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A Holistic Take on Prepaid Payment Wallet License in India

prepaid wallet license india

Introduction

The prepaid payment wallets are also known as PPIs and they happen to be the instruments having fiscal worth against which the goods and services can be bought and funds can also be transferred. The monetary worth injected into the prepaid payment wallets turns out to be the sum that the holder has paid towards it either via cash or debit to a bank account or credit card. The prepaid payment wallets have become very well-known for the last few years as they can be used with ease in other manners for transactions. The transactions performed by them are clear, responsible, and easy to use. The prepaid payment wallets can also be called e-wallets. For the assessing and the permitting the transactions between the various prepaid payment instruments, the Reserve Bank of India has given certain recommendations.

The prepaid mechanisms can be issued in these forms:

Smart Cards

Internet Accounts

Internet Wallets

Wallet Accounts

Magnetic Strip Cards

Paper Vouchers

And any other thing that can be utilized to obtain the prepaid amount

TYPES OF PREPAID PAYMENT INSTRUMENTS

Closed Wallet or Closed Prepaid Payment Instrument –

These are the types of PPIs that are issued to its consumers by a company specifically for the purpose of purchasing goods solely of that company. This kind of PPI can be utilized for buying goods and services of that particular company which has issued it. For example – Reliance Supermarkets, etc.

Semi Closed wallet or Semi Closed Prepaid Payment Instrument –

With regard to this type of the prepaid payment instruments in which the holder

Semi Open Wallet or Semi Open Prepaid Payment Instrument –

These instruments are to be used by the holders for purchasing goods and services at merchant spots accepting cards. Cash withdrawal and redemption are not possible with such kinds of instruments.

Open Wallets –

These happen to be the prepaid payment mechanisms used to obtain goods and services at anywhere and the holders have the rights to withdraw cash from ATMs.

Cross Border Transactions –

As per the guidelines of the RBI the prepaid payment wallets do not apply to individuals who have the approval to issue the Foreign Exchange denominated prepaid payment instruments, in sync with the provisions of Foreign Exchange and Management Act. The transaction limit for cross border transactions is kept at INR 5,000.

ADVANTAGES OF E-PAYMENT WALLET

1. It is a secure mode of payment.

2. It can save time as all the bills regarding telephone, electricity, mobile etc. can be paid online.

3. It gives access for online deals from anywhere and any time.

4. These are fiscal transactions that are transparent and responsible to the issuer of e-wallet.

SUITABILITY ASPECTS FOR ISSUING PREPAID PAYMENT INSTRUMENTS

The Banks and the NBFCs can issue prepaid payment instruments only once after getting approval from the Reserve Bank of India

The entities apart from banks or NBFCs should have at least confirmed total worth of Rs. Fifteen crores, according to its last audited balance sheet.

For seeking approval, these entities need to make an application to the Reserve Bank of India.

A newly incorporated company has to submit a certificate regarding the present net worth along with its temporary balance sheet from its Chartered Accountant.

if any entity other than Banks and NBFCs is having the license for providing prepaid payment instrument prior to the Reserve Bank of India making it essential to have total worth of INR fifteen crores, such entity will have no option but to hike its net-worth legitimately to this limit before the end of September, 2020.

It is essential for the entity to be registered under the Company Act, 2013 or the Companies Act, 1956 to obtain the license from the RBI.

It is pertinent that the activity to function as a prepaid payment instrument the issuer is specified in the Object Clause of the Memorandum of Association of the company.

FACTORS SURROUNDING CAPITAL FOR ISSUE OF PREPAID PAYMENT INSTRUMENTS

While calculating the net worth of a company, the following things have to be a part of the net worth:

The Paid-up equity share capital

The Free Reserves

The Preference shares

The Share Premium Account

The Capital Reserves representing surplus

DOCUMENTS REQUIRED FOR GETTING THE PREPAID WALLET LICENSE

The Name of the entity

The Address Proof of entity’s registered office

The Constitution of the entity

The Entity’s certificate of incorporation

The chief business of the entity

The Information of the management

The Particular of Statutory Auditor of the entity

The latest authorized balance sheet of the company

The Names and Addresses of the Bankers of the Company

Any other crucial documents that may be required from time to time.

THE APPROVAL METHOD FOR APPLICATIONS GIVEN BY NON-BANKING ENTITIES

Step 1: A non-banking entity wanting the approval of RBI has to make an application in Form A according to the Regulation 3(2) of the Payment and Settlement System Regulations, 2008.

Step 2: The RBI will consider the suitability of the entity during the screening process.

Step 3: Post the eligibility, it is evaluated whether the company is sound financially and the assessment of the management of the company is performed for which opinion from regulators, government authorities, etc. is taken.

Step 4: Following this the applicant is examined on other factors that includes the potency of its customer service, overall capability, technical proficiency and other related requirements.

Step 5: If the company fails the suitability criteria, then the application will be rejected. The fee given by the company during the making of application shall not be refunded.

Step 6: If every essential condition is met by the company, it will be given the in-principle nod by the Reserve Bank of India, which shall be important for six months.

During the six months of the in-principle approval, the entity has to submit a proper System Audit Report. If the company is unable to furnish this report, its in-principle nod will automatically fade away.

Step 7: Post the approval, the company gets a Certificate of Authorization, which would remain in force for five years from the day it has been given a nod.

If the certificate of authorization has to be renewed, an application needs to be put in to the RBI three months before the expiry of the certificate. If there happens to be a problem in giving the application promptly, then the RBI reserves the rights to accept or reject the application of renewal.

Step 8: If an entity obtains the final approval, then it has to initiate its business operations within six months of obtaining the nod. If it cannot, then the approval will peter out.

However, a one time extra duration of six months is availed from the RBI by giving a written request beforehand mentioning a convincing reason obstructing the launch of business operations. The RBI has the right to accept or reject such requests for providing additional time.

Step 9: Those issuing prepaid payment instruments must document all the dealings undertaken via Prepaid Payment Instruments for a minimum of ten years. According to the suggestion of the RBI, this data has to be given either to the RBI or any other agencies, as required. The issuers of prepaid payment instruments also need to file Suspicious Transaction Reports (STRs) to FIU-IND (Financial Intelligence Unit-India).

EXTRA CONSENT REQUIRED BY THE NON-BANKING COMPANIES

If a non-banking company is given the Certificate of Authorization for providing prepaid payment instruments, then a written approval is needed of the RBI in following conditions:

If there has been any takeover or acquirement of authority of the company and the same has effected any change in management or not;

If due to an alteration in the management there has been a change in thirty percent directors of the company, excluding the independent directors. But beforehand written consent of the RBI will not be required for those directors re-elected on retirement via alternation.

LEGALITY OF THE PREPAID WALLET LICENSE

The prepaid payment instruments license is valid for at least one year from the day it is issued to the concerned holder. The PPI issuer is duty-bound to inform the holders regarding the expiry of the PPIs through either SMS or e-mail or post or any other means inside a reasonable time duration. The intimation pertaining to the expiry of the PPI has to be made in the holder’s chosen language as specified by him or her at the time of obtaining the PPI. In case the PPI lapses and the holder does not provide a renewal application for a new PPI, he or she can get a grace period of sixty days.

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.The Methods Involved in Song Copyright in India

song copyright in india

Merely composing a song will not suffice as it has to be secured from violation as well. To safeguard your song from being used by your competitors or rivals is also quite critical. Copyright registration is an ideal tool to safeguard your creative work. In this write up, we will strive to provide detail regarding the procedures revolving around song copyright in India.

What do you mean by copyright registration?

Copyright Registration in India happens to be an intellectual property right provided by the law to authors of literary works. Also to, music, drama, other creative works, producers of cinematograph movies, and sound recordings. Having a copyright registration for your works comes with a lot of benefits such as the rights of copying, information to the public, modification, and interpretation of the work. The chief objective of the registration is to reward the creator or author for their work by offering better safeguards against infringement. Further, as a good news for every song author or producer at present they can even protect their song’s lyrics and music.

Merits regarding Copyrights

Nobody will be able to violate your work in any way, be it a company or any other business.

The copyright registration certificate comes across a genuine piece of document and remains active for the lifetime of the owner plus sixty years.

Infringing upon someone’s work is an offense liable for punishment and a police complaint can put an end to it.

If violated, a civil suit can be filed at the location of the owner of the copyright.

Also, anybody is allowed to copy any material report like the filing of it in any medium including automated or electronic means.

To create any cinematograph film or sound recording regarding the work. This pertains to the arrangement of your work.

If it is with regard to a computer application or program, the rights also include to sell or give on hire, any depiction of the computer program.

Documents needed to Copyright a Song

In order to furnish an application pertaining to songs copyright, the NOC of the publisher/producer/author/composer and the others linked with the creation of a song should present them.

Two original and similar samples or copies of the work.

The Methods Pertaining to Songs Copyright in India

Application filing

The first step involved in the procedure of copyright registration is to apply online via the portal of a copyright attorney. The application can be registered by the candidate or any other person authorized by him or her. As for the application record, the characteristics of the copyright and its information will be documented properly together with the number of fees. Also, post successfully submitting the application, a diary number will be created.

Unsuccessful Formality check

After the acceptance of an application to the department, it has to go through an examination or check as a formality. The examination is performed to assure the important requirements of 2 copies of work. Further, if the statement fails to qualify in the formality check, a letter seeking to meet the requirements will be given to the applicant at his/her delivery address.

Period of Waiting

In case the application or request moves from the second stage devoid of any problem, it will be free or can take any kind of objection from the person. Also, this is particularly for those who claim or have any kind of inclination in the matter regarding the copyright for 30 days. Also, if no objection has its allowance, then the application will have another preparation according to first come first serve basis.

Hearing process

If there is an objection regarding the copyright, a report will be given to both the people. Post receiving the reply, a hearing will be documented by the registrar. Also, in the hearing, both parties get an opportunity to raise their view points. If the form is received, it will again be transferred to the auditor for checking.

Registration Given/ Denied

In the end, the application will go to the registrar. If he is dissatisfied, the application can be rejected. Also, the notice will be given to the applicant. However, if the registrar is happy with the application, he gives his ascent for the same and dispatches extracts of the same to the applicant. After this, you will have exclusive rights over your songs.

Copyright with Vakilsearch

Vakilsearch assists you to copyright your songs in 3 simple steps –

A good check of the files that you sent us will be done

An application is made and then filed

Our experts update you constantly throughout the processing of your copyright application.

Finally

So, to protect your work from violations or infringements, copyright registration is a must. Don’t waste your time just do it immediately.

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Dissecting Farmers Agreement of price assurance bill 2020

Dissecting Farmers Agreement of price assurance bill 2020

The Farmers Agreement on Price Assurance and Farm Services Act, 2020 was brought in with the purpose of offering a national structure to an agreement that strengthens and safeguards the farmers who deal with wholesalers, processors, agri-business firms, exporters or any large retailers. A level of transparency and trading off agricultural products on the basis of an agreement are very critical. The agreement needs to encompass everything regarding the price, parties, delivery procedure, product and the dispute resolution method.

What’s this Farmers agreement all about?

The terms and conditions pertaining to the distribution of the agricultural products such as statutory price, class, quality, time of supply and rest of the relevant matters.

Conditions and assistance regarding the farm service supply.

As per the agreement, an oral agreement is futile. It ought to be in writing in a local language and also, the terms have to be devised in a modest way and an easy lingo for the convenience of all concerned parties. Unless there happens to be a shift, the farming agreement has to meet all the criteria given under the contract law. Therefore, the parties involved in the contract should get into the same freely and satisfy all important things mentioned in the contract.

Length of Farmers Agreement

The least duration of a farming agreement happens to be one crop season, or 1 production cycle of the livestock and the maximum is five years. In circumstances where the production cycle exceeds 5 years, the maximum duration of the farming agreement will be decided mutually between the sponsor and the farmer.

Inputs regarding the sponsor in the Agreement

The sponsor has to supply the inputs to the farmers and the commitments of the sponsor has to be specified in the agreement. Also, the sponsors has to share the mandated inputs like delivery and provide farmers with technical guidance either free of cost or on cost sharing basis. He need to give the inputs at a specific place and time as given in the agreement.

Inputs’ Usage by farmers

The inputs provided by the sponsor have to be validated and examined to determine their quality and quantity by the farmer. In case of any woes experienced by the farmers, they should inform the sponsor in writing. The inputs have to be in line with the instruction specified in the farming agreement and there should not be any deviation from the chief purpose. Further, if there is any kind of loss post delivery, then the entire onus will be on the farmers input. The farmer might return any underutilized inputs by the completion of the production cycle or according to the agreement.

Exemption provided in farmers agreement

In the farming agreement, the agricultural produces are exempted from the legislation aimed at managing the sale and purchase of farm produce. Moreover, these products will also be kept away from the provisions of the Essential Commodities Act, 1955 and confined to the stock limit obligation.

Pricing under farmers agreement

The amount of the farm produce has to be given as per the Farming agreement between sponsor and farmer.

In cases where the price of the produces is variable, the agreement provides the following:

  • A specific price needs be paid for such produce.
  • Any extra amount beyond the above the guaranteed price such as premium and bonus to justify the ideal value to the farmers and such quoting of the price may be linked to an existing price mentioned in the APMC market or the transaction platform or electronic trading and finally any other apt standard price.
  • The method regarding ascertaining the mentioned price shall be in line with the agreement.

Dispute redressal in the Agreement

The agreement regarding the farming needs to make provision for a conciliation board and the conciliation method for addressing the disputes. The board has to make sure that both the parties to the agreement get equal and fair representation. The beginning of any dispute is to refer the same to the resolution board. In case the dispute is not resolved by the conciliation board within 30 days, the either party could seek a resolution from the Sub-Divisional Magistrate. Also, parties reserve the right to appeal against the decision of the Sub Divisional Magistrate. The Appellate Authority and the magistrate have to conclude the dispute in question within 30 days. Further, the appellate authority and the magistrate have got the writ to slap penalties suitable in their view on the party. But, no act or order shall be passed for recovering dues against the agricultural land of the farmer.

Merits pertaining to the farmers’ agreement

This legislation can be beneficial for the farmers as it enables them to deal with the wholesalers, large retailers, exporters etc minus any concerns regarding exploitation. It even works in the favor of the farmers by putting the risk of market uncertainty on the sponsor and also enables the farmer to partake in excellent inputs and contemporary technology. It even aids in enhancing the revenue of the farmer and brings down marketing expenditure.

Also, the farmers will be involved in direct marketing and thereby eliminates the intermediaries and avail the best price available. Farmers are also offered appropriate safeguard from sales, mortgage, and lease of their lands and secured against any kind of recovery.

Conclusion

The government’s intention behind the act is to offer a national and consistent framework on the farming agreement that strengthens and safeguards the farmers and makes them deal directly with exporters, wholesalers, processors and Agribusiness firms. This also cut down the prospects of exploitation as they can sell their products to anyone. This will be beneficial for farmers in enhancing their income and reducing the marketing expenditure. In case of any dispute between the parties, then there is a provision to resolve the same in this act.

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Chief attributes regarding the amended Essential Commodities Act

Chief attributes regarding the amended Essential Commodities Act

The Essential Commodities Act got amended by the Government of India in September 2020. The amendment in question took down the Essential Commodities Ordinance, 2020 (EC Ordinance) enacted in June 2020. The EC ordinance was initiated for the purpose of effecting certain changes in the Essential Commodities Act, 1955. The amendment pertaining to September 2020 has done away with the EC ordinance brought out in June. This write up strives to highlight crucial attributes regarding this amendment.

What is the meaning of Essential Commodities?

According to the dictionary, an essential commodity happens to be a need that is vital for any kind of a living being. This would be normal food grains and other kinds of supplements which can be an essential aspect of the lives of individuals.

As per the Essential Commodities Act, 1955, a clear definition for Essential Commodity is missing. But, Section 2(A) of the Act explains essential commodities as “a kind of item included under the list of the Schedule which is mentioned under the Act”. This is merely a usual meaning of essential commodity.

Also, the government wields the authority to enhance or reduce the list of essential commodities under this Act.

Items in the list of essential commodities

Any kind of medical equipment or drugs.

Food items for day to day intake like any kind of edible oil.

Fertilizers (both liquid and solid) – These could be organic or inorganic.

Cotton Yarn or any other hank yarn.

Petroleum-Based Products.

Textiles such as Raw Jute and Other Products.

Cattle Food.

Seeds of Fruits, Vegetables and other forms of edible plants.

Face Masks.

Hand- Sanitizers.

The afore-mentioned list contains several forms of essential commodities. Face Masks and Sanitizers also got added in the list from 13 March 2020, due to the surge of Coronavirus across the country. In the above list, the government has got the right to control and regulate the supply of all the items. Control implies that the government can also add or exclude any items in the list of EC.

The bill repealed by the Amendment?

Big modifications were made in the September amendment in the EC bill pertaining to the essential commodities act. It took down the Essential Commodities Ordinance 2020 brought on in June. Diverse views are circulating regarding the changes effected by the amendment.

Features of the Amendment to the Bill

The present amendment transformed the function of the Essential Communities Act 1955. This has a wholesome backing as it benefits farmer’s right to livelihood. This apart, farmers can also sell directly to private companies.

The government reserves the right to cap stock holding on essential commodities. The stock-Holding limit pertains to the extent of control the government has over the commodities. According to the amendment, stock holding ceiling on essential commodities is possible only during extreme circumstances. These circumstances are the Act of God, natural calamities, war, external aggression, famine, and other circumstances.

The government has the right to regulate commodities such as pulses, cereals, potatoes, and onion and edible items during the above-mentioned circumstances. This amendment exists under section 1A of the amendment bill.

The government has the right to implement any kind of ceiling only if the following obligations are met:

In case of a 100% price surge in agricultural or horticulture produce. This price rise has to be in the retail price of the agricultural or horticulture produce.

In case of a 50% spike in the retail rate of non-perishable agricultural produces.

This kind of imposition will be arrived at on the basis of the price of the agriculture or horticulture produces in the existing 12 months or the average retail price being charged. The lower of the above value will be considered.

The ordinance is not valid for any processor, or any kind of value chain participant of the agriculture or horticulture produce. For this, the stock held by a person or a company should not be over:

The entire processing ability of the installed system; or

Demand for the exporter in the event of any kind of exports.

Value chain participant happens to be any kind of individual or entity involved in enhancing value to the agricultural production chain. This participant could be in any level of the process, including storage, production, packaging, transport, and distribution to the agricultural produce.

The features of this ordinance are not applicable to any kind of government order pertaining to the public distribution system or any form of the target public distribution systems. Under these systems, the government disburses pulses and food grains at subsidized rates to certain people.

Does this amendment hold any merits?

  • Several experts have clarified that his amendment can be good going forward.
  • Farmers can deal with companies and other private organizations devoid of any intermediaries for the purpose of selling agricultural produce.
  • The livelihood of farmers would go up in the future.
  • Farmers do not require any middlemen for using this system.
  • Overall farmer’s income will intensify as the products created by farmers can be sold anywhere. This will not just be applicable in any local mandi or Kirana stores.
  • Large organizations would put in money in villages by dealing with farmers directly, thus augmenting their revenue.

Demerits pertaining to the Amendment

Many have hailed the amendment, but there have been many criticisms as well.

With private organizations dealing with produce, hoarding will intensify. Prior to the amendment, hoarding wasn’t permitted. But, this amendment can result in indirect hoarding also. These amendments take away the states’ rights to create rules on Essential Commodities, because this amendment was enacted across the nation.

Goods’ prices under the Essential Commodities act may go up if large procurement orders are performed by various organizations. This will permit the government to control the products under the amendment via the ‘exceptional circumstances’ clause in the bill.

Hoarding can also hike the rates of essential commodities such as onion and potato, which is quite common in the kitchens of Indian households.

Conclusion

The government effected a change in the essential commodities act, 1955. The amendment regarding the bill abandoned the EC (Ordinance), 2020 brought out by the government to control commodities. Having said that, the amendment permitted the government only to regulate the stock holding limit regarding essential commodities under extreme circumstances. Yet, this amendment can benefit the farmers. Farmers would be able to transact with organisations directly. This can boost their revenues from agricultural produce. But, the amendment could increase the prospect of hoarding. So, it can be safely surmised that the amendment has both positive and negative aspects.

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Start a business instantly with your Aadhaar Card

Start a business instantly with your Aadhaar Card

It is no child’s play to start a business. You are always in a dilemma whether to take the legal way or not. But, the Modi government has come up with a fresh proposal after which, you will run out of excuses to begin a business. This initiative is known as Udyam registration.

“All you need is the Aadhaar card” goes the new slogan for entrepreneurs seeking to start a business. This write up will focus on the new initiative and reason for government to take this step.

The new declaration

Come July 1, the MSME registration method will be totally paperless and on the basis of self-declaration. According to the MSME notification, sole document needed to register your company would be Aadhar number. As part of the minimalist process, the government wants a sole window system across India.

Reason to initiate the process

MSMEs encountered a lot of issues while uploading documents. “The requisite documents are too many and the time required is less. I could hardly find time to receive Udyog Aadhar registration” – said Rahul Bharagava, partner at a small tech-firm.

According to the government, Udyam registration is purely paperless and it could be a boon for those grappling with bureaucratic Red-tapism.

Other objectives of starting the move:

Spotting the beneficiaries of several schemes launched by the government due to COVID-19 pandemic.

Saving time and money for small businesses.

What to expect from Udyam registration?

Udyam registration will give you the following:

An Udyam registration certificate.

An embedded QR code with which info about the new enterprises can be obtained.

For MSMEs with Udyog Aadhar registration, they should get Udyam registration so as to be governed by a unified code of conduct. In case an MSME is occupied with several or manufacturing services, they need to put them under one MSME but there will be no multiple registrations.

Conclusion

At present when everyone is going digital, it’s time to abolish paper work. In case you have an MSME or need to register as one, Udyam registration facilitates a paperless environment. If you need more info about Udyam registration, then get in touch with our experts.

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How Payment Gateways function? What are the advantages?

How Payment Gateways function? What are the advantages?

For the last few years, the usage of digital payment methods has touched a new high. Things have perked up further for digital payment during the Covid-19 pandemic as well. But, how many of you are aware of the functioning of the payment mechanism? Through this write up we strive to provide a good account of the same.

What do you mean by a Payment Gateway?

It happens to be a merchant service that approves and evaluates debit or credit card or PayPal payments for online traders and old-fashioned businesses. In simple terms, it acts as a mediator between your web store and the payment processor who gets paid by your customer. The digital transactions are enabled by coding sensitive data and shifting it between a payment portal and back/front end processor.

Digital payment process

Gathers info on the credit/debit card;

Encrypts the transaction information;

Sends it to the credit/debit card processor; and

Dispatches an approval or a rejection.

Is the process safe?

Payment Gateway (PG) can easily be merged with the majority of websites and virtual shopping carts to facilitate online credit card processing. This shopping cart is frequently utilized prior to the PG. It enables your customers to select the items they want to purchase, and post checkout, the shopping cart adds the purchased stuff and tax and then gathers the customer’s shipping and billing info.

Once the shopping cart process finishes, the PG encrypts and records sensitive data such as credit or debit card numbers, CVV, and CVV2 information. These are very crucial data and need to be secured from nefarious activities. Security is a critical part of these procedures. The card associations have drafted rules and regulations which should be followed by the person who obtains the card information. These rules are known as Payment Card Industry- Data Security Standard.

To add more layers of protection, online order is concluded with an HTTPS protocol that conveys personal information safely via the parties involved in the transaction.

The Functioning of Payment Gateway

It enables interaction between your website or brick and mortar store, the payment processor, and the bank whose credit or the debit card is used to finish the purchase.

Working Processes

The process starts as a customer places an order on a product from a PG-compliant merchant. The customer then clicks buy or any other similar option via keying in the card particulars on the app or merchant website.

If the order happens through a website, the customer’s web browser codes the information to be sent to the merchant’s web server. In other scenarios, similar action is performed via the Secure Socket Layer.

Following this the information is passed on from Merchant’s site to the PG.

PG dispatches transaction details to the payment processor of the concerned bank of the merchant.

A clearance request goes to the card association, which post examining the request, responds back to the processor. It signals whether the transaction was successful or failure, in the latter case it even provides reason for rejection.

Then the payment processor passes on this info to the PG.

Then PG sends it to the Merchant website. This is known as authorization and it takes 2 to 3 seconds. The merchant then finishes the order, and the above process can be repeated.

Finally, the PG indulges in a procedure called settling. In this it clubs all your transactions and dispatches them to the concerned bank of the merchant in a single batch vis the settlement processor.

It even stores your transactions and permits you to see those via the PG report facilities. This is how the PG process happens.

Advantages of opting for a Payment Gateway (PG)

Utmost Safety

The best part of using PG is the safety it offers to your e-commerce store, which makes sure customers are happy shopping. It efficiently handles all the safety aspects of the transaction and makes sure that the money reaches the destination without any issues.

Smooth integration

PGs can be easily integrated with well-known e-commerce platforms. For example, Shopify has integrations with over 100 PGs. They also possess a unique box payment system, which spares you the process of sign up.

Round-the-clock availability

The other benefit of selling online is that there is no need to be glued to the computer while sales are happening. It operates on autopilot mode. Hence, make purchases anytime you want to.

Several options on offer

The PG is receptive to both debit and credit card transactions at a basic level, however if you require more advanced options that assist PayPal payments and gift vouchers then those can also be availed.

Insightful reporting

It even gives instant reporting, which makes you aware of the health of your business. This is a huge advantage in case you want to learn how to boost sales or something similar.

Conclusion

These apart, there are several functions performed by Payment gateways such as clarifying the limit of merchant’s transactional ability, dispatching payment records, assuring encryption, and safety. These are only the tip of the iceberg; there are many more fascinating aspects of PG.

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Tips to remember while applying for loan

business 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:

  1. Business licenses and registrations critical to operating business
  2. Articles of Incorporation
  3. Copies of contracts entered with third parties
  4. Franchise license/ agreement
  5. Commercial Leases
  6. Documents from the local body confirming the permit (in case of industry)
  7. The application forms can be perfect to state your projected financial statements
  8. Bank Statements
  9. Balance Sheet
  10. Income Statement
  11. Cash Flow
  12. 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.

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

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.

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TDS on cash withdrawals over 1 crore

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 27th 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 20th 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 15th 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.

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Options before telecom to furnish guarantees for clearing AGR dues

dot osp registration

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.

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