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Rules of SEBI (Stock Broker) Amendment Regulations Act, 2021

Rules of SEBI (Stock Broker) Amendment Regulations Act, 2021

The SEBI (Stock Broker) Amendment Regulations, 2021 had been notified by the Securities and Exchange Board of India, the last date of March 30, 2021. In this, regulations were issued to amend the SEBI (Stock Broker) Regulations, 1992. Regulations were introduced in the exercise. Powers conferred under Section 30 of SEBI Act 1992. In this article, we will discuss the major changes brought about by the amendment.

Definition of SEBI (Stock Broker) Amendment Regulations, 2021

As per the amendments brought in SEBI Scheme, the definitions are inserted in Regulation 2 of SEBI (Stock Brokers) Regulations. These include the following definitions, which are as follows:

  • Underwriter

The underwriter is a person, a body who engages in the business of underlining the issue of corporate securities.

  • Underwriting 

This means that there is a contract to acquire a subscription for issued securities, or to subscribe for an issued sale, which is presented for sale without balance.

  • Issue

Issue means the sale or purchase of securities by a body corporate or any other individual or any person or group of such persons on their behalf, such as from the holder or holders of a merchant banker or the holder of such body corporate’s securities or persons. Or a group of people etc.

Important Changes in SEBI (Stock Brokers) Amendment Regulations, 2021

Some of the important changes includes in SEBI (Stock Brokers) Amendment Regulation Act, 2021, as follows:

  • As per Regulation 3, it has been provided that every stockbroker holding a valid certificate of registration will be entitled to act as an underwriter.
  • In addition, each stock broker acting as an underwriter will enter into a contract that is valid with the body on the basis of which he acts as an underwriter.
  • Each share broker acting as an underwriter must maintain the following books of account and documents, including:
  1. An entity is corporate in relation to the underwriter

Copy of the balance sheet and profit and loss account at the end of the accounting period and the auditor’s report on the accounts for that period.

  1. The body is not corporate in relation to underwriting

Records in relation to the funds received and expended by them and in respect of which receipts and expenditure are held and their assets as well as liabilities.

  • Each stockbroker, acting as an underwriter, must enter into an agreement with each body corporate, on whose behalf it acts as an underwriting authority, and the said agreement shall, among other things, provide for –
  1. The period for which the rule for the agreement is applied.
  2. Allocation of duties as well as responsibilities between the underwriter and the client.
  3. Number of underwriting obligations.
  4. The period within which the underwriting issue should be subscribed after notice from or on behalf of a corporate body of that kind.
  5. Commission amount or brokerage payable to the underwriter.
  6. Particulars of arrangements made by the underwriter to fulfill the underwriting obligations, if any.

Moreover, SEBI (Stock Brokers) Amendment Regulations, 2021, lays down the responsibilities and duties of a stock broker acting as an under-broker.

Responsibilities of a stock broker as an under broker

The following responsibilities should be fulfilled by the stock broker as an underwriter:

  • Not every share broker acting as an underwriter should receive any direct or indirect profit from underwriting other than the commission or brokerage payable under the agreement for underwriting.
  • According to all agreements, the total underwriting obligations should not exceed 20 times the net worth, which is under the rule.
  • Each share broker acts as an underwriter, who is asked to subscribe to the securities of an entity corporate for a contract, must subscribe to such securities within 45 days of receiving such notice from such body corporate.

Underwriter’s Duty

Further, the responsibilities provided above, the stock broker acting as an under-broker shall follow the points indicated below:

  • The stock broker will make all efforts to protect the interests of its customers.
  • He will ensure that it and its personnel act in an unethical manner in all its deals in which the body is an issue of corporate securities.
  • He shall not make any statement, oral or written, which may misrepresent:
  1. Service that the underwriter is able to perform for his client or has been provided to another issuing company.
  2. His commitment to underwriting.
  • A stock broker has to avoid a conflict of interest and disclose his interest adequately.
  • He should put in place a mechanism to resolve conflicts of interest situations that may arise in the conduct of his business or, if it arises, take appropriate steps to resolve them in an equitable manner.
  • He must make reasonable disclosures about his potential source or duties to the client and potential areas of conflict of interest when he acts as an underwriter that may hinder his ability to provide impartial, objective and impartial services .
  • He should not give any confidential information about his issuing company to the other issuer, press, or any other party that came to his knowledge of the issuing company without disclosing it to the director and director of the board of directors and directors. .
  • The stock broker should ensure that any change in the status of registration / any punitive action by the board or any material change in the financial which could adversely affect the interests of the clients / investors and the customers are informed immediately, And any outstanding balance is transferred to any business. Other registered persons as per any instructions of the affected customers / investors.
  • The stock broker or any of the employees should not submit any investment advice regarding any security in publicly accessible media in real time or non-real time, unless its interest is disclosed, including the said security. Includes his long / short position. While giving such advice.

If an employee of a stockbroker gives such advice, the stockbroker must ensure that when giving such advice, it is mandatory for the stockbroker to disclose his interest based on the interests of the family member and employer of the employee.

  • A stockbroker or its director, partner, manager, who manages business affairs in whole or to a large extent, is not required to engage in insider trading either through his accounts or his associates or family members, relatives or friends. needed.
  • Although he will not engage in any unfair competition, which may be detrimental to entities acting in the interest of the underwriters as the underwriter may carry on the business or, likely, while competing, may put other such underwriters in a disadvantageous position related to the underwriter. Assignments.
  • There should not be a party or instrument for the underwriter:
  1. Create false market
  2. Ragging price or manipulation
  3. Passing of unpublished price-sensitive information in relation to securities that is listed on or proposed to an individual or intermediary to a stock exchange.

Conclusion

Thus, It is clear that the SEBI (Stock Broker) Amendment Regulations, 2021 contains provisions relating to agreements with customers, which have been inserted as underwriters with common responsibilities and duties. For accurate or more information or understanding, please visit SEBI notification.

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Form 10BA: Filling Up Income Tax Form

Form 10BA: Filling Up Income Tax Form

A declaration has been filed by the Form 10BA taxpayer claiming the deduction under section 80GG of the Income Tax Act for rent paid on rental property. This article focuses on how to file Form 10 BA before claiming deduction under Section 80GG.

About Form 10BA

Form 10BA is a statement documented by the taxpayer, which is required to claim deduction under section 80GG for rent paid on rental property. It is mandatory for taxpayers to meet two requirements to claim deduction under section 80GG.

These requirements are as follows: 

  1. The first requirement as per the requirements is that the taxpayer should not obtain a House Rent Allowance (HRA) from any organization.
  2. The second requirement is that HUF should not keep any self-occupied dwelling. In the case of taxpayer, spouse and minor children, or the assessee be a part of HUF (Hindu Undivided Family).

A taxpayer can submit the statement in Form 10BA if both of the above requirements are met, and it will be mandatory to file the form before filing the Income Tax Return.

Section 80GG of the Income Tax Act,1961 talks about the reduction in rent paid on rental property, whether it is furnished or unfounded. The taxpayer should not receive any HRA (House Rent Allowance) from his organization. The above mentioned condition is necessary for the taxpayer to claim deduction under Section.

Conditions For Deduction Under Section 80GG

Following are the conditions for claiming deduction under section 80GG:

  • A self-governing person can claim deduction only under section.
  • The person claiming the deduction can be a salaried or self employed person.
  • In case of a salaried person, one should not get HRA (House Rent Allowance) from his organization.
  • From 10BA has to be submitted to the Income Tax Department.
  • The assessee should not in any case have self-occupied property like a house.
  • Assessment of spouse, minor children or taxpayer, a member of the HUF should not have a comfortable living space where he or she is living under employment or offering occupation or service.

Let’s Understand by examples:

The following are understood through an example of this concept.

One person worked for the initial six months, and after that, he started working as a freelancer. He lived on rented property for the entire year and took HRA, and has no self-owned property. He can claim deduction under Section 80GG and in the present case files Form 10BA for the rent of the last 6 months paid by him.

Purpose of Deduction Under Section 80GG & Filing Form 10BA

For FY 2018-19 and AY 2019-20, the deduction under the section should be at least: 

  • Payment of full rent which is less than 10% of the entire income.
  • 25% annual payroll deduction
  • Rupee. 5000 monthly (this means it is Rs. 60,000 annually)

Here is a list of requirements for claiming deduction:

  • The assessee should not in any case have self-occupied property like a house.
  • A self-governing person can claim deduction only under section.
  • In case of a salaried person, the person should not obtain HRA (House Rent Allowance) from his organization.
  • The person claiming the deduction can be a salaried or self employed person.
  • Assessment of spouse, minor children, or taxpayer, a member of the HUF should not have a comfortable living space where he or she is living under employment or offering occupation or service.
  • Form 10BA must be submitted to the Income Tax Department.

List of ITR Forms Applicable Under Section 80GG

The list of ITR forms implemented under Section 80GG are as follows:

  • ITR 1
  • ITR 2
  • ITR 3
  • ITR 4

The expected date for filing ITR has been set as July 31 of the next financial year.

Documents required for filing Form 10BA

Further, to documents including Form 16 and PAN details, file forms are the documents required for filing:

  • Rent Agreement and Rent Voucher
  • PAN details of the landlord, if the value of rent is more than Rs. 1 lakh.

Form 10BA is therefore filed which ensures that the landlord is not declaring the benefit of the self-occupied house at the same or any other place.

Procedure for filing Form 10BA

10BA is required to be filed online through an e-filing portal, which is very easy. Following are the online steps to fill the form:

  • Go to the Income Tax e-filing portal and login through credentials.
  • Go to the e-file option and choose the income tax form.
  • Choose Form 10BA from the drop-down menu, and then choose the corresponding assessment year.
  • Select the submission mode and submit it online.
  • Then click on Continue.
  • Enter all the details including the name of the landlord, how much rent has been paid, rent property address etc.
  • Preview the form and then submit it.

Details required in Form 10BA

The following details are required in Form 10BA:

  • Taxpayer name
  • PAN Details
  • Rental Property Address
  • Paid the rent
  • Landlord’s name and address

Conclusion

Form 10BA is a statement that should be filed on the Income Tax website under the e-filing portal. The form is filed to claim deduction under Section 80GG of the Income Tax Act. Thus, it is preferable to file Form 10BA before filing ITR and claim deduction from rent under Section 80GG.

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Get Yourself Registered on TDS TRACES Website

Get Yourself Registered on TDS TRACES Website

The Income Tax Department has introduced the concept of TDS TRACES, in which taxpayers and deductors have explained the entire process as well as can easily download the challan details from here. Apart from this, the mistakes made in the previously filed returns can also be rectified.

Know About TDS TRACES

TRACES, TDS Reconciliation Analysis and Correction Enabling System is in fully expanded form. The Income Tax Department has introduced this online facility to make the process efficient and to rectify the already filed TDS returns. This avoids the task of filing revised returns for the process of rectification, which is a time-consuming process. Taxpayers and deductors can easily access the TRACES website through an online process. One can refer to TDS and TCS paid while filing the return to ask for further details and to check the details.

TDS TRACES Registration

Registration on TDS TRACES can be done as both taxpayers and deductors.

As a Taxpayer

  1. Go to the website (www.tdscpc.gov.in).
  2. Select the taxpayer option and then click Register as a new user.
  3. It is necessary to provide the following details to the applicant:
  1. Name
  2. In case of date of birth or company date of incorporation
  3. PAN Details
  4. Verification Code 
  1. After filling in these details, click on proceed.
  2. In addition, the following details are required:
  1. TDS or TCS details through Form 26AS or Form 16 / 16A
  2. Details through Form 26QB
  3. Statement of advance tax, self-assessment tax, TDS on the property paid from the challan.
  1. Go ahead and then provide the applicant’s communication details.
  2. Then create an account and verify the details entered, and click proceed.
  3. The taxpayer will receive an activation link. The message will be sent to the registered email and mobile number by the taxpayer. In this message, click on the link and activate the account from OTP.
  4. After this, TDS TRACES login.

As a Deductor

  1. Visit website (www.tdscpc.gov.in)
  2. Select the deductor option and then click Register as a new user.
  3. Fill in the required details: 
  1. TAN
  2. Verification Code.

The system will automatically detect details such as form type, fiscal year and quarterly.

  • The deductor will be required to enter a TDS Return Token Number or PRN (Provisional Receipt Number).
  • A valid CIN, BSR code, date of deposit, invoice amount and CD record number are provided along with the challan number.
  • A maximum of 3 PAN-amount combinations are filed by the deductor and a TDS file has to be submitted against the PAN as well.
  • The deductor will then have a validation code valid for the previous financial year, quarter and type of form. Enter the authentication code to proceed.
  • Go ahead and then provide the applicant’s communication details.
  • Then create an account and verify the details entered, and click proceed.
  • An activation link will be received on the deductor’s registered email and mobile number. Click on the link that came in the email and mobile messages. Activate the account by receiving OTP.
  • Then login TDS TRACES and take advantage of the services offered in it.

Use of TDS TRACES

The TDS TRACES website allows taxpayers as well as TDS Deductor to perform various activities, but has some limitations:

  • TCS / TDS file for rectification
  • View challan status
  • Submit refund request online
  • View and download Form 26AS
  • Complete online correction of previously filed TDS returns
  • Check the status of various tax details online
  • Download the consolidated file, justification report and both Form 16 and 16A.
  • Online correction of OLTAS challan.

TDS TRACES has transformed the complex and paper-based system that allows taxpayers and deductors to take advantage online.

Facilities available at TDS TRACES

The following are the main facilities offered by TDS TRACES to the taxpayer:

  • Download Form 26AS and Form 16B
  • TDS Certificate Verification
  • The collected TDS compliance report can be studied and downloaded from here.

The facilities offered by TDS TRACES to deductors are:

  • The status of the challan can be seen
  • Download Form 16 and Justification Report
  • Online improvement
  • TDS Refund
  • View TDS / TCS Credit against PAN
  • Declaration of non-filing statement.

TDS Challan Checking  Process on TRACES

It is of utmost importance to check the TDS details while filing your quarterly TDS or TCS return. Checking can easily be done by logging into the TRACES account. The status of the challan can be seen by CIN (Challan Identification Number) or BIN (Book Identification Number). By providing a CIN or BIN, the status of the invoice can be seen by the duration of the payment.

Following are the steps to check TDS Challan on Trucks, which are:

Step 1: Log in to the TRACES portal using credentials.

Step 2: Then move the cursor over the statement or payment link in the top menu. Click the status of the invoice from the drop-down menu on it.

Step 3: Check the status of the challan by CIN or BIN.

CIN

In case of CIN, select the CIN option to check the status of the challan. After that choose the payment term and click proceed. A list will appear for the status of the movement, where the details will be found.

BIN

In the case of BIN, select the BIN option to check the status of the challan. Choose the payment term, then click Go. After clicking enter BIN details on the open page, then view consumption details and click on it.

Conclusion

The Income Tax Department has introduced the concept of TDS TRACES, in which taxpayers and deductor can study the challan, as well as download the challan details. TRACES taxpayers can rectify mistakes made in previously filed returns with this new concept and also provide a number of features for deductions on its taxpayers.

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RBI Extends Timeline To Comply With Directions On Recurring Online Transactions

RBI Extends Timeline To Comply With Directions On Recurring Online Transactions

The Reserve Bank of India announced an extension of the timeline for the processing of recurring transactions from six months to 30 September 2021. With many banks failing to comply with the directives, including the top lenders, the Reserve Bank decided to extend the implementation date of the guidelines for recurring online transactions. In this article, let’s take a look at this development.

Background

RBI issued a framework for processing e-mandate on recurring online transactions. This framework initially applied to cards and wallets, but in January last year the framework was also extended to cover integrated payment interface transactions.

The additional factor of authentication requirement has made digital payments safe and secure in India. With customer security and convenience in the use of recurring online transactions, the framework extended the use of the additional factor of authentication during registration and earlier transactions (to the extent of Rs 2000, with rest for subsequent transactions, up to Rs 5000), and prior Transaction notification, mandate withdrawal facility, etc.

The major motive behind this framework was to protect customers from fraud and to hear about customer convenience. Extending the timeline to 31 March 2021, based on the request of the Association of Indian Banks to allow banks to complete migration, RBI advised stakeholders to migrate to the framework by 31 March 2021 in December last year. Therefore, sufficient time was provided to the stakeholders to follow the guidelines.

Although, it was noted that the framework was not fully implemented even after extending the deadline. The RBI stated that this compliance has been noted with grave concern and will be dealt with separately. It is further noted that implementation delays by some stakeholders led to potential large-scale customer inconvenience and default conditions. Therefore the Reserve Bank, with the aim of preventing any inconvenience to the customers, decided to push the timeline for stakeholders to migrate to the framework by six months by 30 September 2021.

RBI Required Mandatory Points for Recurring Online Transactions

The following mandatory points may be noted:

  • Beginning in October, if you have set the option of auto payment for recurring transactions, you will need additional authentication as per the rules issued by the Reserve Bank.
  • As a relief for bank customers, RBI has raised the limit of recurring transactions to Rs 5000.
  • This means that if you have a recurring auto payment of more than Rs 5000, you will receive an OTP from your bank, and once the OTP is certified, the payment will be deducted.
  • The new RBI rules will apply to transactions made using all types of cards. This means that when you have a registered debit card or credit card for auto payment, you will need an additional factor of authentication if the transaction is worth more than Rs 5000.
  • All types of prepaid payment instruments, including wallets, are included in the scope of the new RBI regulations. This means that any recurring payment of more than Rs 5000 through it will require additional authentication.
  • The Reserve Bank has in the past introduced a number of security and security measures for payment via card, and now the UPI has also been included under the requirement for additional authentication.
  • As the new RBI rule, it will allow banks to send notifications to their customers 24 hours for auto payments for recurring transactions.
  • Customers will be provided with the option to select the mode of notification they wish to receive at the time of registering the e-mandate for recurring auto payments.

Banks Ready for the Change of Recurring Online Transactions

For banks and payment institutions, this change is nothing short of a tough challenge where they need to overhaul existing recurring payment flows and maintain standardization for easy execution of payments.

Officials at fintech firms said the industry sought a further expansion because of the infrastructure burden on merchant partners, banks and payment processors. He said that banks have a difficult task with the infrastructure population already upgrading their systems and standardizing payment flows for the Reserve Bank’s new mandate for recurring payments. In addition, the payment failure risk increases in case of any fault in the system, which will affect customer confidence on recurring payments.

HDFC claimed that it completed the development of a common e-mandate platform and is working jointly with merchants to enable it to live for its customers as soon as possible. An official of the State Bank of India said that the bank does not have an auto-charge facility on its debit card and is now installing a new structure.

Conclusion

The Reserve Bank of India, as a one-time measure, has extended the timeline to ensure full compliance with the new framework. It may be noted that during the extended timeline, no new mandates for recurring online transactions will be registered by stakeholders unless the mandates are in line with the framework. The RBI warned that any further delay in following the framework beyond the above timeline would attract stringent supervisory action.

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Everything You Need To Know About Credit Score

Everything You Need To Know About Credit Score

Today’s era, people are very enthusiastic to know about the credit score, but the information remains incomplete due to lack of complete information in one place. This article talks about credit score in detail as well as how important it is for borrowers to maintain a good score.

A credit score refers to a score of 3-digits between 300-900 and credit information is given to the company based on information provided by individuals or companies. This credit score in turn is accessed by your potential lenders. It is considered by bankers and lenders to be one of the most important deciding factors.

What is a Credit Score?    

A credit score refers to a number between 300 and 900 that reflects the creditworthiness of the consumer. Accordingly, the higher credit score, the better a borrower represents the potential lenders.

Credit history under a credit score is based on the number of accounts opened, the total level of loan and repayment history and other factors. Many times lenders use the credit score to evaluate the probability that a person will repay the loan on time.

A credit score is important because it is represented by the value or dependence of the borrower. A person has a direct relationship with the eligibility for the loan.

Importance Of Credit Score in India

In India, the Reserve Bank of India(RBI) has the rights to license the company to access and manage credit information. The RBI has so far licensed four companies to carry out these activities, which are as follows: 

  1. CIBIL- Credit Information Bureau (India) Limited
  2. Equifax
  3. Experian
  4. High Mark

First in 2001, CIBIL started its activities and became the most popular credit information company in India. Additionally, the other three companies monitoring credit scores have their own scoring system.

One special thing in these companies is that if the credit history is six months old, then they score one in terms of no credit history or zero. Apart from this, these companies provide in-depth credit reports and credit scores based on credit reports.

What is CIBIL? How does it analyse the credit score? 

CIBIL stands for Credit Information Bureau (India) Limited. It is one of the credit information companies, which is engaged in maintaining records of all credit-related activities of companies and individuals, including credit cards and loans.

Registered banks and financial institutions periodically report to CIBIL all credit-related activities. CIBIL issues the CIR (Credit Information Report) and credit score periodically based on the credit-related information provided, which serves to provide data to banks by helping banks filter out loan applications received during their business.

What Is The Credit Score Range In a Credit Score?

A credit score range in a credit score is a 3 -digit number that summarizes the activities of a person’s or company’s credit history. A credit score is between 300 and 900. It is important to maintain a high credit score in the credit score. The higher the credit score, the easier it will be for an individual or company to obtain loan approval.

The most commonly used scoring model has a credit score range of 300 to 900. Creditors set their own standards for which score they will accept, but these are general guidelines:

  1. A score of 750 – 900 is generally considered excellent credit. This credit score indicates that the party concerned is paying all dues on time. Given this credit score, it becomes easy to get a loan or credit card approval from the bank.
  2. A credit score between 650 and 749 is considered good credit. This score is considered good by good lenders and willing to offer loans.
  3. This credit score between 550 and 649 is appropriate. It states that the party concerned struggles to pay the outstanding balance and interest rates will also be higher.
  4. Scores of 350 – 549 are considered bad credit scores. This indicates that the party concerned (individual or company) is not able to pay the EMI on time. Getting a loan or credit card in this credit score range is difficult because looking at the credit score, it seems to indicate a higher risk.
  5. And, credit scores below 350 are non-applicable or have no history. If a person or company has not taken any loan or has not used a credit card, then there will be no credit history i.e. the credit score will be considered non-applicable.

Thus, a good credit score range increases the likelihood of a good deal on debt and credit cards.

Why do lenders monitor credit scores?

Lenders check the credit score to see the creditworthiness of the borrower, so that the lender can know which category the credit score range of the borrower is in. The lender will monitor the borrower according to the credit score range.

Some of the main factors are:

• Lender looks at credit history

• Find out the borrower’s ability to repay the loan

• To determine and understand whether the borrower qualifies for the loan

• To know about the risk and debt balance of the borrower

• To fix the amount for the loan and applicable interest

How to analyze your credit score?

Want to know your credit score check? Just read the following steps…

Step 1) Firstly, visit to https://www.cibil.com/ and have to log in 

Step 2) Register to receive your annual credit score and online report.

Step 3) Then, You need to fill in your personal details such as address, PAN details, date of birth etc.

Step4) Click Submit after filling. After submitting the details, the applicant will receive an SMS and an email about the credit score.

Step5) Click on the link in SMS or Email. Then you will be directed to the CIBIL login page. And enter the email ID and password once sent.

Now you can see your credit score on the screen. The Reports tab will take you to your Reports section. Check account information for detailed reports and your credit history.

Conclusion

If you start monitoring your credit score, you will realize that your unwillingness to repay the loan or over-indebtedness increasingly affects your chances of getting a loan in the future. And you will become more specific about repayment of your loan and overdraft and avoid applying for additional loan.

Thus, it can be concluded that maintaining a high credit score is important as it ensures ease of obtaining loan or credit card approval. At the same time it would be more likely to get loan approval.

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How to Invest in Alternative Investment Fund (AIF) in India?

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In today’s market in India there are several ways of investment by way of mutual funds, stocks etc. and the unconventional options like Alternative Investment funds. 

If you are looking for the best way to invest then AIFs are a very good option to invest if you are ready to take additional risk. 

In order to avail good profits out of AIFs, you need to be well read about these funds. These funds have a bright future in India especially with the high net worth individual clients.

So in this blog we will delve deeper to understand different ways to invest in AIF and its benefits thereof.

What is an Alternative Investment Fund?

Alternative Investment fund is a fund which is privately pooled from the Indian or foreign investor for investing in accordance with a defined investment policy for the benefits of its investors.

AIFs in India are established either as a company, Trust or LLPs or a corporate body. This asset class includes venture capital funds, private equity, angel funds and hedge funds.

If an investor is meeting all the investment criteria then AIFs are the best option for them to choose.

These Funds do not come under the purview of Securities and Exchange Board of India (SEBI) mutual fund regulations.

However, AIFs product comes under the purview of regulation 2(1) (b) of the regulation Act, 2012 of SEBI.

SEBI classifies AIFs into 3 broad categories as in Category I, Category II and Category III.

Classification of Alternative Investment Funds

SEBI has classified the AIFs into three broad groups as-

Category I

Category I usually invests in startups or in small or medium enterprises for ventures in their early stages or infrastructure or social venture etc.

These sectors are considered as socially desirable or economical by the government of India as well as for the regulatory bodies.

Sub-Categories of Category I of AIF

  • Venture Capital Funds- these ventures invest in the start ups and emerging businesses which have a long term growth curve. These ventures take part in day to day operations of the businesses.
  • Angel Funds- These funds comply with the regulations of Chapter III-A of the SEBI AIF regulation for making investments.
  • Small and Medium Enterprises Funds- In this investments are done in small and medium enterprises. The minimum investments for these funds are capped at INR 1 crore, with a minimum tenure of lockin period of three years.

Category II

Category II AIF do not take any sort of leverage or borrowing except meeting day to day operations of the company.  The minimum corpus for this scheme is INR 20 Crore, with a tenure for lockin period for 3 years.

There is no incentive or concession from the government side on these funds.

Sub-categories of Category II

  • Private Equity Funds- These funds take complete ownership of the company as they cannot raise funds by equity and investments, with a lock-in period ranging between four to seven years.
  • Debt Funds- These funds generally invest in the debt securities. Investments in these funds are either done in listed or unlisted companies according to the fnd objectives.
  • Funds to Funds- These funds follow a strategy of investment to invest in other Alternative Investment Funds. 

Category III

These funds apply in various trading strategies like future and margin trading, arbitrage and derivative trading while investing in listed or unlisted derivatives.

They are two types of funds as close ended and open ended funds and are way less regulated than the traditional funds.

Sub-Categories 

  • Hedge Funds- These Funds pool investments from private investors to invest in international as well as domestic markets using several trading as well as investment strategies. These funds include a hefty fee of about 2% of the investment and about 20% share of the profits.
  • Private Investment in Public Equity- These fund managers in this strategy often buy stocks of publicly traded companies, but at a discounted price. 

How to invest in any AIF

If you are ready to take risk then investments in AIF is the best option. You have to be eligible to invest in AIFs usually it is the resident Indians, NRIs i.e. who have settled abroad and foreigners. If you are a general investor, your permissible limit will be INR 1 crore whereas the minimum investment limit is INR 25 Lakh for the angel investors.

And investors who are willing to make an investment in unlisted companies, then you should be prepared to undertake the associated underlying list. An AIF cannot openly invite the public to subscribe to its units, rather they can only raise funds from the esteemed investors through a private placement.

After payment of the registration fees, once the certification is done by SEBI that the AIF has been registered, the AIF contacts the stock exchanges for the listing of the funds by submitting an investment management agreement or a placement memorandum, in accordance with Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012. You have to submit your income proof, ID proof and the PAN card to invest in an AIF. 

Contact BIAT Consultant for your AIF registration needs at info@biatconsultant.com. 

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How to save Income Tax through Tax Planning in India

How to save Income Tax through Tax Planning in India

For many people Income tax becomes challenging which could be because of many reasons. Therefore, it is important to do tax planning and to take expert advice over your Income Tax. Proper tax planning can help you in saving tax. In this blog we will discuss how proper tax planning can help you in saving tax.

What is Tax Planning in India?

So basically tax planning is understanding or analysing one’s financial situation from a tax efficiency point of view so as to plan one’s finances in the most optimized manner. 

Tax planning helps taxpayers to make the best use of tax exemptions, deductions and benefits to minimize his tax liability every year.

Therefore individuals, businesses and organizations with the help of experts or by themselves do tax planning in order to get benefitted from the taxes paid on their annual income and profits.

What are Different Methods of Tax Planning?

Following are the types of Tax planning-

  1. Short term Planning of Income Tax- The tax planning in this method is done closer to the financial year and selecting the best investment method to save tax. However, at last moment people may make hasty decisions while filing ITR.
  2. Long Term Planning of Income Tax-  Starting Tax Planning at the start of your financial year is known as long term tax planning.
  3. Purposive Planning of Income Tax- Purposes planning of Income tax means planning the taxes in order to avail benefits by taking right investment decisions through correct selection of investment, replacing the assets, business expansion, programme etc.
  4. Permissive Planning of Income Tax- This means Tax planning is done in order to avail tax concessions, deductions and other exemptions permitted under law.

Tips to Save Income Tax

Here we will discuss about Tips to save Income Tax and they are as follows-

  1. Tax Saving Through Interest Payment on Loan- The Central Government has annonces certain tax benefits if you are repaying some education loan, car loan, home loan and personal loan. There are some investments that are considered under section 80-C. Tax benefits are also provided to individuals if they are paying Life Insurance premium (LIC) or have subscription to units of Mutual Funds equity. This could turn out to be the best tax saving option if it is executed wisely.
  2. Buy a Health Insurance Policy- As per section 80D of the Income Tax Act, premium paid on health Insurance policies are allowed as deduction from total income. Benefit of upto 15000 could be availed. This is also a great option to save tax.
  3. Make a Donation- section 80 G of the Income Tax Act allows tax deductions, if contributions are made to a charitable trust or to Non Governmental organizations. This will not only help you to save tax but also brings some virtue.
  4. Equity Mutual Funds- Investing in Equity Mutual Funds also makes your profits 100% non taxable. However it is advisable not to sell their equity shares before 12 months or one year as income tax could incur on your profits.
  5. House Rent Allowance- If you are staying in a rented accommodation, then you can claim house rent allowance to save tax on house rent.
  6. Medical Bills- You can use the receipts of purchase of medicine which can benefit you in saving tax at the end of year. A specified amount is not taxable for you and your family.
  7. Daily Travel Allowance- You can also avail tax benefits from your company for conveyance. It will help you in saving tax on conveyance allowance. However, it is not required to submit any proof regarding the same.

How can you smoothen your tax benefit at the last minute

Following are the guidelines on how to save taxes at the last minute-

  1. Calculate- Calculate how much you need to invest. Consider various deductions for this that you are eligible for.
  2. The Right Product- If you make a rush, then you may end up making the wrong investment. Therefore always analyze tax saving investment products on parameters like liquidity, lock in, expected return, capital risk and taxation.
  3. Prepare a budget- It is always beneficial to make investment budget for a few months as last minute saving could put more strain on your finances.

Therefore, proper tax planning could also help you to save in your income tax. You can take assistance from financial experts like Chartered Accountants so that they can guide you in a better way on how to invest and where to invest in order to save income tax.

BIAT Consultants provide best financial assistance on how you can save income tax.

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Termination and Liquidation of Alternative Investment Funds (AIF)

Termination and Liquidation of Alternative Investment Funds (AIF)

The year 2020 has gone for good as it affected many businesses including alternative investment funds which leaves investors in dismay amidst widespread job loss and business shutdowns.

These markets faced serious concerns around the life of funds centered around-

  • Early Termination
  • Liquidation and
  • Extension of the Funds

In this blog we will discuss Alternative Investment Fund and primarily we will discuss category I and II in this blog, as in India these both funds are close ended funds registered under SEBI.

Different Types of Alternative Investment Funds

  1. AIf Category I- This category has a positive effect on the financial system. The AIf programme includes funds that make advances to sectors that have significant economic and social viability and includes Venture Capital Funds, SME Funds, Social Venture Capital Funds and infrastructure Funds.
  2. AIF Category II- This category of funds used to meet day to day expenses that are permitted by SEBI. This category also includes AIF debt funds. Based on the state objectives of the fund, investments are done primarily by listed/unlisted investee corporates in this fund. 
  3. AIF Category III- This AIF program comprises of all those funds that are likely to result in negative externalities involving complicated strategies in trading and degenerative systematic risk involved in leveraging and includes –
  1. Hedge Funds
  2. Private Investment in Public Equity (PIPe) funds

Salient features of AIF

Following are the salient features of AIF-

  1. Category I and II are given for a term of 3 years and can be extended for 2 more years with the approval of at least two third of investors by value. Category III on the other hand has the option of being open ended or close ended.
  2. SEBI mandates the filing of information memorandum for stipulated fees. 
  3. AIF under category I and II may be listed on stock exchange provided the tradable lot comprise a minimum amount of INR 1 Cr. However, stock exchange programmes cannot be opted by any AIF to raise funds.
  4. The permitted upper limit of investible funds for any investee company is 25% for any AIF programmes/schemes.
  5. As per SEBI, all AIFs are required to have qualified Institutional Buyer status.
  6. Proper guidelines are available in AIF regulations in order to avoid any conflict in future.
  7. On an annual basis all AIFs are required to provide the investors with the composite financial details around portfolio company and material risk involved along with the strategies used to manage them.
  8. As per guidelines SEBI reserves the right of investigation and/or inspection of the AIFs and also issues further necessary guidelines as required.

Termination of Alternative Investment Funds

AIFs generally expire when the fixed term of the fund as documented in the fund papers expires.

However there is always a prior termination of AIFs as mentioned in the clause of the agreement. AIF regulations also talks about early termination of AIFs.

It is obvious that both the investors and fund managers are aligned and focus all strategies and efforts towards the continuation of the fund till its original expiry date; more so investments in funds with longer tenure are designed to reap returns over a designated time period.

The principal objective being the maximisation of the value of the portfolio by aligning with the time available based on the tenure of the fund. For this asset class, the planned ‘orderly exit’ helps the fund to optimize the risk and return opportunities.

For AIF Category I, there is a distinct difference between liquidation and termination (winding up) of the fund. Liquidation should ideally happen within 12 months of termination of the fund. Understanding the difference becomes important in drawing giveback provisions for investors.

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Registration processes in BIS : Step by step guide

bis registration process

BIS happens to be a national authority which promises the superiority, security and dependability of products in India. The intention of BIS is to check the samples of products when they are in the preliminary and surveillance stage. India has in total eight central, four regional and three branch laboratories of BIS.

BIS Registration Product Scheme

BIS Registration product Scheme happens to be one of the biggest schemes across the world having more than 26500 licenses encompassing in excess of 900 products. It permits the manufacturer the usage of the well-known ISI Mark on their products which assures superior quality. BIS Registration product scheme even runs Foreign Manufacturers Certification Scheme with which international manufacturers can get a license to utilise the BIS standard mark.

Documents needed for BIS Registration

Documents needed for BIS registration process is segregated into two parts:

First part delves into the technical details of the products available for lab tests. The information manufacturer must submit the construction details of the product such as:

  • PCB Layout
  • Schematic Diagram
  • User Manual
  • Critical Components List
  • As for the second part you must submit the Factory Documents & Information to finish the BIS Application Form and Process, that is, all rudimentary details regarding the manufacturing unit:
  • Trademark Registration Copy
  • Organizational chart of the factory
  • Legal address proof of factory
  • List of machinery
  • List of equipments
  • Documents of Authorized Indian Representative (AIR) when the manufacturer is from outside India

The BIS Registration processes usually consume close to 30-35 days to finish including testing time of 15-20 days and the BIS Application processing time which is 10-15 days.

Types of BIS Registration Schemes

The BIS Registration for the product is classified under various types of schemes which is as follows:

Normal Process For Local Manufacturer

The applicant must furnish the BIS registration or BIS Registration application along with some documents and the necessary fees. Post the submission of the application an assessment is done by a BIS officer whereby the samples are checked in the factory and drafted an indigenous testing report. And, if everything goes according to the script then BIS registration is given when the sampling procedure is accepted.The BIS registration is given within 4 months post submitting the application.

Simplified Process for Local Manufacturers

Over here, the applicant along with the application for BIS Registration furnishes a test report of the sample from the accredited lab to the BIS officer. In case the test report is good enough then the BIS officer will validate the factory and give certificate of registration within 30 days of submission of BIS Registration application with a required test report.

The simplified procedure is applicable for grant of license of All India First license cases and for all the products except for the following:

Products such as cylinders, valves, cement, etc. , where it is essential to have the consent from another statutory body;

All other products where BIS license is given as per factory testing;

Packaged Drinking Water (PDW) and Packaged Natural Mineral Water (PNMW).

Eco Mark Scheme

BIS also offers License to eco-friendly products under a special scheme- ECO Mark Scheme where every environmental product is classified in line with the basic requirements under Indian Standards.

Foreign Manufacturers Certification Scheme

The ISI mark for foreign applicants or manufacturers is specifically designed and given under a different scheme within a 6 months period. In the year 2000 the concept of Foreign Manufacturers Certification Scheme (FMCS) was brought in by the Bureau of Indian Standards (BIS) with the objective of enabling the overseas applicants or foreign manufacturers so that they also can utilize Standard Mark on their products. A BIS license that fits into this process can be had in 6 months.

Registration Process for BIS Registration

Licensing Process

As for the licensing process, these steps are needed-

  • Submission of application
  • BIS Officer going for a preliminary Inspection
  • Post the Inspection, the samples get checked
  • After conclusion all the assessment, the final outcome will be given

Surveillance Process

Following the Inspection Process, the next method is called the surveillance process in which the factory’s total survey is done. The following steps are initiated for the surveillance procedure

  • The Inspecting authority will go the factory and verify it
  • Post the testing, the samples are taken
  • The samples will be given to the Independent labs
  • The test report will intimate about the complaint or provide response on the investigation
  • The performance review report will be prepared
  • Upon the review of the report license is granted

BIS Registration Mandatory Products

Not every electronic product or other products require BIS Registration however there are some products that come under the essential requirement. The list of products is given below-

  • Cement and Concrete
  • Diesel Engines
  • Household electronics
  • Food and related products
  • Oil Pressure Stoves
  • Automobile Accessories
  • Steel products
  • Wood Products
  • Leather Product
  • Cylinders, valves, and Regulators
  • Medical Equipment
  • Electrical Transformers
  • Testing instruments
  • Rubber and plastic
  • Machinery and equipment

Validity for BIS Registration

The BIS registration remains active for two years and is renewable if the product and the standard are not modified. License renewal is done for at least a period of one year and maximum up to five years. Though, the renewal hinges on the yearly license fee and advance minimum marking fee. If the renewal application is made post the expiry of validity of the license, the applicant will have to cough up a late fee of rupees five thousand.

What do you mean by Compulsory Registration Scheme (CRS)?

In October 2012, the Ministry of Electronics & Information Technology brought an order that stipulates that no one is permitted to manufacture or store some goods. It gave “Electronics and Information Technology Goods (requirement for Company Registration) Order, 2012 and has provided 15 categories of electronic products that have been exempted from sale, import or distribution. Notify goods that do not follow the Indian Standards. Hence, it is mandatory for the manufacturer of the listed electronic products to apply for BIS registration by following the prescribed procedure:

  • Bureau of Indian Standards (BIS) during that stage enrolls the manufacturers under its registration scheme.
  • The enlisted makers are allowed to announce that their products are in conformity with the specified Indian Standards.
  • The registered manufacturers must specify that their products use the Standard Mark notified by the Bureau.
  • Provisions of Chapter IVA of BIS Rules 1987, regulates Compulsory Registration Scheme.
  • The Ministry of Electronics & Information Technology (MEIT) has swelled its list by including 50 more products, all these products come under the category of products that require Compulsory Registration.

Who all can apply?

  • Manufacturers of the products mentioned in the scheme which is located in India or outside India.
  • The different Registration number for products manufactured at various locations.
  • The separate Registration number for every brand being manufactured at the same location.

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Yearly compliance checklist for Startups In India

Yearly compliance checklist for Startups In India

Do you intend to set up a startup but worried about several laws to follow? In case your answer is yes then we can help you with all the compliances regarding start up.

With regard to start up, money is precious and it won’t be a good idea to waste some currencies as penalties towards non-compliance. So, follow rules and regulations to bypass hurdles.

The various laws you must follow:

  • Goods and Services Act (GST)
  • Companies Act
  • Labor and mercantile laws
  • Income Tax Act

After getting your startup registered as an Indian company, it is essential to follow the provisions specified in the Companies Act, 2013.

List of major things one should not miss with regard to startup:

  • Accounts filing with ROC (Form AOC-04)
  • Board meetings
  • Statutory Audit
  • Annual General Meeting (AGM)
  • Annual Returns with ROC (Form MGT-07)

These happen to be some chief Startup compliances that individuals must follow but apart from these there are some more forms that differ. To give an example, if you have taken a bank loan, you must file the CHG-01 form with ROC to get your charge registered. There exists a penalty for the late filing of the statutory forms.

It is essential for every company to get the turnover audited by a certified CA every year. Even if there had been no transaction in a year.

Filing income tax is a must

In case the startup is formed as a limited liability partnership or a proprietor company, it is mandatory to file the income tax. If the taxable income happens to exceed the exemption limit, you must file within a certain time limit. A fee is levied for filing income tax late.

Startup Checklist to follow with GST

The ideal thing about GST is that you are no longer required to pay indirect taxes. Goods and Service tax is an easy and convenient tax regime. You should register under GST in case of a turnover of over Rs 20 Lakhs annually. If you happen to hail from any special states, you must get registered if the turnover exceeds Rs 10 Lakhs annually. In case you happen to be an online seller, GST compliance is mandatory.

In short, you must follow below-mentioned Startup compliances for GST:

Annual GST in case the annual turnover goes beyond Rs 2 Crores.

Registration if you go beyond exempted turnover of Rs. 20/10 lakhs

Monthly returns in case the turnover exceeds Rs 1.5 Crores or else quarterly returns

Annual returns

EWAY bill for transportation if the value of invoice crosses Rs 50 thousand for transportations of the goods.

Startup checklist to follow with labor laws

There are three chief laws applicable to a company on the basis of the number of employees working under you:

Provident fund

Provident fund applies to you if there are over 20 people working under you. You have to register under PF and file the returns. Each month, a part of employees’ salaries must be cut and paid to the government together with the share of the employer. Then, a return must be filed. Do not ignore PF as it is a critical law to be followed.

ESI

Employees’ State Insurance happens to be a health insurance and social security scheme meant for the workers in India. This fund is handled by the State Insurance Corporation for employees as per the ESI ACT 1948. The ESI law functions akin to the PF law.

Profession Tax

For certain states, it is essential to file the profession tax. For example, in states like Karnataka, in case you pay over Rs 15,000 salary then it is a must to subtract Rs 200 each month and pay the same to the government.

It is a must to follow these laws so that your company does not face any legal hurdles going forward. Hence, ignore this at your peril.

Who we are?

We are one of the leading business management consultants in India providing several services such as Proprietorship Firm Registration and Start up Compliance Package and Company Compliance Package. We also offer a host of services in tax administration and procedure expansion to efficiently manage GST compliance Process. You may contact biatconsultant.com now

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