BIS & Company Registration India | Financial & Legal Consultant

September 14, 2020September 14, 2020

Tips to remember while applying for loan

These days there are several types of business loans and lending options. Therefore, small business owners can easily avail these facilities in comparison to others. Despite having myriad options, becoming eligible for a business loan can be a bit challenging. So prior to taking a final call regarding a business loan, it is advisable to gauge your eligibility to ensure that you are not walking down the wrong path. To secure cent percent loan approval necessary documents together with proper timing and a good CIBIL are required.

Answer properly on loan application form

Business loan application forms differ from one lender to another, however they have similar questions for which you should have appropriate answers. If the answer is found unsatisfactory then it can lead to the rejection of your loan application. The information normally sought by lenders are:

Reason for availing the loan
The way you are going to utilize the loan amount, in case it is permitted
The net revenue of your business
The inventories/machinery you are supposed to buy, and your suppliers
Your clientele
Any other business debt incurred by you
Staff information
Personal history

Sound business Planning

Lenders need a superior and successful strategy to be presented along with the loan application. The strategy has to have anticipated budget reports such as advantage and disadvantage, revenue, and fiscal record. The lenders will also require a credit report from every three important customer CIBIL score offices prior to accepting your loan application. Any negativity on your credit report can seriously affect the prospect of availing loan. So, prior to applying for a loan, just examine your CIBIL score yourself and rectify the problems (if any) before going ahead with the application.

Lucidity of cash inflow

A business with poor cash flow is normally construed as a risky proposition by the banks. This is due to the fact that the bank would think the business would give more priority to your professional expenses than repaying the credit. They would also evaluate bank statements of the business and personal accounts to understand your monetary position thoroughly.

It is possible to better your cash flow (if it is on the lower side) by performing a cash flow evaluation of your business, devising goals, and drawing a clear cut payment plan for your business.

Offering guarantee against loan

In order to be in the safe zone, banks will seek a collateral against money being lent. This is a good option to reduce risk factor. The collateral being offered has to a perfect cover for the money borrowed so as to convince them that their money won’t sink.

The collateral could be anything from a real estate property to expensive equipment or machinery related to your business.

Furnish right documents

You are required to give a few documents to showcase the strength of your business and your ability to pay back the loan. Documents to be provided again varies from lender to lender. The documents needed comprise certain legal and personal documents.

The legal documents needed are:

Business licenses and registrations critical to operating business
Articles of Incorporation
Copies of contracts entered with third parties
Franchise license/ agreement
Commercial Leases
Documents from the local body confirming the permit (in case of industry)
The application forms can be perfect to state your projected financial statements
Bank Statements
Balance Sheet
Income Statement
Cash Flow
Last year ITR documents

Compare your lending alternatives

Upon convincing yourself to go for a business loan, you are required to perform in depth research regarding the borrowing alternatives before you. There are nationalised banks to NBFCs and DSAs for the purpose of business loans. To take the first step, prepare a list of banks and lending institutions giving the type of loans you require. Then juxtapose these options with factors such as loan amount given, interest rate, flexible principle for approval and easy and convenient terms & conditions. In case you are still in a dilemma take the help of an expert.

September 7, 2020September 7, 2020

Is pitch-deck sufficient to receive financial aid from investors?

Raising funds is no child’s play. As for attracting Seed Funding from the Venture Capitalists (VCs), a robust pitch deck offered by highly ambitious entrepreneurs might look good. The excellent tones coupled with incredible presentations will go a long way in making good impact upon the investors. Each entrepreneur need to come out with stories that catch everyone’s fancy. However, is that sufficient? The answer is a strict no. A pitch deck might grab attention, however, that will not convince investors to jump into your venture. The pitch deck has to be accompanied by an excellent business plan. It is common knowledge that Venture Capitalists want those firms with solid foundation and an excellent track record. Also, they want companies that has the potential to increase the profits or Return on Investment. Mere lip service will not be sufficient to convince the investors and VCs want assurance that their money won’t sink in this venture. .

Things to factor in while investing in a company

Firms with streamlined operations

it is to be remembered that the angel investors do not want to put their money in a risky venture. So, a company has to prove its credentials. They want companies with attractive portfolios and highly skilled managers who have the ability to enhance the revenue potential of the business.

Promising outlook

In case your start-up looks very promising and it is trying to garner a large customer base, then the same can impress the investors and they might take keen interest in your venture. So indulge in an in depth analysis of the market conditions and the kind of traction you can gain among your customers. These things are appreciated by the investors a lot.

Products holding a lot of promise

As we all know that the market is crowded. In such circumstances one needs to have unique ideas and innovative skills to stand apart from the crowd. Further, you need to ensure the products or services offered by you provide viable and cost-effective solutions to the existing problem.

The strength of your team

Investors are highly likely to put their money into a skillful team with qualified members working in a close-knit surrounding. So, it is necessary for the organization to have a dedicated and hard working team that can perform any job efficiently. There is a perception among investors, which is cent percent right, that diligent and educated team members can script success stories constantly.

Venture has to be risk-free

Anyone wanting to invest would be wary of the risk factor involved in the venture. If the venture is fraught with danger then no one would like to part with their hard-earned money. So, any negativity regarding your new venture makes it difficult for you to find Venture Capitalists’ funding.

Display a proper illustration of your capabilities

The commercial viability surrounding your venture can only be established if you and your team members showcase your ideation capacity and problem-solving skills clearly. Hence, an overall planning to make things work and provide the right solution go a long way in convincing investors about your business strength.

No legal issues

Nobody wants to touch a business having legal complications even with a barge pole, least of all investors. Hence, an organization mired in legal issues would be a strict no for investors or VCs. Your credibility is at stake and that is akin to suicide mission for fund investors.

Last but not the least

It does not matter whether you are an upcoming entrepreneur or an established one, putting up a good show is imperative. A pitch deck is a must to break ice with the angel investors, but this alone won’t suffice as your skills and expertise also matter. You have to convince the investors that you have it in you to go the distance. So, consider all these aspects before looking for an investor.

Frequently Asked Questions

Q. Is seed funding relies solely on pitch decks?

Ans. Not really. Seed funding requires a lot more than pitch decks. In fact, commitment on the part of entrepreneurs to take business to greater heights and dedication to convince investors that their money will not go down the drain are also required.

Q. If my company has a legal issue will the investors put in money?

Ans. No way. No investor would love to invest in a company fraught with legal complexities.

Q. Is a team must while initiating a project or a plan?

Ans. It is not mandatory but desirable as people tend to get impressed by a group of people working together for a common goal. A unified outfit comes across as very ideal to the investors.

Q. Can I dabble upon something that nobody has done before?

Ans. Yes, you can. A fresh idea with a vibrant approach can trigger interest among investors. However, the plan has to be convincing and very much in the realm of possibility.

August 31, 2020August 31, 2020

TDS on cash withdrawals over 1 crore

In a bid to introduce a cashless economy in India, the Finance Minister, Ms. Nirmala Sitharaman declared Section 194N under the Income Tax Act, 1961 during the Union Budget 2019. It states that 2% TDS rate will be subtracted on yearly cash withdrawals of more than Rs 1 crore with effect from 1st September 2019 with regard to banks, cooperative societies and post office accounts.

Goal of passing Section 194 N

This step was taken:

to check heavy cash withdrawals

give big thrust digital payments

monitor cash flow in the country

stop the growth of unaccounted wealth and

slowly end black money in India

Section 194N Of The Income Tax Act 1961 Amended Vide Clause 84 Of Finance Act 2020

Two houses of parliament passed the Finance Bill 2020 by amending the current scope of Section 194N on 27^th March 2020 with the ratification of the President of India. The Bill made TDS provisions tough on those who are not filing their income tax returns in the previous years.

It reads as follows-

Clause 84 of Finance Act 2020

The following section shall be substituted effectively from the 1st July, 2020, with regard to section 194N of the Income-tax Act, namelyEach person, being, — (i) a banking company for which the Banking Regulation Act, 1949 is applicable (including any bank or banking institution referred to in section 51 of that Act);(ii) a co-operative society involved in performing the functions of banking; or(iii) a post office, accountable for paying any amount, being the amount or the aggregate of amounts, as the case may be, in cash going beyond one crore rupees in the last year, to any person (herein referred to as the recipient) from more than one accounts maintained by the recipient with it shall, during the payment of such sum, subtract an amount that is equal to two per cent of such sum, as income-tax:Provided that in case of a recipient who has not filed the returns of income for all of the three assessment years relevant to the three previous years, for which the time limit of file return of income under sub-section (1) of section 139 has expired, immediately preceding the previous year in which the payment of the sum is made to him, the provision of this section shall apply with the modification that—(i) the sum shall be the amount or the aggregate of amounts, as the case may be, in cash exceeding twenty lakh rupees during the previous year; and(ii) the deduction shall be—(a) an amount equal to two per cent. of the sum where the amount or aggregate of amounts, as the case may be, being paid in cash exceeds twenty lakh rupees during the previous year but does not exceed one crore rupees; or(b) an amount equal to five per cent. of the sum where the amount or aggregate of amounts, as the case may be, being paid in cash exceeds one crore rupees during the previous year:

A peek into the latest amendments to Section 194N of The IT Act, 1961

TDS has been extended on cash withdrawals in the current amendment to Section 194N of the Income Tax Act, 1961. There will be a deduction of 2 percent of TDS in case the assessee fails to file income tax for 3 years. A 2 percent of TDS will be applicable to cash withdrawal involving more than Rs 20 Lakhs but less than Rs 1 Crore, in a financial year. With regard to cash withdrawals going above Rs 1 Crore, 5 percent of TDS will apply. In case the assessee has filed income tax for the relevant financial year, no TDS deduction will be there. However, if the assessee has taken out cash amounts exceeding Rs 1 Crore, a 2% TDS deduction on the amount will be levied.

These are some examples to best illustrate above mentioned matters

Case 1 – Suppose if A has taken out Rs 99.50,000 from his bank account in a year and later on he withdraws Rs, 2,00,000 in March, the TDS will be for Rs 1,50,000 ( for cash more than Rs 1 Crore). The total payment the recipient receives will be Rs 1,97,000.

Case 2– In case A takes out Rs 1,00,00, 000 from his bank in a year and later gives a bearer cheque to B, his friend for Rs 5,00,000 to be paid in cash, there won’t be any TDS over here. Despite the cash taken exceeding Rs 1 Crore, in this case, the bank account of the recipient and the holder are different.

Note: Any kind of account held by an individual in a bank falls under the Rs 1 Crore ceiling. For instance, assuming that A holds both current and savings accounts with the same bank, the prescribed limit of Rs 1 crore will apply on the total cash withdrawals from both the accounts.

Case 3- In case A has an account in a separate branch of the same bank in the country, the ceiling of Rs 1 Crore will be there on the net cash withdrawals from the branches in the same bank.

Case 4– In case A has several accounts in diverse banks and takes out cash exceeding 1 crore from different banks, TDS won’t be there for him in such a scenario.

Principal tips regarding Amended Section 194N

This section is applicable to cash in takes from banks including cooperative banks and post office accounts.

The ceiling of Rs 1 Crore will cover based on bank and not on branch. This is as a result of main banking solutions presently executed by banks.

TDS levies on cash withdrawals will come into the equation if the total amount of intakes in a financial year exceeds Rs 1 Crore from one or more bank accounts.

The purpose of cash withdrawals i.e. for professional or personal reasons is immaterial under Section 194N.

TDS rates will only apply on the excess amount of cash withdrawal not on total amount. The sum beyond the prescribed limit will come under the ambit of TDS.

2% and 5% are deduction rates for TDS with regard to certain cases where the assessee has failed to file tax returns in the last few years.

The Amended Section 194N Under TDS (FY 2020-21) will come into effect from 1st July 2020.

Provisions of Amended Section 194N apply to-

An Individual

A Hindu Undivided Family or HUF

A Local Authority

A Company

Partnership Firm/LLP

Body of Individuals (BOIs) or Association of Persons (AOPs)

The payers in the ambit of Section 194N are –

Private and Public Sector Banks

A Post Office

A co-operative bank

Exemptions Under Section 194N-

The Government

Any White Label ATM Operator of any Bank

Banks with the inclusion of cooperative banks

Business correspondent of a banking company

Any other person notified by the Government of India

Farmers- The Central Government has prescribed the specifications for trader or commission agent functioning under the Agriculture Produce Market Committee (APMC) vide Notification No. 70/2019-Income Tax Dated 20^th September, 2019.

The Central Board of Direct Taxation (CBDT) excludes cash intakes by an authorized dealer or an agent of its franchise or sub-agent and a RBI licensed Full-Fledged Money Changer (FFMC) or any agent from its franchise from TDS net under Section 194N subject to conditions laid out vide Notification No. 80/2019-Income Tax dated 15^th October 2019.

Benefits of Section 194N

Heavy cash intakes will come down drastically and digital exchanges and payments will go up.

Help the Tax Department to evaluate data conveniently and huge cash transactions can be probed.

An organized automated system will come up for encouraging digital payments and an economy devoid of cash.

Hiccups regarding amended Section 194N

A strong TDS deduction automated system will be required for each transaction to find accounts where cash intakes cross Rs 1 Crore.

Deployment of the automated system falls on banks and other financial establishments. The toughest arena is the ATMs where implementing the system will be tough for banks and other financial departments. An automated mechanism has to be integrated with ATMs where cash withdrawals beyond Rs 1 crore can be found with ease.

Conclusion

It is creditable on the part of the Indian Government to bring in financial reforms to achieve the objective of a cashless economy. Post demonetisation, the arrival of Section 194N and its current amendment is a good effort in pushing digital transactions and eliminating cash transactions slowly from the country.

August 25, 2020August 25, 2020

Options before telecom to furnish guarantees for clearing AGR dues

Introduction

The issue of Adjusted Gross Revenue (AGR) is literally giving sleepless nights to some of the telecom majors. The matter has generated enough heat in India with some like Vodafone threatening to quit its operations in the country. However, things are finally showing semblance of normalcy with some flexibility being given to telecom operators with regard to AGR. The Telecom majors such as Vodafone-Idea and Bharti Airtel have plans to provide license, spectrum, tangible net assets and tax refunds as security to assure the honoring of AGR dues.

The problem persists

As part of the hearing process with regard to the AGR a week before, the Supreme Court has stringently sought a reply from the telecom operators, regarding the roadmap, timeline and security related to the AGR payment. This was part of the response regarding the plea that the Department of Telecommunication or DOT filed, permitting telecom players to pay the AGR dues in a flexible way over the next 20 years. However, the apex court was of the view that staggered payment can only happen if there is a clarity over schedule or security on the part of the telecom players. According to a reliable source, “Telecom operators are presently evaluating the net worth of their tangible assets. This is very critical in getting clarity over the security aspect the Supreme Court had sought from them.” But the woes regarding the AGR are only exacerbating despite having a clear idea with regard to the way forward concerning the AGR dues. The problem began when the National Company Law Appellate Tribunal accepted spectrum within the ambit of asset in a hearing, but the Department of telecommunication disagreed with it. So, the whole matter of whether spectrum qualifies as assets lies with the Supreme Court.

Security clearance through assets sans spectrum

For the telecom major duo, Vodafone Idea and Bharati Airtel, the privilege of the tax refunds is there and the same amounts to INR 35,000 Crore. Also, there is a provision of some funds from the pending public sector units and the same comes to INR 20 thousand Crore. With such sources of revenue, the two telecom operators can breathe a little easy regarding the issue of AGR.

Guarantee is proving to be a thorn in the flesh for telecos

Despite Supreme Court asking the telecom players to furnish guarantee acting on the plea of DoT, things don’t look very promising for the telecom operators. According to a source, “ the banks have already been stretched a lot by the telecom operators that providing more guarantee would be out of the question. Also,there exists another problem wherein one has to furnish the security of 70%-90% of the loan dues to obtain the loan amount. This is very much impossible considering the situation that the pandemic had on the businesses and economy as a whole. This prompted Vodafone-Idea to say that it can’t provide a guarantee.

Finally,

The signs are not too favourable for telecom companies with regard to the AGR with an obstinate Department of Telecommunication breathing down their necks. As of now, the situations the telcos are in turn out to be a bit ominous as they are looking at projecting spectrum, license and tax refunds as guarantees related to AGR. It is very difficult to pin the blame on anyone for this matter. In reality, it is the DoT that grants the telecom operators the OSP License. So, it is in the best interest of telecom players to file the tax returns appropriately and on time. In case, the telecom businesses find the task to challenging then they should take the help of tax experts. Had these operators filed the returns properly things would not have reached this stage. This proves that filing tax returns is important otherwise a headache like AGR would always crop up to take away your peace and happiness.

August 17, 2020August 17, 2020

RBI guidelines on NBFC take over

What is NBFC?

A Non Banking Financial Company (NBFC) happens to be a company that is registered under the aegis of Companies Act, 2013 of India. It is involved in the trading of loans and advances, shares acquisition, stock, bonds, hire-purchase insurance business or chit-fund business.

Takeover of NBFC

Takeover of NBFC normally happens via the documents pertaining to the target firm. If Acquirer gets sanction to the takeover of the concerned NBFC, an MOU will be signed along with a token sum. Then Know Your Customer (KYC) Documents, Business Plan & Projection for 3 years have to be made with regard to incoming directors, as per the suggestion of the acquirer. Through this article, we intend to throw light on RBI regulation pertaining to the acquisition of NBFC.

Basic formalities

Relevant documents has to be submitted to the RBI by the acquirer. The acquirer has to reply to all RBI queries related to the takeover. After getting the approval letter from the RBI, the acquirer is required to issue a public notice in the 2 newspapers for 30 days in accordance with the RBI guidelines. This is done to invite any objection, if any, from the general public or any interested parties with regard to the change in management. The inking of Share Purchase Agreement & giving of change of management, payment of remaining considerations etc. has to happen on the 31st day of newspaper notice or as concurred by all the parties concerned.

The need of RBI Approval beforehand

Prior written consent of the RBI is needed for:

Any alteration in control of an NBFC, which might not lead to change of management;

Any change in the nature of shareholding, which would result in acquisition/ transfer of shareholding of 26 percent or more of the paid-up equity capital of NBFC. However, prior consent would not be mandatory if the nature of shareholding does not exceed 26 percent which is as a result of buy back of shares/ decrease of share capital and it has approval of the competent court. In such cases, the RBI has to be informed within 1 month from its occurrence.

Any change in the composition of the NBFC which would lead to an alteration in over 30 % of the directors, not including independent directors.

Beforehand approval is also not needed for those directors who are selected again post retirement on a rotational basis.

NBFCs will continue to concerning any alteration in their directors/ management as Financial Companies Acceptance of Public Deposits (Reserve inform the Reserve Bank required in Non-Banking Bank) Directions, 1998,

Non-Systemically Significant Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2015 & Systemically Important Non-Banking Financial (Non-Deposit Accepting Holding) Companies Prudential Norms (Reserve Bank) Directions, 2015.

Application for advance Approval

Applications pertaining to this can be submitted to the Regional Office of the Department of Non-Banking Supervision under whose authority the Registered Office of the NBFC is located.

The need of advance Public Notice regarding alteration in Control/Management

It is necessary to give public notice of at least 30 days in advance prior to conducting the sale of, or change of the ownership via selling shares, or alteration in control, either with or without the sale of shares. This type of public notice will have to be provided by the NBFCs & also by the other party or jointly by the relevant parties, post getting the advanced permission of the RBI.

The public notice should clarify the reason to sell or transfer ownership/ control, the details regarding transferee & the motive behind such sale or transfer of ownership/ control. The notice has to appear in at least one prominent national & in one popular local (covering the place of registered office) vernacular newspaper.

The guidelines mentioned above are applicable instantly i.e., the same will be valid for any takeover or acquisition of control, any diversion in the shareholding or any change in the management happening post the date of this circular.

Other laws apply as well

These guidelines will be including, & not in suppression of the essence of any other laws, rules, regulations or directions, till the time it is active.

Repeal & Saving

Non Banking Financial Company, (Approval of Acquisition or Transfer of Control) Directions 2014 dated May 26, 2014, will remain cancelled. Despite this, any thing done, purported to have been done or unleashed within the directions hereby nullified shall continue to be guided by the clauses of the stated directions.

Annex

Particulars about the suggested promoters/ directors/ shareholders of the Company

Sr. No.	Particulars Required	Response
1.	Name
2.	Designation	Chairman/ Managing Director/ Director/ Chief Executive Officer
3.	Nationality
4.	Age (has be backed with the date of birth)
5.	Business Address
6.	Residential Address
7.	E-mail address/ Telephone number
8.	PAN Number under Income Tax Act
9.	Director Identification Number (DIN)
10.	Social security number/Passport No.*
11.	Educational/professional qualifications
12.	Professional milestone related to the task
13.	The area of business or vocation
14.	Any other information relevant to the Company
15.	Name/s of other companies in which the person has held the post of Chairman/ Managing Director/ Director/ Chief Executive Officer
16.	Name/s of the regulators (RBI, SEBI, IRDA, PFRDA, NHB or any other foreign regulator) of the entities mentioned in which the persons hold directorships
17.	Names of the NBFC, in case, the individual is related as Promoter, MD or Director comprising a Residuary NBFC, which has not been allowed to accept deposits/ prosecuted by the RBI?
18.	Details of the tribunal, if any, pending or commenced or resultant in a conviction in the past in contradiction of the person or against any of the entities he is associated with for violation of economic laws & regulations
19.	Cases, if any, involving the person or relatives of the person or the entities in which the person is associated with, are in default or have been in evasion in the last five years in related of credit services acquired from any entity or bank
20.	In case the person happens to a member of a professional association/ body, particulars of the disciplinary action, if any, pending or commenced or leading to conviction in the past against him/ her or whether he/ she has been barred entry of any professional occupation at any time
21.	Whether the person is eligible for disqualification provided under Section 164 of the Companies Act, 2013
22.	Has the individual or any of the companies, he/ she belongs to, been under any kind of probe at the instance of the Government Department or Agency
23.	Has the person been found violating rules/ regulations/ legislative requirements by Customs/ Excise/ Income Tax// Foreign Exchange/ Other Revenue Authorities, if so, give particulars
24.	Involvement in the business of NBFC (number of years)
25.	Equity shareholding in the company No. of sharesFace valuePercentage of total paid up equity share capital of the company
26.	Name/s of the companies, firms & proprietary concerns in which the person holds substantial interest
27.	Names of the principal bankers to the concerns at 26 above
28.	Names of the overseas bankers *
29.	Whether the number of directorships held by the person goes beyond the limits permitted under Section 165 of the Companies Act, 2013
* For foreign promoters/ directors/ shareholders Note: Different form should be given with regard to each of the proposed promoters/ directors/ shareholders

Information about Corporate Promoter

Sr. No.	Particulars Required	Response
1.	Name
2.	Business Address
3.	E-mail address/ Telephone number
4.	PAN Number under Income Tax Act
5.	Name & contact details of compliance officer
6.	Line of business
7.	The details of their major shareholders (more than 10%) & line of activity, if corporates
8.	Names of the principal bankers/ overseas bankers *
9.	Name/s of the regulators (RBI, SEBI, IRDA, PFRDA, NHB or any other foreign regulator)
10.	Names of Firms in the Group as defined in the Prudential Norms Directions
11.	Names of the firms in the Group that are NBFCs
12.	Specify the names of companies in the group which have been prohibited from accepting deposits/ prosecuted by RBI?
13.	Particulars of trial, if any, pending or started or led to a conviction in the past in contradiction of the corporation for violation of economic laws & regulations
14.	Cases, if any, wherein the corporate, has defaulted or have been in default in the last 5 years with regard to credit facilities sought from any entity or bank
15.	Whether the business has been under any kind of probe by the Government Department or Agency
16.	Has the Corporate been found guilty of violating rules/ regulations/ legislative requirements by Customs/ Excise/ Income Tax// Foreign Exchange/ Other Revenue Authorities, if so, give particulars
17.	Is the promoter corporate/ majority shareholder of the promoter business, if a business, ever applied to RBI for CoR which has been rejected

August 13, 2020August 13, 2020

What is the exemption limit of agricultural income?

What do you mean by agricultural income?

Agricultural income constitutes the money or revenues earned from areas such as farming/Agriculture land, building on/associated with agricultural land, and the commercial gains made out of horticultural land.

According to the Section 2 (1A) of the Income Tax Act of 1961, agricultural income is:

Any income or money made out of any piece of land in India meant for agriculture

Additionally, any revenue derived out of such land through agricultural works like refining agricultural products so as to make it commercially viable in the market

Any income collected through saplings or seedlings reared in a nursery

Moreover, any revenue linked to a farmhouse lest it is in line with provision prescribed in Section 2 (1A)

Section under which agriculture income is exempted

As specified under Section 10 (1) of the Income Tax Act of 1961, agricultural income is set aside from taxation. But, it is included for computation of the total tax liability provided the guidelines given beneath are followed in totality:

Total agricultural income does not go beyond Rs. 5,000/- for the last financial year.

Net income, on top of the gross agricultural income, breaches the general exemption ceiling (It is to be noted – The primary limit of agricultural revenue kept out of tax net is 2,50,000 for person less than 60 years of age and Rs. 3,00,000 for those higher than 60 years of age)

For people who meet the afore-mentioned criteria, the taxable agricultural income will be calculated by following these methods-

Method 1: Inclusion of the agricultural income to the cumulative income

Method 2: By including income exempted under Section 10 in the agricultural income

Method 3: Moreover, deducting the amount acquired from Step 2 from that of Step 1 to arrive at the final tax liability.

Pay your taxes to rid yourself of anxiety

Benefit u/s 54 B

The person who pays tax (individual or HUF) can gain under this section, provided he sells his agricultural land to purchase another. But there is a catch as he has to meet certain conditions to claim the benefit.

Some fine Examples Of Agricultural Income

These happen to be:

Revenue derived through selling replanted trees

Additionally, the rental accrued from a piece of agricultural land

Revenue obtained through selling of seeds

Money earned via nurturing creepers/ flowers

Further, profits accrued through a partner belonging to a firm or a company indulging in agricultural production or activities

So, interest received by a partner from a firm or company via ploughing in capital in agricultural endeavors

Commonly Asked Questions

1. What is the ceiling for agricultural income tax exemption?

The primary limit to exempt agricultural income from tax is –

-Rs. 2, 50, 000 for people falling below the age bracket of 60

Rs. 3, 00, 000 for people above the age bracket of 60

2. Why is agricultural revenue kept away from the tax net?

Since from the beginning itself, agriculture happened to be a major source of income generation for a large number of the population in India. Also, the whole country still relies a lot on crop production to get its food on the table. This also happens to be a primary sector, pushing the economic wheels of the country. Hence, it is imperative that the Government comes up with schemes, strategies, and policies that ensure the constant evolution of the agriculture sector. So, in one such scheme, agricultural revenue is kept away from the purview of income tax.

3. How do we portray agriculture revenue in income tax?

In case your gross agricultural revenue happens to be less than Rs 5000 during a financial year, it can be projected in your income tax return ITR-1. However, in the event of your income going beyond Rs 5000, Form ITR -2 becomes applicable.

3. What is agricultural income and how is it treated for tax purposes?

Under Section 2 (1A) of the Income Tax Act of 1961 agricultural income is defined as –

A rent or income sourced from any piece of land in India meant for agriculture

Also, any money generated from such land through agricultural activities like processing of agricultural products to make it commercially viable

Additionally, any income made from saplings or seedlings nurtured in a nursery

Any income pertaining to a farmhouse if it follows guidelines prescribed under Section 2 (1A)

Income included for the sake of tax

As described in Section 10 (1) of the Income Tax Act of 1961, agricultural income is set aside from taxation.

But, agricultural income is used for the net tax liability calculations if the conditions described underneath are met totally-

Gross agricultural income going above Rs. 5,000/- in the last financial year

Net income, along with the gross agricultural income, breaks the basic exemption ceiling

August 2, 2020August 2, 2020

GST Penalties and Appeals

The GST Law has defined its offenses and penalties that are levied in each scenario. This is an important topic for every business owner, CA, CS as any mistake can cause severe consequences.

Overview

GST law prevents many tax evasion and corruption over tax as it contains strict provisions for offenders regarding penalties, prosecution and arrest. The introduction of GST Law Government of India ensures to prevent tax evasion and corruption and also introduces stricter liabilities for the non-payment of the same.

Offences and Penalties

Offenses

There are 21 offences which are being introduced under GST law. Some of the offences which has been introduced by the introduction of GST law are as follows-

When the company/organization or an individual has not enrolled themselves under GST Law, even when it is required by law.
Supply of any goods/ services without any invoice or issuing a false invoice.
The issue of invoices by a taxable person using the GSTIN of another bonafide taxpayer.
Submission of false information without getting registered under GST Laws.
Submission of fake financial records/ documents or files,or fake returns to evade tax.
Obtaining refunds by fraud.
Deliberate suppression of sale to evade tax.
Opting for a composition scheme even though a taxpayer is ineligible.

Penalty

If any of the offense is committed by a taxpayer, then he is liable for the penalty which he has to pay under GST. the principals on which these penalties are based are mentioned by law.

For Late Filing

If returns of GST are filed late i.e. after the last date of filing, then it would involve a penalty of Rs. 100 per day as per the Act. So it is 100 under cgst and 100 under sgst so, total late fee would be levied of Rs. 200/- per day along with the interest of 18% per annum. The time period will be from the next day of filing of the date of payment.

For not filing

If you are not filing your GST return, then it will have a cascading effect as you will not be able to file your subsequent returns and therefore it involves heavy penalty and fines.

For the 21 offenses with no intention of fraud or tax evasion

If the offender is not paying the tax or making short payments must pay a penalty of 10% of the tax amount due subject to a minimum of Rs. 10,000/-.

For the 21 offense for the intention of fraud or tax evasion

In this case the offender has to pay 100% penalty for tax evasion subject to a minimum of Rs, 10,000/-. The tax evader could be imprisoned for a term of 1 year for tax amount 100-200 lakhs, upto 3 years for 200-500 lakhs and upto 5 years for the tax amount of 500 lakhs and above.

Inspection under GST

The Joint commissioner of CGST and SGST may have reasons to believe hat in order to evade tax, a person has suppressed any transaction or claimed excess input tax credit etc. then the joint commissioner can authorize any other officer of CGST/SGST in writing to insect places of business of the suspected evader.

Search and Seizure under GST

The joint commissioner can order for search and seizure if he finds any person liable for tax evasion on the basis of the inspection.

Goods in Transit

If a person in charge is carrying goods exceeding 50,000/- is required to carry the following documents-

Invoice or bill or delivery challan
Copy of e-way bill

Compounding of offences under GST

Compounding offenses is a shortcut method to avoid litigation. In case of prosecution each time of hearing in criminal proceedings a person has to appear before a magistrate along with his advocate which is little time consuming process.

In compounding offence, the accused is not required to appear personally and can be discharged on payment of compounding fee which cannot be more than the maximum fine as applicable under GST.

Prosecution under GST

If someone has committed crime under GST law deliberately, then he is subject to criminal prosecution under the law. A few example of these offenses are follows-

Issue of an invoice without supplying any goods and services
Obtaining refund of any CGST/SGST by fraud
Submitting fake financial records/ documents or files and fake returns to evade tax.
Helping another person to commit fraud under GST.

Arrest under GST Law

Any person accused of committing a cognizable offense is entitled to get arrested within 24 hours of the offense. Then he is to be produced before the Magistrate within 24 hours of the arrest.

Appeal

Any person aggrieved by the decision of tribunal or court may appeal in the appellate court. If the person is aggrieved by the decision of fit appellate authority then he could appeal in the National Appellate Tribunal and then to the High court and Supreme court thereafter.

May 12, 2020May 12, 2020

What is a Non Disclosure Agreement?

A non-disclosure Agreement is a legal contract stating certain confidential information, and the extent to which it is restricted to the third parties. It can be entered into or with a person or organization.

Confidential information could be anything i.e. Trade secrets, business plan, business methods and strategies, drawings, charts and more. Confidential information also includes software programmes and code.

Advantages of a Non-Disclosure Agreement

Protects Business Secrets

NDA helps protect business secrets and other confidential information. It is a common agreement that is usually signed by every employee of the organization.

Enhances client relationships

Organizations generally let their employees sign NDA to help maintain a strong client relationship.

NDA Procedure

Organizations generally execute agreements to be signed by their employees so that in future if they change the organization they will not disclose any secret information in front of any competitor organization. We help our clients in roaring of the NDA according to the needs. It takes approx. 3-4 days.
In case you would like any changes to the agreement, our team will help in doing that. Two rounds of iteration are included in the original price.

Why BIAT Legal LLP

We deliver all doubts in just 4 business days. And if you are not fully satisfied then it takes another couple of days to keep our clients satisfied to the fullest.
We have a strong team having experience over 5 years who would advise you the best and clear all your queries around the clock. But our motive is to ensure that no client is unsatisfied.

Therefore, we can say that BIAT Legal LLP is a one stop solution for all your legal needs.

May 12, 2020May 12, 2020

Know your legal right/ Divorce in India

Between any couple divorce appears to be the most traumatic occurrences of their lives. However, it can be a costly affair in India if divorce is contested by any of the parties. Even couples who agree for mutual divorce have to show to court that they have been separated a year before the filing of the divorce petition. In India dovorce is considered to be a personal matter as rules of divorce are connected with one’s religion like Hindus, Buddhists, Sikh, and Jains is governed by Hindu Marriage Act, 1955. Muslims by dissolution of muslim marriages act, 1939, Parsis by the Parsi marriage and Divorce Act, 1936, and Christians by Indian Divorce Act, 1956.

The spouse can initiate to send legal notice before ending their relationship.

There are different grounds on which divorce is granted, here our expert legal team helps you understand different topes of Divorce petitions and help in understanding the divorce process in India.

Types of Divorce Petitions

Divorce with Mutual Consent

When both spouses agree to a divorce, then it is considered a Mutual Divorce. However, as per the Act, a couple should at least be separated for over a year and the same is to be proved before the Hon’ble Court. Ofte, even when either of the spouses is reluctant to the mutual divorce, agrees to a mutual divorce because it is relatively inexpensive, time saving and not as traumatic as a contested divorce. Matters such as child’s custody, maintenance and property rights could be agreed mutually through an Agreement.

There are three aspects regarding which a husband and wife have to reach a consensus.

First is Maintenance decided by a wife. For this no law has stated the minimum or maximum limit of support. It could be any figure or no figure.

Second is of Custody of a child, it takes maximum time in court to decide the custody of a child. It takes much longer when it is without mutual consent. Child custody in a mutual consent could be shared, joint or excessive depending upon the understanding of the spouses.

Third one is the Property, the spouses must decide who will get which part or how much of the property. Thus includes both movable and immovable property. Even bank accounts could also be shared amongst the two. It is not necessary for it to be fair, so long as it is agreed to by both parties.

Once the first motion of the Divorce is filed, before filing of the second motion of divorce, there is a timing minimum of 6 months. However, waiver application could be moved before the Hon’ble court and its total courts jurisdiction on its allowance. As per section 13B of Hindu Marriage Act, 1955 and section 28 of special marriage act, 1954, the couple should be living separately for at least one year before divorce proceedings can begin. Living separately does not mean that they are living in different locations, it’s just mean that couple have to prove that there is no relationship between two as husband and wife i.e. having no physical relationship etc.

Divorce without Mutual Consent

In case of a contested Divrce following could be the grounds on which Petition can be filed-

Cruelty

Cruelty could be physical or mental cruelty. If any of the spouses has an apprehension or a reason to believe that he/she has been a victim to cruelty then it would be a sufficient ground to file for Divorce.

Adultery

If the husband has maintained illegal or consesunal intercource with a third woman, the wife is free to file for Divorce. However, it is no longer considered as a crime after the Supreme Court Recent judgement.

Desertion

If one spouse is deserting the other spouse without a reasonable cause (cruelty for eg) then there is a reason for Divorce. There should be a proper reason to prove that. As per the act, dissertation should have lasted for at least two consecutive years.

Conversion

If any spouse converts his/her religion then divorce could be filed.

Mental disorder/unsoundness of mind

If any spouse becomes of unsound mind then divorce can be granted by either of the spouses.

Renunciation of the world

If any spouse has renounced the world then spse can take divorce.

BIAT Legal LLP over the years has become expert in handling Family and Matrimonial Litigations.

April 3, 2020April 3, 2020

Trademark Renewal Process In India

The Trademark Renewal can be defined as a process of restoration of all terms ,conditions , rights and security which a trademark provides to the business or a company.

RENEWAL TIME PERIOD OF TRADEMARK –

The trademark has a validity time period of 10 years and later on the company or business need to renew the registration without wasting time.

The organisation should register within 6 months before expiration after 06 months of the expiration or within one year of expiration.

RESTORATION OF TRADEMARK AFTER BEING REMOVED FROM REGISTER –

A Trademark can be restored even after being removed from the register .the process involves filing TM -10 and TM-13 forms along with the prescribed fee within one year of the trademark expiry.

DIFFERENCE BETWEEN TRADEMARK REGISTRATION AND TRADEMARK RENEWAL –

The Trademark registration leads to protection of the brand name and its right to use from any misuse.The trademark renewal on the other hand leads to the extension of the protection of the product brand and its rights for the next 10 years.

CONSEQUENCES FOR NON RENEWAL OF TRADEMARK WITHIN TIME LIMIT –

In case the renewal is not being applied within the specified time frame ,the trademark gets removed from the register immediately.One should remember that the maximum time to apply for the renewal of a trademark is 12 months after the expiry of the trademark registration.

TRADEMARK BEING REMOVED ON BASIS OF NON USE –

When a trademark is not being used for the period of consecutive 05 years from the registration date or not used for a period of 03 months before date of application for removal ,thereafter it can be removed .

TRADEMARK OWNER BEING INITIATED ABOUT RENEWAL OF TRADEMARK –

The trademark owner is always initiated about the trademark renewal and it is done through IP India.An electronically generated notice is being sent from the trademark automation system and is delivered to the owners address through the registered post.

TRADEMARK RENEWAL NOT DONE IN DUE TIME AND OTHER COMPANY REGISTERS THE SAME –

In case the trademark renewal is not done by the owner in a specified time frame after the expiration , it goes available in the public domain and anyone can apply for the registration and the previous owner has no right to stop the registration since he does not have the rights of that particular trademark.

ANYONE ELSE APPLY FOR RENEWAL ON PLACE OF TRADEMARK OWNER –

In case , the owner is not available to apply for trademark renewal , the renewal can be done through his /her authorized agent , administrator ,managing trustee etc.

OBJECTION BEING RAISED DURING TRADEMARK RENEWAL –

During the renewal of trademark when an objection is being raised , a letter of query is being sent to the applicant.There after the renewal process remains pending till a response from the applicant is not being received.

CAN A TRADEMARK CLASS CHANGE DURING RENEWAL –

No , a trademark class once registered cannot be changed by the entity or there cannot be any modification once after the registration.