Thinks globally, acts locally
In general, the last date for filing income tax return is 31st July 2019 for the assessment year 2019-20. One need to report income pertaining to the financial year 2018-19 by this date. If one fails to file the income tax return by this date, there would be late fee consequences ranging from Rs 1,000 to Rs 10,000 as explained under.
India welcomes foreign nationals and organization to set up their business in India. India is a land of opportunities coupled with various government incentive schemes for start-ups.
It is important to choose an appropriate form of business entity, which would facilitate achieving the desired results. It is the first step towards setting up of any business. A foreign individual or company can set up business operations in India in the form of:
1. Foreign Company Representation
a. Liaison office – The office acts as the communication medium only
b. Branch office – Can do business as an agent of the foreign company
c. Project Office – Suitable in case of executing a single project
2. India Corporate Set-up
a. Wholly owned subsidiary – New Private Limited entity owned fully by Foreign company
b. Joint Venture – A new private limited with an Indian partner
c. Limited Liability Partnership – A new corporate entity in the form of partnership with an Indian player
Considering the popular modes, we have listed the main features of the following kind of structures.
| Liaison office | Branch Office | Wholly owned subsidiary | |
| Legal Entity | No separate legal entity | Separate legal entity | |
| Incorporation approval | Prior RBI approval | Post incorporation reporting | |
| Foreign Direct investments | As per RBI framework | ||
| Commercial activity | Can act as a channel of communication only | Can act as buying/selling agent, can’t do manufacturing (except within SEZ) | Can operate complete business activity |
| Pre-requisites | Parent Company should have a profitable track record during immediately preceding three years in the home country and the net worth as per latest audited Balance Sheet should not be less than USD 50,000/- and USD 100,000 for opening a Liaison office and Branch office respectively. | No such requirement | |
| Income Tax rates | Not applicable, as no business activity allowed | At the rate of 40% | At the rate of 25-30% |
| Tax on Repatriation of profits | None | Approx 17-20% | |
| Exit from India | Faster and easy in comparison to other structures | Easier than wholly owned subsidiary | Complex in comparison to other structures |
One may please select upon these structures which cater to the requirements of the planned India entry.
With the various measures taken by Government to simplify GST, in a meeting of GST council, it was decided to change the basis of the rate of tax for Hotel Industry. The basis of rate was changed from ‘declared tariff’ system to ‘actual tariff’ system. Declared Tariff means the tariff declared by Hotel at any place like Board at the hotel, promotion material, at any digital platform and so on. In general practice, there is usually a difference between declared tariff and actual tariff.
The concept of declared tariff on the one side could have fetched more revenue to government but was very subjective and difficult to enforce. The notified change is a welcome move for industry which simplifies the procedure and arrests the unwanted valuation litigation. It will make things pocket-friendly and simple to understand for the end user as well.
The Indian Government has a focus of doubling the tourism foreign exchange earnings and has a target of 20 million foreign tourist arrivals (FTAs) by the year 2020. The measure should also help increase the country’s ranking in terms of ‘ease of doing business’ across countries.
The notification to this effect was issued on 26th July 2018 vide Notification No. 13/2018-Central Tax (Rate)
Introduction to Section 194C
As per Section 194C of the Income Tax Act, 1961 any payment to a transporter is subject to a Tax Deduction at Source (TDS) at the rate of:
1% in case if the payee is an Individual or a HUF, and
2% in case of other payees
In case, if such payment exceeds Rs. 30,000 per contract or aggregate of such payments of contracts in a financial year exceeds Rs. 100,000.
TDS on transporters for plying, hiring and leasing goods carriage
Old Provision (till May 31, 2015)
The earlier provision provides that no TDS be deducted from payments made to the transporters if the transporter furnishes his PAN to the payer.
New Provision with effect from June 1, 2015
The new provision of Section 194C limits the above cases for non-deduction of tax. Non-deduction of tax will be applicable only for small transport operators owning not more than 10 goods carriages for the financial year.
Process identified
If the transporter is doesn’t own > 10 goods carriage at any time during the financial year, then deductor has to obtain a declaration from transporter along with the copy of a PAN before credit or payment to the transporter, whichever is earlier.
The transporter is liable for TDS if > 10 goods carriage is owned at any time during the year. The TDS has to be deduction at the time of paying charges to goods transporter. TDS will be deducted at the rate of 1% or 2% as per the status of Transporter.
Conclusion
With this amendment to the Act, reporting all deductions w.r.t Nil TDS on transporter payment in quarterly return (26Q) is made compulsory.
The person responsible for making the payment to the transporters, which is subject to tax, must collect following documents for such transactions:
Self-attested copy of PAN Card
Declaration of the fact that such contractor is neither registered nor the owner of more than 10 goods carriages.
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Forbes’ Best Countries for Business rankings, Singapore ranks at Rank 9, vis-à-vis India ranks at number 63.
Singapore is considered as world’s second best after New Zealand, when it comes to ease of doing business ranking by World Bank for year 2018. India positions at rank 100.
Singapore is, in fact, is considered the most friendly business environment for promoters. Let’s look at comparative business advantages if one does business in Singapore or India.
Income Tax
At India, the tax highest tax slab is 30% excluding 15% surcharge and other cesses, while at Singapore it is 22%
Tax on dividend
At India, dividend distribution tax is charged at 15%, while there is no dividend distribution tax at Singapore.
Income tax for companies
At India, a flat rate of 25% plus applicable surcharge is charged for small companies and 30% for plus applicable surcharge on bigger ones. In comparison, Singapore charges 17% corporate tax to companies.
Tax exemption for new companies
While there are stringent conditions to be met at India for claiming any tax advantage in initial years, Singapore gives full tax exemption on the first $ 100,000 chargeable income in first 3 years.
Conclusion
In the times of globalization, zero country borders, instant communication, every business wants to expand its wings across the globe. Singapore does offer a very good environment for your global needs.
How to decide, when you should file an application for grant of incentives under the SEIS scheme of DGFT. You need to make sure that the Invoices raised by you during the year has been remitted to your account by your client to avail the benefits to the fullest. One can file the application for FY 2018-19 by 31st March 2020 to avail the reward without imposing any cut.
Last year by mid term review of FTP, the benefits were increased by 2% effective 1st November 2017. In case your last year incentives are yet to be availed, divide your application under two parts for different percentages of benefit availment. The validity of duty credit scrips was also raised from 18 months to 24 months for SEIS.
Effective 6th October 2017, the rate of GST on duty scrips was made NIL. The duty credits scrips were made transferable long back.
The E-com module for SEIS #application for the period-2018-19 has been released by DGFT on 01.05.2019. One can now file the application for claiming #service #export #benefit for the said #financialyear.
Do make sure that the payments from Debtors as on 31.03.2019 has been realized to avail the benefit at the fullest.
In a series of steps taken by Government to curb shell companies, Government has made it mandatory for companies (companies formed on or before 31.12.2017) to file various return in e-Form ACTIVE (INC-22A) (Active Company Tagging Identities and Verification), listed as under:
Before filing this form, the company must complete annual filings till 31.03.2018. The form is not applicable to Companies under Struck off, under the process of striking off, under the process of liquidation, amalgamated, dissolved companies as recorded in ROC records.
Last Date of filing form – 25.04.2019, the date got extended to 15.06.2019
Consequences of non filing:
Weblink of Rules: –
http://www.mca.gov.in/Ministry/pdf/CompaniesIncorporationAmendmentRules_21022019.pdf
http://www.mca.gov.in/Ministry/pdf/CompaniesRegnOfficesFeesRules21022019.pdf
Applicable to whom:
All companies who get supplies of goods and services from the micro and small enterprises and payment to such vendors exceed 45 days.
What to file:
Need to file a one time return in Form MSME – 1 by 21st Feb 2019 followed by half yearly returns
What to report in Form:
Need to give the details of such identified vendors, amount of payment outstanding exceeding 45 days, reason of delay in payment
Consequences of wrong or delay or non-filing:
Penalty on company Rs 25,000
Every officer in default – Minimum fine Rs. 25,000 which may extend to Rs. 300,000 or Imprisonment which may extended to 6 months or both
Latest update dated 21.02.2019:
MCA General Circular 1/2019, Extension for last date of filing initial return in MSME Form I. The period of 30 days for filing initial return in MSME Form I shall start from the date the said e-form is deployed on MCA 21 portal. Form is still to be released.
