GST For Goods Transport Agency

Transport of goods by road is the most commonly used mode of transportation for businesses which supply goods. This transportation by road is facilitated either by a Goods Transport Agency (GTA) or common carriers such as autorickshaw or courier agencies. In this blog, we will understand what is meant by a Goods Transport Agency (GTA) and the GST rates for transportation service provided by a Goods Transport Agency. This is the first blog in the series wherein, we will understand the various tax provisions with respect to services provided by Goods Transport Agencies and the tax impact on persons taking their services.

GST Registration
GST registration is mandatory in India for entities having more than Rs. 20 lakhs of aggregate turnover in a year (Rs. 10 lakhs in Special Category states). However, some of the supplies provided by a goods transport agency would be liable for GST under reverse charge basis. In a reverse charge transaction, the recipient of the goods is made liable for payment of GST. Hence, while providing services, goods transport agency must be aware of the reverse charge mechanism and raise invoice accordingly.

What is a GTA?
As per Notification No. 11/2017-Central Tax (Rate) dated 28th June, 2017, “goods transport agency” or GTA means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called.
This means, while others might also hire out vehicles for goods transportation, only those issuing a consignment note are considered as a GTA. Thus, a consignment note is an essential condition to be considered as a GTA.

What are the services provided by a GTA?
The service includes not only the actual transportation of goods, but other intermediate/ancillary service provided such as-

• Loading/unloading
• Packing/ unpacking
• Trans-shipment
• Temporary warehousing etc.
• If these services are included and not provided as independent activities, then they are also covered under GTA.

What will be the rate of Tax in Case of the Goods Transport Agency (GTA Services) under GST Per se?
Looking at the entry no. 3, Services of goods transport agency (GTA) in relation to transportation of goods [other than used household goods for personal use]. The rate mentioned in the rate schedule is 5% (without ITC)
Entry no. 4 of the rate schedule prescribed says that Services of goods transport agency in relation to transportation of used household goods for personal use. The rate prescribed is 5% even in this case.
Important point to highlight here is that the transporter providing any other services like “Right to use” or “Leasing” of the vehicles, he will have to review the rates separately and not take the 5% as his rate.
This means that generally the rate is 5% for the GTA under GST. The point to be highlighted is that NO ITC is available to the transporter in this case.

Persons Required to Pay GST on Reverse Charge
When taking the services of a goods transport agency, the following types and class of entities would be required to pay GST on reverse charge basis.

• Factories registered under the Factory Act.
• Societies registered under the Society Act.
• Any co-operative society.
• Any person who is registered under GST.
• Any Body Corporate (Company or LLP)
• Any partnership, if registered or not as well as AOP.

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Step By Step Guide To File GST Return-3B

GSTR-3B filling is under progress and the last date for GSTR-3B filling is 20 August 2017. Please find below the step by step guide on how to file GST Return-3B.

Step by step guide on how to file GST Return-3B
1. After login, select Return Dashboard
2. Select Financial Year 2017-18 and Month July. Click Search and Select GSTR-3B
3. Declare your liabilities and ITC claims in Section 3.1 and 4 respectively by clicking on the tiles and furnishing the required information. Transitional ITC cannot be claimed in GSTR 3B. It can be claimed only through TRANS 1 and TRANS 2.
4. Enter details of interest, if payable, in Section 5.1. Late fee will be computed by the system
5. Click on Save GSTR-3B After you save the data, Submit button will get enabled. Please note that after submit, no modification is possible. Hence ensure that details are filled correctly before clicking on Submit button.
6. On clicking Submit GSTR-3B button, System will post (debit) the self-assessed liabilities including system generated late fee in Liability Register and credit the claimed ITC into ITC ledger.
7. After this the Payment of Tax tile will be enabled, please click it and declare your payment details to pay the taxes and offset the liability.
8. Click CHECK BALANCE button to view the balance available for credit under Integrated Tax, Central Tax, State Tax and Cess. (This includes transitional credit also, if TRAN-1 and 2 are submitted). This will enable you to check the balance before making the payment for the respective minor heads. The balance is also displayed when the mouse is hovered on the applicable data entry field in payment section.
9. Please fill out the section that specifies how you wants to set-off your liabilities using a combination of Cash and ITC.
System checks if you have sufficient Cash/ITC balance.
It also checks if the Reverse charge liabilities are set-off only through CASH.
System also checks if all liabilities are set-off. Part payment is not allowed in GSTR-3B.        Hence, ensure sufficient balance in Cash and ITC Ledger to Offset liability
In case of ITC utilisations, the system checks the prioritization rules viz. IGST Credit has to be first utilised for paying IGST liability and remaining for CGST liability and thereafter SGST liability; SGST credit has to be first used for paying SGST liability and then IGST liability; CGST Credit has to be first used for CGST liability and the remaining for IGST Liability; SGST credit cannot be used for paying CGST liability and CGST credit cannot be used for paying SGST liability
Transition ITC, if available in ITC ledger, can be used for payment of liabilities of GSTR 3B
10. Click the OFFSET LIABILITY button to pay off the liabilities
11. Click on declaration statement
12. Select Authorized Signatory filing the Form
13. Click on File GSTR-3B button with DSC or EVC
14. Message for successful filing will appear and Acknowledgement will get generated

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GST rates changed for 40 items, deadline for GSTR 1 filing extended to October

The Goods and Services Tax Council on Saturday raised the cess on motor vehicles--mid-size cars, large cars and sports utility vehicles by 2%, 5% and 7% respectively instead of whole 10% increase effected in the law, while keeping the overall tax incidence within 50%. This increase in cess rate would take the overall tax incidence on mid size cars to 45%, large cars to 48% and SUVs to 50% from 43%( 28% GST+ 15% cess) now. Industry had pitched for differential hike --lower increase for mid-sized cars arguing that this price increase in this segment would impact middle class.The #GST Council had at its last meeting approved a proposal for an amendment in the compensation law to raise the cess to 25% from 15%.

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Frequently Asked Questions On GST (Goods And Service Tax)

1. Would head offices providing centralized HR, Finance and IT functions also need to raise invoices to its branch- Yes, if the head office and branches are distinct persons as specified in section 25(4), invoice is required to be issued and GST should also be paid.  (Company formation in India)
2. Where free replacement is provided to the customers without consideration under warranty, no GST is chargeable on such replacement. In such cases goods may be sent on delivery challan as provided in rule 55 of the CGST Rule, 2017
3. How the invoicing should be done for free goods given along with sale so that corresponding input tax credit is not required to be reversed for products under scheme?- Invoice value would include value of all goods including those supplied free. In such cases, ITC is not required to be reversed
4. How to send demonstration equipment and instruments to customers or branch offices with in India on returnable basis? – No sale is involved- As the goods are sent on returnable basis and no transfer of title is involved, it is not a supply of goods. If some element of service is involved, the same will be a taxable supply. The goods may be sent on delivery challan without invoice as it is not a supply of goods.
5. How to send equipment and instruments to manufacturers’ factory for repairs and calibration with in India on returnable basis? – No sale is involved.- Challan for movement of goods without supply is to be issued in terms of Rule 55 of CGST Rules.
6. Mistakes done in GSTR Returns can be corrected in subsequent returns to be filed through amendment Table (For example Table 11 of GSTR-1). Such mistakes can be corrected till the due date for filing of the return for the month of September subsequent to end of the year or filing of the annual return, whichever is earlier.
7. No ITC is permitted to GTA engaged in providing GTA services which are under RCM and are treated as exempted supplies in the hand of GTA. However, if GTA is also liable to pay tax under forward charge as supplier, he is not permitted to avail ITC if he is claiming the concessional rate of 5%. If ITC is claimed, the GST rate for GTA in forward charge will be 12%.
8. The compensation to employees in the form of money is not a supply. However, fringe benefits are supply of goods or services and are liable to tax if not exempted. These are transactions in furtherance of business and even if supplied without consideration, the same are deemed supply (Company registration in India)

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Reverse Charge Mechanism Under GST And Implications Of Exemption Upto Rs. 5000 Per Day

Let’s look at the critical provisions of the GST law which have enabled reverse charge mechanism :-
Compulsory Reverse Charge even if the supplier is registered –
Sec 9(3) The Government may, on the recommendations of the Council, by notification, specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both.
The above section primarily covers services availed from Goods Transport Agency, Lawyer, government, corporate sponsorships, director etc.         Chartered accountant in India

Reverse Charge if the supplier is unregistered –
Sec 9(4) The central tax in respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a registered person shall be paid by such person on reverse charge basis as the recipient and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both. Company formation in India

Central Government had come up with an exemption to the small miscellaneous transactions from unregistered persons.

Notification No. 8/2017- Central Tax (Rate) dt 28.06.2017 issued by Central Government has exempted intra-State supplies of goods or services or both received by a registered person from any supplier, who is not registered, from the whole of the central tax leviable thereon under sub-section (4) of section 9 of the Central Goods and Services Tax Act, 2017 (12 of 2017)
The said exemption shall not be applicable where the aggregate value of such supplies of goods or service or both received by a registered person from any or all the suppliers, who is or are not registered, exceeds five thousand rupees in a day.
To sum up, the supply should be intra state supply (within the state) and can be for goods as well as services or both. Moreover the supply should be received by the registered person from an unregistered dealer only and upto a daily limit of Rs. 5000/-
Example:-
Mr. X  purchased following items from unregistered dealer, all are dated 01.07.2017 as under:
1st bill – From Ram: Stationery = 2000/-
2nd bill – From Shyam: Lunch = 1000/-
3rd bill – From Madhu : Books = 3000/-
In this case, The bills of Mr. X will not get covered under this notification as aggregate value of all supplies exceeds 5000/- on a single date (01.07.2017)
Exemption would have been available if,:
1) Bill dates are different (So that it will come under 5000/- day limit, say bill date of Ram is 02.07.2017)
2) Any of the bills are 1000/- less than the mentioned value(Say Bill of Madhu is Rs 2000/-
3) If the one of the bills in the same of other person (say, one of the bill is in the name of Mr. Y)
FAQ’s
Whether these 5000 limit be availed for those cases where compulsory tax is payable in RCM basis as per section 9(3) of CGST act?
Where Compulsory tax is to be paid under the Reverse Charge Mechanism under 9(3) of CGST Act, and as per Notification N0o. 13/2017- Central Tax (Rate) dt 28.06.2017 the benefit of this limit cannot be availed. Reason being these notification cover only cases of 9(4) and not 9(3).
Mr. X purchased following items from unregistered dealer, all are dated 01.07.2017 as under:
1st bill – From Ram: Stationery = 2000/-
2nd bill – From Shyam: Lunch = 1000/-
3rd bill – From Madhu: Goods Transport Agency = 3000/-
In this case, The bills from Mr Ram and Mr Shyam will get covered under this notification as aggregate value of all supplies does not exceed 5000/- on a single date (01.07.2017). For the Third bill from Madhu Reverse charge is payable u/s 9(3) without any exemption threshold.
Whether this daily limit benefits would be available if the goods/services received from persons covered under 9(4) are blocked credits?
The benefit of daily limit would be available. Output Tax under reverse charge would be payable if it crosses the daily limit even though they are covered under blocked credits.
What if the limit crosses 5000 in a day, is GST payable over and above the value or from rupee 1?
If the value of taxable supplies exceeds Rs5000 per day for all suppliers, then GST would be payable on the Total value of the supplies received from unregistered persons.

Is this limit applicable to all supplies?
The limit is applicable to only taxable supply of goods or services or both. Exempt supplies are out of the preview of this notification.
Mr. X purchased following items from unregistered dealer, all are dated 01.07.2017 as under:
1st bill – From Ram: Stationery = 2000/-
2nd bill – From Shyam: Hotel Room = 1000/-
3rd bill – From Madhu: Books = 3000/-
In this case, the bills of Mr. X will not get covered under this notification as aggregate value of all supplies does not exceed 5000/- on a single date (01.07.2017) as the supplies from Shyam for Hotel room booking are exempt under Entry 14 of the exemption notification (12/2017).

What if the supplies are procured from Interstate supply from unregistered?
Benefit of this notification is available only for Intra State Purchase. If any transactions are done on an interstate basis the same are covered under the forward charge and in any case the reverse charge provisions are not applicable.
Goods and services both inclusive 5000 or separate?
Yes, the benefit is inclusive for all goods or services or both.
What rate GST should be payable then?
GST should be payable as per the schedules rate of the product/service.
What if procured from Composition persons?
Since Composition persons are registered person, reverse charge is not applicable on such supplies.
Can credit be availed for these taxes paid and on what basis, any invoice issue requirement?
Credits can be availed on payment of GST in cash. A consolidated monthly tax invoice can be raised if supplies are received from a single vendor. The Invoice shall be raised on the date of receipt of goods or services or both. Also a payment voucher needs to be issued on the date of making any advance payment as the time of supply is invoice of payment whichever is earlier.

We have compiled the daily expenses which would be liable to GST if procured from unregistered supplier as below:-
Nature of Expenses GST Rate GST IMPACT/ OTHER REMARKS /Supplies from UR (RCM Applicable)
No GST / NIL GST or EXEMPTED :-
1 Electricity Charges 0% Out of GST
2 Water Charges 0% Out of GST
3 Bank Interest 0% Out of GST
4 Professional Tax 0% Tax levied by local body / other association out of GST
5 License renewal like Pollution, Factories & Boilers & Local Bodies 0% Tax levied by local body / other association out of GST
6 Building or Property Tax 0% Tax levied by local body / other association out of GST
7 Rent Deposits 0% If adjusted with rent or forfeited – GST applicable
8 Other Deposits 0% If adjusted with other expenses or forfeited – GST applicable
9 Petrol Expense 0% Petrol & Diesel out of GST
10 Salary 0% Out of GST
11 Staff Amenities 0% Out of GST if in lieu of salary.
12 Gifts to Staff 0% Gifts by employer of value above Rs. 50000/- shall be liable to GST as outward supply.
13 Staff Mediclaim Contribution 0% Out of GST if in lieu of salary
14 Allowance & incentive to employees 0% Out of GST if in lieu of salary
15 Stamp & Registration Fees 0% If only a pure agent service – ensure GL balance Nil
16 Provision for Doubtful Debts 0% No credit / deduction shall be allowed
17 Bad Debts Written Off 0% No credit / deduction shall be allowed
18 Warranty Labour Charges 0% If there is no supply element & no consideration
19 Donation 0% If there is no supply element & no consideration
20 Labour Welfare Fund Contribution 0% Out of GST
21 Staff Medical Expenses 0% Employee service without any margin
22 Fine & Penalties by Government 0% Out of GST
23 Discounts – shown in bill 0% GST applicable is after all discount
– if shown in the bill
24 Free Gifts, Gold Coin to Customers 0%
25 Interest on Service Tax/ TDS 0%
26 Interest on Vehicle Loan 0%
27 Interest Others 0%
28 Local Conveyance 0%
29 Transportation Charges – Non GTA / Trucks 0%
GST Applicable & No ITC :-
28 Food Expense 12% / No ITC
29 Travel claims – Radio Taxi (Rent-a-cab) 5% No ITC
30 Transportation Charges – GTA 5% No ITC
31 Club & Membership fees 18% No ITC
32 Life Insurance Exps for Employees 18% No ITC
33 Work Contract Services – Construction of Building 18% No ITC if not supplied for outward works contract services
GST Applicable / RCM supply of URD :-
34 Advertisement Charges 18%
35 Advertisement in Magazine, 18%
36 Advertisement in Media 18%
37 Discounts – after issue of invoice (Post supply discount) GST Impact Credit note has to be issued, liability will be reduced to extent of GST on discount.
38 Annual Maintenance Charges 18%
39 Bank Charges – Service charges recovered 18%
40 Broker Fee & Charges 18%
41 Call Centre Expense 18%
42 Customer Schemes by MSIL 18%
43 Construction Work 18% GST amount – no ITC – for immovable property (Building)
44 Consumables Paint material & Other Consumables 28%
45 Customer Welfare expense 18% Food charges – No ITC
46 Contract Labour Expense 18%
47 Extended Warranty Cancellation Charges 18%
48 Free Service Camp Expense 18% If any third party bill comes
49 House Keeping Charges 18%
50 Insurance Charges 18%
51 Legal charges to advocate 18% Advocate raise bill without GST component – RCM to us
52 Loading & unloading Charges 18%
53 Local Conveyance 5% / 12%
54 Mediclaim Policy Premium Contribution A/ c 18%
55 Mobile Allowance 18% Pure Agent Service / If margin then GST applicable
56 Other Training Expense 18%
57 Postage and Courier Charges 18% Subject to certain exemptions
58 Printing & Stationery(Flex Printing, Broad Printing, Notice Printing) 18%
59 Rates and Taxes Actuals Depends on case to case basis
60 Recruitment Expenses 18%
61 Rent Paid 18%
62 Rent Paid for Mess (Employees) 18%
63 Repair and Maintenance – Building / Electrical / P& M / Others 18%
64 RTO Expenses 18% or 28%
65 Sales Promotion – Others / SSI / Display 18%
66 Sponsorship services 18% Reverse Charge to Service Receiver – ITC can be availed
67 Security Charges 18%
68 Staff Recruitment 18%
69 Staff Training Expenses 18%
70 Staff Uniform Expenses 18% If a third party bill comes
71 Stationery Expenses 18%
72 Subscription & periodicals 18%
73 Telephone Charges 18%
74 Transportation Charges – GTA 5%
75 Travelling Expenses Interstate 5%/18% Services from Tour operators / Agencies
76 Travelling Expenses International 28%
Note: The above expense heads are for illustrative purpose only. The applicability of GST on a particular expense has to be checked on case to case basis.

Company registration in India

Company registration in India means legally getting the right to do business.In India, registration of company is also known as formation of business or incorporation of company.
Let us see what is this Company thing all about and then move on to Company Registration.

What are the documents required to register your startup?
An entity required to be incorporated as a Private Limited Company or a Limited Liability Partnership has to be registered with the Ministry of Corporate Affairs. Now the government has come up with several initiatives where an entity can be incorporated in just 1 day.

Private Limited Company
A Pvt. Ltd company allows you to play around with the capital structure, you can also play around with the rights distribution, which isn’t so easy in a limited liability partnership. Hence, investors will ask you to convert from an LLP to a Pvt. Ltd. company.
The Directors of the proposed company must have a Digital Signature Certificate (DSC) to sign the e-forms.
The proposed name of the company should be given along with the main line of business.

The directors and the subscribers of the proposed company should have the following:
(a) PAN as nationality proof
(b) Photo
(c) Aadhar/ Driving Licence/ Voter Card/ Passport as identification proof
(d) Utility Bill i.e, electricity bill/ telephone bill/ bank statement etc.
(e) email-id
(f) mobile number
The incorporation documents required are as follows:
(a) Affidavit by the promoters
(b) Declaration in DIR – 2 by the directors
(c) Declaration in INC – 9 by the promoters
(d) Declaration in INC – 8 by a Chartered Accountant/Company Secretary/Lawyer/Cost
Accountant

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.
The partners of the proposed LLP must have a Digital Signature Certificate (DSC) to sign the e-forms.
The proposed name of the LLP should be given along with the main line of business.

The partners of the proposed LLP should have the following:
(a) PAN as nationality proof
(b) Photo
(c) Aadhar/ Driving Licence/ Voter Card/ Passport/ electricity bill/ telephone bill/ bank statement
(d) email-id
(e) mobile number
For Registered office of the LLP:
(a) Ownership deed (if the property is owned) or
(b) Rent agreement along with latest Rent receipt and P.Tax (if the property is rented) or
(c) NOC from the owner of the property and
(d) Latest Utility Bill in the name of the owner i.e, electricity bill/mobile bill/ telephone
bill/ gas bill.
The LLP agreement should be prepared and executed on the stamp paper.

Related : HOW GST WORKS IN INDIA

How India & Afghanistan can grow together

India remains an integral part of Afghanistan’s steady progress in institutionalizing peace, pluralism, and prosperity. Ties between Afghanistan and India go beyond the traditionally strong relations at the government level. Since time immemorial, the peoples of Afghanistan and India have interacted with each other through trade and commerce, peacefully coexisting on the basis of their shared cultural values and commonalities.
This history has become the foundation of deep mutual trust. Public opinion polls in Afghanistan confirm this, as well as the sentiment Afghans share about feeling at home whenever they visit India.

Growing Asia

• Fastest growing continent in the world with 60% of world’s
  population (4.2 billion)
•  Two-third of global growth would come from Asia in next few
  years
•  In 1990, the top five economies were not among Asia. Today,
  Japan, China and India are top 3 economies in the world
•  Asia’s share is expected to touch 50% of world’s GDP by 2050

Why Afghanistan

• A population of 34 million and increasing
•  Five year compound annual growth (CAGR) is 5.4%
•  GNI per capita is US$630
•  FDI has increased from US$ 230k in 1970 to US$ 169mn in 2015
•  Exports and imports taken together equals 53% of GDP
•  Infusion of billions of dollars in international assistance and investments as well as
  remittances from Afghan expats
•  World Bank expects to provide US$250-300 mn in grants annually to Afghanistan
  through the World Bank Group
•  One of the mineral-rich countries of the world
  (the country holds US$ 3 trillion in untapped mineral deposits without Uranium )
•  Low tax rates in Afghanistan
  (Corporate tax rates are 20% with an overall tax burden of 6.5% only of total domestic income)
•  Improved agricultural production
•  Formation of democratic government & improved regulatory environment

India- Afghanistan relations

• Bilateral relations between the two countries have always been strong and
  friendly
•  India’s financial assistance to Afghanistan was 880 crore in 2015-16
•  In 2016, India has also extended an aid of over UD$2 billion to Afghanistan
  for one of India’s most expensive projects in Afghanistan (Salma dam)
•  India-Afghanistan bilateral trade stood at US$643 million in 2015-16
•  Afghanistan sets a target of US$10 billion for bilateral trade and
  investment with India in five years
•  In February 2017, Indian visa regime has been further liberalised to make
  it even more convenient for Afghan nationals to visit India

Our support to Afghanistan

• Needs in Afghanistan
  • Skilled manpower
  • Professional services for businesses
•  Strengths to work with India
  • Convenience of working in the same time zone
  • Connectivity time is less than two hours
  • Similar cultural backgrounds

Why India can be a strong partner to Afghanistan

• World’s third largest economy (Would double in size to US$ 4–5 trillion in a decade)
•  Fastest growing economy in the world (Current: 7% , by 2018: 7.8%)
•  By 2020, retail market is expected to grow to US$ 1.1 trillion (growing at a high rate of 20%-25% p.a.)
•  IT-business process management (BPM) sector in India is estimated to expand at a CAGR of 9.5% to US$ 300 billion by 2020
•  Indian construction equipment industry’s revenues are estimated to reach US$ 22.7 billion by 2020
•  Total FDI equity inflows touched US$ 35.84 billion (till December 2016)
•  Under FDI, all sectors other than sectors which are specifically prohibited or under approval route
•  Taxes on companies has been reduced to 25% (For companies with annual turnover less than 50 Crores)
•  Low labor costs (Total labor force of nearly 530 million)
•  Working age group will be more than 64% by 2021 (15-59 years)
•  Skill set of India has improved over the years with 40% employable candidates. We have 1.5mn engineering pass outs in India every year

Related : Doing Business in India

How GST impact the wallet of the common man.

Since the passing of the GST Constitutional Bill by the Rajya Sabha in August last year, the country has been preparing itself for the new tax regime. The new GST law is India?s biggest tax reform initiative which is expected to improve compliance levels, increase government revenue in company registration in India and create a common playing field for businesses by amalgamating a host of central and local taxes.

On the face of it, GST seems to be a mixed bag with some of the necessities becoming cheaper, while the others might get more expensive. While in the longer run the Goods and Service Tax might have a favorable effect on most of the sectors of the economy, in the short run, as with the most of the reforms, the benefits seem to be limited. Based on the experience of GST implementation in other countries, India could observe an inflationary impact at the onset of the reform, which might fade away once the legislation sinks in.

The present rate of service tax is 15 percent and is applicable to most of the services, excluding essential ones like cultural activities, ambulance services, and certain pilgrimages and sports events. Under Goods and Service Tax, this rate would increase to 18 percent making the services more costly. For some goods like edible oil, textiles, etc. the excise duty is nil and the VAT in several states is 5 percent. Hence, the total cost of such goods is close to 8%-9%. With GST, the cost of such goods is likely to increase and this might put a hole in the budget of a common man to wholly owned subsidiary in India.

Doing Business in India

Doing business in India offers enormous opportunities for Foreign companies. However, India is a large and complex market. It should not be seen as one market, but a series of interconnected regional markets where the legislative and investment climate may change from one state to another.
It is wiser to be in India now…

• Fastest growing economy in the world
  (Current: 7% , by 2018: 7.8%)
• World’s third largest economy
  (Would double in size to US$ 4–5 trillion in a decade)
• Taxes on companies has been reduced to 25%
  (For companies with annual turnover less than 50 Crores)
• World’s second-largest telecommunication market
  (1058.86 million subscribers)
• By 2020, retail market is expected to grow to US$ 1.1 trillion
  (growing at a high rate of 20%-25% p.a.)
• World’s sixth largest pharmaceutical market by 2020
• By 2050, India will have added 300 million people
• Working age group will be more than 64% by 2021
  (15-59 years)
• Growing urban markets
  (23.1 Million people shifting from rural to urban areas in two decades)
• Low labour costs
  (Total labour force of nearly 530 million)
• Purchasing power parity, India’s economy is third largest in the world
  (Current-$ 8.7 trillion, by 2025-$ 20 trillion )

Foreign Direct Investment into India

Automatic Route

• All sectors other than sectors which are specifically prohibited or under approval route
• Should comply with sector based investment and other conditions (i.e. sectoral caps)

Approval Route

100% FDI through Government approval route

• Extraction of titanium
• Publishing of scientific & technical magazines/specialty journals/ facsimile
• Edition of foreign newspapers
• Satellites (establishment & operation)
• Pharmaceuticals (Brownfield)

100% FDI: Government approval required beyond 49%

• Telecom Services
• Broadcasting Carriage Services
• Single Brand product retail trading

100% FDI: Government approval required beyond 74%

• Existing projects of Airport

49% FDI : No Government approval required

• Infrastructure Company in the Securities Market
• Insurance
• Pension Sector
• Power Exchanges
• Defense
• Air Transport Services (Scheduled): 100% for NRI

49% FDI through Government approval route

•  Broadcasting Content Services (except Up-linking & Down-linking
  of Non-‘News & Current Affairs’ TV Channels)
•  Private Security Agencies

FDI limits less than 100%

•  Banking (Private Sector): 74% FDI is allowed. However,
  Government approval is required beyond 49%
•  Banking (Public Sector): 20% FDI is allowed with Government
  approval
•  Multi Brand product retail trading: 51% FDI is allowed with
  Government approval
•  Print Media: 26% FDI is allowed with Government approval

Reasons to set up a limited company

Setting up a limited company will mean more administration and more paperwork than if you are a sole trader but there are many advantages to being a limited company, not least eliminating and personal financial liability.
When a sole trading business fails then the owner is personally responsible for any debt, which can have a negative effect on your credit rating and ability to obtain personal loans in the future. You could risk becoming personally bankrupt if the debts are too high for your to pay off.
If you set your business up as a limited company you are protected from this risk.

What are the Benefits :
Whilst running a limited company does have its fair share of responsibility, and the administrative responsibilities are certainly greater than other ways of working, there are many advantages too.

• Limited liability – In simple terms, if you run a Limited Company you are protected should things go wrong. Assuming all rules have been followed, as a director you will not be personally liable for any financial losses made by the company.

• Separate entity – A Limited Company is a legal entity in its own right. This means that everything from the company bank account, to the ownership of assets relates to the business. They are totally separate from the interest of the directors and shareholders.

• Tax – As a director and shareholder of a limited company you could elect to take the majority of your income in the form of dividends, which enables you to manage your own tax liability and potentially save on National Insurance costs.

• Perception – If you plan to do business with larger companies, it can help if you are working via a Limited Company as it gives off a more professional image. In some industries, it may even be a mandatory requirement as they will not deal with sole traders or partnerships.

• Protection – As well as the limited liability protection mentioned above, once you have successfully registered your company, your company name is protected by law. Companies House has very stringent rules for the naming of companies so no one else can use the same name as you, or anything deemed too similar.

• Ownership and succession – As the sole shareholder in your business, you own the business. However, a Limited Company can easily transfer ownership of shares, or existing shareholders can sell a stake in the company to other parties at any time. If for example a shareholder wishes to retire, or bring a new director on board, it is far easier to transfer ownership, or part ownership, of a Limited Company than it is with a less formal business structure.

• Take home pay – It’s safe to say that this is the area where you can really reap the rewards of running your own Limited Company. The only person you need to pay as a Limited Company is yourself – combined with the tax efficiencies on offer, this means you can keep anything from 81 to 86 percent.

Accounts
Accounts must be prepared each year but most small companies are not required to have them audited so the process is relatively simple, especially now that the process can be done online.

Source :-http://www.ajsh.in/blog

Audits Under PCAOB Standards

A yearly audit is a key safeguard for your money and a planning tool for the year ahead. Think of it as a “year in review” for your finances.

The primary benefit of an annual audit under PCAOB standards  is the confidence it gives you and your members that the PTO’s financial house is in order. Basically, the audit verifies the numbers, ensures accuracy, and assesses procedures. A comprehensive audit also identifies internal controls that should be implemented to improve the integrity of your financial systems. Furthermore, the audit gives closure to the treasurer and sets a starting point for the new year’s activity. An audit is also the primary tool for uncovering financial mismanagement. Hopefully you won’t need to conduct an audit for this reason, but an annual audit can uncover problems before they become significantly more serious. Your PTO might also choose to include in your audit a review of how closely your group’s income and expenditures matched the year’s budget. This type of review can be a strong planning tool.

The audit is not within the jurisdiction of the PCAOB. This seems like a strange request.  Perhaps the client is a clearing agency or futures commission merchant registered with the Commodity Futures Trading Commission, which requires that entities registered with it have an audit performed in accordance with PCAOB standards. Maybe the client has entered into a contractual agreement that requires an audit conducted under PCAOB standards. Or maybe, for whatever reason, the client just wants an audit conducted under PCAOB standards.

The PCAOB determines which audits are within its jurisdiction, including audits of the financial statements of issuers and nonissuer brokers and dealers registered with the SEC. A regulator (other than the PCAOB) requiring that the audit be conducted in accordance with PCAOB standards does not make the audit fall within the jurisdiction of the PCAOB. Therefore, even though the regulator— for example, the CFTC— requires an audit to be conducted in accordance with PCAOB standards, that audit is required to also be conducted in accordance with GAAS.

The Auditor’s Report

The report from the auditor will mark the completion of the review. If you are using volunteers, you should clearly itemize what you expect back, so your auditors know when they have completed their job.

Ensure that your auditor has returned the files you provided, and file the original report in the PTOs permanent archives. At the first meeting of the new school year, you should present the auditors report and move that it be adopted. According to Robert’s Rules of Order, once the annual report of the auditor is adopted, it is no longer necessary to move to adopt each month’s treasurer’s report. The reports are presented and then simply filed for next year’s audit.

Related Things you should Know before Registering a Company in India

Private Ltd, LLP or public Ltd which to choose when going for new company registration in India

 

Fortunately, the new rules and regulations are easier when it comes to start-up a new business in India. Also, there are hassle free new company registration service providers available in India who take care of A to Z of forming and registration of the company. In this post, we will touch upon various forms of new company registration In delhi presently available and which is best suited for your business.

Related : Registration in company in India

To start with, below mentioned is explanation for new company registration in gurgaon that are done in India:

Sole Proprietorship: The sole proprietorship is the simplest business form under which one can operate a business. The sole proprietorship is not a legal entity. It simply refers to a person who owns the business and is personally responsible for its debts.

When to incorporate: However, after the introduction of the concept of One Person Company. It is not recommended to form a proprietorship in India.

Limited Liability Partnership: Partnerships when given the feature of limited liability, the LIMITED LIABILITY PARTNERSHIPS came into picture. LLP is a separate legal entity and which can be formed in India by minimum of two persons with a motive of earning profit.

When to incorporate: LLP enjoys the benefits of private limited company and traditional partnerships, therefore, because of increasing compliance in private limited company, it is recommended for start-ups to incorporate LLP if they are not planning to raise investments in future.

Partnership: A business organization in which two or more individuals manage and operate the business. Both owners are equally and personally liable for the debts from the business. Partnerships are easy to form. There is no minimum capital requirement. Only two people are needed to incorporate the partnership.

For More Blog Visit : http://www.companyformationsservices.com/blog.php

What is Subsidiary Company in India

Subsidiary company is any company whose interests are held and controlled or held by another company. Paid up equity share capital and preference share capital of the subsidiary company can be used to determine the holding company, subsidiary company relationship between two companies.

What is a Subsidiary Company?

There’s often a lot of confusion regarding the position of the subsidiary company and what it does. A subsidiary company is a company that is either owned or owned in part by another company. The company that owns the subsidiary is known as a parent company or a holding company. It should be noted that a holding company does slightly differ from a parent company, though.

What is WOS (Wholly Owned Subsidiary)

When one company is 100% owned by another company, it is called Wholly Owned Subsidiary of the company who had made 100% investment in it.

How To Set Up a Subsidiary

To setup one of these companies, you only need a sole director. The requirement for a company secretary was waived some years ago. The only restriction is that the sole director cannot then act as the company secretary. When you register as a sole director, you will enter both your residential address and a service address. Only the service address will appear in the public records.

The key here is that in the various documentation you submit regarding shareholders you will have both an individual director and another company as a shareholder. You are prohibited from having an entire company owned by another company.

Once you submit the documents, you will have a decision within 24 hours from Companies House.

Conclusion

Opening up a subsidiary isn’t a decision that you should take lightly. It isn’t always necessary and it may be better to simply open a different company from scratch. You have to make this decision by yourself. And it may be better to employ a professional agent to help with the opening of your subsidiary.

Know more about how to register company in India

How GST Works in India

 GST is a type of value added tax and a proposed comprehensive indirect tax levy on manufacture, sale and consumption of goods as well as services at the national level. It will replace all indirect taxes levied on goods and services by the Indian central and state governments. Further, the Goods and Service Tax (GST) is considered to be one of the biggest reforms in India’s indirect tax structure.

THE NEED FOR GST

Suppose Mr. A sells goods to Mr. B and charges sales tax; then Mr. B re-sells those goods to Mr. C after charging sales tax. While Mr. B was computing his sales tax liability, he also included the sales tax paid on previous purchase, which is how it becomes a tax on tax.

This was the case with the sales tax few years ago. At that time, VAT was introduced whereby every next stage person gets credit of the tax paid at earlier stage. This means that when Mr. B pays tax of Rs. 11, he deducts Rs. 10 paid earlier.

Similar concept came in Excise Duty and Service Tax also, which is called Cenvat credit scheme. To a huge extent, the problem of cascading effect of taxes is resolved by these measures.However, there are still problems with the system that have not been solved till date.

GST will solve this problem. Let us see how.

• Sale in one state, resale in the same state

In the example illustrated below, goods are moving from Mumbai to Pune. Since it is a sale within a state, CGST and SGST will be levied. The collection goes to the Central Government and the State Government as pointed out in the diagram. Then the goods are resold from Pune to Nagpur. This is again a sale within a state, so CGST and SGST will be levied. Sale price is increased so tax liability will also increase. In the case of resale, the credit of input CGST and input SGST (Rs. 8) is claimed as shown; and the remaining taxes go to the respective governments.

 
•  Sale in one state, resale in another state

In this case, goods are moving from Indore to Bhopal. Since it is a sale within a state, CGST and SGST will be levied. The collection goes to the Central Government and the State Government as pointed out in the diagram. Later the goods are resold from Bhopal to Lucknow (outside the state). Therefore, IGST will be levied. Whole IGST goes to the central government.

• Sale outside the state, resale in that state

In this case, goods are moving from Delhi to Jaipur. Since it is an interstate sale, IGST will be levied. The collection goes to the Central Government. Later the goods are resold from Jaipur to Jodhpur (within the state). Therefore, CGST and SGST will be levied.

Online Services May Face Google Tax

The digital space has grown rapidly in the past few years and is expected to grow substantially in next few years too. The biggest beneficiaries of this rapid growth in the digital space are companies earning through digital ads like Google,Facebook,Twitter,LinkedIn etc.
Tax adviser in India

Moreover, these companies are located outside India, and hence they are not even subject to any taxes in India. These new business models have created new tax challenges by challenging the current manner of levy of tax which are based on the presence based on permanent establishment rules..
The ‘Google Tax’ or ‘Facebook Tax’ which was first announced in the FY17 budget statement by Finance Minister Arun Jaitley will be levied from June 1. Here’s all you need to know about it — what Google Tax is, who will pay it, and its implications —

Chartered accountant in India

As the name suggests, it’s got something to do with e-commerce companies.

The Google Tax was announced to introduce a tax on the income as accrue to a foreign e-commerce company outside of India. Google Tax or ‘equalisation levy’ as it’s called in India, is expected to impact the bottomlines of giants like Google, Facebook, and others.

Why has the tax been introduced?

The tax has been aimed at technology companies that make money via online advertisements. Their revenue is mostly routed to a tax haven country. This tax will help bring the said companies under the tax radar in India. With this new tax, India has also joined the list of other Organisation for Economic Cooperation and Development (OECD) and European countries where a similar tax is already in place.

The government has earned Rs.100 crore in revenue on account of the equalisation levy so far. Companies like Facebook, Yahoo, Twitter and Google earn significant revenues from India from local advertisers. A committee set up by the Central Board of Direct Taxes to examine indirect taxation in India of e-commerce had recommended an equalisation levy of 6-8 per cent on 13 broad services based on the OECD’s Base Erosion and Profit Shifting guidelines.

Importance of hire Reliable Bookkeeping Services?

Business owners in need of reliable accounting services should ensure to hire accomplished accountants. It is quite easy to obtain bookkeeping services because there are practicing individuals as well as companies. The work demands in your accounting department will determine the kind of professional to be hired. When looking for reliable bookkeeping services Coral Springs FL accountants are obtainable online

LLP Registration in India


At Reliable Bookkeeping Services, we look for long term relationships. Bookkeeping is not the most exciting task and bookkeepers also like excitement and once internal bookkeeper learns all about your business, they stop learning and that leads to boredom and resignation. Other factor that may influence them to move on is a better opportunity or less appreciation by business owner.



At Reliable Bookkeeping Services, we will never leave our clients alone, as we believe in building business relationships for longer term. We have been serving clients in different industries, we always stay enthusiastic and excited about new challenges and domains we will be working on for them. And we promise you will never be disappointed.



An accountant is useful in doing your taxes and giving advice on financial strategies, bookkeepers are more concern with the daily operational costs and the bills your business incurs. That is, bookkeepers are more concern with your payrolls, invoices, utility bills, and other immediate financial concerns that needs your attention whereas accountants are more concerned with your business’ overall financial health.



Having a clear picture of your finances is one of the most crucial steps in running a business, no matter how small you might deem it to be. Hiring a bookkeeper can save your from a potential heartbreak of losing the fruits of all your hard work simply because you tried to do everything on your own.

Register a new company with company formation Services

 Registering a new company could not be simpler when registering online with company formation India. We are companies house e-filing partner which allows us to set up new limited companies online for our clients in the UK and overseas through our sister company. The company incorporation India website is integrated directly with companies house allowing you to check the availability of your company name. We can help clients from their companies within just 3 hours through our quick online company formation service.

What type of company do you want to form?

• UK limited company
•  Limited liability partnership 
• Flat Management Company
• Readymade company
• Company limited by guarantee
• Public limited company

Company formation online a quick and easy way to register a new company

• Company formation in 6 simple steps
•  Choose your company name
•  Add additional business services
• Checkout
• Enter your company details
• Submission to companies house

Source : www.companyformationindia.com

VAT Registration in India

Value Added Tax or VAT is a mandatory requirement for all kinds of business. Proprietorships, partnerships, private limited companies, manufacturing firms and even traders of any kind of products need VAT registration. VAT is similar to Central Service Tax (CST) and Taxpayer Identification Number (TIN). They use the same 11 digit number.

What is VAT?
VAT is an indirect tax levied on goods and services when they are sold to the ultimate customer. VAT is paid by the producers to the government. The producers then collect the tax amount from the consumer, by adding it to the price.
A registered business may also apply for the Input Tax Credit (ITC) and apply it on future sales. This will relieve the company of paying VAT themselves. With ITC registration, the VAT amount is added to the retail invoice and the customer makes the payment.

When is VAT Registration Compulsory?
Businesses with an annual turnover of more than Rs.5 lakhs (in some states it is Rs.10 lakhs), must acquire a registered VAT id. The VAT rates vary from state to state, business categories and the type of goods delivered. The amount of VAT charged is controlled by the state governments. This is why it varies from place to place.
The tax is based on value addition to manufactured goods. VAT id owners having an annual turnover of Rs. 50 lakhs are entitle to the Composition Scheme. Under this scheme the business must pay only a small percentage of tax on its gross turnover. However, it requires the said business to compromise its ITC agreement and forgo its benefit.

Acquiring a VAT id
To obtain a VAT id you need to go through the process of VAT id registration. The procedure involves 6 basic steps.

Step – 1 Locate Central Tax Office
Identify the Central Tax Office within the city your business is based. The tax office should house the VAT registration department as well.

Step – 2 Obtain Registration Form
Request for a VAT id registration form from the VAT office.

Step – 3 Attach Valid Documents
Fill out the application form with the correct details and attach the following documents to it:
– Central Sales Tax registration certificate (Form A)
– Professional Tax registration certificate
– Proof of address and ID of the proprietor, partner or director
– Four passport size photographs of the proprietor, partner or director
– Bank account number and PAN card number of the proprietor, partner or director
– Documents stating the details of your business activities
– In case of a partnership, a copy of the Partnership deed
– Incase of a private limited company, a copy of the memorandum of association and articles of association
– A copy of the rental agreement of the business

Step – 4 Verification
At this step, the local VAT authorities will inspect your business premises at a time scheduled by them.

Step – 5 Collect Registration Certificate
The last step after verification and fee payment requires you to collect the Taxpayer Identification Number (TIN) provided immediately. The VAT registration certificate will be issued either the next day or within a week via post.

Why is VAT Registration Important?
VAT is a primary tax that adds to the nation’s revenue and economy. As a result it is a mandatory tax for all business establishments. The registration process is very easy. The fees are fixed and the verification process is simple.

Source : http://www.ajsh.in/blog

Union Budget 2017 highlights

 Finance minister Arun Jaitley presented the Union Budget 2017 in Parliament on Wednesday. The biggest highlight in the 2017 budget was the slashing of income tax by half for individual tax payers, ban on cash transactions over Rs. 3 lakhs and reduction in holding period to 2 years for capital gains. In this article, we look at the highlights of the 2017 Budget with respect to an Entrepreneur or Business Owner in India.

Related : Company formation in India

Income Tax

 Income tax rate has been slashed from 10% to 5% for individuals who earn between Rs.2.5 lakhs to Rs.5 lakhs. Now after rebates, even a person with a Rs.3 lakhs income could enjoy zero tax liability. Since, proprietorship firms are taxed similar to individuals, micro enterprises having income of less than Rs.5 lakh would enjoy the benefits in tax reduction.

Tax Break for Startups

 Continuing to build on the 2016 Budget by extending special support for Startups, the Finance Minister has increased the period of profit-linked deductions available to Startups to 3 out of 7 years from the current 3 out of 5 years.

Budget 2016-17 kick-started the process. Several deductions were reduced and sunset dates put for others along with reductions in tax rates for some categories of businesses – new manufacturing companies set up after March 2016 were given the option of being taxed at 25 percent provided they did not claim any exemption and companies with turnover less than Rs 5 crore got a 1 percent reduction. However, some new exemptions were given to start-ups, with certain conditions.

This year, admittedly, Jaitley has not moved forward on withdrawing exemptions even as he reduced corporate tax rates.

But let’s look at who has got this benefit: the small and medium enterprises sector. Income tax for companies with an annual turnover of up to Rs 50 crore has been brought down to 25 percent. A big chunk of this lot was paying an effective tax rate of 30.26 percent, while the large companies (turnover above Rs 500 crore) paid an effective tax rate of 25.9 percent. So Jaitley has in a way done the tax equivalent of social levelling. Large companies have not got any tax relief this year.

Stimulating Bank Credit

 To stimulate bank credit to businesses, various measures have been announced as follows in the 2017 Budget:

• The allowable provision for Non-Performing Asset (NPA) of Banks has been increased from 7.5% to 8.5% to improve the risk appetite of Banks.
• In line with the ‘Indradhanush’ mission, Rs. 10,000 crores has been allocated in the 2017 Budget for recapitalisation of Banks.
• Lending target under Pradhan Mantri Mudra Yojana hase been increased to Rs. 2.44 lakh crores. Priority under the scheme will be given to borrowers from certain backgrounds like Dalits, Tribals, Backward Classes.

Source : www.ajsh.in/blog

How to Register a Company in India

Being register as a company is always turned to be a hectic schedule while accompanying with several rules and guidelines. In India as per New Companies Act, 2013; different companies of different rules as for private limited, public limited, govt. company, semi government company, One Person Company, NGO and many more. Company law for varied companies generally varies that need to be accompanied by the owners or partners before applying with company registration.

Company Registration India acts and laws do not only bring the status of legality but also the level of credibility and reliability in the target market. Companies with business laws are always preferred by the target audience where they expect the services with high quality ad best cost. Registered products and services are always be treated with high concern in compare of those unregister services. Thus, not only from law point of view but also from marketing and branding purpose; those company registration services have really proved to be as a bloom for all types of business houses.

Company Formation in India

Let’s start the registration procedure: 4 Steps

Step 1: Acquire Director Identification Number(DIN)

This is the first process in registration that each director of the company should obtain their identification number. As per the amendment act 2006, acquiring a DIN  is compulsory for every director i.e. as such every existing and intending directors have to obtain their DIN. To get DIN one need to file a eForm DIN-1. The DIN-1 form is available on Official site of the ministry of corporate affairs the link is DIN-1 Form.

    Register yourself on MCA Website first and have a login id. After filling DIN-1 Form, one should upload the filled form by clicking to eForm upload button on MCA website and should pay applicable fees.
    After getting generated DIN one should intimate their company about DIN. The director can intimate their company about DIN  by using DIN-2 Form.
    Then company should intimate the Registrar of Corporates(ROC) about all director’s DIN through DIN-3 Form.
    If there is any change in DIN or need for any updation  like change of address, personal details etc, then director should intimate this change by submitting the eForm DIN-4 Form.

Step 2: Acquire Digital Signature Certificate(DSC):
In order to ensure the security or authenticity of documents filed electronically the information act 2000 demands a valid digital signature on the documents submitted electronically. This is the only and safest way that one can submit their documents electronically. The digital signature certificate should be acquired by only those agencies which are appointed by the controller of certification agencies (CCA). One should not use DSC given by any other agency which is not approved and it’s illegal to use others DSC as yours or the false one.

If you already have a digital signature then you can use the same, no need to apply for another. But do check for your digital signature validity, agencies issue DSC’s with one or two year validity after expiry you have to renew it.

One can acquire his/her Digital Signature certificates  from these government listed agencies like TCS, IDBRT, MTNL, SAFESCRYPT, NIC, nCODE Solutions etc. to check out their price details of these Govt approved agencies, Go to this link.

 Step 3: Create a account on MCA Portal – New user registration
This is about having a registered user account on MCA Portal for filing a eForm, for online fee payment, for different transactions as registered and business user. Creating an account is totally free of cost. To register yourself on the MCA portal, click on the register link.


Step 4: Apply for the company to be registered.
This is the final major step in a registration of your company which includes incorporating company name, Registering the office address or notice of situation of office and notice for appointment of company directors, manager and secretary. And also regarding the take and pay for their qualification shares.

After submitting these forms, once the application has been approved by MCA, you will receive a confirmation email regarding the application for incorporation of a new company, and the status of the form will get changed to Approved.

Formalities to be followed while company Incorporation in India:

•     Obtain a TAN card
•     Obtain a Permanent account number (PAN) from income tax dept. India
•     If required: Documents obeying shop and establishment acts.
•     If required: For foreign trade, Registration documents of import export code from Director, General of foreign trade.
•     If required: Registration documents of Software technologies Parks of India (STPI).
•     If required: RBI approval for foreign companies investing in India and FIPB approval.
•     Both Indian and foreign directors need to have valid Digital Signature Certificates from authorized agencies.