Last date for filing ITR for FY 2018-19 and late fee

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.

Planning to start business in India

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 officeBranch OfficeWholly owned subsidiary
Legal EntityNo separate legal entitySeparate legal entity
Incorporation approvalPrior RBI approvalPost incorporation reporting
Foreign Direct investmentsAs per RBI framework
Commercial activityCan act as a channel of communication onlyCan act as buying/selling agent, can’t do manufacturing (except within SEZ)Can operate complete business activity
Pre-requisitesParent 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 ratesNot applicable, as no business activity allowedAt the rate of 40%At the rate of 25-30%
Tax on Repatriation of profitsNoneApprox 17-20%
Exit from IndiaFaster and easy in comparison to other structuresEasier than wholly owned subsidiaryComplex in comparison to other structures

One may please select upon these structures which cater to the requirements of the planned India entry.