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.