall be deductible on the sales consideration or the stamp duty value of the
    immovable property, whichever is higher.
  • • But where both the sales consideration as well as the stamp duty value are less than Rs. 50 Lakhs,
    no deduction of tax will be required u/s 194-IA.
  • • This amendment is effective from 01st April 2022

How and When TDS has to be paid under section 194-IA –

  • • TDS deducted u/s 194-IA is to be deposited within a period of 30 days from the end of the month in which tax is so deducted.
  • • TDS is to be deposited electronically through a challan-cum-statement in Form No. 26QB. This
    challan can be accessed at the NSDL portal.
  • • PAN of both buyer and the seller are sufficient for the purposes of Form 26QB. Other details needed
    are the details of property sold, address details of buyer and seller along with their email id and mobile numbers.
  • • The person (buyer) who has deducted & deposited tax u/s 194-1A shall issue TDS certificate in Form No. 16B to the seller within 15 days from the due date of furnishing the challan-cum-statement in Form No. 26QB.

Important Note – No TAN is required for deduction of tax at source u/s 194-1A and no filing of TDS return is required.

Penalties Applicable on non-filing of Form 26QB.

Interest on:Calculation
Non-deduction of TDS 1% per month for the period from the date on which TDS is deductible/collectible to the date on which TDS/TCS is actually deducted. 
Non-remittance of TDS1.5% per month for the period from the date on which TDS is deducted to the actual date of payment.
Late filing fee:Calculation
Late filing fee under section 234E @ Rs 200
per day 		In case of default of non-filing or late filing of Form 26QB, a penal fee is applicable under section 234E of the income tax act. Rs. 200 has to be paid for every day during which such failure continues. The buyer would also be liable for defaults of late deduction, late payment, and interest thereon. 
PenaltyCalculation
Penalty under section 271H Assessing Officer may levy penalty under section 271H at his discretion. This section is applicable when a statement as required by the tax laws is not submitted timely.
The penalty under this section must be more than Rs 10,000 and can extend to Rs 1 lakh. However, if TDS is deposited with a fee & interest and the statement is submitted within 1 year of the time prescribed, no penalty shall be levied. 

Union Budget-2023-24 – Amendments in GST

Here is a summary of amendments proposed by the Union Budget in GST :

1. ITC Denied on goods or services procured for Corporate Social Responsibility (CSR)

  • ⦁ Union budget, 2023-24 has proposed to restrict the ITC on goods and services procured for Corporate Social Responsibility.
  • ⦁ However, so far, companies are entitled to take such ITC unless the same is restricted under any other clause.

2. Amendments on offenses and Compounding provisions

  • ⦁ Following offenses has been decriminalized under section 132 of CGST Act:
    • ⦁ obstructs or prevents any officer in the discharge of his duties under this Act;
    • ⦁ tampers with or destroys any material evidence or documents;
    • ⦁ fails to supply any information which he is required to supply under this Act
  • ⦁ The minimum and maximum amounts for compounding of offences reduced to 25 per cent and 100 per cent of tax involved, respectively.

3. Penalties on e-commerce operators (Section 122 of CGST Act)

  • ⦁ Specific penalty provisions has been incorporated for e-commerce operator if it:
    • ⦁ Allows supply of goods or services by unregistered person through it, other than persons who are specially exempted, or
    • ⦁ Allows inter-State supply of goods or services or both by a person who is not eligible to make such supply; or
    • ⦁ Fails to furnish correct information in TCS return
  • Defaulting e-commerce operator shall be liable to pay penalty of higher of following amounts:
    • ⦁ INR 10,000; or
    • ⦁ Amount of tax involved

4. Maximum time limit specified to file GST Returns

  • ⦁ Till date, a registered person is allowed to file pending GST returns (GSTR-1, GSTR-3B, GSTR-9, GSTR-9C or any other GST returns) with applicable interest and penalties without any limit of period.
  • ⦁ Union budget has proposed to impose time limit of 3 years from due date for filing of following returns:
    • ⦁ GSTR-1: Return of outward supplies
    • ⦁ GSTR-3B: Return of summary of outward and inward supplies and corresponding tax payable
    • ⦁ GSTR-9: Annual return
    • ⦁ GSTR-9C: ITC Reconciliation
    • ⦁ GSTR-8: TCS Return
  • ⦁ Such a period of 3 years can be further extended by the government.

5. Extension of Composition Scheme to taxpayer selling through e-commerce operator

  • ⦁ As per Section 10(2) and (2A) of CGST Act, a registered person engaged in making supply of goods through e-commerce operators is not entitled to opt for composition scheme.
  • ⦁ Union budget has proposed to extend the facility of composition scheme to such dealers as well.

6. Other Amendments:

  1. 1. It has been clarified that Entry No. 7, High seas sales, and Entry No. 8, supply of goods from bonded warehouses before clearance for home consumption, are effective from 01.07. 2017 itself. Further, no refund shall be granted of tax collected in pursuance of such entries so far.
  2. 2. In definition of “online information and database access or retrieval services’ (‘OIDAR’), condition of “essentially automated and involving minimal human intervention” has been removed.
  3. 3. Where both supplier and recipients are located in India, place of supply In case of transportation of goods to outside India was “designation of goods”. Such provision has been omitted and now in such case, place of supply will be:
    1. a. B2B Supplies: Location of Recipient of service
    2. b. B2C Supplies: Place where goods are handed over for transportation
  1. 4. Power granted to prescribe the manner and conditions for computation of interest in case of delayed refunds.
  2. 5. Power is granted to the GST portal to share information provided by taxpayers with other systems notified by the Government. Such details to be shared post obtaining consent of supplier/recipient as applicable. 

The contents of this article are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the author nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon.

Overview of GST Returns in India

Goods and Services Tax (GST) is a tax reform that has transformed the Indian taxation system. It was introduced in India on July 1, 2017, with the aim of bringing a uniform tax structure across the country. GST replaced multiple indirect taxes levied by the state and central government, such as value-added tax (VAT), service tax, excise duty, and others.

Under the GST regime, taxpayers are required to file periodic returns with the GST authorities. GST returns are documents that contain details of all transactions made by a taxpayer during a specific period, including sales, purchases, and taxes paid and collected.

In this blog, we will discuss the different types of GST returns, their due dates, and the process of filing GST returns in India.

Types of GST Returns There are different types of GST returns that taxpayers are required to file, depending on their category and turnover. The following are the main types of GST returns:

  1. 1. GSTR-1: GSTR-1 is a monthly or quarterly return filed by registered taxpayers that contain details of all outward supplies or sales made during the period. The due date for filing GSTR-1 is the 11th day of the following month, for monthly filers, and the 13th day of the month following the end of the quarter, for quarterly filers.
  3. 2. GSTR-2A: GSTR-2A is an auto-generated return that contains details of all purchases made by a taxpayer from a registered supplier, as uploaded by the supplier in their GSTR-1. It is a read-only return, which means that taxpayers cannot make any changes to it.
  5. 3. GSTR-3B: GSTR-3B is a monthly return filed by registered taxpayers that contains details of all outward supplies, inward supplies, and input tax credit claimed during the period. The due date for filing GSTR-3B is the 20th day of the following month.
  7. 4. GSTR-4: GSTR-4 is a quarterly return filed by taxpayers who have opted for the Composition Scheme. It contains details of all outward supplies made during the period, including tax collected. The due date for filing GSTR-4 is the 18th day of the month following the end of the quarter.
  9. 5. GSTR-5: GSTR-5 is a monthly return filed by non-resident taxpayers who are registered under GST. It contains details of all outward supplies made during the period, including tax collected. The due date for filing GSTR-5 is the 20th day of the following month.
  11. 6. GSTR-6: GSTR-6 is a monthly return filed by Input Service Distributors (ISDs) that contains details of all input tax credit received and distributed during the period. The due date for filing GSTR-6 is the 13th day of the following month.
  13. 7. GSTR-7: GSTR-7 is a monthly return filed by taxpayers who are required to deduct tax at source (TDS) under GST. It contains details of all TDS deducted during the period, as well as the details of the deductee. The due date for filing GSTR-7 is the 10th day of the following month.
  15. 8. GSTR-8: GSTR-8 is a monthly return filed by e-commerce operators who are required to collect tax at source (TCS) under GST. It contains details of all supplies made through the e-commerce platform, including tax collected. The due date for filing GSTR-8 is the 10th day of the following month.

Due Dates of Filing GST Return

The due dates for filing GST (Goods and Services Tax) returns depend on the type of return and the turnover of the taxpayer. Here are the due dates for filing GST returns in India for regular taxpayers:

  1. 1. GSTR-1: This return contains details of outward supplies and is filed monthly. The due date for GSTR-1 is the 11th of the following month.
  3. 2. GSTR-3B: This return contains details of both inward and outward supplies and is filed monthly. The due date for GSTR-3B is the 20th of the following month.
  5. 3. GSTR-4: This return is filed by composition scheme taxpayers and contains details of quarterly returns. The due date for GSTR-4 is the 18th of the month following the quarter.
  7. 4. GSTR-5: This return is filed by non-resident taxpayers and contains details of inward supplies. The due date for GSTR-5 is the 20th of the following month.
  9. 5. GSTR-6: This return is filed by Input Service Distributors (ISDs) and contains details of input tax credit received and distributed. The due date for GSTR-6 is the 13th of the following month.
  11. 6. GSTR-7: This return is filed by taxpayers who are required to deduct tax at source (TDS) and contains details of TDS deducted. The due date for GSTR-7 is the 10th of the following month.
  13. 7. GSTR-8: This return is filed by e-commerce operators who are required to collect tax at source (TCS) and contains details of TCS collected. The due date for GSTR-8 is the 10th of the following month.

It is important to note that the due dates may change from time to time, and taxpayers are advised to check the official GST portal for the latest updates. Additionally, late filing of GST returns may attract penalties and interest, and taxpayers should ensure timely compliance.

Late Fees Under GST

Under GST (Goods and Services Tax), late fees are charged for delay in filing of returns. The late fees for GST return filing depend on the type of return and the duration of the delay.

  1. 1. For GSTR-3B, the late fee is Rs. 50 per day for each day of delay (Rs. 20 per day for taxpayers having nil tax liability). The maximum late fee is capped at Rs. 5,000.
  3. 2. For GSTR-1, GSTR-5, and GSTR-5A, the late fee is Rs. 100 per day for each day of delay (Rs. 25 per day for taxpayers having nil tax liability). The maximum late fee is also capped at Rs. 5,000.
  5. 3. For GSTR-6, the late fee is Rs. 50 per day for each day of delay (Rs. 20 per day for taxpayers having nil tax liability). The maximum late fee is capped at Rs. 5,000.

It is important to note that the late fees for GST return filing are subject to change by the GST council. It is also important to file GST returns on time to avoid late fees and penalties.

Interest Under GST

In the context of the Goods and Services Tax (GST) system in India, interest is charged under certain circumstances. Here are some of the key points related to interest under GST:

  1. 1. Interest on late payment of tax: If a registered taxpayer fails to pay the GST liability within the due date, interest will be charged at a prescribed rate. The interest is calculated from the day after the due date till the date of actual payment.
  3. 2. Interest on claim of excess input tax credit: If a registered taxpayer claims excess input tax credit (ITC) in their GST returns, interest will be charged on the amount of excess credit claimed. The interest is calculated from the date of claiming excess ITC till the date of its reversal.
  5. 3. Interest on refund of excess tax paid: If a registered taxpayer has paid excess tax and claims a refund of the same, interest will be paid by the government on the amount of excess tax paid. The interest is calculated from the date of payment of excess tax till the date of its refund.
  7. 4. Interest on delayed refunds: If the government delays the refund of excess tax paid to a registered taxpayer beyond a prescribed time limit, interest will be paid by the government on the amount of delayed refund. The interest is calculated from the date after the expiry of the prescribed time limit till the date of refund.

The rate of interest for each of these scenarios is prescribed by the government and is subject to change from time to time. It is important for taxpayers to comply with the GST regulations and pay their taxes on time to avoid interest charges.

Note – This is an educational content and should not be treated as legal advice, kindly contact our team so that they can help you with exact solution.

Union Budget – FY 2023-24 – Income Tax Amendments

Union budget 2023-24 has proposed various amendments in the Income tax act such as Change in slab rates, extended benefits to MSME Enterprises, relaxation in tax audits threshold limits, Relaxations for cooperative societies etc.

During the budget, every person, from a big corporation to a small businessman, looks after amendments in Income tax because it does not only impact pockets of taxpayers but also decides on compliances a business needs to carry out. Every extra compliance leads to an increase in cost and have other impacts as well.

In this article a detailed discussion is made of amendments proposed in Income Tax Act, 1961 by Union Budget FY 2023-2024.

1. Amendments in Personal Income Tax

  • ⦁ Union Budget, 2023-24 has proposed amendment in slab rates under section 115BAC (i.e., New Tax Regime) within an objective to reduce income tax liabilities.
  • ⦁ Following are the new slab rates:
Income RangeIncome Tax Rate
Upto INR 3,00,000NIL
INR 3,00,000 to INR 6,00,0005% on income above INR 3,00,000
INR 6,00,000 to INR 9,00,00015000+ 10% on Income above INR 6,00,000
INR 9,00,000 to INR 12,00,00045,000 + 15% on income more than INR 9,00,000
INR 12,00,000 to INR 1500,00090,000 + 20% on income more than Rs 12,00,000
Above INR 15,00,000150,000 + 30% on income more than Rs 15,00,000
  • ⦁ Further, tax rebate under section 87A has been increased from INR 12,500 to INR 25,000 under the new regime. Therefore, the threshold limit of exempted income has been increased from INR 5,00,000 to INR 7,00,000.
  • ⦁ Highest slab of surcharge has been reduced from 37% to 25%. Therefore, the highest rate of income tax has been reduced from 42.744% to 39%.
  • ⦁ New tax regime shall be the default scheme and if the taxpayer wants to opt for the old regime then he has to specifically opt the same.

2. Enhancement in Threshold limit of Presumptive Taxation

  • ⦁ Presumptive income allows ad hoc deduction of expenses for small business and professionals.
  • ⦁ Threshold limit to avail benefit of presumptive taxes has been enhanced:
Nature of BusinessExisting Threshold limit to avail presumptive taxationProposed Threshold limit to avail presumptive taxation
Eligible BusinessINR 2 CroresINR 3 Crores
Eligible ProfessionalINR 50 LacsINR 70 Lacs
  • ⦁ However, the benefit of enhanced threshold limit shall be provided where atleast 95% of receipts and payments are made through non-cash methods.

3. Amendment in TDS & TCS Provisions

  • ⦁ As per Section 194N, cash withdrawal from a bank exceeding INR 1 Crores is subject to TDS @ 2%. The Union Budget has proposed to enhance the threshold limit of INR 1 Crore to INR 3 Crores where the recipient is a Co-operative society.
  • ⦁ TDS on winning from online games shall be deducted at rates in force without any threshold limit. TDS shall be deducted at the time of withdrawal of funds or at the end of the Financial year.
  • ⦁ Interest to listed debentures has been brought under TDS ambit. TDS shall be deducted @ 10%.
  • ⦁ TDS on withdrawal of funds from employees provident funds (EPF) shall be deducted @ 20% in case of non-furnishing of PAN. Earlier TDS was required to be deducted at maximum marginal rate.
  • ⦁ Refund of TDS Deducted across Financial years
    • ⦁ Taxpayers generally face addition with respect to income disclosed in ITR of a year and TDS on such income is deducted by the counterparty in subsequent financial year.
    • ⦁ Union budget has provided that in such cases, assessee can make an application in prescribed form to the Assessing officer to claim benefit of such TDS.
    • ⦁ Such an application can be filed within 2 years from the end of the financial year in which TDS has been deducted.
    • ⦁ Further, the provisions of rectification shall also apply and the assessee also can make an application for rectification. For the purpose of rectification, a period of 4 years shall be reckoned from the end of the financial year in which such tax has been deducted. 
  • ⦁ As per Section 206AB, TDS shall be deducted at higher rate from specified persons, i.e., persons who have failed to file income tax returns. Union budget has excluded following persons from specified persons list:
    • ⦁ a non-resident who does not have a permanent establishment in India;
    • ⦁ a person who is not required to furnish the return of income for the assessment year relevant to the said previous year and is notified by the Central Government in the Official Gazette in this behalf.

4. Deductions to be allowed on payment basis

  • ⦁ In order to provide more security to MSME, the union budget has amended Section 43B to provide that deduction of sum payable to Micro, Small and Medium Enterprises (MSME) shall be allowed only on payment basis.
  • ⦁ So far, deduction for deposit taken from NBFC is permitted during the Financial year in which payment is made. Now, Government shall prescribe the list of NBFCs for Section 43B.

5. Lower rate of Income Tax for manufacturing cooperative societies

  • ⦁ A new section 115BAE is proposed to be inserted, which provides that following reduced rates of income tax shall apply:
    • ⦁ Manufacturing co-operative societies (established on or after April 1st, 2023, and commencing production on or before March 31st, 2024): Income tax shall be charged at 15% (plus surcharge of 10% & cess)  [provided that specified incentives or deductions are not availed]. 
    • ⦁ Income not derived or incidental to manufacturing or production: Income shall be charged at 22%.

6. Income tax on maturity proceeds of Life Insurance Policy

  • ⦁ Section 10(10D) provides that the amount received on maturity of life insurance policies is exempted from income tax subject to given conditions.
  • ⦁ Union budget has proposed to withdraw such exemption on insurance policies, other than unit linked insurance policies, issued on or after 01.04.2023 if the amount of premium payable exceeds INR 5 lacs for any of the previous year during the term of policy.
  • ⦁ In case of more than one life insurance policies, other than ULIP, threshold hold of INR 5 Lacs shall be checked for all premiums paid during the year.
  • ⦁ However, such exemption is not withdrawn on the sum received on death of a person.
  • ⦁ Amount received on maturity, net of non-tax deducted premium, shall be taxed under head “Other Incomes” in the year of receipt.

7. Exemptions to Newly established Units in Special Economic Zones (Section 10AA)

  • ⦁ Section 10AA provides for 100% and 50% deduction of profit derived from the export by newly set-up units in SEZ.
  • ⦁ As per amendments, deduction under section 10AA shall be provided only if return is filed within the due date specified u/s 139(1).
  • ⦁ Further, Deduction shall only be allowed if the proceeds from the sale of goods or provision of services are received within 6 months from the end of the previous year or within such further period as the competent authority may allow in this behalf.

8.  Amendments in Capital Gain

  • ⦁ Similar to goodwill, cost of acquisition and cost of improvement of self-generated intangible assets and rights shall be considered as “NIL” while computing capital gains on sale of such asset.
  • ⦁ Capital gain arise on transfer or redemption or maturity of Market Linked Debenture shall be considered capital gains arising from the transfer of a short-term capital asset. Further, while computing such capital gain, no deduction shall be allowed in respect of securities transaction tax.
  • ⦁ Investment under Section 54 and Section 54F has been capped for INR 10 Crores. Therefore, if cost of new asset exceeds INR 10 Crores, the amount exceeding INR 10 Crores shall not be taken into account.
  • ⦁ The transformation of physical gold into Electronic Gold Receipts and vice versa by a Vault Manager registered with the Securities and Exchange Board of India (SEBI) shall not be considered as a transfer for purposes of capital gains taxation. 
  • ⦁ While computing cost of acquisition of the asset or the cost of improvement, no additional shall be made of interest expense for which deductions are already claimed u/s Section 24(b) or or Chapter VI-A of Income Tax Act.

9. Other Amendments

  • ⦁ Benefit of Section 115BAC (i.e., new tax regime) is proposed to be extended to Association of Persons (AOP) (other than co-operative societies), Body of Individuals (BOI) and Artificial Judicial Persons (AJP). This will help in reduction of Income tax liabilities. 
  • ⦁ For the purpose of claiming deductions under section 80-IAC, incorporation date of eligible start-ups is proposed to be extended from 1st April, 2023 to 1st April, 2024.
  • ⦁ The exemption can be claimed by trusts or institutions only if return of income is furnished within time limit prescribed under section 139(1) or 139(4).
  • ⦁ Government has provided for a new appellate authority, the Joint Commissioner (Appeal), for specific categories of taxpayers, such as individuals and HUFs, to speed up the resolution process in appeal proceedings.

The contents of this article are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the author nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon.

How to Determine the Taxability of Foreign Resident in India?

According to the provisions of the Income Tax Act, 1961; all the foreigners or individuals who belong to a different country but staying and working in India or individuals who belong to India but working in any other part of the world, have to pay income tax, as the Income Tax Act, 1961 provides for taxability depending upon the residential status of a person. Here in this article, we are going to discuss all the details related to tax by NRI and foreigners.

This tax is levied regardless of the individual’s status of citizenship, or intention of staying in India. However, the extent of taxability may vary depending upon the residential status of the person. 

There could be some tax deduction at source on income earned in India, though the person will be entitled to take credit of such amount while filing the income tax return. However, if Income tax payable is less than tax deducted at source, then balance amount can be claimed as refund.

Tax By NRI and Foreigners- How is a foreign national’s or expatriate’s income taxed after becoming a resident of India?

In India, the taxability of income of a foreign national solely depends on the person’s residential status. The following can be the different scenarios of taxability based on residential status:

  1. 1. Resident and Ordinary Resident: For a person who is a resident and ordinary resident in India as per Income Tax Act, 1961 then the total income earned by such person anywhere in the globe, including India, is taxable in India. This includes even if the income is earned in the country of citizenship and taxed there.
  2. 2. Non-Resident (NR) and Resident But Not Ordinary Resident (RNOR): In case the expatriate is a Non-Resident (NR) or Resident but Not Ordinarily Resident (RNOR) as per Income Tax Act, only the income earned, i.e, Income accrued or deemed to be accrued in India or Income received or deemed to be received in India, is taxable in his hands in India. 

So the first thing is you need to find out your residential status to ensure what tax is levied on your income. 

As per the Income Tax Act, residential status rules, the first 2 years of a foreign national’s arrival to India will put the person into RNOR (Resident but Not Ordinarily Resident) status and he/she will pay tax for only the income earned in India.

However, there are certain other criteria given under Income Tax Act to determine whether a person is NRI (Non-Resident), RNOR (Resident but not Ordinary Resident), or ROR (Resident and Ordinary Resident) and then only one can check tax by NRI.

How to check Residential Status?

To determine residential status, Income Tax Act, 1961 defined 2 stages wherein first we need to determine whether a person is resident or not and if a person is found resident then it is further determined whether he is an ordinary resident (ROR) or not (RNOR).

Let’s have a look at criteria given by the Income Tax Act, 1961 to determine residential status:

1. Resident

The first step is to determine whether a person is a resident or not for the relevant previous year or not. As per Section 6 of the Income Tax Act, if he satisfied either of the following condition:

  1. The concerned individual has been in India for more than 182 days during the relevant previous year; or 
  2. The concerned person has stayed in India for 365 days or more for 4 years immediately preceding the relevant previous year and has stayed in India for 60 or days during the relevant year. 

As per explanation to Section 6(1), if any person who is an Indian Citizen or person of Indian Origin and staying outside India and he comes to India for a visit in any Previous year then in the second option period of instead of 60 days, period of 182 days shall be considered.

Let’s understand the same with an example. Mr A has the following different scenarios of stays in India for F.Y. 2019-20:

Stay in India During F.Y. 2019-20Stay in India During F.Y. 2015-16 to F.Y. 2018-19Residential status
200 days600 daysResident. Criteria A satisfies. So, we are not required to check Criteria B.
200 days 30 daysAlso regarded as Resident. Criteria A satisfies. So, we are not required to check Criteria B.
150 days600 daysResident. Criteria A doesn’t satisfy. Criteria B satisfied
40 days600 daysNon-Resident. No criteria satisfied.

Amendments by Finance Act, 2020.

However, with an objective to stringent provisions related to residential status, the Finance Act, 2020 has proposed to change the period of 182 days, in explanation to section 6(1), to 120 days in case where total income of a person, other than income from foreign sources, exceeds INR 15 lacs. Therefore, If concerned individuals have stayed in India for more than 120 days during the relevant financial year then he shall qualify as resident.

2. Resident and Ordinary Resident (ROR)

Once it is determined that a person is a resident for a financial year then it is determined that whether such person Ordinary Resident (ROR) or Not Ordinary Resident (RNOR). 

To get the status of ROR, an expatriate must have to meet the following 2 conditions simultaneously:

  • ⦁ Such a person is Resident In India during 2 or more Financial years out of 10 financial years immediately preceding relevant Financial year; and
  • ⦁ Such persons have resided in India for a total duration of 730 days or more during 7 financial years prior to the relevant Financial Year.

3. Resident but not Ordinary Resident (RNOR)

If a person fails to satisfy the above-mentioned conditions then he will be considered RNOR.

Let’s understand the same with an example. Mr. A has qualified as Resident for FY 2019-20. Now following are the different scenarios to check his status as ROR and RNOR:

No of years during which Mr. A was resident during F.Y. 2009- 2010 to F..Y. 2018 -2019Stay in India During F.Y. 2012-13 to F.Y. 2018-19Status
1 Year720 DaysRNOR.
1 year740 daysSame
3 years720 DaysSame
3 years740 daysROR

Amendments by Finance Act, 2020

Finance Act, 2020 has proposed to replace the period of 2 years to 4 years. Therefore, to qualify as ROR, you have to qualify as a resident for 4 or more out of 10 immediately preceding financial years.

4. NR (Non-Resident)

If a person fails to satisfy either of the condition given for residential status then he shall be considered as Non-Resident for the purpose of Income Tax Ac, 1961.

You can refer to the table below to understand better and determine your residential status,

Basic conditionsRORRNORRNORNR
A.1. Your total stay in the country is 182 days (120 days from F.Y, 2020-21 onwards) or more during the relevant financial year. Or,2. stay is 60 days or more in India in the relevant financial year and total stay is 365 days or more during the last 4 financial years.YesSameSameNo
Additional ConditionsRORRNORRNORNR
B.Your cumulative stay in India is 730 days or more during 7 financial yearsYesYesNoNA
C.You were an Indian resident for at least 2 (4 years or more from F.Y. 2020-21 onwards)  of the last 10 financial yearsYesNoYesNA
  • ⦁ If you satisfy all the conditions i.e. condition A, B, and C then you qualify as a ROR.
  • ⦁ If you satisfy condition A and any of conditions B and C then you qualify as an RNOR.
  • ⦁ But if you do not satisfy condition A then you qualify as NR. Therefore, the condition B and C does not apply in this case.

What are the factors in determining the Tax liability of a Foreign National in India?

As we’ve already mentioned, the tax liability of a foreign individual depends only on the residential status which can be outlined as follows-

  • ⦁ Resident and Ordinary Resident: Expatriates who have qualified to be a resident of India, need to pay tax on the total income earned throughout the globe. This income may also include the amount of remuneration which is paid to them in their own country. 
  • ⦁ Non-Resident (NR) or Resident but Not Ordinary Resident (RNOR): Foreign individuals who qualify to have the status of an NRI or RNOR, are liable to pay tax on the income which is accrued or deemed to be accrued in India or received or deemed to be received in India Only.  

What type of incomes of Foreign Nationals are taxable in India?

Foreign nationals residing in India are liable to pay tax for the following types of incomes- 

  • ⦁ Employment Income
    • ⦁ Reimbursements
    • ⦁ Cash compensations
    • ⦁ Salaries
    • ⦁ Wages
    • ⦁ Allowances
  • ⦁ Non-Employment Income
    • ⦁ Income generated through the investments made abroad but sent directly to a bank account in India
    • ⦁ Royalties received from an Indian individual
    • ⦁ Capital gained through the selling of Indian based assets
    • ⦁ Interest payments on the infrastructure bill funds in India

DTAA (DOUBLE TAXATION AVOIDANCE AGREEMENT)

In the case of residents, income earned in India or outside India is liable to Income Tax in India and in case of non-resident, income earned in India is taxable. 

However, there are certain cases where an expatriate may get assigned to pay tax two times [in India and another country] for the same Income. 

To avoid such instances, the Government of countries enters into an agreement with the Government of other countries. To avoid double taxation of Income and these agreements are known as facilities of the Double Tax Avoidance Agreement (DTAA).

DTAA or Double Tax Avoidance Agreement is a particular agreement that two countries have made to help the foreign individuals in avoiding taxation of his/her total income in both the countries. 

By availing the benefits of DTAA, one can easily avoid paying tax two times on such income which is taxable in India and another country as well. 

DTAA set out different conditions which help in determining the tax amount by foreigners.

Documents required by Foreign Nationals to file ITR in India –

Certain documents that you are mandatory to have or required to be provided by a foreign national while filing Income Tax Returns (ITR) in India. These are- 

  • ⦁ Form 16- Form 16 is a certificate issued under the Income Tax Act, 1961 which shows Tax deducted by the payer on salary. For the purpose of claiming credit for such TDS, the person needs to furnish a copy of his Form 16. Please note that Form 16 is applicable as per the Income Tax laws of India. Such credit of TDS will get reflected in 26AS of the assessee also.
  • ⦁ Form 16A: Similarly to Form 16, Form 16A represents TDS deducted on Incomes other than Salary and this certificate consists of information related to the amount of tax which has been deducted at source and also other details of deductor. 
  • ⦁ Bank Statements- Expatriates have to provide bank statements mandatorily, that contains the detail of transactions made with the purpose of income accrued, investments, and expenditure owing to a taxation year.
  • ⦁ Investment Proofs- If an expatriate has certain investments that don’t show up in Form 16 then he requires to provide the proof separately for the same. 
  • ⦁ Details of Property- If any property or asset of a foreign individual is sold in India, the capital gain tax will be levied on the income that came from the sale. The details of selling the property or asset must be presented at the time of filing Income tax Returns. 

Note – The contents of this article are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the author nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon.

Process to Change the Name of a Private Limited Company

Change Name of Private Limited

The process to Change the Name of a Private Limited Company under the Companies Act, 2013 –

Changing the name of the company requires amending the AOA and MOA of the Company. The Name of a company is its unique identity, and the same is also found in the first clause of the MOA (also known as the Name Clause). 

The management of the company desiring to change the Company Name would need the consent of its shareholders and the approval of the CRC(MCA) and ROC. Alteration in the name clause is provided under sections 13 (2) and 13 (3) of the Companies Act, 2013. Change in the name has no impact on its legal entity or its existence as a corporate entity.

It will not result in the creation of a new company or entity.

Step I: Board resolution of the Company

The very first step is the drafting of the Board resolution for the Change in Name of a Private Limited Company. Notice has to be issued at least 7 days, according to the provisions of Section 173(3) of the Companies Act, 2013. Board Members should give their principle approval for the change in the name of the Company. They will suggest proposed new names for the Company and will set the agenda for the Meeting of shareholders. They can pass the resolution regarding:

  • ⦁ Proposed new names for the company;
  • ⦁ Authorizing any Director or Practicing Company Secretary for making an Application with the Registrar of Companies for the approval of a new name as decided by the Board;

Step II: Check whether the name is available or not

In the second step, regarding the checking of name availability with the MCA & Trademark for Change in Name of a Private Limited Company. When the resolution is passed, we have to check whether the proposed name is available or not. You have to submit RUN (not e-form) along with the fee prescribed, i.e. Rs. 1,000 only.

The proposed name should be in consonance with the name guidelines given in Rule-8 of the Companies (Incorporation) Rules, 2014, like it should not be identical with any other existing company’s name, should not violate trademark, does not include offensive words, it should be in consonance with the principal object of the companies, etc.

Step III: Approval of the new name by the CRC (MCA) of the company

After CRC approves the name availability, they will issue a Name Approval Letter with respect to approval for the availability of the name for the company. It must be taken care that the proposed name cannot be made available for a period exceeding 60 days from the date of approval and this approval does not grant any kind of right of privilege. The name is liable to be withdrawn at any time before approval of the name change if it is found later on that the name ought not to have been allowed.

Step IV: Notice for EGM & passing of Member’s resolution for changing the name of the company

When the name is approved by CRC, the company should call an EGM to pass a special resolution in favor of changing the name of the company. The board has to then issue a notice to all shareholders, Directors, and Stakeholders of the company in accordance with Section 101 of the Companies act 2013. It should accompany an explanatory statement (102) stating the reasons for the change in name in the interest of the director. The notice should be issued at least 21 days before the meeting. If 95% of the shareholder’s consent, then EGM can be conducted on shorter notice.

The following resolutions have to be passed at the Meeting:

  • ⦁ Change of name of the Company and alteration of MOA and AOA of the company subsequently.
  • ⦁ If the name is changed due to a change in the business activity or the object of the company, then the main object in MOA also has to be changed.
  • ⦁ Delete any other object in the object clause of the MOA of the company.
  • ⦁ The liability clause of the MOA has to be amended.
  • ⦁ New AOA and MOA have to be adopted, which are consistent with the Companies Act 2013.

Step V: Application for approval of company name change

Once the special resolution is passed in EGM in step IV, the company has to file the resolution so passed with the Registrar of Companies within 30 days of the passing of the resolution. Form MGT-14 has to be filled with filling resolution to the registrar with the following documents attached:

  • ⦁ Notice issued for EGM along with explanatory statements
  • ⦁ A certified true copy of Special resolutions and Board Resolution;
  • ⦁ Altered MOA and AOA.
  • ⦁ Minutes of the extraordinary general meeting;
  • ⦁ Consent letter to shareholders, in case the extraordinary general meeting is convened on shorter notice.

The company also has to submit form INC-24 to obtain approval from the Central Government for the change of the company’s name within 30 days of the passing of the special resolution. You have to attach the following documents:

  • ⦁ Notice of extraordinary general meeting along with the explanatory statements;
  • ⦁ A certified true copy of Special resolutions and Board resolutions;
  • ⦁ Altered Memorandum and Articles of Association;
  • ⦁ Minutes of the extraordinary general meeting;
  • ⦁ Consent letter to shareholders, in case the extraordinary general meeting is convened on shorter notice.
  • ⦁ SRN of the Form MGT-14

Step VI: Issue of new Certificate of Incorporation.

Jurisdictional ROC will check and review the forms and documents filed by the company. If he is satisfied with the forms and documents given by the Company, then Registrar will issue the New Incorporation certificate stating the new name of the company. The name will be effective from the date of issue of the certificate.

So these above steps which you have to follow to change in Name of a Private Limited Company.

For Which Company, Change in Name is not allowed?

  1. 1. Companies which not filed annual returns to register.
  2. 2. Companies that failed to pay or repay matured deposits or debentures or interest thereon.

Note: Both the Form MGT-14 and Form INC-24 is Non-STP Form. Generally, it will take 20-25 days for the entire process.

How To Register A Company In UAE From India?

In recent years, more and more businessmen are exploring the possibility of Registering a Company in UAE from India. In this insight, we discuss the requirements and procedures to Register a UAE Company and set up Business in UAE for Indian Businessmen and other Foreign Nationals.

The requirements for registering a company in UAE keep changing to make them more business-friendly to foreign investors. One of the latest changes that have been introduced is that a local sponsor is no longer required for mainland companies unless the company operates in a strategic sector. Registering your UAE Company to start doing business in UAE has just become simpler.

Steps to register your company in UAE:-

1. Business Activities Description

The nature of your business activities and the whether you will be only exporting services or products Vs. trading locally determines your establishment’s business model and the choice of authorities under which your UAE company will register. Some activities require specific approvals.

If your preference is to Register a company in Dubai and, in case you are only exporting, you have a choice of several specialized economic business zones. Alternatively, you may register your company as a mainland company in Dubai.

2. Trading Name Registration for Company in UAE

A company is required to register a Trade Name to be used for doing business in UAE. The trade name to be used must not be previously reserved by another business and it must follow the UAE trade name reservation rules. Certain names and terms are prohibited.

3. Choice of Business Jurisdictions Based on Your Needs and Requirements

The choice of Business Jurisdiction is largely determined by the physical location of the Company and vice versa. Apart from business considerations in relation to the chosen area to operate in, different jurisdictions have different characteristics/regulations, and so forth. Our expert consultants are available to help you choose the location and jurisdiction that are best suited to your business objectives.

4. Memorandum of Association

The Memorandum of Association of your UAE company stipulates your company’s structure and internal regulations. Our helpful consultants will advise on the clauses that are best suited to your requirements.

A Local Sponsor Agreement is still no longer required and foreign nationals can have 100% ownership of their companies unless the company operates in a strategic sector.

5. Business License Application

A business license is required for doing business in the UAE. The authority that will grant the business license depends on whether the company is Mainland or under one of the available Free Zones. Depending on the activities of the company, additional approval may be needed from other government bodies.

6. Investor Visa and Emirates ID Application

Investor Visa and Emirates Id ensure that the owner and staff of the UAE Company can travel to and live in the UAE with no restrictions.

7. Open Company Bank A/c.

Of Course, no company can operate without a bank account and there is a big choice of credible banks in UAE to choose from. Nowadays, the procedure for opening a bank account is lengthy, but our experienced consultants are well-equipped to assist you in the best possible way.

8. UAE Company Registration Cost

UAE Company Registration Cost depends on several factors, some of which have been above. Our experience and expertise allow us to advise our clients on the best choices that enable their UAE company to operate efficiently and avoid unnecessary costs during the incorporation phase. We make UAE company registration from India both hassle-free and cost-efficient.

REQUIREMENT TO OPEN A COMPANY

  • ⦁ FZE–1 shareholder; FZC–2 to 10 shareholders.
  • ⦁ There are no mandatory requirements for a paid-up capital. However, the capital mentioned in the Articles of Association will be AED 150,000; In case the company will be on the Mainland, the share capital will be AED 100,000.
  • ⦁ Virtual office/ office space is compulsory.
  • ⦁ Minimum 1 and any person can become the director/ manager.
  • ⦁ The Director/ Representative of the company needs to visit Dubai for the bank account opening process and security approval.

DOCUMENTS REQUIRED

  • ⦁ Application forms duly signed by the authorized signatory.
  • ⦁ Passport Copy of the UBOs/ Shareholders/ Directors.
  • ⦁ Copy of National Identity Card/Aadhar Card of the UBOs/ Shareholders/ Directors.
  • ⦁ Most Recent Utility Bill/ credit card statement/ bank statement with the name and residential address of the UBOs/ Shareholders/ Directors.
  • ⦁ Curriculum Vitae (CV) /Profile of the UBOs/ Shareholders/ Directors.
  • ⦁ One color photograph for each UBO/ Shareholder/ Director/ Partner/ Manager.

INDIVIDUAL SHAREHOLDER

  • ⦁ Application forms duly signed by the authorized signatory.
  • ⦁ Certificate of Incorporation of the corporate shareholder (mother company).
  • ⦁ Memorandum & Articles of Association of the mother company.
  • ⦁ Board Resolution detailing the formation of the branch or the subsidiary nominating an authorized manager.
  • ⦁ Passport Copy of the UBOs/ Shareholders/ Directors.
  • ⦁ Copy of National Identity Card/Aadhar Card of the UBOs/ Shareholders/ Directors.
  • ⦁ Most Recent Utility Bill/ credit card statement/ bank statement with the name and residential address of the UBOs/ Shareholders/ Directors.
  • ⦁ Curriculum Vitae (CV) /Profile of the UBOs/ Shareholders/ Directors.
  • ⦁ One color photograph for each UBO/ Shareholder/ Director/ Partner/ Manager.

CORPORATE SHAREHOLDER

  • ⦁ Application forms duly signed by the authorized signatory.
  • ⦁ Certificate of Incorporation of the corporate shareholder (mother company).
  • ⦁ Memorandum & Articles of Association of the mother company.
  • ⦁ Board Resolution detailing the formation of the branch or the subsidiary nominating an authorized manager.
  • ⦁ Passport Copy of the UBOs/ Shareholders/ Directors.
  • ⦁ Copy of National Identity Card/Aadhar Card of the UBOs/ Shareholders/ Directors.
  • ⦁ Most Recent Utility Bill/ credit card statement/ bank statement with the name and residential address of the UBOs/ Shareholders/ Directors.
  • ⦁ Curriculum Vitae (CV) /Profile of the UBOs/ Shareholders/ Directors.
  • ⦁ One color photograph for each UBO/ Shareholder/ Director/ Partner/ Manager.

What is due date for claiming ITC for FY 2021-22 ?

Vide Finance Act 2022 Government has amended Sec 16(4) of CGST Act 2017 and extended due date for claiming ITC to 30th November of next year.

⦁ However it is to be noted that, yet this amendment is not made effective by government.

⦁ Therefore as of now , kindly claim pending ITC of FY 2021-22 before due date of Sep 2022 return.

#gst #itc #gstreturn #gstitc #inputtaxcredit

Due to recent changes in ITC Table of GSTR 3B, additional details to be checked for the purpose of GSTR 3B –

1.    Details of Ineligible Credit – Ineligible ITC is now required to reversed from the gross ITC availed in GSTR 3B and therefore, the complete details of Ineligible ITC is required to be reported in GST return. Such Ineligible ITC should include the following details:
 
·      ITC not allowed as per section 17(5) of CGST Act
·      ITC not allowed on account of POS rules
·      ITC pertaining to the invoices which are pending for payment for more than 180 days to be counted from the date of invoice
 
2.    Details of ITC which was claimed inadvertently in the previous periods – It may include the following:
 
·      Ineligible ITC wrongly claimed earlier
·      ITC claimed twice and to be reversed now
·      ITC to be reversed due to other reasons

#gstreturn #gstindia #gstregistration #gst #gstlitigation #gstupdates