Goods & Services Tax
What are the components of GST?
GST will have 3 tax components, which includes a central component (Central Goods and Services Tax or CGST) and a state component (State Goods and Services Tax or SGST) where centre and state will levy GST on all entities, i.e. when a transaction happens within a state. Inter-state transactions will attract the Integrated Goods and Services Tax (IGST), to be levied by the centre, i.e. when a transaction happens one state to another.
What is the input tax credit?
Input tax credit lets you reduce your tax you have already paid on inputs and pay the remaining amount at the time of paying tax.
You pay taxes on the purchase when a product is purchased from a registered seller, and when you sell the product, you too collect the tax. With input credit, you can adjust the taxes paid at the time of purchase with the amount of tax on sales (output tax) and pay the balance liability of tax, i.e. tax on sale minus tax on the purchase.
Who needs a GST Registration?
Every business or corporation that are involved in the buying and selling and good of services have to register for GST. It is mandatory for companies whose turnover is more than Rs.20 lakhs (for supply of services) and Rs. 40 lakhs ( for supply of goods) yearly to register for a GST.
All businesses making interstate outward supplies of goods have to register for a GST too. The same applies to businesses making taxable supplies on behalf of other taxable persons, example Agents and Brokers.
What are the GST tax rates?
- Items that are considered basic necessities come under exempt list i.e. they are not taxed.
- Household necessities and life-saving drugs etc. are taxed at 5%.
- Products like computers and processed food are taxed at 12%.
- Hair oil, toothpaste and soaps, capital goods, industrial intermediaries and services are taxed at 18%.
- Luxury items are taxed at 28%.
Income Tax
Income Tax Return is a form which is used to file the income tax with the Income Tax Department. Income tax is a tax imposed by the Central Government on income of a person.
Filing income tax is every citizen’s responsibility. The IT department verifies these declarations of income and if any amount has been paid in excess, the department refunds the amount to the assessee’s bank account. All entities are required to file the taxes on time to avoid penalty.
The form that contains information of income and tax paid of an assessee is called Income Tax Return. The Income Tax Department of India has various forms for it such as ITR 1, ITR 2, ITR 3, ITR 4S, ITR 5, ITR 6 and ITR 7.
Things to remember during income tax return filing
- Do not wait for the due date to file the return.
- Always collate all the documents needed to file ITR
- Pick the correct IT return form. This is important.
Why file IT returns?
- Loans: Bank loans like education loans, vehicle loans, personal loans, can be availed easily as they require last three year’s IT returns.
- Visa: As Immigration centres scrutinize many documents and IT returns proofs is a mandatory document for visa applicants.
- Avoid penalties: Hefty amounts would be charged for non-filing of income tax returns and hence it is always better to file it to avoid legal repercussions.
Employee Provident Fund
Employees’ Provident Fund is a social security scheme that helps employees save a small portion of their salary for future benefits.
Every company has to offer its employees an EPF or Employees Provident Fund which is akin to a retirement fund. EPF comes under the purview of the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952. EPF registration is mandatory for organizations with total employee strength more than 20. Such employers can opt for online PF registration from Vakilsearch. Companies can register for employee provident fund, in 2 easy steps:
- Connect with a dedicated affiliate for data validation
- Receipt of PF number
Eligibility for EPF Registration for Indian employers
- A factory with the total employee strength of 20 or more.
- An establishment that employs more than 20 persons. Here, the Central Government defines the class of such firms.
- An establishment that has less than 20 workers and has been notified of compulsory registration for not less than 2 months.
- Companies with less than 20 employees
(Note: Such companies must issue a notice to the Employees’ Provident Fund Organization in 2 months or less than that - The employer and the employees of an establishment must mutually agree to apply for PF to the Central PF Commissioner. A notification has to be sent to the Official Gazette from the date of the agreement.
Company Act
The Companies Act 2013 is an Act of the Parliament of India on Indian company law which regulates incorporation of a company, responsibilities of a company, directors, dissolution of a company. The 2013 Act is divided into 29 chapters containing 470 sections as against 658 Sections in the Companies Act, 1956 and has 7 schedules. The Act has replaced The Companies Act, 1956 (in a partial manner) after receiving the assent of the President of India on 29 August 2013. The Act came into force on 12 September 2013 with few changes like earlier private companies maximum number of members were 50 and now it will be 200. A new term of “one-person company” is included in this act that will be a private company and with only 98 provisions of the Act notified. A total of another 184 sections came into force from 1 April 2014.
Online Company Registration in India
Private Limited Company is one of the highly recommended ways to start a business in India. This type of company offers limited liability for its shareholders with certain restrictions placed on the ownership. An LLP has partners, who own and manage the business. Whereas in private limited company registration, directors may be different from shareholders.
LLP Registration
Limited Liability Partnership (LLP) in India took shape after January 2009, making it an instant success with startups and professional services. Limited Liability Partnership Registration, governed by the Limited Liability Partnership Act, 2008, combines the benefits of a partnership with that of a limited liability company. LLP was introduced to provide a form of business that is easy to maintain and to help owners by providing them with limited liability.
One Person Company (OPC)
The One Person Company (OPC) in recent times was launched as a good refinement over the sole proprietorship. In OPC, a single promoter gains full authority over the company thereby restricting his/her liability towards their contributions to the enterprise. Therefore, the said person will be the sole shareholder and director.
Startups, Entrepreneurs & Business
A startup or start up is a company or project initiated by an entrepreneur to seek, effectively develop, and validate a scalable business model. Hence, the concepts of startups and entrepreneurship are similar. However, entrepreneurship refers to all new businesses, including self-employment and businesses that never intend to grow big or become registered, while startups refer to the new businesses that intend to grow beyond the solo founder, have employees, and intend to grow large. Start ups face high uncertainty and do have high rates of failure, but the minority that go on to be successful companies have the potential to become large and influential. Some startups become uniorns, i.e. privately held startup companies valued at over US$1 billion
NGO
An NGO is a non-government organization with a charitable objective, for the betterment of the society in general. It can be started as a Trust, a Society or a Non-Profit Company [Section 8 Company], depending on the activity you wish to undertake.
n India, NGO is an umbrella term for all non-profit organizations including Trust, Society and Section 8 Company. Other names for such not-for-profit organizations are “Sangathan”, “Sangh”, “Sangam”. Income tax exemption is available for all non-profit NGOs.
Why register an NGO in India?
- A registered NGO gains the legal status and becomes accountable for the funds received. For instance, when an individual donates funds to a charitable trust, it is received under the name of the organization and used for the trust’s activities. In an unregistered firm, the assets can be received under anyone’s name and may be used for their own profit.
- An organization that is registered as an NGO reinforces the ethical, social and legal norms of our society.
- The basic requirement for running an NGO is to have a bank account under its name. In order to open an account, it is mandatory to be registered as a Trust, Society or Section 8 Company.
Business Planing & Investment
In order to get business funding you need a business plan, right? While having one in place can be an enormous advantage in securing investment, successful business aren’t always started on paper. How you get your business planning ready for the funding stage isn’t necessarily a uniform process, but the final definitely stage is.
Why You Don’t Need A Business Plan To Start-Up
When the Harvard Business Review conducted research for their book Heart, Smarts, Guts, and Luck, they interviewed hundreds of successful entrepreneurs and small business owners about what it takes to build a success business, they found a number of recurring themes. One of them was that over 70% of them did not start with a business plan at all.
Business Planning For Investment
It is at this point that a business plan is an essential tool for any business looking to raise money to help their business grow. There are few (if any) financial providers willing to look at investing in your company without seeing a clearly defined and achievable business plan.
By now your business should have already have a well-defined business (whether you started with a business plan or not) and looked at what is needed in order to become even bigger and more profitable. You will have looked at your role within the company and the business roles of your key staff, as well as having a keen understanding of how investment and technology can expand the existing operations of your business
FAQs on Consultancy
ARN which stands for Application Reference Number is generated
ARN stands for Application Reference Number. It is the conclusive proof of successful submission of the application to the GST servers. It is generated after the TRN (Temporary Reference Number) & uploading of requisite documents.
The excess tax can be claimed as a refund by filing your Income tax return. It will be refunded and credited back into your bank account through ECS transfer. It is important to make sure no mistakes are made while mentioning bank details such as account number, IFSC code etc in the ITR form.
A business plan is almost essential for entrepreneurs who are seeking to raise money to help fund their companies. … It also gives any actual investors a set of financial benchmarks for which the entrepreneur can be held accountable. In a sense, a business plan is a ticket to enter the financial dance.
Both the employee and employer contribute 12% of the salary. The employers part consists of 12% of basic wages + dearness allowance + retaining allowance. If the number of employees is less than 20 in the firm, then the PF rate is 10%.
Yes, it is a good to register a family member as a partner. At a later stage one can change this or transfer shares of the directors.