Maitreya Patni - A. Chandak & Co.

Thursday, 30 March 2017 17:59

QuickBooks Services

Business runs better with QuickBooks, the #1 accounting solution for small business. You can quickly do your invoicing, bookkeeping, and billing because QuickBooks gives you the things you need most, all in one place. Easily track sales and expenses, accept payments, scan receipts, and be ready for tax time. Use the new QuickBooks on all your devices, wherever you go throughout your day. It syncs data automatically across your computer, iPad, iPhone, or Android. And of course, all your data is protected. Its comprehensive tool set makes it easy to manage your company's money matters and get a picture of its overall financial standing. The ability to generate almost any type of report is a real time-saver (and probably a life-saver), especially come tax time. Overall, this is a solid product and anyone that's considering starting a small business should include QuickBooks Online as part of their business plan. A.Chandak & Co. provides following QuickBooks Services :-

Proprietorship Concern

Proprietorship concern is a business structure in which an individual and his/her company are considered a single entity for tax and liability purposes. A proprietorship is a company which is not registered with the state as a limited liability company or corporation. The owner does not pay income tax separately for the company, but reports business income or losses on his/her individual income tax return. The owner is inseparable from the proprietorship, so he/she is liable for any business debts. This form of entity is not permitted for foreign company or overseas citizens.

One Person Company (OPC)

An One Person Company (OPC) is a hybrid structure, wherein it combines most of the benefits of a sole proprietorship and a company form of business. It has only one person as a member who will act in the capacity of a director as well as a shareholder. Thus, it does away with the hassles of finding the right kind of co-partner/s for starting a business as registered entity. The best part is, legal and financial liability is limited to the Company and not the member. Hence, you do not need to share your piece of cake in the name of partnership. You have an idea...You own it!

Incorporate your OPC

The process of incorporating the OPC is almost similar to that of a private limited company with minor differences.
OPC will be formed as a ‘Private Limited Company’.
It will have only one person as member. Memorandum of Association of such a company will mandatorily prescribe the name of the person, who in the event of death or disability of the subscriber shall assume his position.
The member of the OPC will have the right to change the nominee at any time with due intimation to the Registrar.
OPC can be formed as company limited by share capital or limited by guarantee or unlimited company.
The words ‘One Person Company’ will have to be mentioned in brackets below the name of such company, wherever its name is printed, engraved or affixed.
One person can form only one OPCs.

Relaxations available to OPCs in comparison to general private limited companies

Provisions of Annual General Meeting (AGM) and Extra-Ordinary General Meetings do not apply to an OPC.
An OPC should have a minimum of one director and a maximum of fifteen 15 directors.
In case the Board consists of only one director, then the OPC is exempted from the requirement of conducting a Board Meeting as well.
It will be deemed to have complied with the provisions relating to Board meetings, if at least one meeting is conducted in each half of the calendar year.
However, the gap between the two meetings should not be less than ninety 90 days.
There is no requirement of appointing a first director for the company. The sole member is deemed to be the first director.
The OPC is also exempt from provisions relating to notices of the meetings, statement to be annexed to notice, Quorum for Meetings, Appointment of Chairman of Meeting, Proxies, Restriction on Voting Rights, Voting by show of hands, Voting by Electronic Means, Demand for Poll, Postal Ballot and Circulation of Member’s Resolution.

How is OPC different from sole-proprietorship?

First and foremost, simply because OPC has a separate legal entity from its owners. In case of sole proprietorship, there is no distinction between the two entities. This means that the liability of the owner is separate from the entity. Or in other words, the threat of lien on personal property in case of unmet liabilities is non-existent.
Personal financial trustworthiness and credit ratings of the owner does not affect the ratings of the OPC, at least not directly.
Owing to the feature of it having a separate legal entity from its owners, the OPC is taxed separately, unlike a sole proprietorship.
Undoubtedly, the compliances in an OPC are a bit more tedious as compared to sole proprietorship.

Is there any threshold limits for an OPC to mandatorily get converted into either private or public company?

In case the paid up share capital of an OPC exceeds fifty lakh rupees or its average annual turnover exceeds during the relevant period exceeds two crore rupees, then the OPC has to mandatorily convert into private or public company.

Partnership Concern

Partnership is defined as a relation between two or more persons who have agreed to share the profits of a business carried on by all of them or any of them acting for all. The owners of a partnership business are individually known as the "partners" and collectively as a "firm". A partnership is easy to form as no cumbersome legal formalities are involved. Its registration is also not essential. However, if the firm is not registered, it will be deprived of certain legal benefits. The Registrar of Firms is responsible for registering partnership firms.

A partnership is formed by an agreement, which may be either written or oral. When the written agreement is duly stamped and registered, it is known as "Partnership Deed". Ordinarily, the rights, duties and liabilities of partners are laid down in the deed. But in the case where the deed does not specify the rights and obligations, the provisions of the THE INDIAN PARTNERSHIP ACT, 1932 will apply. The deed, generally contains the following particulars:-

Name of the firm.
Nature of the business to be carried out.
Names of the partners.
The town and the place where business will be carried on.
The amount of capital to be contributed by each partner.
Loans and advances by partners and the interest payable on them.
The amount of drawings by each partner and the rate of interest allowed thereon.
Duties and powers of each partner.
Any other terms and conditions to run the business.

Advantages

Ease of formation
Greater capital and credit resources
Better judgement and more managerial abilities

Disadvantages

Absence of ultimate authority
Liability for the actions of other partners
Limited life
Unlimited liability

Partnership is an appropriate form of ownership for medium sized business involving limited capital. This may include small scale industries, wholesale and retail trade; small service concerns like transport agencies, real estate brokers; professional firms like charted accountants, doctors' clinic, attorney or law firms etc.

Limited Liability Partnership

A corporate business vehicle that enables professional expertise and entrepreneurial initiative to combine and operate in flexible, innovative and efficient manner, providing benefits of limited liability while allowing its members the flexibility for organizing their internal structure as a partnership.
Owing to flexibility in its structure and operation, it would be useful for small and medium enterprises, in general, and for the enterprises in services sector, in particular. Internationally, LLPs are the preferred vehicle of business, particularly for service industry or for activities involving professionals.

LLP is governed by the provisions of the Limited Liability Partnership Act 2008, the salient features of which are as follows: -

The LLP shall be a body corporate and a legal entity separate from its partners. Any two or more persons, associated for carrying on a lawful business with a view to profit, may by subscribing their names to an incorporation document and filing the same with the Registrar, form a Limited Liability Partnership. The LLP will have perpetual succession.
The mutual rights and duties of partners of an LLP inter se and those of the LLP and its partners shall be governed by an agreement between partners or between the LLP and the partners subject to the provisions of the LLP Act 2008 . The act provides flexibility to devise the agreement as per their choice.
The LLP will be a separate legal entity, liable to the full extent of its assets, with the liability of the partners being limited to their agreed contribution in the LLP which may be of tangible or intangible nature or both tangible and intangible in nature. No partner would be liable on account of the independent or un-authorized actions of other partners or their misconduct. The liabilities of the LLP and partners who are found to have acted with intent to defraud creditors or for any fraudulent purpose shall be unlimited for all or any of the debts or other liabilities of the LLP.
Every LLP shall have at least two partners and shall also have at least two individuals as Designated Partners, of whom at least one shall be resident in India. The duties and obligations of Designated Partners shall be as provided in the law.
The LLP shall be under an obligation to maintain annual accounts reflecting true and fair view of its state of affairs. A statement of accounts and solvency shall be filed by every LLP with the Registrar every year.
The Indian Partnership Act, 1932 shall not be applicable to Limited Liability Partnerships.

Private Limited Company

A private limited company is a voluntary association of not less than two and not more than two hundred members, whose liability is limited, the transfer of whose shares is limited to its members and who is not allowed to invite the general public to subscribe to its shares or debentures. Its main features are :-

It has an independent legal existence. Companies Act, 2013 contains the provisions regarding the legal formalities for setting up of a private limited company.
The liability of its members is limited.
The shares allotted to it's members are also not freely transferable between them. These companies are not allowed to invite public to subscribe to its shares and debentures.
It enjoys continuity of existence i.e. it continues to exist even if all its members die or desert it.
Hence, a private company is preferred by those who wish to take the advantage of limited liability but at the same time desire to keep control over the business within a limited circle and maintain the privacy of their business.

Advantages

Continuity of existence
Limited liability
Less legal restrictions

Disadvantages

Shares are not freely transferable
Not allowed to invite public to subscribe to its shares
Scope for promotional frauds
Undemocratic control

Limited Company

A public limited company is a voluntary association of members which is incorporated and, therefore has a separate legal existence and the liability of whose members is limited. Its main features are :-

The company has a separate legal existence apart from its members who compose it
Its formation, working and its winding up, in fact, all its activities are strictly governed by laws, rules and regulations. Companies Act, 2013 contains the provisions regarding the legal formalities for setting up of a public limited company.
A company must have a minimum of seven members but there is no limit as regards the maximum number.
The shares of a company are freely transferable and that too without the prior consent of other shareholders or without subsequent notice to the company.
The liability of a member of a company is limited to the face value of the shares he owns. Once he has paid the whole of the face value, he has no obligation to contribute anything to pay off the creditors of the company.
The shareholders of a company do not have the right to participate in the day-to-day management of the business of a company. This ensures separation of ownership from management. The power of decision making in a company is vested in the Board of Directors, and all policy decisions are taken at the Board level by the majority rule. This ensures a unity of direction in management.
As a company is an independent legal person, its existence is not affected by the death, retirement or insolvency of any of its shareholders.

Advantages

Continuity of existence
Larger amount of capital
Unity of direction
Efficient management
Limited liability

Disadvantages

Scope for promotional frauds
Undemocratic control
Scope for directors for personal profit
Subjected to strict regulations

The major difference between Private Limited Company & Limited :

In Private Limited Company the shareholders comprise of close group of friends and relatives.
A Private Limited company cannot make an offer for public to subscribe its shares. Whereas a Limited Company can give an advertisement and invite general public to subscribe for its shares.
Basically a Private Limited company is a corporate version of partnership firm where as a Public Limited company is a full-fledged corporate body.
For a Private Limited company minimum 2 shareholders are required whereas for Public Limited Company minimum 7 shareholders are required.
A shareholder of a Public Limited company can transfer his shares freely at the stock exchange where the shares are listed whereas in a Private Limited Company a shareholder cannot transfer his shares without the consent of other shareholders.
Also shares of the Private Limited company cannot be listed on stock exchanges and hence cannot be traded there like shares of a Public Limited company.

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Thursday, 30 March 2017 15:57

Foreign Direct Investment

India's foreign trade policies have been formulated with a view to invite and encourage Foreign Direct Investment in India (FDI). The process of regulation and approval has been substantially liberalized. The Reserve Bank of India has prescribed the administrative and compliance aspects of FDI.

FDI can be divided into two broad categories - Investment under automatic route and investment through prior approval of Government.

Procedure under automatic route
FDI in sectors/activities to the extent permitted under automatic route does not require any prior approval either by the Government or RBI. The investors are only required to notify the Regional office concerned of RBI within 30 days of receipt of inward remittances and file the required documents with that office within 30 days of issue of shares to foreign investors.

Procedure under Government approval
FDI in activities not covered under the automatic route, requires prior Government approval and are considered by the Foreign Investment Promotion Board (FIPB). Approvals of composite proposals involving foreign investment/foreign technical collaboration are also granted on the recommendations of the FIPB. For detail of project under Automatic Route and Government Route.

FDI Allowances in various sectors

Agriculture – 100%.
Plantation Sector – 100%.
Mining of metal and non-metal ores – 100%.
Mining – Coal & Lignite – 100%.
Food Product Retail Trading – 100%.
Broadcasting Carriage Services (Teleports, DTH, Cable Networks, Mobile TV, HITS) – 100%.
Broadcasting Content Service - Up-linking of Non-‘News & Current Affairs’ TV Channels/ Down-linking of TV Channels – 100%.
Airports – Greenfield – 100%.
Airports – Brownfield – 100%.
Air Transport Service – Non-Scheduled – 100%.
Air Transport Service – Helicopter Services/ Seaplane Services – 100%.
Ground Handling Services – 100%.
Maintenance and Repair organizations; flying training institutes; and technical training institutions – 100%.
Construction Development – 100%.
Industrial Parks – new and existing – 100%.
Trading – Wholesale – 100%.
Trading – B2B E-commerce – 100%.
Duty Free Shops – 100%.
Railway Infrastructure – 100%.
Asset Reconstruction Companies – 100%.
Credit Information Companies – 100%.
White Label ATM Operations – 100%.
Non-Banking Finance Companies – 100%.
Pharma – Greenfield – 100%.
Petroleum & Natural Gas - Exploration activities of oil and natural gas fields – 100%.
Petroleum refining by PSUs – 49%.
Infrastructure Company in the Securities Market – 49%.
Commodity Exchanges – 49%.
Insurance – 49%.
Pension – 49%.
Power Exchanges – 49%.

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Thursday, 30 March 2017 15:57

JOINT VENTURE WITH AN INDIAN PARTNER

Foreign Companies can set up their operations in India by forging strategic alliances with Indian partners. Joint Venture may entail the following advantages for a foreign investor:

Established contacts of the Indian partners which help smoothen the process of setting up of operations
Established distribution/ marketing set up of the Indian partner
Available financial resource of the Indian partners

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Thursday, 30 March 2017 15:56

Branch Office

A branch would mean an establishment carrying on substantially the same activity as its Head Office.

Activities Permitted:

As per the guidelines laid down by the RBI, the Branch Office in India is allowed to carry on only the following activities:

Export / Import of goods
Rendering professional or consultancy services
Carrying out research work, in which the parent company is engaged
Promoting technical or financial collaboration between Indian companies and parent or overseas group companies
Representing the parent company in India and acting as buying / selling agent in India
Rendering services in Information Technology and development of software in India
Rendering technical support to the products supplied by parent / group companies

Approval / Incorporation
Foreign companies intending to open a Branch Office in India need to obtain prior permission of RBI which would encompass even approval to the scope of activities that are intended to be carried out in India.

In addition to above, the foreign company is also required to obtain a Certificate of establishment of place of business in India from the Registrar of Companies (ROC).

Typical Points about Branch Office

Branch Office is considered a part of the foreign company and is not treated as a separate legal entity.
The office can undertake trading activities, but not manufacturing.
It is subject to taxation in India at 42.23% on income accrued in India.
If there is a double taxation agreement with the country in which the foreign company is incorporated, the tax paid in India can be set off against the total tax payable by the parent company abroad.
Branch offices may repatriate profits to their Head Office without obtaining prior approval.
The Branch Office would not expand its activities or undertake any new trading, commercial or industrial activity other than that is expressly approved by the RBI.
The entire expenses of the Branch Office in India will be met either out of the funds received from abroad through normal banking channels or through income generated by it in India.
The Branch Office will not accept any deposits in India.

Repatriation of Profits

A Branch Office can remit the profits (net of any withholding tax) generated out of its operations in India on production of the prescribed documents, and on establishing that it has earned a net profit by undertaking the permitted activities. The Branch Office need not retain any profits as reserves in India.

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Thursday, 30 March 2017 15:55

LIAISON OFFICE

A Liaison Office is in the nature of a representative office set up primarily to explore and understand the business and investment climate.

A liaison Office is not permitted to undertake any commercial / trading/ industrial activity, directly or indirectly, and is required to maintain itself out of inward remittances received from abroad through normal banking channels.

Activities Permitted:

Representing in India the parent Company / group Companies
Promoting export/ import from/ to India
Promoting technical / financial collaborations between the parent / group companies and companies in India
Acting as a communication channel between the parent company and Indian companies

Approval / Incorporation

Any foreign company intending to open a liaison Office in India is required to obtain prior approval from the RBI, the apex foreign exchange management authority in India. Approval is usually granted for three years and can be renewed on expiry thereof. In addition to above, the foreign company is also required to obtain a Certificate of establishment of place of business in India from the Registrar of Companies (ROC).

Typical Points about Branch Office

Any foreign company intending to open a liaison Office in India is required to obtain prior approval from the RBI, the apex foreign exchange management authority in India. Approval is usually granted for three years and can be renewed on expiry thereof.
In addition to above, the foreign company is also required to obtain a Certificate of establishment of place of business in India from the Registrar of Companies (ROC).

Suitability of a Liaison Office

The liaison office generally acts as a communication channel between the parent company overseas and its present or prospective customers in India. The liaison office can also be set up to establish business contacts or gather market intelligence to promote the products or services of the overseas parent company. The liaison Office cannot undertake any business activity in India nor earn any income in India. The liaison Office has to meet its entire expenses from funds received from the parent company through normal banking channels. At the time of closure of the liaison Office, the RBI grants permission to repatriate the balance in the Indian bank account to the parent company. Since the liaison Office is not permitted to earn any income, it should not constitute a taxable entity in India. However, the liaison Office would be required to withhold tax from certain payments and hence to comply with the requisite tax withholding requirements under the domestic tax law.

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Thursday, 30 March 2017 15:54

100% OWNED SUBSIDIARY

Form a Company and the parent Company will hold 100% of Shares in the Company.
- The Company can take up any business in India.
- NO RBI permission.
- Will be treated as Domestic Company
Tax Rate Slab will be 30%

Approval / Incorporation

The Company is required to obtain a Certificate of establishment of place of business in India from the Registrar of Companies (ROC).

Can be independently promoted by Parent Company
Can be promoted by any two people in India and then the holding of this person can be purchased by the Parent Company. (If this is the case, intimation about the transfer of share is required to be informed to Reserve Bank of India).

Typical Points about 100% Subsidiary

The profit earned in India can only be taken away by parent Company in the form of dividend after payment of dividend tax.
No easy exit.
Transfer pricing issues if purchases made from sister concern.

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Thursday, 30 March 2017 15:53

Project Office

Foreign Companies planning to execute specific projects in India can set up temporary project/site offices in India. RBI has now granted general permission to foreign entities to establish Project Offices subject to specified conditions. Such offices cannot undertake or carry on any activity other than the activity relating and incidental to execution of the project. Project Offices may remit outside India the surplus of the project on its completion, general permission for which has been granted by the RBI.

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Thursday, 30 March 2017 10:29

Our Alumni

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Tuesday, 28 March 2017 12:09

Transformation To GST

The Indian indirect taxation system is due for a seminal tax reform with the introduction of a unified Goods and Services Tax (GST) as against the prevailing plethora of taxes (value-added tax (VAT), central sales tax (CST), service tax, customs duty, excise duty, entry tax, etc.).

The new GST regime will open up an array of opportunities for businesses across India as well as those planning to enter the Indian market. On the other hand, GST may also pose various challenges with respect to business planning, budgeting and investment, as it will change many earlier assumptions regarding business and the market and as a whole. The challenge at hand for the business community is to adapt to the transitional tax reforms by understanding the nuances of the new GST regime.

In this evolving indirect tax scenario, we at A.Chandak & Co. plan to assist our clients in bridging the gap over to GST by providing specialised services to mitigate any GST-related tax risk. Our vide range of Services on GST are:-

GST Tax Risk Management Service

GST Tax Risk Management Service is a comprehensive review program designed to assist GST-registered businesses to ascertain their level of GST risks with regards to the overall control of the business operations.

This review would cover the controls surrounding the preparation of the GST returns, output tax and input tax considerations faced by your company. If need be, our review program will assess your current accounting system’s functionalities which may potentially produce inaccurate information or errors in the process of preparing the GST returns. With the results of our assessment, we aim to mitigate the risks faced by your company from getting penalized by the CBEC/GST Authorities due to potential errors in the GST submission and reporting.

GST Retainership Package

As the implementation of GST is at it’s bring in our country, your business may face many technical and practical issue in complying with the GST requirements. Therefore, it is important for you to understand clearly the GST treatments and implications on your business to avoid any penalties that may be imposed on your company. Our retainer program is a subscription-based retainer program that allows you to post your GST-related questions for the attention of our team of GST experts. As a subscriber to this program, you will also be notified of all the latest updates or changes in the GST laws, regulations, orders and guides that are published by the CBEC or the GST Council.

Technical Opinion on GST Implications

There will be times when your business is faced with uncertainties in identifying the appropriate GST treatments or implications for a particular transaction or arrangement. Such ambiguities may be caused by the complexity of the transaction or it may represent an area that has yet to be extensively covered by the relevant GST laws, regulations, orders or guides published by the CBEC or GST Council. In such cases, we would assist your business in studying the arrangement in detail and providing you with our expert opinion on the issue faced by your business. If required, we will assist your business to make a representation or seek an advance ruling on the matter.

GST Appeal & Dispute Resolutions

If you feel that your business has been wrongly penalised or affected by an adverse decision by the Assessing Officer of GST , we will be able to assist your business in appealing the penalty or against the adverse decision. As authorised representative, we will also be able to assist your business as follows:-

Apply for advance rulings;
Appeal your GST dispute at the GST Appeal Tribunal.

Goods And Services Tax (GST) Registration

Filing of Registration Application
Receipt of GST Identification Number (GSTIN)

Accounting & GST Filing (Quarterly/ Monthly)

Online GST Accounting
GSTR Filing for 3 months for ONE GSTIN
Includes returns for July-Aug-Sep
Filing for B2B and B2C invoices

GST Filing - GSTR-4 (Composition Supplier) (Quarterly)

GST Returns (GSTR-4
Filing for B2B and B2C invoices
Reconciliation for all transactions
GST related Book-Keeping and Accounting

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Tuesday, 28 March 2017 12:07

Determining the Arm Length Pricing, Preparation of Transfer Pricing Report & Conducting Transfer Pricing Audit

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