Amendments to the Central Goods and Services Tax Act, under the Finance bill, 2019

Finance Minister Nirmala Sitharaman in her maiden Budget speech has sought to implement the amendments made by the GST Council under the Finance Bill, 2019. Here are all the major updates, along with our take on how this affects GST-registered taxpayers:

1. Section 10: Composition schemeA new sub-section has been introduced to bring in an alike Composition scheme for service providers, as well as suppliers of both goods and services (mixed suppliers), having an annual turnover of up to INR 50 lakhs in the preceding financial year. Below mentioned are some further explanations which are added to the section –

• Value of exempt supplies of services provided by way of extending deposits, loans or advances, with interest or discount as the consideration shall not be considered as part of the aggregate turnover, for determining eligibility into the scheme.
• Value of exempt supplies of services provided by way of extending deposits, loans or advances, with interest or discount as the consideration shall not be considered as part of the aggregate turnover, to determine the value of turnover in a particular State or Union Territory.

In addition, any supplies made from April 1, 2019 of the year till the date the taxpayer becomes liable for registration shall not be taken into account.

As committed by the GST council, the amendment brings into effect the composition scheme for all the mixed suppliers clarifying that services which include extending deposits etc. shall not be part of aggregate turnover.

1. Section 22 : Persons liable for registrationThe threshold limit for registration under GST is increased from INR 20 lakhs to INR 40 lakhs for a supplier of goods only. Only the suppliers of goods whose turnover exceeds INR 40 lakhs will now come under the purview of GST registration. The amendment is beneficial especially for small and medium taxpayers who need not to get themselves registered under GST unless their turnover exceeds INR 40 lakhs. This is applicable only to those who are exclusive suppliers of goods.
2. Section 25: Procedure for RegistrationThis is a new sub section introduced to mandate authentication using Aadhaar number for every registered person under GST. This section also prescribes the manner in which Aadhaar authentication needs to be done. In case a person fails to undergo Aadhaar authentication, then his registration would be deemed invalid. The mandatory disclosure of the Aadhaar number, first under the Income Tax Act, and now under the Central Goods and Services Act, shows the importance the Government has now placed on the Aadhaar Card. The government plans to administer both direct and indirect taxes via Aadhaar while PAN may continue to be in use for routine compliances.
3. Section 31A: Mode of PaymentThis will be a new section inserted in the CGST Act which will mandate certain registered suppliers to give their recipients the option of prescribed modes of electronic payment.
4. Section 39 : Section 39: Furnishing of returnsThis section has been amended to introduce an option for specified taxpayers to furnish their returns on a quarterly basis instead of monthly. Taxes will need to be paid monthly. The sub-section prescribes the time limit for Composition taxpayers to file their returns, which as per the Act, formerly need to have been filed every quarter. The Government has now introduced the annual filing of returns for Composition taxpayer, however, the tax will still need to be paid on a quarterly basis.
5. Section 49: Payment of tax, interest, penalty and other amountsTo remove inconveniences for taxpayers, a new sub-section has been added to facilitate the transfer of amounts paid under tax, interest, penalty, fee or any other amount that is available in the electronic cash ledger to the correct head under integrated tax, central tax, State tax, Union territory tax or cess in the electronic cash ledger, as applicable. This tax could not be utilized and would need to be paid again under the correct head. The introduction of this sub-section means that henceforth, all taxes that are incorrectly paid under the wrong heads of tax can now be simply transferred to the correct head.
6. Section 50: Interest on delayed payment of taxThis section has been amended to levy interest on unpaid taxes only to the extent of that portion paid in cash i.e. through the electronic cash ledger. This benefit will not extend to those cases where proceedings have been initiated under Section 73 and Section 74, i.e if there is a pending investigation and tax is due, interest shall have to be paid on the gross tax liability.

In conclusion, these amendments will help Indian government to move towards a cashless economy preventing the evasion of taxes. This will greatly reduce the cost and burden of compliance to these small businesses which had to file as many as 24 monthly returns in the past. Several other measures related to the back end infrastructure for registration and reporting of GST, administrative officials related to GST, etc. will also have to be put in place, before GST can be rolled out.

New company registration in India

Special Economic Zones (Amendment) Bill, 2019

The Special Economic Zones (Amendment) Bill, 2019 was introduced in Lok Sabha by Mr. Piyush Goyal, Minister of Commerce and Industry on June 24, 2019. It was first legislation to be passed by newly- constituted 17^th Lok Sabha. It amends the Special Economic Zones Act, 2005 and replaces an Ordinance that was promulgated on March 2, 2019.  The Act provides for the establishment, development and management of Special Economic Zones for the promotion of exports.

Salient features of the Bill
The SEZ (Amendment) Bill 2019 replaced an ordinance of March 2019, which amended the SEZ Act of 2005 to add two new categories – “trusts or any entity, as may be notified by the Central Government” – among those eligible for setting up units in the notified SEZs. Under the Act, the definition of a person includes an individual, a Hindu undivided family, a company, a co-operative society, a firm, or an association of persons.  The Bill adds two more categories to this definition by including a trust, or any other entity which may be notified by the central government. Below mentioned are the salient features of the Bill:

1. Boost to investment and employment generation

The government had already received eight applications from trusts from reputed companies proposing a total investment potential of INR 8,000 crore. The natures of these trusts or the kind of economic activities they are involved in are not clear yet. Though the opposition was skeptical about the usefulness of the amendment, the SEZs had generated 20 lakh jobs, brought investments worth INR 5 lakh crore, with exports worth INR 7 lakh crore by the end of March 2019.

2. Legroom for a wide range of trusts

The Bill opens up the possibility for all types of trusts to operate from the SEZs – public charitable trusts, private trusts run by big and small corporate houses, business trusts like real estate investment trusts (REITs) and infrastructure investment trusts (InvITs), private companies with their own PF trusts and port trusts run by the government. These trusts run a wide range of activities ranging from health, education, skilling and other livelihood generation activities to manufacturing and financing.

3. Utilization of vacant land and non-operational SEZs

The amendment would also facilitate the use of the SEZ land lying vacant. According to the Ministry of Commerce and Industry, 40 % of the notified SEZs are non-operational and more than 50 % of land notified for the SEZ use is lying vacant.

By allowing trusts to set up units in the SEZs, the unused land could be put to productive use now.

The SEZs have contributed significantly to the economy. SEZs are major export hubs in the country as the government provides several incentives and single-window clearance system. The developers and units of these zones enjoy certain fiscal and non-fiscal incentives such as no license requirement for import; full freedom for subcontracting; and no routine examination by customs authorities of export/import cargo. They also enjoy direct and indirect tax benefits.

If you are looking for assistance to setting up a SEZ unit in India as per your business requirements and wish to gather more information about compliances associated with it to refine your business strategies, our team of experts can assist you throughout the process.

We can also assist you in setting up your business in India, accounting, bookkeeping, payroll, auditing, taxation, secretarial compliances, and trademark registration, business structuring and advisory services. If you require any assistance in this regard, kindly click here

Cracking the Code – Insolvency and Bankruptcy Code, 2016

Insolvency and Bankruptcy Code (“Code”) in India has gained importance these days to protect the rights and interest of different parties involved with a business setup. However, with each passing day government has received multiple suggestions for making amendments in the already existing Code to fit in the dynamic needs of the business environment. Consequently, the Code has experienced innumerable alterations every now and then.
Previously, we laid emphasis on the meaning, vision and facilitators of the Code. It also highlighted how the Code affects our economy in general. For information on any of the above mentioned, kindly visit Discerning Insolvency and Bankruptcy Code, 2016
Procedure for resolving insolvency
Following steps are proposed for resolving insolvency:

• InitiationIn case of default, debtor or creditor might initiate resolution process which is administered by professionals. Debtor’s financial information is provided by the professional to the creditor from the information utilities and manages the property of debtors. This process is undertaken for 180 days and no legal action can be taken against the debtor during this period.
  
• Decision to resolve insolvencyInsolvency professionals take charge and constitute a committee of financial creditors who lend money to the debtors. This committee will be responsible for taking the decision regarding the future of the outstanding debt owed to them. It is on the option of the committee to revive the debt owed to them by transforming repayment schedule or liquidating the property of the debtor te repay the debts owed to them. If the committee does not reach to a viable conclusion within 180 days then the property of debtors is sold or liquidated.
• Liquidation procedureInsolvency professional is empowered to administer the process of liquidation in case debtor willing goes into liquidation. Proceeds from the sale of property are dispensed in the following arrangement:
• Insolvency resolution cost inclusive of insolvency professional’s remuneration
• Secured creditors whose loans are backed by collateral or any dues to other employees
• Unsecured creditors
• Any outstanding amount to government
• Priority shareholders
• Equity shareholders

Concerns explicitly mentioned in the Code requiring consideration
Following concerns are clearly stated in the Code and are required to be focused for efficient and effective functioning of the Code.

• Situation of competition and conflictInsolvency professionals (“IPs”) are regulated by insolvency professional agencies (“IPAs”), which are further administered by the Bankruptcy Board (“Board”). IPs are members of multiple IPAs who monitor their functioning, instead of a single regulator which is an unsettled situation. This might stir a situation of competition in this domain and may also pose a reason of conflict between the IPAs and regulators. Such a framework is distinct from today’s practice where the regulator directly regulates its registered IPs.
  
• Ambiguous distribution hierarchyThe Code lays down a specific order for distributing property during liquidation which is misty in nature as:

1. Secured creditors will receive their entire outstanding amount rather than upto their collateral value
2. Unsecured creditors have priority over trade creditors
3. Government dues will be repaid after unsecured creditors
   

• Undefined rolesFunctioning of IPs, IPAs and information utilities is responsible for the smooth functioning of the Code. Modifications and alterations are required from time and on for proper functioning of the network. Additionally, National Company Law Tribunal (NCLT) who is responsible for adjudicating corporate insolvency issues has not been constituted yet as a result of which Debt Recovery Tribunal (DRT) is overloaded with pending cases.

To conclude situation of the Code, it seems to be in the elementary stage, backed by a strong structure and framework. The government is working on constantly modifying the provisions of the Code. Supreme Court has also amended it from time and on. This changes if introduced successfully, will enable banks to take early legal actions. The focus of IBC lies on instituting a proper insolvency resolution process, which focusses on efficient resolution mechanism and not a recovery system. Currently, it is an initiative in process with improving future anticipations only if it conquers its present day obstacles, plugs gaps and tackles crucial concerns.
If you have any questions or would like to discuss more about the Code, our experts can ensure right business insights and best practices for you.
We can also assist you in setting up your business in India, accounting, bookkeeping, payroll, auditing, taxation, secretarial compliances, and trademark registration, business structuring and advisory services. If you require any assistance in this regard, kindly click here

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.

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.

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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.

BUSINESS OPPORTUNITIES IN INDIA

India has emerged as the number one FDI destination in the world during the first half of 2015.With FDI capital inflows of US$30.8b, India has outpaced all other economies, moving up to the premier position from being in the fifth spot during the corresponding period of the previous year.
In FY15, India’s growth was 7.3 per cent, which would increase to 7.5 percent each in the next two years of 2016-17 and 2017-18.

Why invest in India?
India is a large and rapidly growing consumer market constituting up to 300 million people for branded consumer goods.

• This market is estimated to be growing at 8% per annum.
• Demand for several consumer products is growing at over 12% per annum.

Consultancy on following:

•  Expansion of business.
• Tax implications.
•  Setting up of new business abroad.
•  Regulatory compliance.
•  Accounting needs.

Key Investors

•  Expansion of business
•  Setting up of new business abroad
• SMEs and Large size firms

Benefits

•  Better Business Contacts
•  Ease of Business Promotion
•  Effective communication
•  Global Presence
•  Improvement in Quality of Service
•  Cost Savings
•  Increased Revenue Potential

INDIA GROWTH & INITIATES

• By 2040, India will have added 1bn people (Almost it’s entire current population to the middle class)
• The biggest youth population in the world.(572 million are under the age of 24)
• One of world’s top ten industrial producers.(19th largest exporter and 10th largest importer in the world.)
• World’s third largest economy by 2030.
• One of the world’s biggest telecom markets (with over 850 million wireless subscribers ).
• One of fastest growing retail markets. (The estimated economic value of top 5 retail markets is $450 billion.)
• Purchasing power parity, India’s economy is fourth largest in the world at $ 4.06 trillion

Now that you now know these facts, it becomes important that you sit and check yourself to see if you would still want to go ahead with setting up your business in India. This is not to say that India isn’t a favorable place for business. As a matter of fact, you can make loads of returns of investment in India.

Foreign Investment deas

It is a very common belief that starting a business in India requires huge amount of investment. But not all businesses require too much investment. India is a land of opportunities and one can start a business with low investment or even no investment. You can start a business in India with a nominal amount of investment and grow your business. India has a rapidly growing economy and has a massive population. In this article we will discuss some ideas for business start-up in India.

• Home canteen: Running a home canteen requires low investment in business. Off late, the business of food supply has gained a lot of popularity. It is a profitable small-scale business. You can start a business in India with a nominal amount of investment and grow your business.

• Dance instructor:You can work as a dance instructor and this does not require a whole lot of money. You can open your own school or work as a freelance dance instructor. Since dance forms an integral part of Indian culture, many parents like their kids to learn dance from a very early age. Therefore, there are plenty of opportunities for a dance instructor to earn both fame and money.

• Fashion designing:If you are good at art and like fashion, then fashion designing is the best choice. In order to make the most sought-after outfits you will have to undergo training in this field.

• Data entry jobs:This job does not require huge investment. If you have a computer at home and internet connection, you can start a data entry company. Filling up forms online is a popular example of data entry jobs on the Internet.

• Homemade chocolates:Making chocolates in your home is amoneymaking business. You just have to get the ingredients that are essential to make chocolates at home. After preparing the chocolates, pack them with fancy wrappers to add creativity and make them more attractive.

• Event management:It is a cost-effective business for people who are interested in organising different types of events and functions.

• Wedding consultant: In India, weddings are big events and take a lot of time. You can work as a wedding consultant to make things simpler and manage them for people who just don’t have the time to do it for themselves.

Apart from this there are many small-scale businesses that require low investment. Business opportunities in India are tremendous.

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