All about Nidhi Company Registration

Nidhi Company is the most popular form for giving loans to its member and accepts deposits from its members. Its main objective is to lend and borrow money amongst its members and to cultivate the habit of savings amongst its members. Nidhi Company is governed by the Provision of Companies Act, 2013 and Nidhi rules 2014.

It provides loans and accepts Deposits you have to register. Nidhi Company is referred to as one of the kinds of NBFC. It is also called a mutual benefit company. But no RBI approval is required to incorporate a Nidhi company as it is the exempted category Nidhi Company will always be a public limited company and its name should end with ‘Nidhi Limited’, Presently Nidhi Company becomes very popular for lending business.

How to Register a Nidhi Company?
• Application for Approval of name.
• Preparations and drafting of Incorporation documents.
• Application for incorporation of Nidhi company with ROC
• Signing of Incorporation documents.
• Obtaining DSC for all members and directors.

Nidhi Company Registration:
1) Instant access to Nidhi software and compliances.
2) Lowest cost across India.
3) It takes 10 or 15 days for Nidhi Company Registration.

Documents Required for Nidhi Company Registration: • PAN
• Address Proof
• Registered Office
• Id Proof
• Passport Photo
• Latest Bank Passbook/Statement of Electricity/Broadband bill

Benefits of Nidhi Company:
Simple Formation of Nidhi Company:
• The formation Of the Nidhi Company is a very easy process.
• It requires only 7 members out of which 3 members would be the directors.
• Nidhi Company does not require obtaining a license from RBI.
• The documents of required registration are very less.
• It takes hardly 10 or 15 days to get registered.

Limited RBI registration:
• There would be the least intervention of RBI.
• Nidhi Companies are exempted from main provisions otherwise applicable to be an NBFC in India.
• These Companies follow Nidhi Rules 2014 issued by the center in respect of the activity and working of the Company.

Benefits of member:
• It works with the objective of increasing the savings of its member.
• Easy to make donations and get loans from the Company.
• Loan is given at a lower rate.
• The risk of non-payment is less than the other finance business.

Restrictions on Nidhi Company:
• The period of repayment of the loan should not exceed one year.
• Only secured loans can be given i.e. insecurity of any gold, silver, or any other valuable jewel.
• Nidhi Company cannot do any chit fund activity, hire purchase, and lease financial activities. Nidhi Company cannot lend or borrow money from any person other than its members.
• It’s not allowed for Nidhi Company to issue preference shares, debentures, or any debt instruments.
• Minimum paid-up capital requirement is Rs 5,00,000

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Updated Return under Income Tax Act

 Updated Income Tax Return Filing

Finally, the provision of filing an updated Income Tax Return has been presented in Income Tax with effect from 01.04.2022. An assessee, whether he has filed or not, an income tax return (whether it be the original return, the delayed return of the revised return), may now provide an updated return of income, within two years from the end of the applicable assessment year. For e.g.: For the AY 2022-23 (i.e. Financial Year 2021-22), the updated return could be filed up to 31st March 2025. The updated return can be also fitted out only once for an assessment year. Though the updated return cannot be filed, if it:

a) is a return of loss or
b) has the outcome of decreasing the tax liability determined as per previously filed return or
c) grades in a refund or increases the refund determined as per previously filed return

Who cannot file an updated return
A person will not be entitled to file an updated return for the applicable assessment year and any year preceding that, if in the relevant previous year –

a) a search or survey has been initiated/ directed against him or
b) books of accounts/other documents/ any assets are requested or
c) a notice has been issued to the effect that any asset detained or requisitioned in the case of any other person, belongs to him or
d) a notice has been allotted to the effect that any books of account or documents, seized or requisitioned in the case of any other person, relates/pertains to him
For e.g.: If the search has been originated against the person in FY 2022-23, then the updated return cannot be filed for the relevant AY 2023-24 or any former assessment year.

The updated return cannot be filed for the year in respect of:
a) which has any assessment/reassessment/re-computation/revision of income is incomplete or has been completed
b) which has hearing chronicles have been initiated
c) the assessing officer has any information about the assessee, under double taxation avoidance agreements or under the following Acts, which has already been transferred to him, prior to the filing of such return –
i. The Smugglers and Foreign Exchange Schemers (Forfeit of Property) Act, 1976
ii. The Ban of Benami Property Transactions Act, 1988
iii. The Prevention of Money-laundering Act, 2002
iv. The Black Money (Unnamed Foreign Income and Assets) and Nuisance of Tax Act, 2015

The circumstance where the filing of updated return is mandatory for succeeding years too
If any person has formally filed a return of loss for any previous year, duly within the time allowed for filing the original return, then he shall be permitted to provide an updated return, if the updated return is a return of income, irrespective of the time limit of two years from the end of the relevant assessment year. However, in such a case, the assessee will have to deliver an updated return for each subsequent previous year, if
a) such loss or even the unabsorbed reduction has been carried forward or
b) tax credit in respect of tax paid on supposed income relating to certain companies or tax credit for substitute minimum tax is to be condensed as a significance of filing the updated return.

Tax on Updated Return
The taxation norms in case of an updated return would though be somewhere different from the normal income tax return. The assessee will have to pay an “additional income tax” along with the tax and interest figured to be payable if filing an updated return.

Additional Income-Tax
The additional income-tax due in case of an updated return shall be equal to – I. 25% of the aggregate tax and interest payable, if the updated return is furnished after the expiry of time offered for filing the belated return of the revised return but before the completion of twelve months from the end of the pertinent assessment year. II. 50% of the collective tax and interest payable, if the updated return is furnished after the expiry of twelve months but before the completion of twenty-four months from the end of the applicable assessment year. Also, the proof of payment of tax, additional income tax, interest, and fee shall attend such return.

Conclusion: At this, one may accomplish that the introduction of a provision for filing an updated return would result in escaping litigation to a good extent. If any income has been left to be reported by the assessee in the return initially filed or the revised return, then the updated return results in an opportunity to rectify such a mistake. Otherwise, assessment chronicles would have been initiated against him, which the assessee always wants to avoid, as he will have to sustain the consulting fees of professionals for responding to the proceedings and then will pay the tax on that income at the conclusion of such proceedings.

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