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.

Union Budget – FY 2023-24 – Income Tax Amendments

Union Budget

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?

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


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 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.

Practicing CAs issue various certificates at the request of their clients and authorities take them as documentary proof to support a transaction.

One of the certificates which are generally asked for by Banks and financial institutions is End Use Certificate. It is part of the banks’ monitoring process after the loan amount’s disbursal.

Utmost care is required from the professional in issuing these certificates. A CA should satisfy himself with documentary proof before the issue of such certificates. There should not be any chance of tolerable error.

It’s beneficial in accepting the assignment if CA knows the level of integrity of the client. The basis of certification and management explanations should be included in the relevant work papers.

#CACertificate #Audit #CompanyAudit #StatutoryAudit #TaxAudit #StockAudit #InternalAudit

New Labour uniform codes

Labour uniform codes
Labour uniform codes

As per the information gathered by me from news/media/notifications, etc on new 4 labour uniform codes- few provisions are being implemented w.e.f. 1-7-22 by Central Govt and rest shall be notified by States as per their “State – Reforms of Labour Code” and dates for implementation shall be as per their state’s gazette notification, the central rules are as under: (Attaching latest booklet on the matter)

*W.e.f 1.7.2022*

1. Working hours can be varied from 10 to 12 hours but an aggregate 48 hours exists so can do 4 day week and three days layoff/weekly off – as per requirement. The Government is also working on the work from home concept.

2. Basic is mandatory 50% of CTC. So pf in any case 12% on Basic that is 50% of CTC.

*Important Note:* Basic can not be less than 50% of CTC but in Minimum wages – that consists of Basic + DA as part of basic therefore for those employees who are getting minimum wages can not be further bifurcated.

NEW LABOUR LAW REFORM CODES: (total 29 existing labour laws merged in 4 new Reform Codes)

The central government has notified four labour codes, namely,

1. the Code on Wages, 2019, on August 8, 2019; (amalgamated 4 laws)
2. the Industrial Relations Code, 2020, (amalgamated 3 laws)
3. the Code on Social Security, 2020, (amalgamated 9 laws) and
4. the Occupational Safety, Health and Working Conditions Code, 2020 on September 29, 2020. (amalgamated 13 laws)


The statutory minimum wage is based on the gross wage payable for a normal working week, i.e. before overtime payments.


1. the basic wage agreed in your contract;
2. performance-related payments and allowances for shift work, irregular hours, etc.;
3. weekly or monthly fixed payments for the turnover you generate;
4. work-related payments by third parties, e.g. tips or payments agreed between you and your employer;
(The total of these amounts may not be lower than the minimum wage.)


Some income components are not included in the calculation of the minimum wage:

1. overtime pay;
2. leave allowance;
3. profit shares;
4. special payments, e.g. incidental payments received for reaching sales targets;
5. future payments you receive subject to certain conditions (e.g. pension and saving schemes to which the employer contributes);
6. expense allowances;
7. end-of-year allowances.


Your gross minimum wage depends on how many hours you work. If you work part time the gross minimum wage is proportionately lower.

Therefore, you are requested to be in touch with experts on the subject for implementing dates of Labour Codes state wise because our company works pan-India.

Read our other blog – Latest Taxation, GST and Other Updates

Chartered Accountant in Pimpri Chinchwad

Test of Control (TOC) vs Test of Details (TOD) –

Test of Control
Test of Details

In a process of Statutory Audit, the Test of Control and Test of Details are two important stages and it also makes an important question from the interview pov.

I have discussed a comparison of both gathered from my experience.

TOC is a type of audit procedure we perform to evaluate whether a client’s internal control works effectively. Thus, we perform the test to obtain evidence of effectiveness before we can rely on controls. In case controls are weak, we will need to increase our substantive tests.

So, we take out the samples from SCOT (Significant class of Transactions), test various assertions, capture the details of the given sample, and match them with supporting documents. The sample size depends on the population and frequency of control.

Based on the TOC, we determine the extent of TOD. Test of Details is a substantive procedure used to collect evidence to verify individual transactions or balances.

So, after a combined assessment of risk and control (CRA), we define the tolerable error (TE) for deviations and obtain the samples for transactions to do the testing. The goal here is to confirm that supporting docs match with each other and the source.

I have only explained the surface of it and there are a lot of other things done throughout this.

I hope it was worth a read! Do add your learnings in the comments.

Windfall tax: Will India impose it too?

Windfall tax: Will India impose it too?

This question has been a buzz in Indian media for the past few weeks. But what is this windfall tax that Indian media is going on about?

What is the windfall Tax?

When a company benefits from something that they are not responsible for and, as a result of that, enjoys the financial gain, that gain is referred to as windfall profits.

Governments, typically, levy a one-time tax over and above the normal rates of tax on such profits, and that is called windfall tax.

Why Now?

So what’s happening is global oil and gas prices are at a peak level due to the Russia-Ukraine conflict. If we take the example of any Indian upstream oil companies, say ONGC, or Oil India. They declared an all-time high net profit in the fiscal year 2021-22.

ONGC declared that its net profit grew by 258% to reach ₹40,306 crores. While the Oil India announced a net profit of ₹3,887.31 crore, which is 123% higher than in the preceding year.

As the Indian government has recently gone for the cut in Central Excise Duty and considering that it is spending more on food and fertilizer there is the requirement of any alternate levy to full fill this gap and one of the solutions could be levying a windfall tax on oil companies.

Countries like Italy and the UK have already imposed a windfall tax over the past couple of weeks.

Will such tax increase the Price of the Fuel?

Very unlikely, as this tax is not part of the input or output cost, but levied only on profit.

Is India really considering such a levy of tax?

While there is no formal denial by the government, upstream oil companies have said they have heard nothing about this.

Let me know your thoughts on whether you believe that such a tax should be levied or not?


Chartered Accountant in Pimpri Chinchwad

Rotation of Auditor under Companies Act, 2013 – Important Step to Maintain Independence of Auditor

It is mandatory for every company registered under the Companies Act, to get its accounts audited by the statutory auditor and present it before the stakeholders every year. An audit is an important activity for every business and the auditor must present his views in an unbiased way.  

The principle of Audit Rotation implies periodic breaks to audit engagements and is imposed to avoid long-term relationships between an auditor and the client. Audit breaks/rotation is a major provision to enhance the Audit quality and maintain the trust of various stakeholders in the company.

Section 139(2) of the Companies Act, 2013 deals with the mandatory auditor/audit firm rotation principle and provides for the rules and regulations in this regard. 

Auditor Rotation Applicability

Section 139(2) of the Companies Act, 2013 provides for mandatory rotation of auditor or audit firm by listed and certain class or classes of companies. The Section specifies that no listed company or a company belonging to such class or classes of companies as specified shall appoint or reappoint

  1. An individual as auditor for a more than one term of five consecutive years and 
  2. An audit firm as auditor for more than two terms of five consecutive years. 

Therefore rotation of auditor is applicable to all listed companies and such other classes of companies as may be prescribed. The list of “such other class of Companies” is provided in Rule 5 of Companies (Audit and Auditors) Rules, 2014. Except for small companies and one-person companies, rotation of auditors is applicable to the following companies:

Sr. No.Category of companyThreshold limit 
1.Unlisted public companiesHaving paid-up capital of Rs. 10 crores or more
2.Private limited companiesHaving paid-up capital of Rs. 50 crores or more
3Any company having paid-up capital below threshold limits as specified under points (1) and (2) above but having public borrowings from a financial institution, banks, or public depositsRs. 50 crore or more

Therefore from the above explanation, it is clear than Auditor Rotation is not applicable to the following companies:

  1. One Person Company 
  2. Small Company
  3. Unlisted public companies having paid-up capital less than Rs. 10 crore or borrowings less than Rs 50 crore
  4. Private Limited companies having paid-up capital less than Rs. 50 crore or borrowings less than Rs 50 crore

Can the Outgoing Auditor be Reappointed in the same company after the completion of his term of the audit?

First Proviso to Section 139(2) provides that after the completion of the audit term (5 consecutive years or 10 consecutive years as the case may be), the outgoing auditor shall not be eligible for re-appointment in the same company:

In the case of individual AuditorFor a period of 5 years from the completion his term
In the case of an Audit FirmFor a period of 5 years from the completion of his term

Therefore post completion of the term of audit, a cooling period of 5 years is provided to be eligible for reappointment as an auditor in the same company.

Provision related to Common Partner in Audit Firm

Second Proviso to Section 139(2) of the Companies Act, 2013 provides that if Audit Firms i.e. incoming audit firm and outgoing audit firm whose tenure has expired in a company immediately preceding the financial year, are having common partner or partners, then such incoming audit firm is not eligible to get appointed as auditor of the same company for a period of 5 years. 

Manner of Rotation of Auditors by the companies on expiry of their term

  1. Recommendation for an appointment:

The Audit Committee, where there is one of the Board shall consider the matter of rotation of auditors and shall recommend his appointment at the annual general meeting of the company.

  1. Prior Period must be taken into consideration:

While calculating the consecutive 5 years or 10 years, the prior period before commencement of the Act, served as Auditor (whether individual or firm) shall be taken into account.

  1. Not eligible for appointment if belongs to the same Network

The incoming Auditor shall not be eligible for appointment if he or any partner of the firm is associated with the outgoing auditor or auditor firm under the “same network of audit firms.”

Rule 6(3) of the Companies (Audit and Auditors) Rules, 2014, provides that while calculating the period of five consecutive years or 10 consecutive years as the case may be the period for which an individual or firm has held office as auditor prior to the commencement of the Act shall be taken into account. The following illustration will help to understand how an appointment shall be made in the first AGM after the commencement of this Act, i.e., 1st April 2014

Illustration 1 (For individual auditor) :

Number of consecutive years for which an individual auditor has been functioning as an auditor in the same company [in the first AGM held after the commencement of provisions of Section 139(2)] Maximum number of consecutive years for which he may be appointed in the same company (including the transitional period)The aggregate period which the auditor would complete in the same company in view of columns I and II 
5 years (or more than 5 years) 3 years 8 years or more 
4 years 3 years 7 years
3 years 3 years 6 years
2 years 3 years 5 years
1 year 4 years 5 years

Illustration 2 (in case of Audit Firm) 

Number of consecutive years for which an individual auditor has been functioning as an auditor in the same company [in the first AGM held after the commencement of provisions of Section 139(2)] Maximum number of consecutive years for which he may be appointed in the same company (including the transitional period)The aggregate period which the auditor would complete in the same company in view of columns I and II 
10 years (or more than 10 years) 3 years 13 years or more 
9 years 3 years 12 years
8 years 3 years 11 years
7 years 3 years 10 years
6 year 4 years 10 years
5 years 5 years 10 years
4 years 6 years 10 years
3 years 7 years 10 years 
2 years 8 years 10 years 
1 year 9 years 10 years

What is the same network of Audit Firms?

Here the same network includes the firms operating or functioning, hitherto or in the future, under 

1.  Same brand name or
2.  Same trade name or
3. It has a common control.

As per the guidelines issued by the Institute of Chartered Accountants of India, for determining whether the firms or individual auditors are operating or working under the same network, the following factors must be considered:

  1. Ownership or control or management of the firms
  2. Sharing of professional resources amongst the firms
  3. Quality control processes among the firms
  4. Co-operation amongst the Audit Firms.

Other important provisions related to rotation

  1. Change in Audit Firm by Partner who certifies the financial statements of the company

Explanation to Rule 6 provides that a firm shall not be eligible for appointment if a partner of an existing firm (outgoing firm), who certifies the financial statements of the company, retires from the said firm and joins another firm of Chartered Accountants. Such a firm shall be ineligible for an appointment for a period of 5 years.

  1. Consecutive 5 years 

Consecutive years shall mean all the preceding financial years for which the individual auditor has been the auditor until there has been a break by five years or more.

  1. Rotation in case the company has appointed joint Auditors

Where a company has appointed two or more individuals or firms or a combination thereof as joint auditors, the company may follow the rotation of auditors in such a manner that both or all of the joint auditors, as the case may be, do not complete their term in the same year.

  1. Term of Audit amongst Partners

The members of the company may resolve for:

a) in the audit firm appointed by it, the auditing partner and his team to be rotated at such intervals as may be resolved by members; or

(b) the audit shall be conducted by more than one auditor.

Auditors’ right to resignation and the company’s right to remove an auditor

The rights of the company to remove the auditor or the right of the auditor to resign before the expiry of the term are retained. Also, the company can remove the auditor before the expiry of the term.

Applicability of Auditor rotation in case of a private limited company

Rule 5 of Companies (Audit and Auditors) Rules, 2014 provides that, the Rotation of Auditor is applicable in the case of private limited companies if, 

  1. The paid-up share capital of the company is Rs. 50 crore or more; or
  2. Has public borrowings from financial institutions, banks, or public deposits of Rs. 50 crore or more.

The companies below the threshold limits as mentioned above, small companies, and One Person Companies are not required to follow the provisions related to the rotation of Auditor or Audit Firm. The Auditor in such companies can be an auditor for any number of years.

Rights Of Homebuyers under – The Insolvency and Bankruptcy Code, 2016

Rights Of Homebuyers

Rights Of Homebuyers under IBC – The Insolvency and Bankruptcy Code, 2016 (“IBC”), as originally enacted, did not provide adequate protection and recognition of the interests of homebuyers in real estate projects. While the Homebuyers are vital stakeholders in real estate projects, the IBC, as initially crafted, did not protect them. This is because they were treated only as ‘other creditors’, not at par with financial and operational creditors, thus they were not only unable to start proceedings under the IBC but had no statutory voting rights in the Committee of Creditors.

Homebuyers recognized as Financial Creditors – Rights Of Homebuyers

On June 6, 2018, the Insolvency and Bankruptcy Code (Amendment) Ordinance was passed, which was replaced by the Insolvency and Bankruptcy Code (Second Amendment) Act, 2018 (“2018 Amendment Act”) on August 17, 2018. By way of the said amendment, an explanation of Section 5(8)(f) of the IBC was added, which provides a definition of “financial debt”. It was clarified that the amount raised from an allottee under a real estate project shall be deemed to be an amount having the commercial effect of a borrowing. It was further clarified that the expressions “allottee” and “real estate project” shall have the meanings assigned to them under the Real Estate (Regulation and Development) Act, 2016 (“RERA”). As a result, Homebuyers/allottees were expressly recognized as financial creditors under the IBC, which enabled them to start corporate insolvency resolution proceedings (“CIRP”) against a defaulting developer under Section 7 of the IBC. It may be noted that homebuyers have been recognized as allottees under RERA. [See Section 2(d)].

The 2018 Amendment Act was challenged before the Supreme Court in Pioneer Urban Land and Infrastructure Limited v. Union of India on the grounds of it being violative of Article 14 and Article 19(1)(g) read with Article 19(6) of the Constitution of India. The Supreme Court rejected the challenges and upheld the constitutional validity of the 2018 Amendment Act. The Supreme Court on reading and interpreting Section 5(8)(f) of the IBC, observed that Homebuyers/allottees were included in the main provision i.e. Section 5(8)(f) from the very inception of the Code, the Explanation being added in 2018 merely to clarify doubts that had arisen in relation the status of Homebuyers. Therefore, the Court held that the 2018 Amendment Act does not infringe Article 14 and Article 19(1)(g) read with Article 19(6), or 300-A of the Constitution of India.

Chartered Accountant in Pimpri Chinchwad

Minimum threshold requirement – Rights Of Homebuyers

On December 28, 2019, the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2019, was promulgated which was replaced by the Insolvency and Bankruptcy Code (Amendment) Act, 2020 (“2020 Amendment Act”) inserting provisos to Section 7 of the IBC. The second proviso states that with Homebuyers, an application for initiating CIRP under Section 7 of the IBC is to be filed jointly by at least 100 allottees or 10% of the total allottees under the said project, whichever is lesser. The third proviso further stated that matters already filed by individual Homebuyers but not yet admitted by the adjudicating authority before the commencement of the 2020 Amendment Act shall be dismissed if they are not modified to fulfill the minimum threshold requirement as stated above within 30 days from the commencement of the 2020 Amendment Act. The Apex Court upheld the constitutional validity of the 2020 Amendment Act in the case of Manish Kumar v. Union of India.

Submission of claims by Homebuyers

The above clarifies that the courts, as well as the legislature, have taken an active approach in not only recognizing but also protecting the rights of homebuyers. There are a host of issues that periodically arise for consideration vis-à-vis their rights, and one such issue is regarding the submission of claims by homebuyers.

Once a Section 7 application is admitted, the adjudicating authority has to pass an order under Section 14 of the IBC, declaring a moratorium and appointing an interim resolution professional (“IRP”). The IRP is required to then make a public announcement which is required to mention the last date for submission of claims by creditors. In terms of Regulation 6 read with Regulation 12 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (“CIRP Regulations”), the creditors may submit their claims within 14 days from the appointment of the IRP, failing which the claim may be submitted within a period of 90 days from the insolvency commencement date. In many judgments, the National Company Law Tribunal (“NCLT”) has clarified that rejection of the claim on the grounds of delay beyond the 90-day period is not sustainable, as the aforesaid provision is merely directory and not mandatory.

While this appears to be settled law, on June 1, 2022, the Principal Bench of the National Company Law Appellate Tribunal (“NCLAT”), New Delhi, comprising Justice Ashok Bhushan, Ms. Shreesha Merla, Mr. Naresh Salencha granted further relief to Homebuyers in relation to the filing of their claims. In the said case titled Puneet Kaur v. K V Developers Private Limited,[8] the NCLAT held that even claims of those Homebuyers ought to be included in the information memorandum who did not file their claims if the same were reflected in the record of the corporate debtor. The NCLAT held that non-consideration of such claims would lead to inequitable and unfair resolution.

The Appellate Tribunal further noted the difficulty faced by homebuyers in filing their claims. It was observed that the public announcement inviting claims is normally done in the area where the corporate debtor has its registered office and corporate office, and there is every likelihood that all the Homebuyers who are usually hundreds in number neither come to know about the CIRP nor do they file their claims within the stipulated period. The NCLAT thus observed that non-submission of claims within the prescribed time is a common feature in the insolvency process of almost all real estate projects. The Appellate Tribunal went on to hold that once the allotment letters have been issued to the Homebuyers and payments have been received, there is an obligation on the part of the real estate company to provide possession of the houses along with other attached liabilities. Therefore, the Homebuyers have every right to agitate their claim.

The NCLAT has recognized the difficulties faced by Homebuyers, who, as the NCLAT recorded in its judgment dated June 1, 2022, usually belong to the “middle class of society”, most of whom have taken loans from banks and other financial institutions, saddling them with liability. In doing so, the NCLAT furthered the trend of the courts, viewing homebuyers with a fair mindset and reiterating the need to protect homebuyers from the technical rigors and procedures contemplated in the IBC.

Chartered Accountant in Pimpri Chinchwad