Search Results

With effect from 01.01.2021, section 16(4) of the CGST Act, 2017 was amended vide the Finance Act, 2020, so as to delink the date of issuance of debit note from the date of issuance of the underlying invoice for purposes of availing input tax credit. The amendment made is shown as: "A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the due date of furnishing of the return under section 39 for the month of September following the end of financial year to which such invoice or invoice relating to such debit note pertains or furnishing of the relevant annual return, whichever is earlier." As can be seen, the words "invoice relating to such" were omitted w.e.f. 01.01.2021. Therefore, Debit Notes (hereafter as "DN") issued prior to 01.01.2021 will be linked to the invoice for considering the last date of availing ITC, whereas same would not be linked to the debit notes issued after 01.01.2021 Therefore, even if invoice is issued in 2020-21 but if debit note is raised in Apr-21 then the credit for the same could be availed until Sep-22. One should take the note of the same and clam the credit accordingly. It is important to understand that the section 34 of CGST which provides time limits for issue of Credit notes (hereafter as "CN") and but it does not provide any time limit for DN Further to this section 16(4) provides the time limit for a claim of ITC for such DN is not linked to the Invoice for such supply and same shall be construed as a "supplementary invoice". Therefore DN can be issued at any time and the ITC thereof would be linked to such debit notes and not invoices for such supply. The time limits for CN is restricted to return of September following the end of the FY in which such supply is made or date of furnishing the relevant annual return, which ever is earlier. Any views expressed in this communication are those of the Author. Review carefully the material and perform such due diligence as you deem fit, including consulting your own independent legal, tax, accountancy and other professional or specialist advisors, as necessary or appropriate. This material is for your general information only and we are not soliciting any action based upon it. This material should not form the primary basis for any decision that you make in relation to matters referred to herein. Opinions expressed are current opinions only as of the date indicated. Author does not accept any responsibility to update any opinions or other information contained in this material.

The government had informed executing the fifth phase of e-invoicing to assessee whose yearly turnover exceeds Rs 10 cr to 20 cr. From Oct 1, 2022, the same phase will start, it just impacts drastically the small businesses that have the same turnover as well as affects their business processes and complaints. An Overview of GST E-invoicing Beneath e-invoicing, the applicable businesses should notify the government to validate the documents. The portal in which the validations would get occur is said to be the invoice registration portal (IRP), such as the NIC and Clear. The outcome is that the government answers with a signed QR code and a unique Invoice Reference Number (IRN). To these kinds of businesses, the e-invoices would get auto-filled in GSTR-1 to the finish of the duration of tax. . A penalty of Rs 25,000 per invoice will be levied if the generation of IRN failed. Rs 10000 per invoice is obligated to be paid when the business does not raise the needed invoices. Towards the exempted supplies the system does not get applicable towards which the supply bill is raised, job works, imports, delivery challans, and entities operating as banks and NBFCs, exhibiting films on multiplex screens, government departments, goods and passenger transportation agencies, and the Special Economic Zones (SEZ) units. A Smart Solution for GST E-invoicing In order to prepare the GST e-invoice system, SAG Infotech Gen GST software is available in both Desktop and Online variants. With the software, you can prepare unlimited e-invoices for many clients as you like. We have a lot of features available in our Gen GST e-invoice software, like importing from government Excel, uploading JSON directory-wise, generating IRNs, cancelling bills, checking JSON validation, and printing bills. Changes in GST E-invoicing Business Compliance and Operations The relevant businesses should establish and test the latest system prior to 1st Oct 2022. Testing the e-invoicing setup is available at present in a sandbox environment on the API portal of the GST Network. First-time compliance asks for all the applicable businesses to enrol in the e-invoice portal like NIC (https://einvoice1.gst.gov.in/) or reported IRPs like Clear. A system is required by the e-invoicing and the process revision and influences how the compliance would get executed. The revisions could be found in the process of business and preparation of GSTR-1, along with modifications in the invoicing software or Enterprise Resource Planning (ERP) systems. Within the auto-population, GSTR-1 filing would get simpler however the same provides reconciliation difficulties between GSTR-1 and sales books in every tax duration. These businesses are obligated to check the entries of the e-invoice in GSTR-1 prior to filing. Tech-based reconciliation could assist them in saving time and effort. The meaning of e-invoicing is not to generate the invoices on the government portal however the same refers to the reporting of the already generated invoices to the government for the purpose of validation. Hence the same reporting needs every invoice, debit, or credit note to be in the specific format which is mentioned said to be the e-invoice schema. Indeed acknowledging the transactions and the documents in which the e-invoicing is applicable and distinct them at the source from the other for simpler reporting in the IRP and the GSTR-1 processing. An identical action would be required for the e-way bills in which the same could be optionally auto-generated relying on the grounds of the inserted e-invoice information. The printing options should be revised for fetching IRN and QR codes in the e-invoice. All above would be the system changes, a reconfiguration shall be required in the current billing or ERP, or accounting systems. The business should choose and execute the effective method for the generation of e-invoices like online and real-time SMS and offline and batch processing. The same could be chosen for the SFTP or API integration using fully functional, end-to-end cloud-based solutions for large invoice scale, and customer service within a specified time. Through the additional method, the same could access the IRPs through current e-way bill APIs or web-based direct integration with IRPs such as NIC and Clear. The businesses could confirm the integration with IRP via GST Suvidha Provider (GSP), also served by Clear. The organizations functioning on a low scale might opt for relying on the lesser cost SMS-based or mobile app-based generation and old offline spreadsheet-based utilities like GePP, while these shall not render in an influential way. There is an internet connection interruption risk for small businesses that used to function in semi-urban and rural areas. Small businesses might hesitate to transform towards innovative tech-based systems. Indeed the invoice-to-pay process could delay the operation of invoices including the payments would get late and might then affect the consumer's regard if the staff is not being trained properly or if a lack of connection setup is there. For confirming the preciseness of the invoices generated beneath e-invoicing, automating invoicing operations becomes critical. The same shall permit to share of the documents between the businesses through tapping the button and monitoring the payments. GST E-invoicing Effect and Purpose The major goal for eliminating the e-invoice turnover limit would be to fetch and prevent bogus tax via rectification in compliance. The same permits the companies including the supply chain to exclusively avail of the validated Input Tax Credit (ITC), hence stopping the GST revenue leakages for the government. To extend the GST digitization would be the move of e-Invoicing. The same fetches the information of the transaction of the businesses at the beginning or at the billing stage. The majority of the assessee comes in the range of Rs 10-20 cr annual turnover as compared to any former e-invoicing stages. The transaction volume of these businesses is higher and secures newer compliance challenges. As per the validation of the government, the system permits small businesses to seek formal credit routes via invoice financing in a simpler way. But the large companies taking their raw materials through these businesses should pose vendor compliance to prevent ITC claim delays. Hence e-invoicing in India permits the business billing or ERP system to communicate with each other. The same shall diminish the manual errors and rectify the clarity.

Clarifications regarding GST on renting of motor vehicles designed to carry passengers to be paid by corporate recipients /Firms Govt. of India vide Circular No. 177/09/2022-TRU dated 03.08.2022 clarified whether RCM is applicable on service of transportation of passengers (Heading 9964) or on renting of motor vehicle designed to carry passengers (Heading 9966) by Body corporate. RCM on Motor Vehicles was originally inserted vide NN-22/2019-Central tax (Rate) & then substituted vide NN-29/2019-Central tax (Rate) in which it was notified that services provided by a non-body corporate to a body corporate by way of renting of any motor vehicle for transport of passengers, tax is required to be paid by the body corporate under RCM. SAC 9966 Renting of motor vehicle with operator for transport of passengers falls under Heading 9966. the service covered here is renting of motor vehicle for transport of passengers for a period of time where the renter defines, how and when the vehicles will be operated determining schedules, routes & other operational considerations. As recommended by the GST Council, it is clarified that where the body corporate hires the motor vehicle (for transport of employees etc.) for a period of time, during which the motor vehicle shall be at the disposal of the body corporate, the service would fall under Heading 9966, & the body corporate shall be liable to pay GST on the same under RCM. Reverse charge thus would apply on act of renting of vehicles by body corporate and in such a case, it is for the body corporate to use in the manner as it likes subject to agreement with the person providing vehicle on rent. SAC 9964 'Passenger transport services' falling under Heading 9964. Heading 9964 covers passenger transport services over pre-determined routes on pre- determined schedules. As recommended by the GST Council, it is clarified that where the body corporate avails the passenger transport services for specific journeys or voyages & does not take vehicle on rent for any particular period of time, the service would fall under Heading 9964 & the body corporate shall not be liable to pay GST on the same under RCM. Govt. of India vide Circular No. 177/09/2022-TRU dated 03.08.2022 clarified about hiring of vehicles by firms for transportation of their employees to & from work is exempt under Sr. No. 15(b) of NN. 12/2017-Central Tax (Rate) transport of passengers by non-air-conditioned contract carriage. Sr. No. 15 (b) of notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 exempts "transport of passengers, with or without accompanied belongings, by non-air-conditioned contract carriage, other than radio taxi, for transport of passengers, excluding tourism, conducted tour, charter or hire." It is clarified that 'charter or hire' excluded from the above exemption entry is charter or hire of a motor vehicle for a period of time, where the renter defines how and when the vehicles will be operated, determining schedules, routes & other operational considerations. In other words, the said exemption would apply to passenger transportation services by non- air-conditioned contract carriages falling under Heading 9964. The exemption shall not be applicable where contract carriage is hired for a period of time, during which the contract carriage is at the disposal of the service recipient & the recipient is thus free to decide the manner of usage (route and schedule) subject to conditions of agreement entered into with the service provider. Disclaimer: The contents of this article are solely for informational purpose. It does not constitute professional advice or a formal recommendation. No part of this article should be distributed or copied without express written permission of the author.

TAXATION ON UNLISTED SHARES & BIGGEST CATCH ON SALE Nowadays there is a boom in equity transactions, investment etc., Indian investors have gone beyond traditional gold, silver, real estate to equities, mutual funds and few have further seen to be investing in the public companies which are about to be listed (Shares brought in unlisted market). Today we are going to understand the Taxation of Shares of public company purchased/acquired before listing. Capital Gains Tax is levied on the transfer of capital asset, and therefore capital gain tax would be applicable on sale of share, now there are 2 scenarios Unlisted share is sold before the company gets listed (Off Market Share Sale) Unlisted Share is sold post the company gets listed on any recognized stock exchange (Regular Sale) I. When the Unlisted Share (UL Share) is sold off the market (i.e. before a company gets listed) STCG - sold on or before 24 months of acquisition LTCG - Sold after 24 months of acquisition Taxation STCG: It would be taxed on slab rate basis or added to your total income and taxed accordingly (Since not covered under 111A) LTCG: For Resident it would be 20%(With Indexation) or 10%(without indexation) and for non-resident, it would be 10%(without indexation) II. Purchase UL SHARE and Sold as Listed Share First we need to identify whether It is STCG or LTCG and then process for Taxation of the same STCG in case of listed equity - If sold within 12 months of purchase. LTCG - If sold post 12 months of purchase (Obviously) Taxation STCG - 15% (Since STT is paid on transaction according to the condition specified under 111A) LTCG - 20% (With Indexation) or 10%(Without Indexation) for both resident and non-resident Exemption limit - Nil Why no Exemption? Section 112A is not attracted on this transaction because according to the provision STT needs to be paid on both acquisition as well as sale, however since it is purchased as unlisted, STT is not paid and hence 112 is charged and not 112A.

The Government of India has entered into agreement with various countries and specified territories to provide relief from double taxation of income. This agreement is known as Double Taxation Avoidance Agreement (DTAA). In order to obtain the relief from double taxation of income under DTAA, one must obtain a certificate of residence known as Tax Residency Certificate. What Is a Tax Residency Certificate? Tax Residency Certificate is issued by the Income Tax Department to Indian Residents. It enables the taxpayer to establish their residential status. This helps the foreign entity to pass the benefit of DTAA to the Indian Residents. Validity of Tax Residency Certificate Tax Residency Certificate once issued is valid for an entire financial year. How to obtain a Tax Residency Certificate? If the applicant is a resident in India, then he/she should file form 10FA and if the applicant is a non-resident, then he/she should file Form 10F to the Jurisdictional Assessing Officer for obtaining Tax Residency Certificate. A person shall be resident in India if he satisfies any of the following 2 conditions- Stayed in India in the previous year for a period of 182 days or more. Stayed in India for 60 days or more in the previous year and 365 days or more in the four years immediately preceding previous year. The following details must be furnished while filing the application- Name Status of the taxpayer i.e whether individual, company, firm etc. Nationality or country of incorporation. Unique Identification Number from which the Government of taxpayer or resident country identifies the taxpayer Period for which the residential status, as mentioned in the certificate is applicable Address of the assessee in the country or specified territory outside India, during the period for which the certificate is applicable. The assessee is required to maintain and provide all the documents in support of the information furnished in the application. If the Jurisdictional Assessing Officer is satisfied with the application filed then he shall provide Tax Residency Certificate in Form 10FB. Format of Application for Tax Residency Certificate Form 10FA [See rule 21AB (3)] Application for Certificate of residence for the purposes of an agreement under section 90 and 90A of the Income-tax Act, 1961 To The Assessing Officer,. Sir, I request that a certificate of residence in Form No. 10FB be granted in my case/in the case of [for person other than individual] 2. The relevant details in this regard are as under: - 3. The following document in support are enclosed:- ………… ………… ……….. I, [full name in block letters] son/daughter of , in the capacity of [designation for person other than individual], verify that to the best of my knowledge and belief, the information given in this form is correct and complete and that the other particulars shown therein are truly stated. Verified today the day of Place: Signature of the Applicant Name Format of Tax Residency Certificate In case your application for the certificate of residency is approved, here’s how the Assessing Officer will issue your TRC: FORM No. 10FB Certificate of residence for the purpose of Section 90 and 90A Certificate It is hereby certified that the above-mentioned person is a resident of India for the purposes of the Income Tax Act, 1961. This certificate is valid for the period ________. Issued on _____ the day of ______, ________. Name of the Assessing Officer Designation *Seal*

(Availability of Books Of Account) Ministry of Corporate Affairs vide its notification dated 5th August 2022 has amended the Companies (Accounts) Rules, 2014 regarding availability of books of account and other relevant books and papers maintained in electronic mode at all times and also details of person in control, if service provider is located outside India. Analysis of the Rules Analysis of the Rules 1. Rule 3(1) 2. Rule 3(2) The books of account and other relevant books and papers referred to in sub-rule (1) shall be retained completely in the format in which they were originally generated, sent or received, or in a format which shall present accurately the information generated, sent or received and the information contained in the electronic records shall remain complete and unaltered. This rule has no Amendment. 3. Rule 3(3) The information received from branch offices shall not be altered and shall be kept in a manner where it shall depict what was originally received from the branches. This rule has no Amendment. 4. Rule 3(4) The information in the electronic record of the document shall be capable of being displayed in a legible form. This rule has no Amendment. 5. Rule 3(5) 6. Rule 3(6) Electronic Mode Means: electronic form as defined in clause (r) of sub-section (1) of section 2 of Information Technology Act, 2000 (21 of 2000) and also includes an electronic record as defined in clause (t) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000) and "books of account" shall have the meaning assigned to it under the Act.

There are several significant changes coming up in September that will affect your savings, regardless of whether you pay income taxes, use debit cards for regular purchases, or participate in the national pension system. 1. Now, taxpayers have 30 days to check their returns By confirming the tax returns, you certify that the data you submitted in the return form is true and accurate and that it complies with the requirements of the Income-tax Act of 1961. For tax returns filed on or after August 1, 2022 (i.e., after the July 31 due date), the time frame for verification has been shortened from 120 days to 30 days. So, for example, if you filed your income tax forms on August 8, you must check them by September 7. The 30-day verification window begins on the day your tax returns are turned in. The deadline to verify returns for tax returns filed on or before July 31, 2022, is still 120 days from the date of filing the tax return. The IT department won't process the returns if verification isn't done within the allotted period. The longer you wait, the longer it will take for any refund- if there is one- to be credited to your account. Furthermore, if you don't check in a timely manner, your return will be considered un filed and subject to all related penalties. Additionally, if you validate the return after the allotted time has passed, it will be regarded as a late filing, and penalties and costs will be assessed. Although physical offline verification is an option, e-verification using net banking and Aadhaar is more practical. 2. Card tokenization for safe transactions In order to ensure secure transactions, all credit and debit card information used for online, POS, and in-app transactions will be replaced in September with special tokens. The mandate of the Reserve Bank of India (RBI) states that the tokenization rule would be implemented from October 1. This will prevent all merchant websites from storing your card numbers, CVV, or expiration date on their systems in order to perform online transactions. If the merchant has the option on its payment gateway page, card users should now save a token and save it on the specific website (for future use). In order to ensure secure transactions, all credit and debit card information used for online, POS, and in-app transactions will be replaced in September with special tokens. The mandate of the Reserve Bank of India (RBI) states that the tokenization rule would be implemented from October 1. This will prevent all merchant websites from storing your card numbers, CVV, or expiration date on their systems in order to perform online transactions. If the merchant has the option on its payment gateway page, card users should now save a token and save it on the specific website (for future use). 3. Fee increase for the National Pension System A commission is subtracted from your contributions to the National Pension Scheme (NPS) through the cancellation of units. On September 1st, the trail commissions on contributions submitted using NPS's direct-remit mode would increase from the current 0.10 percent of the contribution amount to 0.20 percent. The fee increase only applies to direct-remit investments, which give same-day net asset value (NAV) if the investment is received before 9.30 am as opposed to a two- to three-day lag for ordinary NPS investments. As a result, a trail commission of Rs 15 to Rs 10,000 would be subtracted. For instance, a fee of Rs 100 will be taken out instead of Rs 50 earlier if you invest Rs 50,000 in NPS on September 1 in direct-remit mode, i.e., before 9.30 am. The points of presence, such as banks, non-banking financial institutions, or other financial organisations that assist you in investing in NPS, would receive these commissions. 4. The cost of issuing debit cards and annual fees are rising at banks A number of banks have announced an increase in the yearly fees and issuance costs for debit cards starting in September. This is because the price of the semiconductor chips used in the card and other inputs has increased significantly. For instance, starting of September 6, Indian Overseas Bank (IOB) increased the fees for various debit card variations. A Rupay classic debit card from IOB has an issue fee of Rs. 50 and a yearly fee of Rs. 150 starting with the second year. From the second year on, the issuance fee and yearly charge would rise to Rs 150 and Rs 250, respectively. Similar to this, Yes Bank has raised the yearly costs for its Element and Rupay debit cards, which are solely available for Kisan accounts, to Rs 149 and Rs 299, respectively. Previously, Yes Bank assessed yearly fees of Rs 99 and Rs 249 for these cards, respectively. Central Bank of India and Suryoday Small Finance Bank are two additional institutions that have increased issuance fees and annual fees for various card types. 5. Atal Pension Yojana investment window closing soon September 30, 2022 It is the deadline for income taxpayers in the age range of 18 to 40 to sign up for the Atal Pension Yojana. For unorganised workers, the pension plan administered by the Pension Fund Regulatory and Development Administration guarantees a minimum guaranteed pension of Rs 1,000–5,000 per month. It was introduced in 2015 as the Swavalamban Yojana for those with low incomes. The author is a personal finance journalist with 9 years of reporting experience. Based in Agra, he covers financial planning, banking. He can also be reached at ajaakarshjain16@gmail.com

In this article author has tried to throw some light on the procedure to be followed while conducting Revenue Leakage audit in a brief manner: Revenue leakage is the one of the critical components of the Bank Audit. In some banks, it is conducted separately while some consider it as a part of Concurrent Audit or Statutory Audit or Internal Audit. Before commencing the audit, we should obtain the following documents from the respective (Bank Branch) business unit preferably on the e-mail. Last year Revenue Leakage Report; (if any) Loan Balance File (it includes all facilities sanctioned by branch such as Overdraft, Cash Credit, Term Loans etc.); Master Circular for applicable loans sanctioned by branch; List of SMA & NPA Accounts of branch and Recoveries made during audit period against them. Following are the important areas which should be covered for successfully completing Revenue Leakage Audit of the Bank Branch: - 1. Interest Earned on Advances Interest is the major source of revenue for the branches. Generally, following things are to be considered for checking Interest Income of the banks: Sanction Letter for checking the applicable rate of interest on the loan; Whether Interest is charged in accordance with relevant circular or scheme of the bank; Check Interest on NPA Advances is recognized only on the cash basis; Check the interest rate variation report generated from the CBS. This report normally shows the interest rate that are different from the interest rate given for the scheme; 2. Processing/Renewal charges a. Processing Fee Processing fee is generally charged by the branch on fresh advances sanctioned during the audit period. In order to find leakage in the processing fees we have to go through the respective loan circular and sanction letter as well. Verify that charges mentioned in Sanction Letter are debited to borrower’s account accordingly. In some banks processing charges are charged on the basis of the rating of the borrower. These charges are recovered at the time of initial sanction. Nowadays, Processing Fee is charged automatically by CBS but still there are high chances where Processing Fee is not charged due to technical glitches in CBS. For some banks & NBFC(s) especially MFI(s), processing fee is major source of revenue as they are charging very high processing fees. b. Renewal/Review Charges Cash Credit/OD limits and term loans should be renewed/review every year as per the Banking regulations. So, we have to verify that in every CC/OD/Term loan Account, Renewal Charges are debited or not. These are calculated on the basis of the service charges circular of the respective bank. 3. Facility Fees Applicable to NBG(National Banking Group) accounts only on Fund Based (+) Non Fund Based limits (excluding Term Loans) above 1 Crore. 4. Inspection charges Inspection Charges are charged on different types of advances such as term loans, CC, Overdrafts etc.. These are levied because branch is required to inspect different types of securities mortgaged or hypothecated to the bank such as stock and current assets, (generally CC and OD limits) and property in term loans, overdraft limits. Branch officials should carry out inspection of borrower’s site, stock and other current assets depend on the sanction letter, on the basis of limit of advance it is done Monthly/Quarterly/Half Yearly or Yearly. Inspections are also conducted pre or post the sanction of the limit. We have to check that whether charges have been debited according to the terms mentioned in the sanction letter and as per the circular prevailing at the particular time in the bank. In some banks if facility fee is charged in that case inspection charges are waived off. 5. Documentation charges Documentation charges are debited in relation to drafting or modification of standard documents like registered mortgage, equitable mortgage, hypothecation documents for current and non-current assets. (Waived for NBG accounts above 1 crore. Facility fess recovered in such cases) 6. Commitment charges Commitment charges are levied where the borrower has not utilized the sanctioned limit to a specific limit. For example, in some banks if borrower does not utilize at least 50% of the limit sanctioned in that case bank recover the charges from the borrower for non-utilization of the limit which are known as commitment charges. Since the amount is not utilized by the borrower, bank can’t earn interest upon unutilized portion and bank has its opportunity cost. Generally, it has been seen that branches for achieving their targets sanctions higher limits than needed to the borrower. Here, we should be more specified as CBS are currently not able to deduct them automatically in most of the banks. Commitment charges are levied generally on facilities having limits more than 1 crores. 7. Locker Rent . In some branches, locker facility is provided and for which a fee is charged. We need to verify Locker Rent received from customers of a particular period with occupancy of lockers during the said period. 8. Penal Interest Penal Interest is charged on account of non-submission or delay in submission of stock statements, non-compliance of the terms of sanction, incomplete documentation, non-renewal of facilities after due date (non-submission of renewal data including Audited balance sheet), etc. For example, penal charge is to be levied in case of delay in submission of stock statement, here important thing to check is the physical stock statement because to avoid charges in the account officials of the branch updates the date of latest stock statement without receiving the same in physical. These were the major cases where revenue leakage is generally identified. But the list of cases where revenue leakage can exist is not exhaustive. The following are also needed to be verified for the purpose of revenue audits: Ledger folio charges. Cheque book Charges Minimum Balance Charges Upfront fee Credit Information Report charges. The author can also be reached at ramanujan.ca@gmail.com Disclaimer: The information provided by the author in the article is for general informational purposes only. All information provided is in the good faith, however we make no representation or warranty of any kind, express or implied, regarding the accuracy, adequacy, validity, reliability, availability or completeness of any information in the article.

Arjuna (Fictional Character): Krishna, what are the implications if a person makes purchases and expenses in cash? Krishna (Fictional Character): Arjuna, according to section 40A(3) of the Income Tax Act, if payment for any expenditure exceeding Rs.10,000 is made in cash in a day, then the expenditure will be disallowed under the Income Tax Act. Additionally, section 43 states that, if cash payment for the acquisition of any asset exceeds Rs.10,000 in a day, then such expenditure will be not considered in determining actual cost of the asset. Hence depreciation is not allowed on it. Arjuna(Fictional Character): Krishna, what are the implications if a person accepts or repays any amount in cash? Krishna(Fictional Character): Arjuna, as per section 269ST of the Income Tax no person shall receive a sum in cash of Rs.2,00,000 or more- in aggregate from a person in a day; or in respect of a single transaction; or in respect of transactions relating to one event or occasion from a person Also, as per Section 269SS of the Income Tax Act, no person shall accept any loan or deposit or specified sum in cash from a person if the aggregate amount of such loan/deposit along with any previous unpaid loan or deposit (if any) is Rs.20,000 or more. Section 269T provides that no person shall repay any loan or deposit made with it in cash if the amount of the loan or deposit together with the interest is Rs.20,000 or more. Arjuna(Fictional Character): Krishna, what are the implications if a person withdraws cash from his bank account? Krishna(Fictional Character): Arjuna, there is no limit as such for withdrawal of money from bank but Section 194N deals with TDS on withdrawal of money from bank. According to section 194N TDS shall be deducted for cash withdrawals at the rate of- 2% if the amount of withdrawal exceeds Rs.1,00,00,000 in aggregate during the financial year. However, if the withdrawer has not filed his Income Tax Return for 3 previous assessment year then 2% TDS is deducted for the amount from 20 Lakhs-1 crore and 5 % TDS is deducted for amount exceeding Rs.1 Crore. Arjuna(Fictional Character): Krishna, what are the implications if a person Deposits cash in his bank account? Krishna(Fictional Character): Arjuna, there is no limit as such for cash deposits in bank accounts but High valued Cash Deposits in Bank are reported by Bank in Statement of Financial Transactions(SFT) which is reflected in the 26AS and AIS(Annual Information Statement) of the depositor. The Limit for Reporting in Statement of Financial Transactions (SFT) is as follows: If during the Year Rs 10,00,000 or more is deposited in Saving Account. If during the Year Rs 50,00,000 or more is deposited in Current Account. Arjuna(Fictional Character): Krishna, what lesson we should take from this? Krishna(Fictional Character): Arjuna, Just like a taxpayer ensure that no compromises are made in preparations for welcoming Goddess Mahalaxmi, the taxpayers should make sure that they do not contravene any provisions relating to cash in order to avoid problematic consequences.

Important clarifications/ amendments issued by the Government on GST in August/ September 2022 along with compliance timelines in September 2022 #duedates #undergst #sept #important #compilance #gst Compliance Timelines: Updates in the month of August/ September 2022 #CBIC #gst #duedates 1. CBIC issues guidelines for arrest and bail in relation to offences punishable under GST The Department has issued detailed guidelines for arrest and bail in relation to offences punishable under GST. The detailed instructions have been issued with respect to the procedure for arrest, post arrest formalities and submission of reports which shall be followed by the field offices or formations. Instruction No. 02/2022-23 dated August 17th, 2022 . 2. Guidelines on issuance of Summons under GST by CBIC The Department has issued detailed guidelines for issuing Summons under GST. These guidelines must be followed in matters related to investigation under GST and officers are advised to explore instances when instead of resorting to summons, a letter for requisition of information may suffice. Moreover, it is also provided that the non-observance of these instructions will be viewed seriously. Instruction No. 03/2022-23 dated August 17th, 2022 #centralboardofindirecttaxesandcustoms 3. CBIC notifies exchange rates effective from August 19th, 2022 The CBIC has notified the rate of exchange of conversion of the foreign currencies into Indian currency or vice versa, with effect from 19th August 2022, for import and export of goods. In this regard, Notification No.70/2022 -Customs (N.T.) dated August 18th, 2022 has been issued in supersession of Notification No.66/2022-Customs(N.T.), dated August 4th, 2022. Notification No.70/2022 -Customs (N.T.) dated August 18th, 2022 #NT #CBICissues #CGSTV 4. CBIC issues guidelines for launching prosecution under CGST Act, 2017 The Central Board of Indirect Taxes and Customs (CBIC) has issued detailed guidelines for launching prosecution under CGST Act, 2017. These guidelines cover procedures for prosecution, authority to sanction prosecution, monitoring of prosecution, monetary limits, procedure for withdrawal etc. It has also been provided that prosecution should not be filed merely because a demand has been confirmed in the adjudication proceedings. Further, prosecution should not be launched in cases of technical nature, or where additional claim of tax is based on a difference of opinion regarding interpretation of law. (Instruction No. 04/2022-23 dated September 1st, 2022) 5. CBIC notifies exchange rates effective from September 2nd, 2022 . The Central Board of Indirect Taxes and Customs (CBIC) has notified the rate of exchange of conversion of the foreign currencies into Indian currency or vice versa, with effect from 2nd September 2022, for import and export of goods. (Notification No. 73/2022 -Customs (N.T.) dated September 1st, 2022) 6. GSTN incorporates changes in Form GSTR-3B for reporting of ITC availment, reversal and ineligible ITC The Government vide Notification No. 14/2022 – Central Tax dated July 5th, 2022 had notified few changes in Table 4 of Form GSTR-3B for enabling taxpayers to correctly report information regarding ITC availed, ITC reversal and ineligible ITC in Table 4 of GSTR-3B. The notified changes of Table 4 of GSTR-3B have been incorporated in GSTR-3B and are available on GST Portal since September 1st, 2022. The taxpayers are advised to report their ITC availment, reversal of ITC and ineligible ITC correctly as per new format of Table 4 of GSTR-3B at GST Portal for the GSTR-3B to be filed for the period August 2022 onwards. (GSTN Update dated September 2nd, 2022) 7. SC grants one-month extension to GSTN to allow the filing of TRAN-1; Window will start from October 1st The Supreme Court had held that any aggrieved registered assessee can claim benefit irrespective of whether they have filed writ petition before High Court or not and GSTN was to open common portal for filing concerned forms for availing Transitional Credit through TRAN-1 and TRAN-2 for two months i.e. w.e.f. September 1st 2022 to October 31st, 2022. The Supreme Court has extended the time for opening the GST Common Portal for further period of four weeks. GSTN has been directed to open common portal for filing concerned forms for availing Transitional Credit through TRAN-1 and TRAN-2 from October 1st, 2022.

Introduction Law, it is often remarked, is a facilitator for rational human behaviour and action. Economic laws in particular are intended to foster economic growth and any ambiguities and fetters artificially created in them have the dysfunctional impact of retarding growth as opposed to encouraging progression. Surely the former cannot be the intent of the legislature. It is in the above context that there is a new need to look at some of the contentious provisions in the Companies Act, 2013 (hereinafter "The Act") which has substituted what had, become an antiquated piece of legislation- namely the Companies Act, 1956.The 1956 Act,in all fairness, servedthe industry very well for over half a century and in terms of content, it had far greater clarity than the present Act has to offer in respect of several contentious aspects . Indeed, by the same token, it had several provisions which had survived in the Statute Book well past their shelf life ,such as for instance, the thresholdscarved out in the Act for various purposes which needed to be made contemporaneous. There was also a need to remove the dead wood that existed in the Act in the form of some antiquated provisions.Besides, there was an urgent need to usher in provisions relating to corporate governance in the law , given the pace with which reforms were being put through especially from the time the winds of change started to blow in the Economy way back in the 1990s which led to the introduction of clause 49 in the Listing agreement- perhaps the first initiative towards codifying the principles of corporate governance .Of course, this reform was inspired by the happenings in the advanced western economies and the consequent need for India to take a leaf out of them so that as a Nation, we could stand shoulder to shoulder not only in terms of growth but also through judicial reforms. It must be pointed out that the introduction of Clause 49 was preceded by several initiatives more particularly the Desirable Corporate Governance Code (1998) drawn up by the Confederation of Indian Industry(CII). The Report was largely based on the Report of the Cadbury Committee in the U.K under the chairmanship of Sir. Adrian Cadbury which emphasised on the need for codification of certain principles relating to best practices which would sub-serve the interests of stakeholders in companies where a substantial public stake was involved. Over two decades or so, we have come a long way from the embryotic stages of economic reforms and have ushered in reforms of significance which have made the Indian Economy one of the most resilient in the World which has been able even to tide over an earth shattering calamitous event such as the pandemic. A lot has been done but we have still a long way to go.One area which needs immediate attention is to weed out the imperfections in the present Act. For one there is preponderance of delegated legislation which has meant that the law has been tinkered along far too frequently for any one’s comfort. Secondly, in many cases, the sub-ordinate legislation has not been consistent with the Act resulting in disharmony in interpretation.Many of the clarifications issued by the MCA may not be legally sustainable once challenged.There is a need to remove the ambiguity caused by some of the provisions. A discussion paper suffers from the inherent problem of space being amajor constraint. A focussed review ion a host of provisions is rendered impossible for this reason. Hence we have adopted a sectoral approach for our discussion with a focus being on understanding the nuances of the law in Section 186 of the Act. We have carried out an introspection threadbareon some of the pain points in Section 186 , thus justifying the need for a legal review. Section 186 of the Act - A deep dive Section 186 of the Actcorresponds conceptually to Section 372A of the predecessor Act. In reality, it traverses a path which is much wider than its predecessor clause and its tentacles extend much wider than perhaps was intended by the legislature. Further ,it is replete with drafting anomalies which still need to be addressed. It is also much more rigid and inflexible , making it an arduous obligation for Corporates to fulfil as opposed to its avowed intention essentially to regulate investments and lending by companies essentially to corporates. In this exposition we shall seek to make a deep dive into some of the portions in the Section which give rise to ambiguity still and also point out the rigidity and inflexibility in the Section, which makes its acceptance by companies an unconscionable burden. Difference in Marginal notes to the Section as against predecessor provision is indicative of its overarching reach Headings prefixed to Sections or sets of Sections serve as an useful internal aid to the construction of Statutes in that they are preambles to those Sections.However, the marginal heading to a Section cannot control the interpretation of the words of the Section, in particular if the language of the Section is clear and unambiguous.(ChandrajiRao v CIT(AIR 1970 SC 1582). Where there is doubt, the marginal heading can be relied upon as an aid to construction .They cannot control the plain words in the Statute but may explain ambiguous words.(Western India Theatres Ltd v Municipal Corporation of the City of Poona(AIR 1959 SC 586). The marginal note or heading to a Section cannot be applied for construing a Section but it certainly can be relied upon as indicating the drift of the Section or to show what the Section is dealing with. Just a position the above aid to construction, we can make out the difference in the marginal heading as appearing in Section 186 and compare it with that in Section 372A to appreciate the amplitude of the former. Section 186 starts with the heading"Loan and investment by company". Contrast this with Section 372A in the former Act which was introduced by the Companies (Amendment) Act, 1999 to consolidate two Sections 370 and 372 which were regulating , respectively, the provision of inter corporate loans and inter-corporate investments. The heading in Section 372A namely" Inter-corporate loans and investments" clearly indicates the drift of the provision in that it intended only to regulate the inter-corporate loans and investments which is exactly what a legislation which regulates companies ought to do. By contrast, Section 186 simply speaks about loans and investments to be made by a company which clearly is an indication that its purpose is not only to regulate the provision of loans and investments into companies but also to embrace lending to non-corporate entities. Where it relates to making of investments, Clause (c ) in sub-section (2) limits itself to providing the thresholds for investments into any other body corporate. We shall subsequently articulate on the use of the expression "body corporate" which also gives rise to some amount of trepidation. The Notes on Clauses relating to Section 186 contemplate its applicability to "persons" In contrast to Section 372A ,which was clearly intended only to regulate loans and investments to Bodies corporate, the Notes on clauses to the Companies Bill, 2011 clearly provided that its application was contemplated to cover ,apart from bodies corporate , provision of loans to persons as well. Normally the statement of objects and reasons to a proposed legislationare a pointer to the legislative intent.The language used in clause (b) of subsection (2) of Section 186 itself is unambiguous and covers the provision of loans to "Persons’. Considering the above, the statement of objects and reasons provided cannot be applied as an aid to construction of the provisions of the Act though it may be used to ascertain the objects underlying the legislation and the conditions which necessitated the enactment.(A.ThangalKujuMusaliar v M.VenkatachalamPotti,ITO (AIR 1956)(SC 246). "Without prejudice to the provisions contained in the Act"- Significance of the starting words in Section 186 The significance of the opening words as quoted above in the Section need to be understood.The above words indicate that the Section operates in an independent field and will not in any way prejudice the operation of any other provision in the Act.The use of the above expression has been rendered necessary since there are some segments in Section 185 which apparently overlap with Section 186.It is abundantly now clear that Section 185 and 186 operate on separate fields and do not overlap. It is pertinent to note that in ITO v Gwalior Rayon Manufacturing(Weaving)Co.Ltd (AIR 1976 SC 43 at page 47) the Apex Court has explained that where a provision has been enacted "without prejudice toanother provision" it does not have the effect of affecting the operation of the other provision and any action taken under it must not be inconsistent with such other provision. Reference may also be made to the ratio in Institute of Chartered Accountants of India v Vimal Kumar Sharma (1 SCC 534) where it was noted that the use of the words "without prejudice" as appearing in Sections 24A, 25 and 26 of the Chartered Accountants Act, 1949 show that the offences defined in the said Act do not bar the prosecution of offences under the Penal Code. Term "Person" is not defined in the Act.-Limited exclusion of "employee" is a clear after thought! Clause (b) in sub-section(2) of Section 186 covers provision of loans, guarantees or security in connection with a loan to not only a body corporate but also to a person. The term "person" has no definition in the Act. One of the principles of statutory interpretation is that where a word is undefined, it must be construed in its popular sense if it is a word of everyday use or accorded the meaning as per the Lexicon. Popular sense refers to that sense which people conversant with the subject matter with which the statute is dealing with it attribute to it.The meaning or definition of words in a different provision or statute cannot automatically be imported for the interpretation of the same word in another statute.(CIT V Venkateshwara Hatcheries (P)Ltd(237 ITR 174(SC). Having said the above, one must appreciate that the term "person" cannot be limited to its application in common parlance, given that it has a much wider connotation in law as provided in the General Clauses Act, 1897. The General Clauses Act, is a consolidating and amending Act whose purpose is to avoid superfluity and repetition of language.(Rayarappan v MadhaviAmma(AIR 1950 FC 140). The definitions and general rules of interpretation contained in the said Act have to be read in any other statute governed by it unless the statute contain anything repugnant to them in the subject or context.(Dulichand v CIT)(AIR 1956 SC 354). It would be improper in the context of Section 186 to limit the meaning of the term "person" as understood in common parlance, given that the term includes a juristic person such as a company also. Section 2(42) in the said Act defines the term "person" inclusively to include any company or association or body of individuals , whether incorporated or not. From the above, it follows that the term person includes a natural individual , a company, a body of individuals such as a partnership firm, Association of persons as well. The term "person" also includes a juristic person such as an idol or the Gurugranth sahib installed in a temple(ShromaniGurudhwaraPrabandhak Committee v ,Amritsar v ShriSomNathDass(AIR 2000 SC 1421)or a company(Union Bank of India V Khader International Construction (AIR 2001 SC 2277). As Section 186 intends to impose fetters on the provision of loans as also on making of investments, it is clear that loans or guarantees to firms, Association of persons etc. made by a company shall also been taken into consideration for determining the company’s capacity to lend and invest. The use of the word"person" in the Section also meant that employee loans would come within the ambit of the Section. It would be calamitous if the distinguished Board of a large company were to sit in soulful judgement to decide on the request for a loan from an employee in the opulence of a grandiose Board room!. As this set off a furore in Corporate India , as a knee jerk reaction , MCA clarified vide its circular no.4/2015 dated 10.3.2015 that loans and advances to employees other than the managing or whole time directors would not be covered under Section 186.Wiser counsel thus prevailed to reduce the agony of corporate India on this score. The above circular was doubtful of legal sustainability since it contradicted the Act but as it was a benevolent circular , it passed muster since no one wanted to stir the hornet’s nest!. This was clearly a case of the legislature biting more than what it could chew and eventually an Explanation was inserted under subsection (2)to clarify that the term "person" shall not include for the purposes of this subsection any individual who is in employment with the company. Purpose of inserting an Explanation in the Statute The above Explanation was added through the Companies (Amendment)Act 2017 with effect from May 7,2018. The purpose of inserting an Explanation in a statutory provision is to clear any ambiguity.Even though it was inserted subsequent to the introduction of the Act, considering that it is clarificatory, it can be considered to have retrospective operation as held in Abdul latif Khan v Abadi Begum (Mrs.)(AIR 1934 PC 188). Whether the limited exclusion of an employee from the scope of the term "person" is good enough is also a matter of debate considering that loans to other individuals who are not employees including non-executive directors could still come under the sweep of the Section! . This gives scope for the Section to intrude into the jurisdiction of Section 185, conflict with which is sought to be avoided through the usage of the words"without prejudice to the provisions contained in this Act" as explained above. Where a managing director or whole time director is concerned, loans could be provided as either a part of their conditions of service or with the approval of shareholders through a special resolution. Section covers loans and investments into a body corporate Can the definition of "Body Corporate" in the LLP Act be imported to extend the concept The Section takes into its stride the provision of loans, guarantees and making of investments into a body corporate.A "Body Corporate" has been defined by Section 2(11) to include a company incorporated outside India but does not include a co-operative society registered under any law relating to such Societies or to any other body corporate not being a company as defined in the Act , which the Central Govt. may by notification specify in this behalf.Vide Notification no.SO 1592(E ) dated 12.4.2018 , the Central Govt. has clarified that the Asian Development Bank referred to under Section 2 of the Asian Development Act, 1966 shall be a specified body corporate. It is pertinent to note that a "limited liability Partnership"(LLP) is not specifically covered under Section 2(11).However, the Limited Liability Partnership Act, 2008 provides under Section 2(d) a "means " definition to a "Body corporate" which not only includes an LLP constituted in India but also outside India.Thus by importing the definition given in the LLP Act , for the purposes of Section 186 ,we can state that an LLP is a body corporate. Whether one can import the definition given to a term in an allied legislation when the mother legislation has a specific definition is however, a matter of debate. Having said this, consistent with the objective of the Section which is to regulate loans and investments not only in companies but also to persons, we can say that it would be appropriate that LLPs are covered within the ambit of the Section, notwithstanding that they are not bodies corporate under the Act. Should Preference Share capital form part of aggregate of paid up share capital and free reserves Under Section 186(2), no company can make any loans, extend guarantee or provide any security to a body corporate either directly or indirectly and acquire by way of subscription , purchase or otherwise the securities of any other body corporate in excess of the prescribed threshold exceeding sixty percent of its paid up share capital, free reserves and securities premium or one hundred percent of its free reserves and securities premium whichever is more. Up to the above threshold, the decision to make loans and/or investments in securities shall be taken by the board at its meeting convened for the purpose with the unanimous approval of the directors present at the meeting. If the above threshold needs to be breached , the board will have to take the consent of the shareholders by special resolution. The paid up share capital of the company is one of the components that is considered for determining the aggregate threshold. Paid up share capital carries the meaning provided by Section 2(64). It refers to the aggregate amount of money credited as paid up or its equivalent to the amount received as paid up in respect of shares issued. It also includes the value of bonus shares issued against which no payment is received by the company. As per the definition , there is no distinction between equity and preference share capital since the reference is to the amount of aggregate amount of money credited as paid up capital. The moot point that arises is whether preference share capital which carries with it, hues of debt capital and is considered in accounting parlance, as sub-ordinate debt or mezzanine capital should be included in the aggregate of the paid up share capital. It is pertinent to note that the Act does not permit issue of irredeemable preference shares and hence preference capital cannot be considered as permanent capital. If preference share capital is included in paid up share capital, it follows that the ability of the company to make investments into other companies’ securities and to lend / guarantee debts goes up at least for the duration of the tenor of the preference shares. It may also be noted that under the Act for determining the capacity of a company to borrow for the purposes of Section 180(1)(c ) also ,we use the same yardstick as in Section 186.The inclusion of preference share capital in the paid up share capital artificially increases the capacity of a company to borrow, albeit with members’ approval in excess of the paid up capital, free reserves and securities premium.Upon redemption of the preference shares , the base would obviously go down. It is pertinent to note that approvals from members under Section 180(1)(c ), Section 186 are generally one time approvals and it is not as if every company takes the precaution of fine tuning its limits upon redemption of preference shares. There are two schools of thought as regards the inclusion of preference share capital in the capital base.One School advocates that considering that the law does not make any distinction between preference and equity capital while determining the paid up share capital, it is perfectly in order to consider the preference capital as well. The other view which is conservative considers the characteristics ofdebt which is an integral part of preference share capital,given that it yields generally to a fixed rate of return as dividend and also is liable for redemption upon completion of its tenor. As per the Companies (Accounting)Rules, 2014 read with the Companies (Accounting standards)Rules, 2015 which now apply to almost all categories of companies, preference share capital is considered as debt capital where it carries a fixed coupon rate of dividend .It is only when the preference capital is participative in nature which opens up a possibility for a variable component in the preference dividend over and above the coupon rate, that preference capital may be considered as part of equity.Otherwise, preference capital is considered as debt capital and is not taken into consideration for determination of shareholders’ funds or the tangible net worth of the company. Reference may be made to Para 15 in Accounting Standard 32(Financial Instruments-Presentation)which considers a vanilla preference share carrying a fixed return as a debt instrument. Considering the above discussion there is enough logic associated with the exclusion of preference share capital while determining the thresholds under Section 180(1)(c ) and Section 186. A judicial review is called for, leading to either an amendment in the definition of Paid up share capital expressly eliminating paid up preference share capital therefrom or alternatively a notification can be issued to the effect that for the aforesaid provisions in the Act, Preference share capital shall not be considered. Investments/Loans to wholly owned Subsidiary should not form a part of the threshold under Section 186 Under Section 372A of the previous Act, loans and investments made by a Holding Company into its wholly owned subsidiary were exempt for the purpose of computing the permitted limits under the above provision. The present Act has withdrawn the above exemption and the only concession that is offered is that in case of investments/loans to a wholly owned subsidiary ,there would be no need to seek approval of the shareholders by special resolution. However, the loan/investment so made shall be included for ascertaining the threshold. There is a strong case for the status quo ante to be restored considering that in many cases it may be necessary for the holding company to infuse fresh capital or provide loans to its wholly owned subsidiary for its resuscitation. Section 186 is inflexible and rigid As compared to its predecessor clause , the present Act is inflexible for several reasons.For one any loan/investment made into a wholly owned subsidiary will be included for the purpose of determining the thresholds prescribed.The only concession allowed as stated above, is that there would be no need to seek shareholder approval .The former Act eliminated from consideration the lending/ investments made into a wholly owned subsidiary. Further the Act provides that no loans shall be provided on interest free terms. The rate of interest is to be bench marked against yields for Govt. Security linked to their tenor. It is submitted that in required situations the Holding company should have been allowed to lend to its subsidiaries on either subsidised interest rates or at nil rates in case such a measure was needed for the resuscitation of the ailing subsidiary. It is pertinent to note that under the Income tax Act waiver of interest is allowed until it accrues as long as the lender has not made the lending out of borrowed funds. It is intriguing that the Statute should come in the way of what is essentially a business call. Conclusion The above is only one instance of the frailties in the present Act which has proved to be dysfunctional for India Inc. One could take pot shots on the present legislation ad nauseamby poking more holes in terms of drafting anomalies in other provisions in the Statute as well. That, however, is not our intention. We have therefore cherry picked on the major pain areas and areas of ambiguity in a specific provision of the law so that a better legislation could emerge ironing out the deficiencies in the existing provision. In our opinion as expressed earlier, the previous law on the subject was working perfectly well, it had less of clutter as also lesser ambiguity.Change as they say is the only constant in life.At the same time, change for the sake of change is most unwelcome and this is what ails the present dispensation most. Ease of doing business being the mantra doing the rounds across coffee tables, we should do more than glib talk and introspect on the problems which have come about due to tardy drafting majorly in the present Act. Hope, as the Bard remarked "is eternal in the human heart". We sincerely hope that the shortcomings in the present Act should get weeded out over a period of time so that Corporate India does not get bogged down through the weight of sheer procedure and the Statute can live up to the expectation of acting as a growth engine for the Economy.

Producer Company is a separate kind of legal organization under the cooperative societies in India. The main purpose of the Producer Company is to assist farmers in agricultural production, acquirement, storing, packaging, selling and distribution and give them benefits. How Does Producer Company came to the Existence? In India, most of the farmers live in underprivileged condition. They don't have access to the modern technologies, resources and financial assistance. Natural calamities and crop failure scenario make it worse for them to survive. Many of them have resorted to take their own lives. To address this particular issue of the farmers, the Indian Government had assembled an expert committee led by the prominent economist Y. K. Alagh. They proposed the concept of the Producer Company in 2002. Henceforth, it came into existence. How Producers Company Works? Producer Company can be formed by a minimum of 10 people or 2 establishments. The combinations of both also work as well. It is a legally identified as farmers entity with the desire to revamp personal and professional lives of farmers in the rural areas. The Primary Objectives of Producer Company The main purpose of the Producer Company is to perform the below mentioned subjects. Acquisition Preparation and Production Accumulation Classifying Amalgamate Supervision Retailing Trading Export All these purposes are related to the farming and cultivation. Now company registration online services available at cost-effective fees. We can discuss the purpose of the Producer Companies in details. Creation, gathering, obtainment, reviewing, pooling, dealing with, showcasing, selling, fare of essential creation of the Members or import of merchandise and administrations for the benefits of farmers. Preparing and protecting, drying, refining, fermenting, minting, canning, and bundling of the crops, produced by the Members. Assembling, deal or supply of farming equipment, seeds or consumables for the most part to its Members. Giving instruction on the shared help standards, to its members and others. Delivering specialized services, consultancy administrations, preparing, innovative work and any remaining exercises for the betterment of its Members. Age, transmission, and dissemination of force, rejuvenation of land and water assets, their utilization, preservation and correspondence relatable to essential produce. Protection and storage of essential products. Promoting habits of mutual cooperation among the members. Producer Company Registration Requirements Minimum 10 people or 2 institutions must come together to create a Producer Company. Their combination will also works. The Minimum capital must be ₹5 lakhs. The minimum numbers of directors is 5. The upper limit is 15 at most. Please note that the Producer Company cannot be transformed into a public company. Registration Process of Producer Company The producer company registration process is similar to private limited company. The below mentioned steps should be taken. Apply for the Digital Signature Certificate (DSC) and Directors Identification Number (DIN), at first. Name reservation application need to send to the Registrar of Companies (ROC). The name of the company must be concluded with the word "Producer Limited Company." After both of these processes are done, now you must file the application for the incorporation process of your producer company. You need to submit the below mentioned documents along with the incorporation application. Members and Directors Identity and address proof. Copy of Aadhar Card, PAN Card, Voter ID, Driving License, and Passport would work as identity proof. Copy of recent bank statement (with address), Electricity Bill, Telephone bill, Gas connection bill would be sufficient as address proof. DSC and DIN The Producer Company's Articles of Association (AOA) and Memorandum of Association (MOA). Company's office address proof (if the company is on rented ground, then rent agreement/rent receipt and NOC is must) Directors consent form DIR-2 and DIR-8. INC-7, INC-22 and DIR-12.