MAT is an indirect tax levied under the Income Tax Act of India, 1961. As per section 115JB, every foreign and domestic company is required to pay MAT, a rule set up to prevent highly profitable businesses from dodging their tax liabilities.
A large number of companies in India try to evade taxes. For instance, many “zero tax companies” generate substantial revenues but end up paying a nil tax by applying deductions, exemptions and other kinds of loopholes in the system. So, MAT was created so that no company is able to completely evade their tax liability.
MAT Applicability
Minimum Alternate Tax is only applicable to companies and not to individuals, HUFs, partnership firms, LLPs, societies, etc. Rules pertaining to Sec 115JA is applicable on the foreign companies that generate profits through their running business activities in India.
How to calculate the MAT?
Minimum Alternate Tax is equal to 18.5% (15% from AY 2020–21) of Book profits (Plus Surcharge and cess as applicable). Book profit means the net profit as shown in the profit & loss account for the year as addition and deletion by the following items:
Book Profit
The manner of computation of Book Profit is explained under section 115JB of the Act which specifies additions and deductions of specified items from the net profit of the company computed in accordance with the provisions of the Companies Act, 2013. Here is a list of the items which are allowed to be added and deducted from the net profit of the company:
Additions:
a) Income Tax paid or payable (including provision) thereof;
b) Amounts transferred to any reserve;
c) Provisions made for meeting liabilities (other than ascertained liabilities);
d) Provision for losses of subsidiary companies;
e) Dividend paid or proposed;
f) Expenditure relating to incomes exempt under section 10 other than section 10(38);
g) Deferred tax;
h) Expenditure relating to income by way of royalty of patent taxable under section 115BBF
While total financial independence isn’t a simple goal to succeed in , most of the people wish to a minimum of to spend their lives without struggling for creating their ends meet. Financial planning could assist you in meeting your long-term goal, however, you would like to place the plan into effective action.
Here during this personal finance blog, we’ll discuss ten such money moves which could help your finances within the future . These aren’t just investment tips, but also steps which might assist you in optimizing the returns.
1. Inculcate a habit of saving and investing — you want to get inculcate a habit of saving and investing even just alittle amount of cash hebdomadally . It’s not only about the cash that you simply save; it’s more about the habit which you’re inculcating. for creating things easy, there are several apps which could assist you in saving and even investing small funds. Take the advantage of such apps and obtain into a habit of saving a minimum of 10 percent of your income.
2. Reduce your core expenses — regardless of whatever you are doing , attempt to reduce your fixed expenses. Reduction in your month on monthly expenses could assist you to realize your long-term commitments. Doing this effectively can assist you reach your financial freedom much easier and earlier.
3. Workable Household Budget — Developing and sticking to your spending plan is that the best thanks to meet your financial goals. you ought to make sure that your budget isn’t only realistic but also sufficient for your needs. Usually people slash the spending allowances much below the maintainable levels then they provide abreast of entire budget when this doesn’t work for them.
4. Track your Accounts, Bills, and Debts — Good credit score is a crucial facet of an individual’s financial fitness, even just in case you don’t take debts often. Your credit score could affect the insurance premiums and mortgage rate of interest . Low debt-to-credit ratio and timely payments are crucial factors for an honest credit rating. you’ll use personal finance apps for keeping track of your limits, due dates, and balances.
5. Emergency Fund — One thing got to “> you want to calculate is that you simply might need to buy an unforeseen expense. An emergency fund could help in defraying the impact of such unexpected expenses on your budget. you ought to attempt to keep aside a minimum of 6 months of living expenses, however, just in case it seems overwhelming, you’ll start with a lesser amount. Remember that your emergency fund is merely for emergencies; just in case necessary, attempt to make it difficult to access your emergency funds in order that you don’t get tempted to use it just in case of non-emergencies.
6. life assurance Policy — just in case you’ve got a spouse, kids or parents who are hooked in to your income, it’s vital to possess an policy with an appropriate cover. The last item that your dependents would wish is to stress about how they might set about paying the bills while they’re handling your loss.
7. Contingency healthcare plan — Most of the people don’t wish to believe this, however, at some point, you’ll find it unable to form their own healthcare decisions. it’s advisable to deal with this contingency long before such a situation actually occurs.
8. Debt-Free Lifestyle — once you are starting out initially, a number of the debts are inevitable. Educational loans and mortgages are a necessity, and most of the households carry debt which comes from credit cards. As and once you have funded the retirement plans and therefore the emergency fund, work on your debts and pay off your loan and therefore the mastercard bills before the schedule.
9. PPF and EPF investment options — they supply better returns than most of the opposite debt investments. Banks and other financial institutions have reduced the deposits rates drastically after the large inflow of funds post demonetization. Public Provident Fund and Employees’ Provident Fund still provide attractive rates.
10. Advice from experts — The last tip to the readers is to hunt advice from the professional financial planners. Some might ask why you ought to pay INR 10,000–20,000 once a year for his or her financial advice. Advice from expert financial planners would cost you some bucks but would really be fruitful within the long-term.
One of the primary decisions that need to be taken when starting a corporation in India refers to the legal entity under which the respective business will operate the local market. India provides a group of business forms, almost like those available in other jurisdictions. the choice regarding the legal structure of an Indian company should be taken in accordance with the capital the investors have, the obligations and liabilities they need to assume or the dimensions of the business they need to work here. Our team of consultants in company formation in India offers legal assistance for selecting a legal entity suitable for a selected business registered here.
Registering an Indian sole trader
The Indian sole trader represents the only sort of doing business during this country. At an equivalent time, if the business fails, the completing procedure is far simpler than within the case of other business forms.
The procedure on the way to form a corporation in India for a sole proprietorship stipulates that this business form are often found out by one investor, who is performing business activities in his or her own name. Our team of representatives in company formation in India can advise on the benefits of a sole trader.
The company will got to be represented by a company checking account , a requirement imposed to other business structures available here, also on register for value added tax, but only within the situation during which the corporate reaches a particular income threshold. This business form is typically the simplest option within the case of small businesses.
Register a partnership in India
Another business form that’s usually employed in India is that the partnership. Its succcess is given by the straightforward registration procedure. India provides two sorts of partnerships, as follows: 1 partnership registered under the Partnership Act 1932; 2 indebtedness partnership, registered under the indebtedness Partnership Act 2008.
A partnership in India is usually found out by an Indian citizen residing in India, but foreign investors can also found out this business form, after having received permission from the local institutions.
Businessmen are invited to contact our team of specialists in company registration in India for in-depth assistance on the way to choose an appropriate legal entity.
Company registration consultant should be selected very carefully once you are registering a corporation . Transparent pricing, thorough knowledge of Companies Act 2013, in-house company secretary team and knowledge within the field should be checked when selecting a consultant for company registration. Business setup is that the top consultant for company registration in Mumbai, Bangalore, Pune and Hyderabad.
What are the foremost important factors when deciding the consultant?
The most details to think about is:
1. The consultant should be locally present.
2. The consultant shouldn’t be aggregator
3. A in-house team of company secretaries should be present
4. Should be experienced in company registration
What is the approximate cost to register a corporation in Mumbai or Bangalore or Pune?
Generally the value for a corporation registration including 2 directors is Rs 6500- Rs 10000. BusinessSetup.in which is locally present in Mumbai, Pune and Bangalore offers free company registration and charges only the govt fees of Rs 4273.
What are the documents you ought to get after the corporate is registered?
It is vital that you simply get the subsequent documents from your consultant after the corporate is registered:
1. Digital signature for all the director and shareholders
2. MOA
3. AOA
4. Certificate of Incorporation
5. PAN and TAN
6. Share Certificates
7. Company Incorporation form that’s SPICE
8. First board resolution for checking account opening and auditor appointment
What activities can a branch office perform in India?
The branch office are often opened by any foreign company. The activities it can undertake are mentioned below:
1 Export/Import of products
2 Rendering consultancy services
3 Carrying out research work, during which the foreign parent company is engaged.
4 Promoting technical or financial collaborations between Indian companies and parent or overseas group company.
5 Representing the parent company in India and acting as buying/selling agents in India.
6 Rendering services in Information Technology and development of software in India.
7 Rendering technical support to the products supplied by the parent/ group companies.
8 A branch office cannot perform manufacturing activities on its own but can subcontract these to any manufacturer based in India. Branch Offices can remit the profits to its parent company after paying taxes on an equivalent (RBI).
Who is that the approving authority for branch office? Reserve bank of India is that the nodal authority to urge the permission to start out a branch office in India
How much time does it fancy setup a branch office in India? The Branch office could also be registered in 45–60 days
What are the pre requisites to start out a branch office in India?
1 The name of Indian Branch office should be same as that of a parent company.
2 The Branch is simply extension of the exiting company within the foreign country.
3 All the expenses of the BRANCH office are met by the top office, if it doesn’t have the revenue from Indian operations.
4 The foreign parent company getting to setup a Branch office should have a profitable diary during immediately preceding 5 years.
5 The Net worth of the foreign company should be quite or adequate to USD 100,000. The networth certificate should be
6 A branch office is is suitable for foreign companies looking to setup a short lived office in India and not interested or not getting to have future plans for the Indian operations; except banking, shipping and airlines etc. mentioned above.
Documents required for forming a Branch Office in India The application for forming a branch office is to tend to the bank in India. The bank then submits the appliance to RBI for approval.
The following documents are required to open a branch office in India:
A Indian resident who are going to be liable for branch operations and can be susceptible to make the tax payments and regular compliances Form FNC 1 (Three copies)
1 Letter from the principal officer of the Parent company to RBI.
2 Letter of authority from the parent company in favor of Local Representative.
3 Letter of authority/ Resolution from parent company for fixing BRANCH office in India.
4 Comfort letter from the parent company meaning to support the operation in India.
5 Two copies of English version of the Certificate of Incorporation, Memorandum & Articles of association (Charter Document) of the parent company duly attested by the Indian embassy or notary within the country of registration.
6 Certification of Incorporation — Translated & Duly Notarized and properly authenticated.
7 The Latest audited record and annual accounts of parent company duly Translated notarized for past Three years and properly authenticated
8 Name, Address, email ID and phone number of the authorized person in Home Country.
9 Details of Bankers of the Organization the Country of Origin along side the checking account number
10 Commitment from the Organization to the effect that it’ll be hospitable report / opinion sought from its banker by the govt of India / Federal Reserve Bank of India
11 Expected funding level for operations in India.
12 Details concerning address of the proposed local office, number of persons likely to be used , number of Foreigners among such employees and address of the top of the Local office, if decided
13 Details of Activity administered in Home Country by the applicant organization in short about the merchandise and services of company in short .
14 Bankers Certificate from the bank of the parent company about the small print of parent company and duration of banking with parent company
15 Latest Proof of identity of all the administrators — Properly Certified by Banker in Home Country and duly authenticated
16 Latest Proof of address all of Directors — Properly Certified by Banker in Home Country and duly authenticated
17 Details of the Individuals / Company holding more 10% of Equity
18 Structure of the Organization and its Shareholding pattern
19 Complete KYC of Shareholders holding quite 10% Equity within the Applicant Company
20 Resolution for Opening up checking account with the Banker
21 Duly Signed checking account Opening Form for Indian Bank
22 The application for BRANCH office Licenses is approved by the RBI, but as per the recent changes the applications for BRANCH office are routed through the Authorized Dealers (AD). thanks to this the timeline for fixing the BRANCH office has increased tremendously. Further the documentation required for an equivalent has also increased to an excellent extent.
Post Incorporation Procedural Requirements After Incorporation, the subsequent registrations also are necessary for a branch office:
1 Permanent account number — PAN
2 Tax deduction number — tan number Shop & establishment
3 Registration GST Registration if providing services to Indian Customers
4 What are the compliances after the Branch Office is made in India?
Every year a branch office is required to undertake the subsequent activities:
1 Book Keeping
2 Audit
3 Annual activity Certificate with RBI
4 Filling of financials with Registrar of Companies
Changing the name of a corporation cannot continue without complying with the wants of selecting a corporation name set by the Registrar of Companies.
Changing a corporation Name
Getting a corporation ’s name changed by the Registrar of Companies (RoC) is not any small matter! Executing a company name search will assist you select an appropriate name. an equivalent rules and laws apply to vary a person’s name, as well. The procedure to vary the corporate name is well-defined and is to be followed strictly. Hence, it's essential to follow all the wants of the registrar of companies in India.
Benefits To Changing name
1. once you Can’t Get A Copyright: Acquiring copyright and trademark is important to the success of a business because it forms a part of its branding and marketing strategy. However, if the present name of the corporate cannot get copyright it'll affect revenue streams and future earning potential. for brand spanking new names, check name availability, before you opt to vary the corporate name.
2. Memorable Business Name: From a marketing and a business standpoint, memorability is everything when it involves the name of the corporate . So when registering the name of the corporate with the registrar of companies, confirm you select a reputation that's easy to recollect , and also the one that's available as per a corporation name check.
3. Repositioning: To change name or a brand’s name, especially when your business is prepared to maneuver into a replacement market helps with the concept of repositioning. this is often done to specialise in one particular product or niche that's doing better than others, or when entering a replacement market.
4. Specific product or service: This occurs when a business gains popularity for one particular product or service. For that reason, a business or a brand are often renamed to maximize their popularity and generate more demand, or sales.
5. Location Friendly Name: When it involves choosing the way to change name , one effortless thanks to move forward is to think about the situation . If your business is moving to a location then it might be prudent to rename your business to something that's more friendly and acceptable with the situation of the business.
6. Change Of Ownership: When a business passes ownership, it's only natural for the new owner to see name availability, and alter name . For this purpose, the owner will approach the registrar of companies India to vary his/her name .
Checklist For Updating name , After name Change 1. Updating your social media accounts 2. Update Email footers 3. Name change on stationery – letterheads, business cards, etc. 4. Website changes 5. Informing customers and suppliers 6. Voicemails, messages on answering machines 7. Company registers and Articles of Association 8. Update your computer systems 9. Employment Contracts 10. Update business licenses or permits 11. Supplier Contracts
How To Execute a corporation Name Search
One of the foremost important steps before registering a corporation name with the registrar of companies is to make sure to see name availability.
It is advised to shortlist four to 5 business names before checking availability, within the event a number of those names are already taken or in use. When registering your company with the registrar of companies, the Ministry of Corporate Affairs will authorize the name to be used supported existing rules and regulations.
In the event, a brand has already been trademarked, you'll need a NOC certificate from the owner of the name .
Documents Required For name Change When a corporation decides to vary its name, a resolution is passed among the board of directors/members of the corporate . After which, the subsequent two documents are filed with the registrar of companies;
MGT-14:
This e-form is filed with the registrar of companies on the Ministry of Corporate Affairs portal, thirty days after filing the resolution to vary the corporate name. along side the MGT-14 form, the subsequent forms need to be attached also .
1. Notice of Extraordinary general meeting (EGM). 2. Copy of special resolution passed within the EGM. 3. Copy of altered Memorandum of Association and Article of Association, with the new name .
INC-24
After the MGT-14 is approved, the INC-24 e-form is filed within a period of 30 days with the registrar of companies on the Ministry of Corporate Affairs portal. along side the INC-24 form, the subsequent forms need to be attached also . 1. Extract of the Minutes of the Extraordinary general meeting of the corporate 2. Notice of EGM 3. Copy of resolution agreement 4. Copy of altered MOA and AOA, with the new name .
When most small business owners consider the terms bookkeeping and accounting, they often use them interchangeably. While it’s true both bookkeeping and accounting are important within the management of your company’s finances, some key differences between the 2 functions do exist. Therefore, business owners got to understand the roles of every and the way they work together to make sure your company’s success.
Yes, bookkeeping and accounting both need to do with money and therefore the financial picture of your business, but there are key differences. Here’s your chance to know them.When running your business, your ability to grow and succeed is usually hooked in to how organized your financial records are. But managing your business finances is quite just recording your financial transactions and balancing your checkbook. For your business to flourish, you want to be ready to access and use your company’s financial reports to develop a workable business strategy. While both bookkeepers and accountants handle your business’s financial information, they perform different tasks within your company’s financial cycle.
The Function of Bookkeeping
Bookkeeping is comprised of the tasks required during the primary a part of the accounting process. It involves the consistent, timely, and accurate recording of a business’s financial transactions in chronological order. A bookkeeper’s duties include:
Maintaining an entire and arranged set of books, comprised of the overall ledger and every one subledgers (i.e., fixed assets, inventories, assets , accounts payable, cash, tax, costs, and sales) during which to post financial transactions.
Creating and issuing customer invoices. Recording suppliers’ invoices. Paying suppliers. Logging cash receipts from customers. Documenting inventory changes. Processing employee payroll. Managing fund transactions. Preserving all supporting documents for all business transactions.
A bookkeeper follows a selected set of procedures to perform these duties on a repetitive basis. The complexity of a company’s bookkeeping system depends on the dimensions of the business and the way many transactions are completed on a daily, weekly, and monthly basis. Typically, an accountant or the tiny business owner oversees the bookkeeper’s work.
The Function of Accounting
Accounting involves the method of analyzing, interpreting, reporting, and summarizing the financial data recorded by the bookkeeper or the business owner. a number of an accountant’s responsibilities include:
Preparing adjusted entries (i.e., earned revenue or incurred expenses that haven’t yet been recorded during the bookkeeping process). Preparing financial statements on the condition and performance of the corporate . Creating management reports to deal with specific issues. Analyzing operations costs. Creating a corporation budget. Compiling tax returns from the financial data. Helping the business owner understand the company’s financial data and therefore the impact of his/her financial decisions.
Basically, the accounting process helps you understand where your business stands financially at any point in time by measuring your company’s progress within the terms of growth and financial success. Additionally, the financial data generated helps you to form informed business decisions, so you’ll plan for your company’s future.
